Income and Corporation Taxes Act 1988

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

General powers to make regulations under Chapter IV

566

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of “construction operations”

567

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER V — SCHEMES FOR RATIONALIZING INDUSTRY

Deductions from profits of contributions paid under certified schemes

568

• (1) Notwithstanding anything contained in . . . section 33 of ITTOIA 2005or section 53 of CTA 2009 (no deduction for capital expenditure) but subject to the following provisions of this Chapter, where a person pays, wholly and exclusively for the purposes of a trade in respect of which he is chargeable under Part 2 of ITTOIA 2005 or Part 3 of CTA 2009, a contribution in furtherance of a scheme which is for the time being certified by the Secretary of State under this section, the contribution shall, in so far as it is paid in furtherance of the primary object of the scheme, be allowed to be deducted as an expense in computing the profits of that trade.

• (2) The Secretary of State shall certify a scheme under this section if he is satisfied—

• (a) that the primary object of the scheme is the elimination of redundant works or machinery or plant from use in an industry in the United Kingdom; and

• (b) that the scheme is in the national interest and in the interests of that industry as a whole; and

• (c) that such number of persons engaged in that industry as are substantially representative of the industry are liable to pay contributions in furtherance of the primary object of the scheme by agreement between them and the body of persons carrying out the scheme.

• (3) The Secretary of State shall cancel any certificate granted under this section if he ceases to be satisfied as to any of the matters referred to in subsection (2) above.

• (4) The Secretary of State may at any time require the body of persons carrying out a scheme certified under this section to produce any books or documents of whatever nature relating to the scheme and, if the requirement is not complied with, he may cancel the certificate.

• (5) In this section and in section 569 “contribution”, in relation to a scheme, does not include a sum paid by a person by way of loan or subscription of share capital, or in consideration of the transfer of assets to him, or by way of a penalty for contravening or failing to comply with the scheme.

Repayment of contributions

569

• (1) In the event of the repayment, whether directly or by way of distribution of assets on a winding up or otherwise, of a contribution or any part of a contribution which has been allowed to be deducted under section 568, the deduction of the contribution, or so much of it as has been repaid, shall be deemed to be an unauthorised deduction in respect of which an assessment shall be made, and, notwithstanding the provisions of the Tax Acts requiring assessments to be made within six years after the end of the chargeable period to which they relate, any such assessment and any consequential assessment may be made at any time within three years after the end of the chargeable period in which the repayment was made.

• (2) For the purposes of this section, a sum received by any person by way of repayment of contributions shall be deemed to be by way of repayment of the last contribution paid by him, and, if the sum exceeds the amount of that contribution, by way of repayment of the penultimate contribution so paid, and so on.

Payments under certified schemes which are not repayments of contributions

570

• (1) Subject to the provisions of this section, where, under any scheme which is for the time being certified or has at any time been certified by the Secretary of State under section 568, any payment (not being a payment made by way of repayment of contributions) is made to a person carrying on a trade to which the scheme relates, that payment shall be treated for the purposes of the Tax Acts as a trading receipt of the trade, and shall accordingly be taken into account in computing the profits of the trade for those purposes.

• (2) Where . . . the payments which have been made under such a scheme in respect of a trade (not being payments made by way of repayment of contributions) have been made wholly or partly in respect of damage in respect of which no relief may be given under the Tax Acts, and a claim is made to that effect, then, subject to and in accordance with the provisions of Schedule 21—

• (a) relief shall be given in respect of those payments by reducing the amounts which are to be treated as trading receipts of the trade under subsection (1) above; but

• (b) where such relief is given, section 568 shall, in relation to contributions subsequently paid under the scheme in respect of the trade, have effect subject to the modifications specified in Part III of that Schedule,

and paragraph 6 of that Schedule applies for the purposes of this subsection as it applies for the purposes of that Schedule.

• (3) The provisions of this section and Schedule 21 shall apply in relation to any payment made to a person who has ceased to carry on a trade to which any such scheme as is mentioned in subsection (1) above relates as they apply in relation to payments made to a person carrying on such a trade, subject to the modification that so much of that payment as falls to be treated as a trading receipt by virtue of those provisions shall be deemed for the purposes of those provisions to have been made to him on the last day on which he was engaged in carrying on the trade.

• (4) In determining for the purposes of this section and of Schedule 21—

• (a) whether any trade has ceased to be carried on; or

• (b) whether any contribution is paid in respect of a trade in respect of which a payment has been made; or

• (c) whether any payment is made in respect of a trade in respect of which a contribution has been paid,

no regard shall be had to any event which, by virtue of section 18 of ITTOIA 2005 or section 41 of CTA 2009 (company starting or ceasing to be within charge to corporation tax) is to be treated as effecting a cessation of trading.

Cancellation of certificates

571

• (1) Where any certificate granted with respect to a scheme under section 568 is cancelled by the Secretary of State, and any deductible contributions paid in furtherance of the scheme have not been repaid at the expiration of one year from the cancellation, the body of persons carrying out the scheme shall, for the chargeable period in which that year expires, be charged to tax . . . upon the aggregate amount of the deductible contributions which have not been repaid at that time.

• (1A) An amount charged to income tax under subsection (1) above is treated for income tax purposes as an amount of income.

• (1B) So far as relating to corporation tax, the charge to tax under subsection (1) has effect as an application of the charge to corporation tax on income.

• (2) The charge to tax under subsection (1) above shall not be made if the total amount of any contributions, other than deductible contributions, which have been paid under the scheme and have not been repaid before that time is greater than the available resources of the scheme, and shall not in any case be made upon an amount greater than the excess, if any, of those resources over that total amount.

• (3) In subsection (2) above “the available resources”, in relation to any scheme, means a sum representing the total funds held for the purposes of the scheme at the expiration of one year from the cancellation of the certificate plus a sum representing any funds held for the purposes of the scheme which, during that year, have been applied otherwise than in accordance with the provisions of the scheme as in force when the certificate was granted.

• (4) Where the body of persons carrying out a scheme are charged to tax by virtue of subsection (1) above, and, after the expiration of one year from the cancellation of the certificate, any deductible contribution paid in furtherance of the scheme is repaid, the amount upon which the charge is made shall on the making of a claim be reduced by the amount repaid, and all such repayments of tax shall be made as are necessary to give effect to the provisions of this subsection.

• (5) In this section “contribution” includes a part of a contribution, and “deductible contribution” means a contribution allowed to be deducted under section 568, any reduction under Part III of Schedule 21 being left out of account.

• (6) For the purposes of this section, a sum received by any person by way of repayment of contributions shall be deemed to be by way of repayment of the last contribution paid by him, and, if the sum exceeds the amount of that contribution, by way of repayment of the penultimate contribution so paid, and so on.

Application to statutory redundancy schemes

572

• (1) Sections 569 to 571 and Schedule 21 shall, subject to the adaptations specified in subsection (2) below, apply in relation to a statutory redundancy scheme as they apply in relation to a scheme certified under section 568.

• (2) The adaptations referred to above are as follows, that is to say—

• (a) for any reference to a contribution allowed to be deducted under section 568 there shall be substituted a reference to a contribution allowed to be deducted under any provision of the Tax Acts other than that section;

• (b) any provision that section 568 shall, in relation to contributions, have effect subject to modifications, shall be construed as a provision that so much of any provision of the Tax Acts other than that section as authorises the deduction of contributions shall, in relation to the contributions in question, have effect subject to the modifications in question;

• (c) for any reference to the cancellation of a certificate with respect to a scheme there shall be substituted a reference to the scheme ceasing to have effect; and

• (d) for any reference to the provisions of the scheme as in force when the certificate was granted there shall be substituted a reference to the provisions of the scheme as in force when the contributions were first paid thereunder.

• (3) In this section “statutory redundancy scheme” means a scheme for the elimination or reduction of redundant works, machinery or plant, or for other similar purposes, to which effect is given by or under any Act, whether passed before or after this Act.

CHAPTER VI — OTHER PROVISIONS

Relief for losses on unquoted shares in trading companies

Relief for companies

573

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Relief for individuals

574

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Exclusion of relief under section 573 or 574 in certain cases

575

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provisions supplementary to sections 573 to 575

576

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Miscellaneous

Business entertaining expenses

577

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Housing grants

578

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Statutory redundancy payments

579

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provisions supplementary to section 579

580

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Borrowing in foreign currency by local authorities and statutory corporations

581

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Funding bonds issued in respect of interest on certain debts

582

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Inter-American Development Bank

583

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Relief for unremittable overseas income

584

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Relief from tax on delayed remittances

585

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Disallowance of deductions for war risk premiums

586

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Disallowance of certain payments in respect of war injuries to employees

587

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Training courses for employees

588

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Qualifying courses of training etc

589

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART XIV — PENSION SCHEMES, SOCIAL SECURITY BENEFITS, LIFE ANNUITIES ETC.

CHAPTER I — RETIREMENT BENEFIT SCHEMES

Approval of schemes

Conditions for approval of retirement benefit schemes

590

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Discretionary approval

591

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Tax reliefs

Exempt approved schemes

592

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Relief by way of deductions from contributions

593

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Exempt statutory schemes

594

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Charge to tax in certain cases

Charge to tax in respect of certain sums paid by employer etc

595

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Exceptions from section 595

596

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Charge to tax: pensions

597

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Charge to tax: repayment of employee’s contributions

598

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Charge to tax: commutation of entire pension in special circumstances

599

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Charge to tax: unauthorised payments to or for employees

600

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Charge to tax: payments to employers

601

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Regulations relating to pension fund surpluses

602

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Reduction of surpluses

603

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplementary provisions

Application for approval of a scheme

604

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Information

605

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Responsibilities of administrator of scheme, and employer

606

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Pilots' benefit fund

607

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Superannuation funds approved before 6th April 1980

608

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Schemes approved before 23rd July 1987

609

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Amendments of schemes

610

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Definition of “retirement benefits scheme”

611

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other interpretative provisions, and regulations for purposes of this Chapter

612

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER II — OTHER PENSION FUNDS AND SOCIAL SECURITY BENEFITS AND CONTRIBUTIONS

Parliamentary pension funds

613

• (1) The salary of a Member of the House of Commons shall, for all the purposes of the Income Tax Acts, be treated as reduced by the amounts deducted in pursuance of section 4 of the House of Commons Members' Fund Act 2016; but a Member shall not by reason of any such deduction be entitled to relief under any other provision of the Income Tax Acts.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) The . . . trustees of—

• (a) the House of Commons Members’ Fund specified in section 1 of the 2016 Act;

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (bb) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

shall be entitled to exemption from income tax in respect of all income derived from that Fund or any investment of that Fund.

Exemptions and reliefs in respect of income from investments etc. of certain pension schemes

614

• (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) Any interest or dividends received by the person in whom is vested any of the Family Pension Funds mentioned in section 273 of the Government of India Act 1935, and having effect as a scheme made under section 2 of the Overseas Pensions Act 1973, on sums forming part of that fund shall be exempt from income tax.

• (2A) The reference in subsection (2) above to interest on sums forming part of a fund include references to any amount which is treated as income by virtue of Chapter 8 of Part 4 of ITTOIA 2005 (profits from deeply discounted securities) and derives from any investment forming part of that fund.

• (3) Income derived from investments or deposits of any fund referred to in section 648, 649, 650 or 651 of ITEPA 2003 shall not be charged to income tax, and any income tax deducted from any such income shall be repaid by the Board to the persons entitled to receive the income.

• (4) In respect of income derived from investments or deposits of the Overseas Service Pensions Fund established pursuant to section 7(1) of the Overseas Aid Act 1966, the Board shall give by way of repayment such relief from income tax as is necessary to secure that the income is exempt to the like extent (if any) as if it were income of a person not domiciled and not resident in the United Kingdom.

• (5) In respect of dividends and other income derived from investments, deposits or other property of a superannuation fund to which section 615(3) applies the Board shall give by way of repayment such relief from income tax as is necessary to secure that the income is exempt to the like extent (if any) as if it were income of a person not domiciled and not resident in the United Kingdom.

• (6) A claim under this section shall be made to the Board.

Exemption from tax in respect of certain pensions

615

• (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) Where an annuity is paid from a superannuation fund to which this subsection applies to a person who is not resident in the United Kingdom, income tax shall not be deducted from any payment of the annuity or accounted for under Chapter 6 of Part 15 of ITA 2007 (deduction from annual payments and patent royalties) by the trustees or other persons having the control of the fund.

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (6) Subsection (3) above applies to any superannuation fund which—

• (a) is bona fide established under irrevocable trusts in connection with some trade or undertaking carried on wholly or partly outside the United Kingdom;

• (b) has for its sole purpose (subject to any enactment or Northern Ireland legislation requiring or allowing provision for the value of any rights to be transferred between schemes or between members of the same scheme) the provision of superannuation benefits in respect of persons’ employment in the trade or undertaking wholly outside the United Kingdom; . . .

• (c) is recognised by the employer and employed persons in the trade or undertaking; and

• (d) meets the benefit accrual condition (see subsection (6A));

and for the purposes of this subsection duties performed in the United Kingdom the performance of which is merely incidental to the performance of other duties outside the United Kingdom shall be treated as performed outside the United Kingdom .

• (6A) The benefit accrual condition is—

• (a) that, in the case of any money purchase arrangement relating to a member of the fund that is not a cash balance arrangement, no contributions are made under the arrangement on or after 6 April 2017;

• (b) that, in the case of any cash balance arrangement relating to a member of the fund, there is no increase on or after 6 April 2017 in the value of any person's rights under the arrangement;

• (c) that, in the case of any defined benefits arrangement relating to a member of the fund, there is no increase on or after 6 April 2017 in the value of any person's rights under the arrangement; and

• (d) that, in the case of any arrangement relating to a member of the fund that is neither a money purchase arrangement nor a defined benefits arrangement—

• (i) no contributions are made under the arrangement on or after 6 April 2017, and

• (ii) there is no increase on or after 6 April 2017 in the value of any person's rights under the arrangement.

• (6B) For the purposes of subsection (6A)(b)—

• (a) whether there is an increase in the value of a person's rights is to be determined by reference to whether there is an increase in the amount that would, on the valuation assumptions, be available for the provision of benefits under the arrangement to or in respect of the person (and, if there is, the amount of the increase), but

• (b) in the case of rights that accrued to a person before 6 April 2017, ignore increases in the value of the rights if in no tax year do they exceed the relevant percentage.

• (6C) For the purposes of subsection (6A)(c)—

• (a) whether there is an increase in the value of a person's rights is to be determined by reference to whether there is an increase in the benefits amount as defined by paragraph 14(7) of Schedule 18 to the Finance Act 2011, but

• (b) in the case of rights that accrued to a person before 6 April 2017, ignore increases in the value of the rights if in no tax year do they exceed the relevant percentage.

• (6D) For the purposes of subsection (6A)(d)(ii), regulations made by the Commissioners for Her Majesty's Revenue and Customs may make provision—

• (a) for determining whether there is an increase in the value of a person's rights,

• (b) for determining the amount of any increase, and

• (c) for ignoring the whole or part of any increase;

and regulations under this subsection may make provision having effect in relation to times before the regulations are made.

• (6E) In this section, “relevant percentage”, in relation to a tax year, means—

• (a) where, on 20 March 2017, the rules of the fund include provision for the value of the rights of a person to increase during the tax year at an annual rate specified in those rules, that rate, or

• (b) in any other case, the percentage by which the consumer prices index for September in the previous tax year is higher than it was for the September in the tax year before that (or, if greater, 0%).

• (6F) The Commissioners for Her Majesty's Revenue and Customs may by regulations make provision—

• (a) so as to change, or modify the effect of, the benefit accrual condition;

• (b) as to the matters to be taken into account in determining whether the benefit accrual condition is met;

• (c) for a superannuation fund to be treated to any extent as meeting or not meeting the benefit accrual condition.

• (6G) Provision under subsection (6D) or (6F) may be made by amending this section.

• (7) For the purposes of this section—

• “arrangement”, in relation to a member of a superannuation fund, means an arrangement relating to the member under the fund;

• a money purchase arrangement relating to a member of a superannuation fund is a “cash balance arrangement” at any time if, at that time, all the benefits that may be provided to or in respect of the member under the arrangement are cash balance benefits;

• an arrangement relating to a member of a superannuation fund is a “defined benefits arrangement” at any time if, at that time, all the benefits that may be provided to or in respect of the member under the arrangement are defined benefits;

• an arrangement relating to a member of a superannuation fund is a “money purchase arrangement” at any time if, at that time, all the benefits that may be provided to or in respect of the member under the arrangement are money purchase benefits;

• “cash balance benefits”, “defined benefits” and “money purchase benefits” have the meaning given by section 152 of the Finance Act 2004, but for this purpose reading references in that section to a pension scheme as references to a superannuation fund;

• “member”, in relation to a superannuation fund, has the meaning given by section 151 of the Finance Act 2004, but for this purpose reading references in that section to a pension scheme as references to a superannuation fund;

• “pension” includes a gratuity or any sum payable on or in respect of death or, in the case of a pension falling within subsection (2)(g) above, ill-health, and a return of contributions with or without interest thereon or any other addition thereto;

• “overseas territory” means any territory or country outside the United Kingdom;

• “the Pensions (Increase) Acts” means the Pensions (Increase) Act 1971 and any Act passed after that Act for purposes corresponding to the purposes of that Act;

• “United Kingdom trust territory” means a territory administered by the government of the United Kingdom under the trusteeship system of the United Nations;

• “the valuation assumptions” has the meaning given by section 277 of the Finance Act 2004.

• (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (9) For the purposes of this section, a person shall be taken to be employed in the public service of an overseas territory at any time when—

• (a) he is employed in any capacity under the government of that territory, or under any municipal or other local authority in it,

• (b) he is employed, in circumstances not falling within paragraph (a) above, by a body corporate established for any public purpose in that territory by an enactment of a legislature empowered to make laws for that territory, or

• (c) he is the holder of a public office in that territory in circumstances not falling within either paragraph (a) or (b).

• (10) For the purposes of subsection (9), references to the government of an overseas territory include references to a government constituted for two or more overseas territories, and to any authority established for the purpose of providing or administering services which are common to, or relate to matters of common interest to, two or more such territories.

• (11) Where the conditions in subsection (6)(a) to (c) are met in the case of a superannuation fund (“the actual fund”)—

• (a) any disqualifying contributions made under an arrangement relating to a member of the actual fund are treated for the purposes of the Income Tax Acts as instead made under an arrangement relating to the member under a separate superannuation fund (“the shadow fund” for the actual fund),

• (b) any disqualifying increase in the value of a person's rights under an arrangement relating to a member of the actual fund is treated for the purposes of the Income Tax Acts as instead being an increase under an arrangement relating to the member under the shadow fund for the actual fund, and

• (c) any reference in this or any other Act (including the reference in subsection (3) and any reference enacted after the coming into force of this subsection) to a fund, or superannuation fund, to which subsection (3) applies does not include so much of the actual fund as—

• (i) represents any contribution treated as made under, or any increase in the value of any rights treated as an increase under, the shadow fund of the actual fund or the shadow fund of any other superannuation fund, or

• (ii) arises, or (directly or indirectly) derives, from anything within sub-paragraph (i) or this sub-paragraph.

• (12) For the purposes of subsection (11) a contribution, or an increase in the value of any rights, is “disqualifying” if it would (ignoring that subsection) cause the benefit accrual condition not to be met in the case of the actual fund.

• (13) For the purposes of the provisions of this section relating to the benefit accrual condition, where there is a recognised transfer—

• (a) any transfer of sums or assets to the recipient fund by the recognised transfer is to be categorised as not being “a contribution” to the recipient fund, and

• (b) any increase in the value of rights under the recipient fund that occurs at the time of the recognised transfer is to be treated as not being an increase in that value if the increase is solely a result of the transfer effected by the recognised transfer.

• (14) For the purposes of subsection (13), where there is a transfer such that sums or assets held for the purposes of, or representing accrued rights under, an arrangement relating to a member of a superannuation fund (“the transferor fund”) are transferred so as to become held for the purposes of, or to represent rights under, an arrangement relating to that person as a member of another superannuation fund, the transfer is a “recognised transfer” if—

• (a) the conditions in subsection (6)(a) to (c) are met in the case of each of the funds, and

• (b) none of the sums and assets transferred—

• (i) represents any contribution treated as made under, or any increase in the value of any rights treated as an increase under, the shadow fund of the transferor fund or the shadow fund of any other superannuation fund, or

• (ii) arises, or (directly or indirectly) derives, from anything within sub-paragraph (i) or this sub-paragraph.

Other overseas pensions

616

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Social security benefits and contributions

617

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER III — RETIREMENT ANNUITIES

Termination of relief under this Chapter, and transitional provisions

618

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Exemption from tax in respect of qualifying premiums

619

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Qualifying premiums

620

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other approved contracts

621

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Substituted retirement annuity contracts

622

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Relevant earnings

623

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sponsored superannuation schemes and controlling directors

624

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Carry-forward of unused relief under section 619

625

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Modification of section 619 in relation to persons over 50

626

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Lloyd’s underwriters

627

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Partnership retirement annuities

628

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Annuity premiums of Ministers and other officers

629

• (1) For the purposes of this Chapter so much of any salary which—

• (a) is payable to the holder of a qualifying office who is also a Member of the House of Commons, and

• (b) is payable for a period in respect of which the holder is not a participant in relation to that office in arrangements contained in the Parliamentary pension scheme but is a participant in relation to his membership of the House of Commons in any such arrangements, or for any part of such a period,

as is equal to the difference between a Member’s pensionable salary and the salary which (in accordance with any such resolution as is mentioned in subsection (3)(a) below) is payable to him as a Member holding that qualifying office shall be treated as remuneration from the office of Member and not from the qualifying office.

• (2) In this section—

• “Member’s pensionable salary” means a Member’s ordinary salary under any resolution of the House of Commons which, being framed otherwise than as an expression of opinion, is for the time being in force relating to the remuneration of Members or, if the resolution provides for a Member’s ordinary salary thereunder to be treated for pension purposes as being at a higher rate, a notional yearly salary at that higher rate;

• “qualifying office” means an office mentioned in section 2(2)(b), (c) or (d) of the Parliamentary and other Pensions Act 1987;

• “the Parliamentary pension scheme” has the same meaning as in that Act;

and without prejudice to the power conferred by virtue of paragraph 13 of Schedule 1 to that Act, regulations under section 2 of that Act may make provision specifying the circumstances in which a person is to be regarded for the purposes of this section as being or not being a participant in relation to his Membership of the House of Commons, or in relation to any office, in arrangements contained in the Parliamentary pension scheme.

• (3) In subsection (2) above “a Member’s ordinary salary”, in relation to any resolution of the House of Commons, means—

• (a) if the resolution provides for salary to be paid to Members at different rates according to whether or not they are holders of particular offices, or are in receipt of salaries or pensions as the holders or former holders of particular offices, a Member’s yearly salary at the higher or highest rate; and

• (b) in any other case, a Member’s yearly salary at the rate specified in or determined under the resolution.

CHAPTER IV — PERSONAL PENSION SCHEMES

Preliminary

Interpretation

630

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Approval of schemes

631

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Restrictions on approval

Establishment of schemes

632

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Scope of benefits

633

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Annuity to member

634

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Lump sum to member

635

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Annuity after death of member

636

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Lump sum on death of member

637

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other restrictions on approval

638

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Tax reliefs

Member’s contributions

639

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Maximum amount of deductions

640

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Carry-back of contributions

641

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Carry-forward of relief

642

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Employer’s contributions and personal pension income etc

643

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of “relevant earnings”

644

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Earnings from pensionable employment

645

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of “net relevant earnings”

646

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Charge to tax

Unauthorised payments

647

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Contributions under unapproved arrangements

648

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Miscellaneous

Minimum contributions under Social Security Act 1986

649

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Withdrawal of approval

650

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Appeals

651

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Information about payments

652

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Information: penalties

653

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Remuneration of Ministers and other officers

654

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transitional provisions

655

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER V — PURCHASED LIFE ANNUITIES

Purchased life annuities other than retirement annuities

656

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Purchased life annuities to which section 656 applies

657

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplementary

658

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER VI — MISCELLANEOUS

Financial futures and traded options

659

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART XV — SETTLEMENTS

CHAPTER I — DISPOSITIONS FOR SHORT PERIODS

Dispositions for period which cannot exceed six years

660

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Adjustments between disponor and trustees

661

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Application of Chapter I to dispositions by two or more disponors

662

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER II — SETTLEMENTS ON CHILDREN

The general rule

663

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Accumulation settlements

664

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of “irrevocable”

665

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interest paid by trustees

666

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Adjustments between disponor and trustees

667

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Application of Chapter II to settlements by two or more settlors

668

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Power to obtain information under Chapter II

669

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation of Chapter II

670

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER III — REVOCABLE SETTLEMENTS ETC.

Revocable settlements allowing release of obligation

671

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Revocable settlements allowing reversion of property

672

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Settlements where settlor retains an interest

673

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Settlements: discretionary power for benefit of settlor etc

674

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provisions supplementary to sections 671 to 674

675

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Disallowance of deduction from total income of certain sums paid by settlor

676

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sums paid to settlor otherwise than as income

677

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Capital sums paid by body connected with settlement

678

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Application of Chapter III to settlements by two or more settlors

679

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Power to obtain information for purposes of Chapter III

680

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation of Chapter III

681

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Ascertainment of undistributed income

682

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER IV — LIABILITY TO HIGHER RATE AND ADDITIONAL RATE TAX

Liability of settlors

Settlements made after 6th April 1965

683

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Settlements made before 7th April 1965 but after 9th April 1946

684

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provisions supplementary to sections 683 and 684

685

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Liability of trustees

Liability to additional rate tax of certain income of discretionary trusts

686

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Payments under discretionary trusts

687

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Schemes for employees and directors to acquire shares

688

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Recovery from trustees of discretionary trusts of higher rate tax due from beneficiaries

689

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER V — MAINTENANCE FUNDS FOR HISTORIC BUILDINGS

Schedule 4 directions

690

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Certain income not to be income of settlor etc

691

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Reimbursement of settlor

692

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Severance of settled property for certain purposes

693

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Trustees chargeable to income tax at 30 per cent. in certain cases

694

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART XVI — ESTATES OF DECEASED PERSONS IN COURSE OF ADMINISTRATION

Limited interests in residue

695

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Absolute interests in residue

696

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplementary provisions as to absolute interests in residue

697

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Special provisions as to certain interests in residue

698

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Relief from higher rate tax for inheritance tax on accrued income

699

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Adjustments and information

700

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation

701

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Application to Scotland

702

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART XVII — TAX AVOIDANCE

CHAPTER I — CANCELLATION OF CORPORATION TAX ADVANTAGES FROM CERTAIN TRANSACTIONS IN SECURITIES

Cancellation of tax advantage

703

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The prescribed circumstances

704

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Appeals against Board’s notices under section 703

705

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The tribunal

706

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Procedure for clearance in advance

707

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Power to obtain information

708

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of “tax advantage” and other expressions

709

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER II — TRANSFERS OF SECURITIES

Transfers with or without accrued interest: introductory

Meaning of “securities”, “transfer” etc. for purposes of sections 711 to 728

710

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of “interest”, “transfers with or without accrued interest” etc

711

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of “settlement day” for purposes of sections 711 to 728

712

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transfers with or without accrued interest: charge to tax and reliefs

Deemed sums and reliefs

713

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Treatment of deemed sums and reliefs

714

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Exceptions from sections 713 and 714

715

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transfer of unrealised interest

716

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Variable interest rate

717

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interest in default

718

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Unrealised interest in default

719

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transfers with or without accrued interest: supplemental

Nominees, trustees etc

720

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Death

721

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Trading stock

722

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Foreign securities: delayed remittances

723

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Insurance companies

724

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Lloyd’s underwriters

725

Building societies

726

Stock lending

727

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Information

728

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other transfers of securities

Sale and repurchase of securities

729

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transfers of income arising from securities

730

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Purchase and sale of securities

Application and interpretation of sections 732 to 734

731

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Dealers in securities

732

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Persons entitled to exemptions

733

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Persons other than dealers in securities

734

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of “appropriate amount in respect of” interest

735

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Miscellaneous provisions relating to securities

Company dealing in securities: distribution materially reducing value of holding

736

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Manufactured dividends: treatment of tax deducted

737

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplemental

Power to amend sections 732, 735 and 737

738

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER III — TRANSFER OF ASSETS ABROAD

Prevention of avoidance of income tax

739

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Liability of non-transferors

740

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Exemption from sections 739 and 740

741

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation of sections 739 to 741

742

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplemental provisions

743

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

No duplication of charge

744

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Power to obtain information

745

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Persons resident in the Republic of Ireland

746

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER IV — CONTROLLED FOREIGN COMPANIES

Imputation of chargeable profits and creditable tax of controlled foreign companies

747

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Limitations on direction-making power

748

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Residence and interest

749

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Territories with a lower level of taxation

750

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Accounting periods and creditable tax

751

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Apportionment of chargeable profits and creditable tax

752

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Notices and appeals

753

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Assessment, recovery and postponement of tax

754

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Information relating to controlled foreign companies

755

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation and construction of Chapter IV

756

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER V — OFFSHORE FUNDS

Material interests in non-qualifying offshore funds

Disposal of material interests in non-qualifying offshore funds

757

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Offshore funds operating equalisation arrangements

758

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Material interests in offshore funds

759

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Non-qualifying offshore funds

760

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Charge to tax of offshore income gains

Charge to income tax or corporation tax of offshore income gain

761

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Offshore income gains accruing to persons resident or domiciled abroad

762

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deduction of offshore income gain in determining capital gain

763

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Offshore income gains of trustees

764

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER VI — MISCELLANEOUS

Migration etc. of company

Migration etc.of companies

765

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Offences under section 765

766

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation and commencement of sections 765 and 766

767

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Change in ownership of company

Change in ownership of company: disallowance of trading losses

768

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Rules for ascertaining change in ownership of company

769

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transactions between associated persons

Sales etc. at an undervalue or overvalue

770

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transactions by petroleum companies

771

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Information for purposes of section 770, and appeals

772

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation of sections 770 and 771

773

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transactions between dealing company and associated company

774

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other provisions

Sale by individual of income derived from his personal activities

775

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transactions in land: taxation of capital gains

776

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provisions supplementary to sections 775 and 776

777

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Power to obtain information

778

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sale and lease-back: limitation on tax reliefs

779

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sale and lease-back: taxation of consideration received

780

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Assets leased to traders and others

781

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Leased assets: special cases

782

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Leased assets: supplemental

783

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Leased assets subject to hire-purchase agreements

784

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of “asset”, “capital sum” and “lease” for purposes of sections 781 to 784

785

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transactions associated with loans or credit

786

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Restriction of relief for payments of interest

787

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART XVIII — DOUBLE TAXATION RELIEF

CHAPTER I — THE PRINCIPAL RELIEFS

Relief by agreement with other countries

788

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Arrangements made under old law

789

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Unilateral relief

790

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Power to make regulations for carrying out section 788

791

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER II — RULES GOVERNING RELIEF BY WAY OF CREDIT

General

Interpretation of credit code

792

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Reduction of United Kingdom taxes by amount of credit due

793

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Requirement as to residence

794

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Computation of income subject to foreign tax

795

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Limits on credit: income tax

796

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Limits on credit: corporation tax

797

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interest on certain overseas loans

798

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Tax underlying dividends

Computation of underlying tax

799

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Dividends paid between related companies but not covered by arrangements

800

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Dividends paid between related companies: relief for U.K. and third country taxes

801

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

U.K. insurance companies trading overseas

802

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Underlying tax reflecting interest on loans

803

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Miscellaneous rules

Relief against income tax in respect of income arising in years of commencement

804

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Elections against credit

805

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Time limit for claims etc

806

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER III — MISCELLANEOUS PROVISIONS

Sale of securities with or without accrued interest

807

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Restriction on deduction of interest or dividends from trading income

808

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Relief in respect of discretionary trusts

809

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Postponement of capital allowances to secure double taxation relief

810

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deduction for foreign tax where no credit allowable

811

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Withdrawal of right to tax credit of certain non-resident companies connected with unitary states

812

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Recovery of tax credits incorrectly paid

813

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Arrangements to avoid section 812

814

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Power to inspect documents

815

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Disclosure of information

816

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART XIX — SUPPLEMENTAL

Miscellaneous

Deductions not to be allowed in computing profits or gains

817

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Arrangements for payments of interest less tax or of fixed net amount

818

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Old references to standard rate tax

819

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Application of Income Tax Acts from year to year

820

• In order to ensure the collection in due time of income tax which may be granted for any year commencing on 6th April, all such provisions contained in the Income Tax Acts as were in force on the preceding day shall have full force and effect with respect to tax which may be so granted, in the same manner as if that tax had been actually granted by Act of Parliament and those provisions had been applied thereto by the Act.

Under-deductions from payments made before passing of annual Act

821

• (1) Where, in any year of assessment or accounting period, any half-yearly or quarterly payments (or half-periodic or quarterly payments) have been made on account of any interest, dividends or other annual profits or gains, previously to the passing of the Act imposing income or corporation tax for that year or period, and tax has not been charged thereon or deducted therefrom or has not been charged thereon or deducted therefrom at the rate ultimately imposed for that year or period—

• (a) the amount not so charged or deducted shall be charged in respect of those payments to income tax under Chapter 2 of Part 4 of ITTOIA 2005 (interest) or shall be charged to corporation tax. . . . . . ; and

• (b) the agents entrusted with the payment of the interest, dividends or other annual profits or gains shall furnish to the Board a list containing the names and addresses of the persons to whom payments have been made and the amount of those payments, upon a requisition made by the Board in that behalf.

• (2) Any person liable to pay any rent, interest or annuity, or to make any other annual payment—

• (a) shall be authorised—

• (i) to make any deduction on account of income tax for any year of assessment which he has failed to make previously to the passing of the Act imposing the tax for that year, or

• (ii) to make up any deficiency in any such deduction which has been so made,

on the occasion of the next payment of the rent, interest or annuity or making of the other annual payment after the passing of the Act so imposing the tax, in addition to any other deduction which he may be by law authorised to make; and

• (b) shall also be entitled, if there is no future payment from which the deduction may be made, to recover the sum which might have been deducted as if it were a debt due from the person as against whom the deduction could originally have been made if the Act imposing the tax for the year had been in force.

• (3) Subsection (2) above shall apply with respect to—

• (a) any payment to which section 906 of ITA 2007 applies (certain royalties etc where usual place of abode of owner is abroad), and

• (aa) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (b) any royalty or other sum paid in respect of the user of a patent; . . .

• (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

as it applies with respect to any rent, interest, annuity or other annual payment.

• (4) In this section “interest” and “dividends” do not include any interest or dividend which is a distribution.

Over-deductions from interest on loan capital etc. made before passing of annual Act

822

• (1) If in any year of assessment (“the year”) a resolution having statutory effect under the Provisional Collection of Taxes Act 1968 provides for the charging of income tax at a lower rate less than that charged for the previous year, the following provisions of this section shall have effect with respect to deductions in respect of income tax by any body corporate, from payments of interest (not being a distribution) on any of its securities.

• (2) Any deduction which was made before the expiration of one month from the passing of the resolution and which would, if the tax had been renewed at the rate imposed for the previous year, have been a legal deduction, shall be deemed to be a deduction rendered legal by section 2 of the Provisional Collection of Taxes Act 1968 and that section shall, subject to this section, apply accordingly.

• (3) Any over-deduction to be made good under that section may be made good by a reduction of the amount of tax deducted from the next payment of like nature made on the security in question after the passing of the Act imposing the tax for the year.

• (4) Any amount made good under section 2 of the Provisional Collection of Taxes Act 1968 shall—

• (a) in the case of an over-deduction which is made good under subsection (3) above, enure to the benefit of the person entitled to the payment on the occasion of which the over-deduction is made good; and

• (b) in any other case, enure to the benefit of the person entitled to the security in question at the date when the amount is made good,

irrespective, in either case, of whether or not he is the person who was entitled to the payment, or to the security at the date when the original deduction was made.

• (5) Subsection (3) above shall not authorise the retention of any part of the amount over-deducted for more than one year from the passing of the Act imposing the tax for the year.

Adjustments of reliefs where given at different times

823

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Repayment supplements: individuals and others

824

• (1) Subject to the following provisions of this section, a repayment made by the Board or an officer of the Board of any of the following, namely—

• (a) an amount paid on account of income tax under section 59A of the Management Act;

• (b) any income tax paid by or on behalf of an individual for a year of assessment;

• (c) a penalty payable under any paragraph of Schedule 56 to the Finance Act 2009 in respect of an amount falling within any of the following items of the Table in paragraph 1 of that Schedule—

• (i) item 1, 12, 18 or 19; or

• (ii) insofar as the tax falls within item 1, item 17, 23 or 24; and

• (d) a penalty incurred by an individual under any of the provisions of that Act,

shall be increased under this section by an amount (a “repayment supplement”) equal to interest on the amount repaid at the rate applicable under section 178 of the Finance Act 1989 for the period (if any) between the relevant time and the date on which the order for the repayment is issued.

• (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2A) Subsection (1) above shall apply to a repayment made in consequence of a claim under section 228 of the Income Tax Act 1952 (relief in respect of income accumulated under trusts) as if the repayment were of income tax paid by the claimant for the year of assessment in which the contingency mentioned in that section happened.

• (2B) Subsection (1) above shall apply to a payment made by the Board under section 375(8) (payment of amount which borrower would have been able to deduct from interest payment under section 369(1)) as if the payment were a repayment falling within that subsection.

• (2C) Subsection (1) above shall apply to a repayment made by the Board as a result of a claim for relief under—

• (a) paragraph 2 of Schedule 1B to the Management Act (carry back of loss relief),

• (b) paragraph 3 of that Schedule (relief for fluctuating profits of farming etc.), or

• (c) Schedule 4A to this Act (relief for fluctuating profits of creative artists etc.),

as if it were a repayment falling within that subsection.

• (2D) Subsection (1) shall apply—

• (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (b) to a payment made under paragraph 6(1) of Schedule 14 (payment where entitlement to life assurance premium relief has not been given by deduction) as if the payment were a repayment of income tax paid for the tax year in which the entitlement to relief arose.

• (3) For the purposes of subsection (1) above—

• (aa) if the repayment is a payment made by the Board under section 375(8), the relevant time is—

• (i) if the interest payment was made in the year 1996-97 or a subsequent year of assessment, the 31st January next following that year;

• (ii) if the interest payment was made in an earlier year of assessment, the 5th April next following that year;

• (ab) if the repayment is a repayment as a result of a claim for relief under any of the provisions mentioned in subsection (2C) above, the relevant time is the 31st January next following the year that is the later year in relation to the claim;

• (ac) if the repayment is a repayment as a result of a claim under section 496B of ITA 2007 (relief for payments by discretionary trust taxable as employment income), the relevant time is the 31 January next following the end of the tax year to which the claim relates;

• (ad) if the repayment is a payment falling within subsection (2D)(b), the relevant time is 31 January next following the end of the tax year in which the entitlement to relief arose;

• (a) if the repayment is—

• (i) the repayment of an amount paid in accordance with the requirements of section 59A of the Management Act on account of income tax for a year of assessment, or

• (ii) the repayment of income tax for such a year which is not income tax deducted at source (other than a repayment within paragraph (ac)),

the relevant time is the date of the payment that is being repaid;

• (b) if the repayment is of income tax deducted at source for a year of assessment, the relevant time is the 31st January next following that year; and

• (c) if the repayment is of a penalty or surcharge, the relevant time is the date on which the penalty or surcharge was paid.

• (4) For the purposes of subsection (3) above, where a repayment in respect of income tax for a year of assessment is made to any person, that repayment—

• (a) shall be attributed first to so much of any payment made by him under section 59B of the Management Act as is a payment in respect of income tax for that year;

• (b) in so far as it exceeds the amount (if any) to which it is attributable under paragraph (a) above, shall be attributed in two equal parts to each of the payments made by him under section 59A of the Management Act on account of income tax for that year;

• (c) in so far as it exceeds the amounts (if any) to which it is attributable under paragraphs (a) and (b) above, shall be attributed to income tax deducted at source for that year; and

• (d) in so far as it is attributable to a payment made in instalments shall be attributed to a later instalment before being attributed to an earlier one.

• (4A) In this section any reference to income tax deducted at source for a year of assessment is a reference to—

• (a) income tax deducted or treated as deducted from any income, or treated as paid on any income, in respect of that year, . . .

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

but does not include a reference to amounts which, in that year, are deducted at source under PAYE regulations in respect of previous years.

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (6) . . . The Treasury may by order from time to time increase or decrease the rate of interestby reference to which—

• (a) repayment supplements are calculated under subsection (1) above; and

• (b) repayment supplements are calculated under section 47 of the Finance (No. 2) Act 1975.

• (7) A repayment supplement shall not be payable under this section in respect of a repayment or payment made in consequence of an order or judgment of a court having power to allow interest on the repayment or payment, or in respect of a repayment of a post-war credit within the meaning of the Income Tax (Repayment of Post-War Credits) Act 1959.

• (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .