Legalize / United Kingdom / Public General Act

Finance Act 1989

Type Public General Act

Publication 1989-07-27

Last updated 2026-03-18

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

(3A) Subject to subsection (3B) below, where it appears to the inspector that,in any accounting period of a company at the end of which it is a closeinvestment-holding company— (a) arrangements relating to the distribution of the profits of the companyexist or have existed the main purpose of which or one of the main purposesof which is to enable payments, or payments of a greater amount, to be madeto any one or more individuals under subsection (3) above in respect of suchan excess as is mentioned in that subsection, and (b) by virtue of those arrangements, any eligible person— (i) receives a qualifying distribution consisting of a payment made by thecompany on the redemption, repayment or purchase of its own shares, or (ii) receives any other qualifying distribution in respect of shares in orsecurities of the company, where the amount or value of the distribution isgreater than might in all the circumstances have been expected but for thearrangements, the entitlement of the eligible person to have paid to him undersubsection (3) above all or part of a tax credit in respect of anydistribution made by the company in the period shall be restricted to suchextent as appears to the inspector to be just and reasonable. (3B) Subsection (3A) above does not apply in relation to a tax credit inrespect of a dividend paid by a company in any accounting period in respectof its ordinary share capital if— (a) throughout the period, the company’s ordinary share capital consisted ofonly one class of shares, and (b) no person waived his entitlement to any dividend which would have becomepayable by the company in the period or failed to receive any dividend whichhad become due and payable to him by the company in the period. (3C) In subsection (3A) above— - “arrangements” means arrangements of any kind whether inwriting or not, - “close investment-holding company” has the meaning given bysection 13A, and - “eligible person”, in relation to a qualifying distribution,means an individual resident in the United Kingdom who would (apart fromsubsection (3A) above) be entitled to have paid to him under subsection (3)above all or part of a tax credit in respect of the distribution. (3D) In determining under subsection (3) above whether a person is entitled tohave any excess of tax credit paid to him in a case where subsection (3A)above applies, tax credits shall be set against income tax in the order thatresults in the greatest payment in respect of the excess.

(2) This section shall have effect in relation to distributions made bycompanies in accounting periods beginning after 31st March 1989.

Close companies: consequential amendments.

107

Schedule 12 to this Act (in which Part I contains administrativeprovisions relating to close companies and Part II makes amendments connectedwith section 103 above) shall have effect.

Settlements etc.

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108

Settlements where settlor retains interest in settled property.

109

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

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

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

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

Residence of trustees.

110

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Residence of personal representatives.

111

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

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

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

(4) In section 824(9) of the Taxes Act 1988 (repayment supplements), for the words from “or, in” to “section 701)” there shall be substituted the words “or personal representatives (within the meaning of section 111 of the Finance Act 1989)”.

(5) ... this section shall apply for the year 1989-90 and subsequent years of assessment.

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

Miscellaneous

Security: trades etc.

112

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Security: trades etc. (supplementary).

113

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Relief for pre-trading expenditure.

114

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Double taxation: tax credits.

115

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116

Chapter II — Capital Allowances

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117–120

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121

CHAPTER III — Capital Gains

Exemptions

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122

Increase of chattel exemption.

123

(1) In the following enactments, namely—

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

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

for “£3,000”, in each place where it occurs, there shall besubstituted “£6,000”.

(2) This section applies to disposals on or after 6th April 1989 andaccordingly, in relation to subsection (1)(b) above, to assets acquired on orafter that date.

Gifts

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124

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125

Non-residents etc.

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126

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127

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128

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129

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130

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131

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132

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133

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134

Value shifting and groups of companies

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135

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136

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137

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138

Miscellaneous

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139

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140

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141

CHAPTER IV — Management

Information

Power to call for documents and information.

142

(1) Section 20 of the Taxes Management Act 1970 (power tocall for documents of taxpayer and others) shall be amended in accordance withsubsections (2) to (8) below.

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

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

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

(5) Subsections (4) and (5) shall be omitted.

(6) In subsection (6)—

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

(b) the words “and in relation” onwards shall be omitted.

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(10) This section shall apply with respect to notices given on or after the day on which this Act is passed.

Power to call for papers of tax accountant.

143

(1) In section 20A of the Taxes Management Act 1970 (powerto call for papers of tax accountant) for the lasr sentence of subsection (1)there shall be substituted—

(1A) The reference to documents in subsection (1) above does not include— (a) personal records (as defined in section 12 of the Police and Criminal Evidence Act 1984), or (b) journalistic material (as defined in section 13 of that Act). (1B) Subject to subsection (1A) above, the reference to documents in subsection(1) above is to those specified or described in the notice in question;and— (a) the notice shall require documents to be delivered within such time (whichshall not be less than thirty days after the date of the notice) as may bespecified in the notice; and (b) the inspector may take copies of them or of extracts from them.

(2) This section shall apply with respect to notices given on or after the dayon which this Act is passed.

Restrictions on powers under TMA ss.20 and 20A.

144

(1) Section 20B of the Taxes Management Act 1970(restrictions on powers under sections 20 and 20A) shall be amended as follows.

(2) In subsection (1), after the word “question” there shall be inserted the words “, or to furnish the particulars in question”.

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

(4) In subsection (2), after the words “deliver documents”, in the first place where they occur, there shall be inserted the words “or furnish particulars”.

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

(6) In subsection (7), the words from “to a person” to “daughter”shall be omitted.

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) This section shall apply with respect to notices given on or after the day on which this Act is passed.

Falsification etc. of documents.

145

(1) After section 20B of the Taxes Management Act 1970there shall be inserted—

(20BB) (1) Subject to subsections (2) to (4) below, a person shall be guilty of anoffence if he intentionally falsifies, conceals, destroys or otherwisedisposes of, or causes or permits the falsification, concealment, destructionor disposal of, a document which— (a) he has been required by a notice under section 20 or 20A above, or (b) he has been given an opportunity in accordance with section 20B(1) above, to deliver, or to deliver or make available for inspection. (2) A person does not commit an offence under subsection (1) above if heacts— (a) with the written permission of a General or Special Commissioner, theinspector or an officer of the Board, (b) after the document has been delivered or, in a case within section 20(3)or (8A) above, inspected, or (c) after a copy has been delivered in accordance with section 20B(4) or (14)above and the original has been inspected. (3) A person does not commit an offence under subsection (1)(a) above if heacts after the end of the period of two years beginning with the date on whichthe notice is given, unless before the end of that period the inspector or anofficer of the Board has notified the person in writing that the notice hasnot been complied with to his satisfaction. (4) A person does not commit an offence under subsection (1) (b) above if heacts— (a) after the end of the period of six months beginning with the date on whichan opportunity to deliver the document was given, or (b) after an application for consent to a notice being given in relation tothe document has been refused. (5) A person guilty of an offence under subsection (1) above shall beliable— (a) on summary conviction, to a fine not exceeding the statutory maximum; (b) on conviction on indictment, to imprisonment for a term not exceeding twoyears or to a fine or to both.

(2) This section shall apply to any falsification, concealment, destructionor disposal of a document occurring on or after the day on which this Act ispassed.

Entry with warrant to obtain documents.

146

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Procedure where documents etc. are removed.

147

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Interpretation.

148

(1) Section 20D of the Taxes Management Act 1970 shall beamended as follows.

(2) In subsection (2), for the words “of returns or accounts to be made ordelivered by the other” there shall be substituted the words “or deliveryof any information, return, accounts or other document which he knows will be,or is or are likely to be, used”.

(3) For subsection (3) there shall be substituted—

(3) Without prejudice to section 127 of the Finance Act1988, in sections 20 to 20CC above “document” has, subject to sections 20(8C) and 20A(1A), thesame meaning as it has— (a) in relation to England and Wales, in Part I of the Civil Evidence Act 1968, (b) in relation to Scotland, in Part III of the Law Reform(Miscellaneous Provisions) (Scotland) Act 1968, and (c) in relation to Northern Ireland, in Part I of the Civil Evidence Act (Northern Ireland) 1971.

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

Assessments, claims etc.

Assessments founded on fraudulent or negligent conduct.

149

(1) The following section shall be substituted for section 36 of the Taxes Management Act 1970—

(36) (1) An assessment on any person (in this section referred to as “the person in default”) for the purpose of making good to the Crown a loss of tax attributable to his fraudulent or negligent conduct or the fraudulent or negligent conduct of a person acting on his behalf may be made at any time not later than twenty years after the end of the chargeable period to which the assessment relates. (2) Where the person in default is an individual who carried on a trade or profession in partnership with another individual, or with other persons at least one of whom is an individual, at any time in the year for which the assessment is made, an assessment in respect of the profits or gains of the trade or profession for the purpose mentioned in subsection (1) above may be made not only on the person in default but also on his partner or, as the case may be, on any of his partners who is an individual. (3) If the person on whom the assessment is made so requires, in determining the amount of the tax to be charged for any chargeable period in any assessment made for the purpose mentioned in subsection (1) above, effect shall be given to any relief or allowance to which he would have been entitled for that chargeable period on a claim or application made within the time allowed by the Taxes Acts.

(2) Sections 37 to 39 (special provisions as to “neglect”) and section41 (leave required for certain assessments) of the Taxes Management Act 1970shall cease to have effect.

(3) The words “section 36” shall be substituted—

(a) for the words “sections 36, 37 and 39” in section 30(6) of the Taxes Management Act 1970 (tax repaid in error etc.),

(b) for the words “sections 37 to 39” in section 118(3) of that Act (effect under law of Scotland of assessment in partnership name),

(c) for the words “sections 36 and 39” in paragraph 10(1) of Schedule 13to the Taxes Act 1988 (assessments to advance corporation tax), and

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

(4) The words “ fraudulent or negligent conduct ” shall be substituted—

(a) for the words “fraud, wilful default or neglect” in—

(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(iii) paragraph 9 of Schedule 16A to the Finance Act 1973and of Schedule 19A to the Taxes Act 1988 (Lloyd’s), and

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

(5) In section 105 of the Taxes Management Act 1970 (admissibility of evidence), for the words “fraud or default” and the words “fraud or wilful default” there shall be substituted the words “fraudulent conduct”.

(6) In paragraph 9 of Schedule 16A to the Finance Act 1973 and of Schedule 19Ato the Taxes Act 1988, for “37, 40 and 41” there shall be substituted “and 40”.

(7) Nothing in this section shall affect the making of assessments—

(a) for years of assessment before the year 1983-84, or

(b) for accounting periods which ended before 1st April 1983.

Further assessments: claims etc.

150

(1) The following sections shall be inserted after section 43 of the TaxesManagement Act 1970—

(43A) (1) This section applies where— (a) by virtue of section 29(3) of this Act an assessment is made on any personfor a chargeable period, and (b) the assessment is not made for the purpose of making good to the Crown anyloss of tax attributable to his fraudulent or negligent conduct or thefraudulent or negligent conduct of a person acting on his behalf. (2) Without prejudice to section 43(2) above but subject to section 43B below,where this section applies— (a) any relevant claim, election, application or notice which could have beenmade or given within the time allowed by the Taxes Acts may be made or givenat any time within one year from the end of the chargeable period in which theassessment is made, and (b) any relevant claim, election, application or notice previously made orgiven may at any such time be revoked or varied— (i) in the same manner as it was made or given, and (ii) by or with the consent of the same person or persons who made, gave orconsented to it (or, in the case of any such person who has died, by or withthe consent of his personal representatives), except where by virtue of any enactment it is irrevocable. (3) For the purposes of this section and section 43B below, a claim, election,application or notice is relevant in relation to an assessment for achargeable period if— (a) it relates to that chargeable period or is made or given by reference toan event occurring in that chargeable period, and (b) it or, as the case may be, its revocation or variation has or could havethe effect of reducing any of the liabilities mentioned in subsection (4)below. (4) The liabilities referred to in subsection (3) above are— (a) the increased liability to tax resulting from the assessment, (b) any other liability to tax of the person concerned for— (i) the chargeable period to which the assessment relates, or (ii) any chargeable period which follows that chargeable period and ends notlater than one year after the end of the chargeable period in which theassessment is made. (5) Where a claim, election, application or notice is made, given, revoked orvaried by virtue of subsection (2) above, all such adjustments shall be made,whether by way of discharge or repayment of tax or the making of assessmentsor otherwise, as are required to take account of the effect of the taking ofthat action on any person’s liability to tax for any chargeable period. (6) The provisions of this Act relating to appeals against decisions on claimsshall apply with any necessary modifications to a decision on the revocationor variation of a claim by virtue of subsection (2) above. (43B) (1) If the effect of the exercise by any person of a power conferred bysection 43A(2) above— (a) to make or give a claim, election, application or notice, or (b) to revoke or vary a claim, election, application or notice previously madeor given, would be to alter the liability to tax of another person, that power maynot be exercised except with the consent in writing of that other person or,where he has died, his personal representatives. (2) Where— (a) a power conferred by subsection (2) of section 43A above is exercised inconsequence of an assessment made on a person, and (b) the exercise of the power increases the liability to tax of anotherperson, that section shall not apply by reason of any assessment made because ofthat increased liability. (3) In any case where— (a) one or more relevant claims, elections, applications or notices are made,given, revoked or varied by virtue of the application of section 43A above inthe case of an assessment, and (b) the total of the reductions in liability to tax which, apart from thissubsection, would result from the action mentioned in paragraph (a) abovewould exceed the additional liability to tax resulting from the assessment, the excess shall not be available to reduce any liability to tax. (4) Where subsection (3) above has the effect of limiting either the reductionin a person’s liability to tax for more than one period or the reduction inthe liability to tax of more than one person, the limited amount shall beapportioned between the periods or persons concerned— (a) except where paragraph (b) below applies, in such manner as may bespecified by the inspector by notice in writing to the person or personsconcerned, or (b) where the person concerned gives (or the persons concerned jointly give)notice in writing to the inspector within the relevant period, in such manneras may be specified in the notice given by the person or persons concerned. (5) For the purposes of paragraph (b) of subsection (4) above the relevantperiod is the period of 30 days beginning with the day on which notice underparagraph (a) of that subsection is given to the person concerned or, wheremore than one person is concerned, the latest date on which such notice isgiven to any of them.

(2) This section shall apply in relation to any assessment notice of which isissued on or after the day on which this Act is passed.

Assessment of trustees etc.

151

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Distress and poinding etc.

Distress for non-payment of tax.

152

(1) Section 61 of the Taxes Management Act 1970 (distress)shall be amended as follows.

(2) In subsection (1), for the words “the collector shall” onwards thereshall be substituted the words “the collector may distrain upon the goods and chattels of the personcharged (in this section referred to as “the person indefault”).”

(3) In subsection (2), for the words from “a collector” to “Commissioners” there shall be substituted the words “a justice of thepeace, on being satisfied by information on oath that there is reasonableground for believing that a person is neglecting or refusing to pay a sumcharged, may issue a warrant in writing authorising a collector to”.

(4) In subsection (4), for the words “neglecting or refusing to pay”there shall be substituted the words “in default”.

(5) In subsection (5)—

(a) for the word “aforesaid” there shall be substituted the words “indefault”,

(b) the words “within the said five days” shall be omitted,

(c) for the words from “two or more inhabitants of the parish” to “sufficient persons” there shall be substituted the words “one or moreindependent persons appointed by the collector”, and

(d) the words from “The costs” to “the collector, and” shall beomitted.

(6) The following subsection shall be added after that subsection—

(6) The Treasury may by regulations make provision with respect to— (a) the fees chargeable on or in connection with the levying of distress, and (b) the costs and charges recoverable where distress has been levied; and any such regulations shall be made by statutory instrument whichshall be subject to annulment in pursuance of a resolution of the House ofCommons.

(7) This section shall come into force on such day as the Treasury may byorder made by statutory instrument appoint.

Priority in cases of distraint by others.

153

(1) Section 62 of the Taxes Management Act 1970 (priorityof claim for tax) shall be amended as follows.

(2) In subsection (1)—

(a) for the words from the beginning to “shall be” there shall besubstituted the words “If at any time at which any goods or chattelsbelonging to any person (in this section referred to as “the personin default”) are”,

(b) for the word “unless” there shall be substituted the words “theperson in default is in arrears in respect of any such sums as are referredto in subsection (1A) below, the goods or chattels may not be so taken unlesson demand made by the collector”, and

(c) for the words “arrears of tax” onwards there shall be substituted thewords “such sums as have fallen due at or before the date of seizure.”

(3) The following subsection shall be inserted after that subsection—

(1A) The sums referred to in subsection (1) above are— (a) sums due from the person in default on account of deductions of income taxfrom emoluments paid during the period of twelve months next before the dateof seizure, being deductions which the person in default was liable to makeunder section 203 of the principal Act (pay as you earn) less the amount ofthe repayments of income tax which he was liable to make during that period;and (b) sums due from the person in default in respect of deductions required tobe made by him for that period under section 559 of the principal Act(sub-contractors in the construction industry).

(4) In subsection (2)—

(a) for the words from the beginning to “the collector shall” there shallbe substituted the words “If the sums referred to in subsection (1) aboveare not paid within ten days of the date of the demand referred to in thatsubsection, the collector may”,

(b) for the words “shall proceed” there shall be substituted the words “may proceed”, and

Recovery of tax from debtor in Scotland.

154

(1) Section 63 of the Taxes Management Act 1970 (recoveryof tax in Scotland) shall be amended as follows.

(2) In subsection (3), for the words “which relates to” onwards thereshall be substituted the words

insofar as it relates to sums due in respect of— (a) deductions of income tax which any person specified in the application wasliable to make under section 203 of the principal Act (pay as you earn); or (b) deductions required to be made under section 559 of the principal Act(sub-contractors in the construction industry) by any person specified in theapplication.

(3) The following subsection shall be added after that subsection—

(4) In this section references to amounts of tax due and references to sumsdue in respect of deductions include references to amounts which are deemedto be— (a) amounts of tax which the person is liable to pay by virtue of the Income Tax (Employments) Regulations 1973; or (b) amounts which the person is liable to pay by virtue of the Income Tax(Sub-Contractors in the Construction Industry)Regulations 1975.

Priority in cases of poinding etc. by others in Scotland.

155

(1) Section 64 of the Taxes Management Act 1970 (priority of claim for tax inScotland) shall be amended as follows.

(2) In subsection (1)—

(a) for the words from the beginning to “shall be” there shall besubstituted the words “If at any time at which any moveable goods andeffects belonging to any person (in this section referred to as “theperson in default”) are”,

(b) for the word “unless” there shall be substituted the words “theperson in default is in arrears in respect of any such sums as are referredto in subsection (1A) below, the goods and effects may not be so taken unlesson demand made by the collector”, and

(c) for the words “the tax so in arrear” onwards there shall besubstituted the words “such sums as have fallen due at or before the dateof poinding or, as the case may be, other diligence or assignation.”

(3) The following subsection shall be inserted after that subsection—

(1A) The sums referred to in subsection (1) above are— (a) sums due from the person in default on account of deductions of income taxfrom emoluments paid during the period of twelve months next before the dateof poinding, being deductions which the person in default was liable to makeunder section 203 of the principal Act (pay as you earn) less the amount ofthe repayments of income tax which he was liable to make during that period;and (b) sums due from the person in default in respect of deductions required tobe made by him for that period under section 559 of the principal Act(sub-contractors in the construction industry).

(4) In subsection (2)—

(a) for the words from the beginning to “the tax claimed shall” thereshall be substituted the words “If the sums referred to in subsection (1)above are not paid within ten days of the date of the demand referred to inthat subsection, the sums shall”, and

(b) for the words “proceeding at his instance” there shall be substitutedthe word “proceedings”.

Interest etc.

Interest on overdue tax.

156

(1) In section 86 of the Taxes Management Act 1970, forsubsection (3) and the words in subsection (4) preceding the Table there shallbe substituted—

(3) For the purposes of this section— (a) the reckonable date in relation to any tax charged by an assessment toincome tax under Schedule E, and (b) subject to subsection (3A) below, the reckonable date in relation to taxcharged by any other assessment to which this section applies, is the date on which the tax becomes due and payable. (3A) Where an appeal has been made against an assessment and any of the taxcharged by the assessment is due and payable on a date later than the dategiven by the Table in subsection (4) below, the reckonable date in relationto the tax so due and payable is the later of— (a) the date given by that Table, and (b) the date on which the tax would have been due and payable if there hadbeen no appeal against the assessment (assuming in a case where the tax wouldnot have been charged by the assessment if there had been no appeal that itwas so charged). (4) The Table referred to in subsection (3A) above is asfollows—

(2) In section 55 of that Act—

(a) in subsection (2), for the words “it were” onwards there shall besubstituted the words “there had been no appeal.”,

(b) in subsection (6), for paragraphs (a) and (b) there shall besubstituted—

(a) in the case of a determination made on an application under subsection (3)above, other than an application made by virtue of subsection (3A) above, thedate on which any tax the payment of which is not so postponed is due andpayable shall be determined as if the tax were charged by an assessment noticeof which was issued on the date of that determination and against which therehad been no appeal; and (b) in the case of a determination made on an application under subsection (4)above— (i) the date on which any tax the payment of which ceases to be so postponedis due and payable shall be determined as if the tax were charged by anassessment notice of which was issued on the date of that determination andagainst which there had been no appeal; and (ii) any tax overpaid shall be repaid.

and

(9) On the determination of the appeal— (a) the date on which any tax payable in accordance with that determinationis due and payable shall, so far as it is tax the payment of which had beenpostponed, or which would not have been charged by the assessment if there hadbeen no appeal, be determined as if the tax were charged by anassessment— (i) notice of which was issued on the date on which the inspector issues tothe appellant a notice of the total amount payable in accordance with thedetermination, and (ii) against which there had been no appeal; and (b) any tax overpaid shall be repaid.

(3) In section 56(9) of that Act, for the words “amount of” there shallbe substituted the words “amount charged by”.

(4) This section shall apply to tax charged by any assessment notice of whichis issued after 30th July 1982.

Effect of certain claims on interest.

157

(1) In relation to any tax charged by an assessment made under section 252(1)of the Taxes Act 1988 to recover corporation tax that becomes payable as aresult of the making of a claim under section 240 of that Act, the reckonabledate for the purposes of section 86 of the Taxes ManagementAct 1970 (in this section referred to as “section 86”) is the date which is given by paragraph 5 ofthe Table in subsection (4) of that section.

(2) Subsections (3) and (4) below apply in any case where—

(a) there is in any accounting period of a company (in this section referredto as “the later period”) an amount of surplus advance corporationtax, as defined in subsection (3) of section 239 of the Taxes Act 1988, and

(b) pursuant to a claim under the said subsection (3), the whole or any partof that amount is treated for the purposes of the said section 239 asdischarging liability for an amount of corporation tax for an earlieraccounting period (in this section referred to as “the earlier period”), and

(i) an amount of corporation tax assessed for the earlier period would carryinterest in accordance with section 86, or

(ii) an assessment could have been made under section 252(1) of that Act torecover corporation tax for the earlier period.

(3) In determining the amount of interest payable under section 86 oncorporation tax unpaid for the earlier period, no account shall be taken ofany reduction in the amount of that tax which results from section 239(3) ofthe Taxes Act 1988 except so far as concerns interest for any time after theday following the expiry of nine months from the end of the later period.

(4) Where, but for the claim under section 239(3) of the Taxes Act 1988, anassessment could have been made under section 252(1) of that Act to recovercorporation tax for the earlier period, interest under section 86 shall bechargeable, in relation to any time not later than the day referred to insubsection (3) above, as if the claim had not been made and such an assessmenthad been made.

(5) In relation to interest charged under section 86 by virtue of subsection(4) above, section 69 of the Taxes Management Act 1970shall have effect with the substitution for the words following paragraph (c)of the words “as if it were tax charged and due and payable under anassessment”.

(6) In this section—

(a) subsection (1) above shall have effect where the claim under 240 of theTaxes Act 1988 is made on or after 14th March 1989, and

(b) subsections (2) to (5) above shall have effect where the claim undersection 239(3) of that Act is made on or after that date,

but this section shall not have effect in relation to corporation tax forany accounting period ending after the day which is the appointed day for thepurposes of section 85 of the Finance (No.2) Act 1987.

Small amounts of interest.

158

(1) In the Taxes Management Act 1970—

(a) section 86(6) (remission of interest payable on overdue income tax,capital gains tax or corporation tax where interest would not exceed£30), and

(b) section 87(4) (no interest payable on overdue advance corporation tax orincome tax on company payments where interest would not exceed £30),

shall cease to have effect.

(2) The words “of not less than £25” in—

(a) [section 283(1) of the Taxation of Chargeable Gains Act 1992] (norepayment supplement where overdue repayment of capital gains tax less than£25), and

(b) section 824(1)(a) and (b) and (5) of the Taxes Act 1988 (no repaymentsupplement where overdue repayment of income tax etc. less than £25),

and the words “of not less than £100” in section 825(2) of theTaxes Act 1988 (no repayment supplement where overdue repayment of company taxless than £100) shall cease to have effect.

(3) Paragraph (a) of subsection (1) above shall have effect—

(a) in relation to income tax under Schedule E, where the demand for the taxis made on or after the appointed day, and

(b) in any other case, where the tax is charged by an assessment notice ofwhich is issued on or after the appointed day.

(4) Paragraph (b) of that subsection shall have effect where the tax ischarged by an assessment relating to an accounting period beginning on orafter the appointed day.

(5) Subsection (2) above shall have effect in relation to repayments of taxmade on or after the appointed day.

(6) In this section “the appointed day” means such day as theTreasury may by order made by statutory instrument appoint; and different daysmay be appointed for different enactments or for different purposes of thesame enactment.

Interest on tax in case of failure or error.

159

(1) Section 88 of the Taxes Management Act 1970 (intereston tax recovered to make good loss due to taxpayer’s fault) shall be amendedas follows.

(2) In subsection (1), for the words “the fraud, wilful default or neglectof any person” there shall be substituted the words—

(a) a failure to give a notice, make a return or produce or furnish a documentor other information required by or under the Taxes Acts, or (b) an error in any information, return, accounts or other document deliveredto an inspector or other officer of the Board,

(3) The following subsection shall be added at the end—

(7) In paragraph (a) of subsection (1) above the reference to a failure to dosomething includes, in relation to anything required to be done at aparticular time or within a particular period, a reference to a failure to doit at that time or within that period; and, accordingly, section 118(2) ofthis Act shall not apply for the purposes of that paragraph.

(4) This section shall have effect in relation to failures occurring, anderrors in any information or documents delivered, on or after the day on whichthis Act is passed.

Determinations under TMA s. 88.

160

(1) In subsection (1) of section 88 of the Taxes Management Act 1970, for thewords “shall carry” there shall be substituted the words “shall, if aninspector or the Board so determine, carry”.

(2) The following section shall be inserted after that section—

(88A) (1) Notice of a determination under section 88 above shall be served on theperson liable to pay the interest to which it relates and shall specify— (a) the date on which it is issued, (b) the amount of the tax which carries interest and the assessment by whichthat tax was charged, (c) the date when for the purposes of section 88 above that tax ought to havebeen paid, and (d) the time within which an appeal against the determination may be made. (2) After the notice of a determination under section 88 above has been servedthe determination shall not be altered except in accordance with this section. (3) A determination under section 88 above may be made at any time— (a) within six years after the end of the chargeable period for which the taxcarrying the interest is charged (or, in the case of development land tax, ofthe financial year in which the liability for that tax arose), or (b) within three years after the date of the final determination of the amountof that tax. (4) An appeal may be brought against a determination under section 88 aboveand, subject to the following provisions of this section, the provisions ofthis Act relating to appeals shall have effect in relation to an appealagainst such a determination as they have effect in relation to an appealagainst an assessment to tax. (5) On an appeal against a determination under section 88 above section 50(6)to (8) of this Act shall not apply but the Commissioners may— (a) if it appears to them that the tax carries no interest under that section,set the determination aside, (b) if the determination appears to them to be correct, confirm thedetermination, or (c) if the determination appears to them to be incorrect as to the amount oftax or the date on which the tax ought to have been paid, revise thedetermination accordingly.

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

(4) In section 113 of that Act (form of documents), the following subsectionshall be inserted after subsection (1B)—

(1C) Where an officer of the Board has decided that an amount of tax carriesinterest under section 88 of this Act and has taken the decisions needed forarriving at the date when for the purposes of that section that tax ought tohave been paid, he may entrust to any other officer of the Boardresponsibility for completing the determination procedure, whether by meansinvolving the use of a computer or otherwise, including responsibility forserving notice of the determination on the person liable to the interest.

(5) In section 114 of that Act (want of form not to invalidate), after theword “assessment”, in each place where it occurs, there shall be insertedthe words “or determination”.

(6) In paragraph 5 of Schedule 3 to that Act (rules for assigning proceedingsto Commissioners), the following entry shall be inserted in the first columnafter the entry relating to an appeal against an assessment to capital gainstax— “ An appeal against a determination under section 88 of this Act. ”

Tax carrying interest under TMA ss. 86 and 88.

161

The following subsection shall be substituted for section 88(3) of the Taxes Management Act 1970—

(3) Where it is finally determined that any tax carries interest under thissection, the tax shall carry no interest under section 86 or 86A above (and,accordingly, any interest under either of those sections which has been paidbefore the final determination shall be set off against the amount of theinterest under this section); and for the purposes of this subsection adetermination that tax carries interest is not final until it can no longerbe varied, whether by any Commissioners on appeal or by the order of anycourt.

Penalties

Failure to make return.

162

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

Incorrect return, accounts etc.

163

(1) In—

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

(b) section 96(1) of that Act (incorrect return etc. for corporation tax),

for the words “the aggregate” onwards there shall be substituted thewords “the amount of the difference specified in subsection (2) below.”

(2) This section shall apply in relation to returns, statements, declarationsor accounts delivered, made or submitted on or after the day on which this Actis passed.

Special returns, information etc.

164

(1) Section 98 of the Taxes Management Act 1970 (special returns, information etc.) shall be amended as follows.

(2) In subsection (1) (initial and daily penalties)—

(a) for the word “Where” there shall be substituted the words “Subject to section 98A below, where”, and

(b) for the words “subsection (3)” onwards there shall be substituted the words

subsections (3) and (4) below— (i) to a penalty not exceeding £300, and (ii) if the failure continues after a penalty is imposed under paragraph (i)above, to a further penalty or penalties not exceeding £60 for each dayon which the failure continues after the day on which the penalty under paragraph (i) above was imposed (but excluding any day for which a penalty under this paragraph has already been imposed).

(3) In subsection (2) (maximum penalty for information given fraudulently or negligently)—

(a) for the word “Where” there shall be substituted the words “Subject to section 98A below, where”, and

(b) for the words “ £250, or, in the case of fraud, £500”there shall be substituted “ £3,000”.

(4) The following subsections shall be substituted for subsection (3)—

(3) No penalty shall be imposed under subsection (1) above in respect of a failure within paragraph (a) of that subsection at any time after the failure has been remedied. (4) No penalty shall be imposed under paragraph (ii) of subsection (1) above in respect of a failure within paragraph (b) of that subsection at any time after the failure has been remedied.

(5) In the Table—

(a) in the first column, in the entry relating to Part III of the Taxes Management Act 1970, the words “, except sections 16 and 24(2)” shall be omitted;

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

(c) the entry relating to section 481(5)(k) of that Act shall be omitted from the first column and an entry relating to section 482(2) of that Act shall be inserted at the appropriate place in the second column.

(6) In consequence of the amendment made by subsection (5)(a) above section16(6) of the Taxes Management Act 1970 shall cease to have effect.

(7) This section shall apply in relation to—

(a) any failure to comply with a notice or to furnish information, give a certificate or produce a document or record beginning on or after the day on which this Act is passed, and

(b) the furnishing, giving, producing or making of any incorrect information, certificate, document, record or declaration on or after that day.

Special penalties in the case of certain returns.

165

(1) The following section shall be inserted after section 98 of the TaxesManagement Act 1970—

(98A) (1) Regulations under section 203(2) (PAYE) or 566(1) (sub-contractors) of theprincipal Act may provide that this section shall apply in relation to anyspecified provision of the regulations. (2) Where this section applies in relation to a provision of regulations, anyperson who fails to make a return in accordance with the provision shall beliable— (a) to a penalty or penalties of the relevant monthly amount for each month(or part of a month) during which the failure continues, but excluding anymonth after the twelfth or for which a penalty under this paragraph hasalready been imposed, and (b) if the failure continues beyond twelve months, without prejudice to anypenalty under paragraph (a) above, to a penalty not exceeding so much of theamount payable by him in accordance with the regulations for the year ofassessment to which the return relates as remained unpaid at the end of 19thApril after the end of that year. (3) For the purposes of subsection (2)(a) above, the relevant monthly amountin the case of a failure to make a return— (a) where the number of persons in respect of whom particulars should beincluded in the return is fifty or less, is £100, and (b) where that number is greater than fifty, is £100 for each fifty suchpersons and an additional £100 where that number is not a multiple offifty. (4) Where this section applies in relation to a provision of regulations, anyperson who fraudulently or negligently makes an incorrect return of a kindmentioned in the provision shall be liable to a penalty not exceeding thedifference between— (a) the amount payable by him in accordance with the regulations for the yearof assessment to which the return relates, and (b) the amount which would have been so payable if the return had beencorrect.

(2) In relation to a failure to make a return beginning before such day as theTreasury may by order made by statutory instrument appoint, section 98A(2)shall have effect with the substitution of the following paragraph forparagraph (a)—

(a) to— (i) a penalty not exceeding twelve times the relevant monthly amount, and (ii) if the failure continues after a penalty is imposed under sub-paragraph(i) above, a further penalty or penalties of the relevant monthly amount foreach month (or part of a month) during which the failure continues, butexcluding any month after the twelfth or for which a penalty under thissub-paragraph has already been imposed,

Assisting in preparation of incorrect return etc.

166

(1) The following section shall be substituted for section 99 of the Taxes Management Act 1970—

(99) Any person who assists in or induces the preparation or delivery of anyinformation, return, accounts or other document which— (a) he knows will be, or is or are likely to be, used for any purpose of tax,and (b) he knows to be incorrect, shall be liable to a penalty not exceeding £3,000.

(2) This section shall apply in relation to assistance and inducementsoccurring on or after the day on which this Act is passed.

Determination of penalties.

167

The following sections shall be substituted for section 100 of the Taxes Management Act 1970—

(100) (1) Subject to subsection (2) below and except where proceedings for a penaltyhave been instituted under section 100D below or a penalty has been imposedby the Commissioners under section 53 of this Act, an officer of the Boardauthorised by the Board for the purposes of this section may make adetermination imposing a penalty under any provision of the Taxes Acts andsetting it at such amount as, in his opinion, is correct or appropriate. (2) Subsection (1) above does not apply where the penalty is a penaltyunder— (a) section 93(1) above as it has effect before the amendments made by section162 of the Finance Act 1989 or section 93(1)(a) above as it has effect afterthose amendments, (b) section 94(1) above as it has effect before the substitution made bysection 83 of the Finance (No.2) Act 1987, (c) section 98(1) above as it has effect before the amendments made by section164 of the Finance Act 1989 or section 98(1)(i) above as it has effect afterthose amendments, or (d) paragraph (a)(i) of section 98A(2) above as it has effect by virtue ofsection 165(2) of the Finance Act 1989. (3) Notice of a determination of a penalty under this section shall be servedon the person liable to the penalty and shall state the date on which it isissued and the time within which an appeal against the determination may bemade. (4) After the notice of a determination under this section has been served thedetermination shall not be altered except in accordance with this section oron appeal. (5) If it is discovered by an officer of the Board authorised by the Board forthe purposes of this section that the amount of a penalty determined underthis section is or has become insufficient the officer may make adetermination in a further amount so that the penalty is set at the amountwhich, in his opinion, is correct or appropriate. (6) In any case where— (a) a determination under this section is of a penalty under section 94(6)above, and (b) after the determination has been made it is discovered by an officer ofthe Board authorised by the Board for the purposes of this section that theamount which was taken into account as the relevant amount of tax is or hasbecome excessive, the determination shall be revised so that the penalty is set at theamount which is correct; and, where more than the correct amount has alreadybeen paid, the appropriate amount shall be repaid. (100A) (1) Where a person who has incurred a penalty has died, a determination undersection 100 above which could have been made in relation to him may be madein relation to his personal representatives, and any penalty imposed onpersonal representatives by virtue of this subsection shall be a debt due fromand payable out of his estate. (2) A penalty determined under section 100 above shall be due and payable atthe end of the period of thirty days beginning with the date of the issue ofthe notice of determination. (3) A penalty determined under section 100 above shall for all purposes betreated as if it were tax charged in an assessment and due and payable. (100B) (1) An appeal may be brought against the determination of a penalty undersection 100 above and, subject to the following provisions of this section,the provisions of this Act relating to appeals shall have effect in relationto an appeal against such a determination as they have effect in relation toan appeal against an assessment to tax. (2) On an appeal against the determination of a penalty under section 100above section 50(6) to (8) of this Act shall not apply but— (a) in the case of a penalty which is required to be of a particular amount,the Commissioners may— (i) if it appears to them that no penalty has been incurred, set thedetermination aside, (ii) if the amount determined appears to them to be correct, confirm thedetermination, or (iii) if the amount determined appears to them to be incorrect, increase orreduce it to the correct amount, (b) in the case of any other penalty, the Commissioners may— (i) if it appears to them that no penalty has been incurred, set thedetermination aside, (ii) if the amount determined appears to them to be appropriate, confirm thedetermination, (iii) if the amount determined appears to them to be excessive, reduce it tosuch other amount (including nil) as they consider appropriate, or (iv) if the amount determined appears to them to be insufficient, increase itto such amount not exceeding the permitted maximum as they considerappropriate. (3) Without prejudice to section 56 of this Act, an appeal from a decision ofthe Commissioners against the amount of a penalty which has been determinedunder section 100 above or this section shall lie, at the instance of theperson liable to the penalty, to the High Court or, in Scotland, to the Courtof Session as the Court of Exchequer in Scotland; and on that appeal the courtshall have the like jurisdiction as is conferred on the Commissioners byvirtue of this section. (100C) (1) An officer of the Board authorised by the Board for the purposes of thissection may commence proceedings before the General or Special Commissionersfor any penalty to which subsection (1) of section 100 above does not applyby virtue of subsection (2) of that section. (2) Proceedings under this section shall be by way of information in writing,made to the Commissioners, and upon summons issued by them to the defendant(or defender) to appear before them at a time and place stated in the summons;and they shall hear and decide each case in a summary way. (3) Any penalty determined by the Commissioners in proceedings under thissection shall for all purposes be treated as if it were tax charged in anassessment and due and payable. (4) An appeal against the determination of a penalty in proceedings under thissection shall lie to the High Court or, in Scotland, the Court of Session asthe Court of Exchequer in Scotland— (a) by any party on a question of law, and (b) by the defendant (or, in Scotland, the defender) against the amount of thepenalty. (5) On any such appeal the court may— (a) if it appears that no penalty has been incurred, set the determinationaside, (b) if the amount determined appears to be appropriate, confirm thedetermination, (c) if the amount determined appears to be excessive, reduce it to such otheramount (including nil) as the court considers appropriate, or (d) if the amount determined appears to be insufficient, increase it to suchamount not exceeding the permitted maximum as the court considers appropriate. (100D) (1) Where in the opinion of the Board the liability of any person for apenalty arises by reason of the fraud of that or any other person, proceedingsfor the penalty may be instituted before the High Court or, in Scotland, theCourt of Session as the Court of Exchequer in Scotland. (2) Proceedings under this section which are not instituted (in England, Walesor Northern Ireland) under the Crown Proceedings Act 1947by and in the name of the Board as an authorised department for the purposesof that Act shall be instituted— (a) in England and Wales, in the name of the Attorney General, (b) in Scotland, in the name of the Lord Advocate, and (c) in Northern Ireland, in the name of the Attorney General for NorthernIreland. (3) Any proceedings under this section instituted in England and Wales shallbe deemed to be civil proceedings by the Crown within the meaning of Part IIof the Crown Proceedings Act 1947 and any such proceedings instituted inNorthern Ireland shall be deemed to be civil proceedings within the meaningof that Part of that Act as for the time being in force in Northern Ireland. (4) If in proceedings under this section the court does not find that fraudis proved but consider that the person concerned is nevertheless liable to apenalty, the court may determine a penalty notwithstanding that, but for theopinion of the Board as to fraud, the penalty would not have been a matter forthe court.

Amendments consequential on section 167.

168

(1) In consequence of the amendment made by section 167 above the Taxes Management Act 1970 shall be amended in accordance withsubsections (2) to (8) below.

(2) In section 20A (power to call for papers of tax accountant)—

(a) in subsection (1), for the words “awarded against him a penalty incurredby” there shall be substituted the words “a penalty imposed on”,

(b) in subsection (2), for the word “award” in the first place where itoccurs there shall be substituted the word “penalty” and for that wordin the second place where it occurs there shall be substituted the word “imposition”, and

(c) in subsection (4), for the words “award against” there shall besubstituted the words “imposition on” and for the word “award” thereshall be substituted the word “penalty”.

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

(4) In section 102 (mitigation of penalties), for the words “recoverythereof” there shall be substituted the words “a penalty”.

(5) In section 105 (evidence)—

(a) the following paragraph shall be substituted for paragraph (a) ofsubsection (1)—

(a) pecuniary settlements may be accepted instead of a penalty beingdetermined, or proceedings being instituted, in relation to any tax,

(b) in paragraph (b) of subsection (2), for the words “sum” onwards thereshall be substituted the words “tax due from him”, and

and (c) any proceedings for a penalty or on appeal against the determination ofa penalty.

(6) In section 112 (loss of documents etc.), the following subsection shallbe added at the end—

(3) The references in subsection (1) above to assessments to tax includereferences to determinations of penalties; and in its application to suchdeterminations the proviso to that subsection shall have effect with theappropriate modifications.

(7) In section 113 (form of documents)—

(a) the following subsection shall be inserted after subsection (1C)—

(1D) Where an officer of the Board has decided to impose a penalty undersection 100 of this Act and has taken all other decisions needed for arrivingat the amount of the penalty, he may entrust to any other officer of the Boardresponsibility for completing the determination procedure, whether by meansinvolving the use of a computer or otherwise, including responsibility forserving notice of the determination on the person liable to the penalty.

and

(b) in subsection (3)—

(i) after the words “Every assessment,” there shall be inserted the words “determination of a penalty,”,

(ii) after the words “notice of assessment” there shall be inserted thewords “, of determination”, and

(iii) after the words “levying tax” there shall be inserted the words “ordetermining a penalty”.

(8) In paragraph 5 of Schedule 3 (rules for assigning proceedings toCommissioners), for the words “section 100(4)” there shall be substitutedthe words “section 100C or an appeal under section 100B against thedetermination of a penalty”.

(9) In section 41 of the Development Land Tax Act 1976(administration of development land tax) the following subsection shall beinserted after subsection (1)—

(1A) Nothing in sections 167 to 169 of the Finance Act 1989 shall apply topenalties relating to development land tax.

Time limits.

169

(1) The following section shall be substituted for section 103 of the Taxes Management Act 1970—

(103) (1) Subject to subsection (2) below, where the amount of a penalty is to beascertained by reference to tax payable by a person for any period, thepenalty may be determined by an officer of the Board, or proceedings for thepenalty may be commenced before the Commissioners or a court— (a) at any time within six years after the date on which the penalty wasincurred, or (b) at any later time within three years after the final determination of theamount of tax by reference to which the amount of the penalty is to beascertained. (2) Where the tax was payable by a person who has died, and the determinationwould be made in relation to his personal representatives, subsection (1)(b)above does not apply if the tax was charged in an assessment made later thansix years after the end of the chargeable period for which it was charged. (3) A penalty under section 99 of this Act may be determined by an officer ofthe Board, or proceedings for such a penalty may be commenced before a court,at any time within twenty years after the date on which the penalty wasincurred. (4) A penalty to which neither subsection (1) nor subsection (3) above appliesmay be so determined, or proceedings for such a penalty may be commencedbefore the Commissioners or a court, at any time within six years after thedate on which the penalty was incurred or began to be incurred.

(2) The amendment made by subsection (1) above shall not affect theapplication of section 103(4) of the Taxes Management Act1970 to proceedings under section 100 of that Act as it has effect before theamendment made by section 167 above.

Up-rating of certain penalties.

170

(1) In section 23(8) of the Taxes Act 1988 (maximum penalty for agents failing to make certain payments on behalf of principals), for “£50” there shall be substituted “£300”.

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

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

(4) In—

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

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

(c) section 658(5) of that Act (maximum penalty for false statements or representations relating to purchased life annuities),

for “£500” there shall be substituted “£3,000”.

(5) In paragraph 2(4) of Schedule 19A to that Act and Schedule 16A to the Finance Act 1973 (maximum penalty for incorrect return byLloyd’s agent), for the words “£500 in the case of fraud and £250 in the case of negligence” there shall be substituted “£3,000”.

(6) This section shall apply in relation to things done or omitted on or after the day on which this Act is passed.

Part III — Miscellaneous and General

Inheritance tax

Gifts to housing associations.

171

(1) The following section shall be inserted in the Inheritance Tax Act 1984 after section 24—

(24A) (1) A transfer of value is exempt to the extent that the value transferred byit is attributable to land in the United Kingdom given to a registered housingassociation. (2) In subsection (1) above “registered housing association”means a registered housing association within the meaning of the Housing Associations Act 1985 or Part VII of the Housing (Northern Ireland) Order 1981. (3) Subsections (2) to (5) of section 23 and subsection (4) of section 24above shall apply in relation to subsection (1) above as they apply inrelation to section 24(1).

(2) In section 23(5) of the Inheritance Tax Act 1984 the words “or, where it is land, of a body mentioned in section 24Abelow” shall be added at the end.

(3) In section 29(5) of that Act—

(a) the words “or, where it is land, of a body mentioned in section24A” shall be inserted at the end of paragraph (b), and

(b) after “24(3) and (4),” there shall be inserted “24A(3),”.

(4) In section 161(2)(b)(ii) of that Act after “24,” there shall beinserted “24A,”.

(5) In section 102(5) of the Finance Act 1986 afterparagraph (e) there shall be inserted—

(ee) section 24A (gifts to housing associations);

(6) This section shall apply to transfers of value made on or after 14th March1989.

Abatement of exemption where claim settled out of beneficiary’s ownresources.

172

(1) The following section shall be inserted after section 29 of the Inheritance Tax Act 1984—

(29A) (1) This section applies where— (a) apart from this section the transfer of value made on the death of anyperson is an exempt transfer to the extent that the value transferred by itis attributable to an exempt gift, and (b) the exempt beneficiary, in settlement of the whole or part of any claimagainst the deceased’s estate, effects a disposition of property not derivedfrom the transfer. (2) The provisions of this Act shall have effect in relation to the transferas if— (a) so much of the relevant value as is equal to the following amount, namelythe amount by which the value of the exempt beneficiary’s estate immediatelyafter the disposition is less than it would be but for the disposition, or (b) where that amount exceeds the relevant value, the whole of the relevantvalue, were attributable to such a gift to the exempt beneficiary as ismentioned in subsection (3) below (instead of being attributable to a giftwith respect to which the transfer is exempt). (3) The gift referred to in subsection (2) above is a specific gift withrespect to which the transfer is chargeable, being a gift which satisfies theconditions set out in paragraphs (a) and (b) of section 38(1) below. (4) In determining the value of the exempt beneficiary’s estate for thepurposes of subsection (2) above— (a) no deduction shall be made in respect of the claim referred to insubsection (1)(b) above, and (b) where the disposition referred to in that provision constitutes a transferof value— (i) no account shall be taken of any liability of the beneficiary for any taxon the value transferred, and (ii) sections 104 and 116 below shall be disregarded. (5) Subsection (1)(b) above does not apply in relation to any claim againstthe deceased’s estate in respect of so much of any liability as is, inaccordance with this Act, to be taken into account in determining the valueof the estate. (6) In this section— - “exempt gift”, in relation to a transfer of value fallingwithin subsection (1)(a) above, means— (a) a gift with respect to which the transfer is (apart from this section)exempt by virtue of the provisions of any of sections 18 and 23 to 28 above,or (b) where (apart from this section) the transfer is so exempt with respect toa gift up to a limit, so much of the gift as is within that limit; - “the exempt beneficiary”, in relation to an exempt gift,means any of the following, namely— (a) where the gift is exempt by virtue of section 18 above, the deceased’sspouse, (b) where the gift is exempt by virtue of section 23 above, any person orbody— (i) whose property the property falling within subsection (1) of that sectionbecomes, or (ii) by whom that property is held on trust for charitable purposes, (c) where the gift is exempt by virtue of section 24, 25 or 26 above, any bodywhose property the property falling within subsection (1) of that sectionbecomes, (d) where the gift is exempt by virtue of section 24A above, any body to whomthe land falling within subsection (1) of that section is given, and (e) where the gift is exempt by virtue of section 27 or 28 above, the trusteesof any settlement in which the property falling within subsection (1) of thatsection becomes comprised; - “gift” and “specific gift” have the samemeaning as in Chapter III of this Part; and - “the relevant value”, in relation to a transfer of valuefalling within subsection (1)(a) above, means so much of the value transferredby the transfer as is attributable to the gift referred to in that provision.

(2) This section shall have effect in relation to deaths occurring on or afterthe day on which this Act is passed.

Stamp duty etc.

Insurance: abolition of certain duties.

173

(1) Stamp duty shall not be chargeable under—

(a) the heading “Policy of Life Insurance” in Schedule 1 tothe Stamp Act 1891, or

(b) paragraph (3) of the heading “Bond, Covenant, or Instrument of any kindwhatsoever” in that Schedule (superannuation annuities).

(2) Subject to section 4 of the Stamp Act 1891 (separate charges oninstruments containing or relating to several distinct matters) an instrumentwhich, but for subsection (1) above, would be chargeable with stamp duty underparagraph (3) of the heading mentioned in paragraph (b) of that subsectionshall not be chargeable with stamp duty under any other provision of the StampAct 1891.

(3) Section 100 of the Stamp Act 1891 (penalty for not making out policy ormaking policy not duly stamped) shall cease to have effect.

(4) Section 118 of the Stamp Act 1891 (assignment of life insurance policy tobe stamped before payment of money assured) shall cease to have effect.

(5) Section 47(3) of the Finance Act 1966 (enhanced dutywhere policy not exceeding 2 years is varied so as to exceed 2 years) andsection 5(3) of the Finance Act (Northern Ireland)1966 (equivalent provision for Northern Ireland) shall cease to have effect.

(6) Subsections (1) and (2) above apply to instruments made after 31stDecember 1989.

(7) So far as it relates to section 100(1) of the 1891 Act, subsection (3)above applies where a person receives, or takes credit for, a premium orconsideration for insurance after 30th November 1989.

(8) So far as it relates to section 100(2) of the 1891 Act, subsection (3)above applies where the policy is made after 31st December 1989.

(9) Subsection (4) above applies to instruments of assignment made after 31stDecember 1989.

(10) Subsection (5) above applies where the policy is varied after 31stDecember 1989 (whenever it was made).

Unit trusts.

174

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

Stamp duty: stock exchange nominees

175

(1) The Treasury may by regulations provide that where —

(a) circumstances would (apart from the regulations) give rise to a charge to stamp duty under Part I of Schedule 13 to the Finance Act 1999 (conveyance or transfer on sale) and to a charge to stamp duty reserve tax,

(b) the circumstances involve a stock exchange nominee, and

the charge to stamp duty shall be treated as not arising.

(2) The power to make regulations under this section shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons.

(3) In this section —

(a) “prescribed” means prescribed by the regulations, and

(b) “stock exchange nominee” means a person designated for the purposes of section 127 of the Finance Act 1976 as a nominee of The Stock Exchange by an order made by the Secretary of State under subsection (5) of that section.

Stamp duty reserve tax: stock exchange nominees

176

(1) The Treasury may by regulations provide that where —

(a) circumstances would (apart from the regulations) give rise to two charges to stamp duty reserve tax,

(b) the circumstances involve a stock exchange nominee, and

such one of the charges as may be prescribed shall be treated as not arising.

(2) The Treasury may by regulations provide that where —

(a) circumstances would (apart from the regulations) give rise to a charge to stamp duty reserve tax and a charge to stamp duty,

(b) the circumstances involve a stock exchange nominee, and

the charge to stamp duty reserve tax shall be treated as not arising.

(3) The Treasury may by regulations provide that a provision of an Act by virtue of which there is no charge to stamp duty reserve tax shall also apply in circumstances which involve a stock exchange nominee and are such as are prescribed.

(4) The Treasury may by regulations provide that a provision of an Act by virtue of which the rate at which stamp duty reserve tax is charged is less than it would be apart from the provision shall also apply in circumstances which involve a stock exchange nominee and are such as are prescribed.

(5) The power to make regulations under this section shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons.

(6) In this section —

(a) “prescribed” means prescribed by the regulations, and

(b) “stock exchange nominee” means a person designated for the purposes of section 127 of the Finance Act 1976 as a nominee of The Stock Exchange by an order made by the Secretary of State under subsection (5) of that section.

Stamp duty reserve tax: information.

177

— Regulations under section 98(1) of the Finance Act 1986 (administration etc. of stamp duty reserve tax) may include —

(a) provision that notice which the regulations require to be given to the Commissioners of Inland Revenue shall be given in a manner or form specified by the Commissioners;

(b) provision that information which the regulations require to be supplied to the Commissioners shall be supplied in a manner or form specified by the Commissioners.

Interest etc.

Setting of rates of interest.

178

(1) The rate of interest applicable for the purposes of an enactment to which this section applies shall be the rate which for the purposes of that enactment is provided for by regulations made by the Treasury under this section.

(2) This section applies to—

(aa) section 15A of the Stamp Act 1891;

(a) section 8(9) of the Finance Act 1894,

(b) section 18 of the Finance Act 1896,

(d) section 17(3) of the Law of Property Act 1925,

(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(f) sections ... 86, 86A, 87, 87A, 88, 103A of the Taxes Management Act 1970,

(g) paragraph 3 of Schedule 16A to the Finance Act 1973,

(ga) section 48(1) of the Finance Act 1975,

(gg) paragraph 6 of Schedule 1 to the Social Security Contributions and Benefits Act 1992,

(gh) section 71(8A) of the Social Security Administration Act 1992, and section 69(8A) of the Social Security Administration (Northern Ireland) Act 1992, as they have effect in any case where the overpayment was made in respect of working families’ tax credit or disabled person’s tax credit;

(h) paragraphs 15 and 16 of Schedule 2, and paragraph 8 of Schedule 5, to the Oil Taxation Act 1975,

(i) section 283 of the Taxation of Chargeable Gains Act 1992;

(j) paragraph 59 of Schedule 8 to the Development Land Tax Act 1976,

(k) sections 233 , 235(1) and 236(3) and (4) of the Inheritance Tax Act 1984,

(l) section 92 of the Finance Act 1986, and

(m) sections . . . ... 824, 825 and 826 of, and paragraph 6B of Schedule 3 to and paragraph 3 of Schedule 19A to, the Taxes Act 1988. and

(n) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . and

(o) section 14(4) of the Ports Act 1991.

(p) paragraph 8 of Schedule 4 to the Tax Credits Act 1999., ...

(q) section 110 of the Finance Act 1999.

(q) paragraph 8 of Schedule 1 to the Employment Act 2002.

(r) paragraph 8 of Schedule I to the Employment (Northern Ireland) Order 2002., and

(s) Chapter 7 of Part 3 of the Income Tax (Earnings and Pensions) Act 2003.

(t) sections 87, 88 and 89 of the Finance Act 2003, ...

(u) . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...

(v) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(w) sections 67 and 68 of the Finance Act 2020.

(x) paragraphs 33 and 33A of Schedule 14 to the Finance (No.2) Act 2023.

(y) paragraphs 33 and 33A of Schedule 14 to the Finance (No.2) Act 2023, as applied in relation to domestic top-up tax by paragraph 4 of Schedule 18 to that Act.

(3) Regulations under this section may—

(a) make different provision for different enactments or for different purposes of the same enactment,

(b) either themselves specify a rate of interest for the purposes of an enactment or make provision for any such rate to be determined by reference to such rate or the average of such rates as may be referred to in the regulations,

(c) provide for rates to be reduced below, or increased above, what they otherwise would be by specified amounts or by reference to specified formulae,

(d) provide for rates arrived at by reference to averages to be rounded up or down,

(e) provide for circumstances in which alteration of a rate of interest is or is not to take place, and

(f) provide that rates or alterations of rates are to have effect for periods beginning on or after a day determined in accordance with the regulations in relation to interest running from before that day as well as from or from after that day.

(4) The power to make regulations under this section shall be exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of the House of Commons.

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

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provisions consequential on section 178.

179

(1) The words “rate applicable under section 178 of the Finance Act 1989”shall be substituted—

(a) for the words from “rate” to “annum” in—

(i) section 18(1) of the Finance Act 1896,

(ii) section 61(5) of the Finance (1909-10) Act 1910,

(iii) section 17(3) of the Law of Property Act 1925,

(iv) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(v) paragraphs 15(1) and 16 of Schedule 2, and paragraph 8(4) of Schedule 5,to the Oil Taxation Act 1975,

(vi) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(vii) sections 824(1) and 825(2) of the Taxes Act 1988,

(b) for the words“ prescribed rate” in—

(i) sections 86(1), 86A(1), 87(1), 87A(1) ... and 88(1) of the Taxes Management Act 1970,

(ii) paragraph 3(4) of Schedule 16A to the Finance Act1973, and

(iii) paragraph 3(4) of Schedule 19A to the Taxes Act 1988,

(i) paragraph 59(1) of Schedule 8 to the Development LandTax Act 1976, and

(ii) section 826(1) of the Taxes Act 1988,

(d) for the words “rate applicable under subsection (2) below” in section233(1) of the Inheritance Tax Act 1984,

(e) for the words “rate for the time being applicable under section233(2)(b) above” in subsection (3), and the words “rate for the timebeing applicable under section 233(2)(a) above” in subsection (4), ofsection 236 of that Act,

(f) for the words “appropriate rate” in section 92(2) of the Finance Act 1986, and

(g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) In section 8(9) of the Finance Act 1894, for thewords from “such interest” to “per cent.” there shall be substitutedthe words “interest at such rate not exceeding that applicable under section178 of the Finance Act 1989”.

(3) In section 236(4) of the Inheritance Tax Act 1984, for the words “as ifsection 233(1)(b) above had applied” there shall be substituted the words “from the end of the period mentioned in section 233(1)(b) above”.

(4) Any amendment made by subsection (1), (2) or (3) above shall have effect in relation to any period for which section 178(1) above has effect for thepurposes of the enactment concerned.

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

Repayment interest: period of accrual.

180

(1) In section 48(1) of the Finance Act 1975, after thewords “carry interest” there shall be inserted the words “from the dateon which the sums were paid until the order for repayment is issued”.

(2) In—

(a) paragraph 16 of Schedule 2 to the Oil Taxation Act1975,

(b) section 105(7) of the Finance Act 1980,

(d) paragraph 10(4) of Schedule 19 to the Finance Act1982,

for the word “repayment” there shall be substituted the words “theorder for repayment is issued”.

(3) In paragraph 59(1) of Schedule 8 to the DevelopmentLand Tax Act 1976, after the word “later,” there shall be inserted thewords “until the order for repayment is issued”.

(4) In section 235(1) of the Inheritance Tax Act 1984(and paragraph 19(3) of Schedule 4 to the Finance Act1975), after the word “made” there shall be inserted the words “untilthe order for repayment is issued”.

(5) In section 92(2) of the Finance Act 1986, for thewords “the time it was paid” there shall be substituted the words “thedate on which the payment was made until the order for repayment isissued”.

(6) In section 826(1) of the Taxes Act 1988, for the words “that repaymentor payment is made” there shall be substituted the words “the order forrepayment or payment is issued”.

(7) The amendments made by this section shall be deemed always to have hadeffect.

Miscellaneous

Broadcasting: additional payments by programme contractors.

181

(1) The Broadcasting Act 1981 shall have effect withrespect to additional payments payable by programme contractors under that Actsubject to the amendments made by Part I, and with the substitution, forSchedule 4 to that Act, of the provisions contained in Part II, of Schedule16 to this Act.

(2) The transitional provisions made by Part III of that Schedule shall haveeffect.

(3) This section shall come into force on 1st January 1990.

Disclosure of information.

182

(1) A person who discloses any information which he holds or has held in the exercise of tax functions , tax credit functions , child trust fund functionsor social security functions is guilty of an offence if it is information about any matter relevant, for the purposes of any of those functions—

(a) to tax or duty in the case of any identifiable person,

(aa) to a tax credit in respect of any identifiable person,

(ab) to a child trust fund of any identifiable person,

(b) to contributions payable by or in respect of any identifiable person, or

(c) to statutory sick pay , statutory maternity pay, statutory paternity pay, statutory adoption pay , statutory shared parental pay , statutory parental bereavement pay or statutory neonatal care pay in respect of any identifiable person.

(2) In this section “tax functions” means functions relating to tax or duty—

(a) of the Commissioners, the Board and their officers,

(b) of any person carrying out the administrative work of the First-tier Tribunal or Upper Tribunal, and

(c) of any other person providing, or employed in the provision of, services to any person mentioned in paragraph (a) or (b) above.

(2ZA) In this section “tax credit functions” means the functions relating to tax credits—

(a) of the Board,

(b) of any person carrying out the administrative work of the the First-tier Tribunal or Upper Tribunal, and

(c) of any other person providing, or employed in the provision of, services to the Board or to any person mentioned in paragraph (b) above.

(2ZB) In this section “child trust fund functions” means the functions relating to child trust funds—

(a) of the Board and their officers,

(b) of any person carrying out the administrative work of the First-tier Tribunal or an appeal tribunal constituted under Chapter 1 of Part 2 of the Social Security (Northern Ireland) Order 1998, or

(c) of any person providing, or employed in the provision of, services to the Board or any person mentioned in paragraph (b) above.

(2A) In this section “social security functions” means—

(a) the functions relating to contributions, child benefit, guardian’s allowance, statutory sick pay , statutory maternity pay, statutory paternity pay, statutory adoption pay , statutory shared parental pay , statutory parental bereavement pay or statutory neonatal care pay—

(i) of the Board and their officers,

(ii) of any person carrying out the administrative work of the the First-tier Tribunal or Upper Tribunal, and

(iii) of any other person providing, or employed in the provision of, services to any person mentioned in sub-paragraph (i) or (ii) above, and

(b) the functions under Part III of the Pension Schemes Act 1993 or Part III of the Pension Schemes (Northern Ireland) Act 1993 of the Board and their officers and any other person providing, or employed in the provision of, services to the Board or their officers.

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

(4) A person who discloses any information which—

(a) he holds or has held in the exercise of functions—

(i) of the Comptroller Auditor General , of the National Audit Office and any member or employee of that Office or of any member of the staff of the National Audit Office that was established by section 3 of the National Audit Act 1983, . . .

(ia) of the Comptroller and Auditor General for Northern Ireland and any member of the staff of the Northern Ireland Audit Office,

(ii) of the Parliamentary Commissioner for Administration and his officers,

(iii) of the Auditor General for Wales and any member of his staff, ...

(iiia) of the Wales Audit Office and any member or employee of that Office,

(iv) of the Public Services Ombudsman for Wales and any member of his staff, or

(v) of the Scottish Public Services Ombudsman and any member of his staff,

(b) is, or is derived from, information which was held by any person in the exercise of tax functions , tax credit functions , child trust fund functions or social security functions, and

(c) is information about any matter relevant, for the purposes of tax functions , tax credit functions , child trust fund functions or social security functions—

(i) to tax or duty in the case of any identifiable person,

(ia) to a tax credit in respect of any identifiable person,

(ib) to a child trust fund of any identifiable person,

(ii) to contributions payable by or in respect of any identifiable person, or

(iii) to child benefit, guardian’s allowance, statutory sick pay , statutory maternity pay, statutory paternity pay, statutory adoption pay , statutory shared parental pay , statutory parental bereavement pay or statutory neonatal care pay in respect of any identifiable person

is guilty of an offence.

(5) Subsections (1) and (4) above do not apply to any disclosure of information—

(a) with lawful authority,

(b) with the consent of any person in whose case the information is about a matter relevant to tax or duty , to a tax credit or to a child trust fund or to contributions, statutory sick pay , statutory maternity pay, statutory paternity pay, statutory adoption pay , statutory shared parental pay , statutory parental bereavement pay or statutory neonatal care pay, or

(6) For the purposes of this section a disclosure of any information is made with lawful authority if, and only if, it is made—

(a) by a Crown servant in accordance with his official duty,

(b) by any other person for the purposes of the function in the exercise of which he holds the information and without contravening any restriction dulyimposed by the person responsible,

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