Finance Act 1994

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Interpretation of Chapter II.

177

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Chapter III — Management: Self-Assessment etc.

Income tax and capital gains tax

Personal and trustee’s returns.

178

• (1) For subsection (1) of section 8 of the Management Act (personal return) there shall be substituted the following subsections—

(1) For the purpose of establishing the amounts in which a person is chargeable to income tax and capital gains tax for a year of assessment, he may be required by a notice given to him by an officer of the Board— (a) to make and deliver to the officer, on or before the day mentioned in subsection (1A) below, a return containing such information as may reasonably be required in pursuance of the notice, and (b) to deliver with the return such accounts, statements and documents, relating to information contained in the return, as may reasonably be so required. (1A) The day referred to in subsection (1) above is— (a) the 31st January next following the year of assessment, or (b) where the notice under this section is given after the 31st October next following the year, the last day of the period of three months beginning with the day on which the notice is given. (1B) In the case of a person who carries on a trade, profession, or business in partnership with one or more other persons, a return under this section shall include each amount which, in any relevant statement, is stated to be equal to his share of any income, loss or charge for the period in respect of which the statement is made. (1C) In subsection (1B) above “relevant statement” means a statement which, as respects the partnership, falls to be made under section 12AB of this Act for a period which includes, or includes any part of, the year of assessment or its basis period.

• (2) For subsection (1) of section 8A of the Management Act (trustee’s return) there shall be substituted the following subsections—

(1) For the purpose of establishing the amounts in which a trustee of a settlement, and the settlors and beneficiaries, are chargeable to income tax and capital gains tax for a year of assessment, an officer of the Board may by a notice given to the trustee require the trustee— (a) to make and deliver to the officer, on or before the day mentioned in subsection (1A) below, a return containing such information as may reasonably be required in pursuance of the notice, and (b) to deliver with the return such accounts, statements and documents, relating to information contained in the return, as may reasonably be so required; and a notice may be given to any one trustee or separate notices may be given to each trustee or to such trustees as the officer thinks fit. (1A) The day referred to in subsection (1) above is— (a) the 31st January next following the year of assessment, or (b) where the notice under this section is given after the 31st October next following the year, the last day of the period of three months beginning with the day on which the notice is given.

Returns to include self-assessment.

179

For section 9 of the Management Act there shall be substituted the following section—

(9) (1) Subject to subsection (2) below, every return under section 8 or 8A of this Act shall include an assessment (a self-assessment) of the amounts in which, on the basis of the information contained in the return, the person making the return is chargeable to income tax and capital gains tax for the year of assessment. (2) A person shall not be required to comply with subsection (1) above if he makes and delivers his return for a year of assessment— (a) on or before the 30th September next following the year, or (b) where the notice under section 8 or 8A of this Act is given after the 31st July next following the year, within the period of two months beginning with the day on which the notice is given. (3) Where, in making and delivering a return, a person does not comply with subsection (1) above, an officer of the Board shall if subsection (2) above applies, and may in any other case— (a) make the assessment on his behalf on the basis of the information contained in the return, and (b) send him a copy of the assessment so made; and references in the following provisions of this Act to a person’s self-assessment include references to an assessment made on a person’s behalf under this subsection. (4) Subject to subsection (5) below— (a) at any time before the end of the period of nine months beginning with the day on which a person’s return is delivered, an officer of the Board may by notice to that person so amend that person’s self-assessment as to correct any obvious errors or mistakes in the return (whether errors of principle, arithmetical mistakes or otherwise); and (b) at any time before the end of the period of twelve months beginning with the filing date, a person may by notice to an officer of the Board so amend his self-assessment as to give effect to any amendments to his return which he has notified to such an officer. (5) No amendment of a self-assessment may be made under subsection (4) above at any time during the period— (a) beginning with the day on which an officer of the Board gives notice of his intention to enquire into the return, and (b) ending with the day on which the officer’s enquiries into the return are completed. (6) In this section and section 9A of this Act “the filing date” means the day mentioned in section 8(1A) or, as the case may be, section 8A(1A) of this Act.

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180

Corporation tax

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181

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182

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183

Partnerships

Partnership return.

184

After section 12 of the Management Act there shall be inserted the following section—

(12AA) (1) Where a trade, profession or business is carried on by two or more persons in partnership, for the purpose of facilitating— (a) the assessment to income tax for a year of assessment, and (b) the assessment to corporation tax for any period, of each partner who is liable to be so assessed, an officer of the Board may act under subsection (2) or (3) below (or both). (2) An officer of the Board may by a notice given to the partners require such person as is identified in accordance with rules given with the notice— (a) to make and deliver to the officer in respect of such period as may be specified in the notice, on or before such day as may be so specified, a return containing such information as may reasonably be required in pursuance of the notice, and (b) to deliver with the return such accounts and statements as may reasonably be so required. (3) An officer of the Board may by notice given to any partner require the partner— (a) to make and deliver to the officer in respect of such period as may be specified in the notice, on or before such day as may be so specified, a return containing such information as may reasonably be required in pursuance of the notice, and (b) to deliver with the return such accounts and statements as may reasonably be so required; and a notice may be given to any one partner or separate notices may be given to each partner or to such partners as the officer thinks fit. (4) In the case of a partnership which includes one or more individuals, the day specified in a notice under subsection (2) or (3) above shall not be earlier than— (a) the 31st January next following the year of assessment concerned, or (b) where the notice under this section is given after the 31st October next following the year, the last day of the period of three months beginning with the day on which the notice is given. (5) In the case of a partnership which includes one or more companies, the day specified in a notice under subsection (2) or (3) above shall not be earlier than— (a) the first anniversary of the end of the relevant period, or (b) where the notice under this section is given more than nine months after the end of the relevant period, the last day of the period of three months beginning with the day on which the notice is given; and the relevant period for the purposes of this subsection and subsection (6) below is the period in respect of which the return is required. (6) Every return under this section shall include— (a) a declaration of the name, residence and tax reference of each of the persons who have been partners— (i) for the whole of the relevant period, or (ii) for any part of that period, and, in the case of a person falling within sub-paragraph (ii) above, of the part concerned; and (b) a declaration by the person making the return to the effect that it is to the best of his knowledge correct and complete. (7) Every return under this section shall also include, if the notice under subsection (2) or (3) above so requires— (a) with respect to any disposal of partnership property during a period to which any part of the return relates, the like particulars as if the partnership were liable to tax on any chargeable gain accruing on the disposal, and (b) with respect to any acquisition of partnership property, the particulars required under section 12(2) of this Act. (8) A notice under this section may require different information, accounts and statements for different periods or in relation to different descriptions of source of income. (9) Notices under this section may require different information, accounts and statements in relation to different descriptions of partnership. (10) In this section “residence”, in relation to a company, means its registered office.

Partnership return to include partnership statement.

185

After section 12AA of the Management Act there shall be inserted the following section—

(12AB) (1) Every return under section 12AA of this Act shall include a statement (a partnership statement) of the following amounts, namely— (a) in the case of each period of account ending within the period in respect of which the return is made— (i) the amount of income or loss from each source which, on the basis of the information contained in the return, has accrued to or has been sustained by the partnership for that period, and (ii) the amount of each charge which, on that basis, was a charge on the income of the partnership for that period; and (b) in the case of each such period and each of the partners, the amount which, on that basis, is equal to his share of that income, loss or charge. (2) Subject to subsection (3) below— (a) at any time before the end of the period of nine months beginning with the day on which a person’s return is delivered, an officer of the Board may by notice to that person so amend that person’s partnership statement as to correct any obvious errors or mistakes in the return (whether errors of principle, arithmetical mistakes or otherwise); and (b) at any time before the end of the period of twelve months beginning with the filing date, a person may by notice to an officer of the Board so amend his partnership statement as to give effect to any amendments to his return which he has notified to such an officer. (3) No amendment of a partnership statement may be made under subsection (2) above at any time during the period— (a) beginning with the day on which an officer of the Board gives notice of his intention to enquire into the return, and (b) ending with the day on which the officer’s enquiries into the return are completed. (4) Where a partnership statement is amended under subsection (2) above, the officer shall by notice to the partners so amend their self-assessments under section 9 or 11AA of this Act as to give effect to the amendments of the partnership statement. (5) In this section— - “filing date” means the day specified in the notice under subsection (2) or, as the case may be, subsection (3) of section 12AA of this Act; - “period of account”, in relation to a partnership, means any period for which accounts are drawn up.

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186

Enquiries: procedure

Power to call for documents.

187

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188

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189

Determinations and assessments to protect revenue

Determination of tax where no return delivered.

190

After section 28B of the Management Act there shall be inserted the following section—

(28C) (1) Where— (a) a notice has been given to any person under section 8, 8A or 11 of this Act (the relevant section), and (b) the required return is not delivered on or before the filing date, an officer of the Board may make a determination of the amounts in which, to the best of his information and belief, the person who should have made the return is chargeable to income tax and capital gains tax for the year of assessment or (as the case may be) is chargeable to corporation tax for the accounting period. (2) Notice of any determination under this section shall be served on the person in respect of whom it is made and shall state the date on which it is issued. (3) Until such time (if any) as it is superseded by a self-assessment made under section 9 or 11AA of this Act (whether by the taxpayer or an officer of the Board) on the basis of information contained in a return under the relevant section, a determination under this section shall have effect for the purposes of Parts VA, VI, IX and XI of this Act as if it were such a self-assessment. (4) Where— (a) an officer of the Board has commenced any proceedings for the recovery of any tax charged by a determination under this section; and (b) before those proceedings are concluded, the determination is superseded by such a self-assessment as is mentioned in subsection (3) above, those proceedings may be continued as if they were proceedings for the recovery of so much of the tax charged by the self-assessment as is due and payable and has not been paid. (5) No determination under this section, and no self-assessment superseding such a determination, shall be made otherwise than— (a) before the end of the period of five years beginning with the filing date; or (b) in the case of such a self-assessment, before the end of the period of twelve months beginning with the date of the determination. (6) In this section “the filing date” means the day mentioned in section 8(1A), section 8A(1A) or, as the case may be, section 11(4) of this Act.

Assessment where loss of tax discovered.

191

• (1) For section 29 of the Management Act there shall be substituted the following section—

(29) (1) If an officer of the Board or the Board discover, as regards any person (the taxpayer) and a chargeable period— (a) that any profits which ought to have been assessed to tax have not been assessed, or (b) that an assessment to tax is or has become insufficient, or (c) that any relief which has been given is or has become excessive, the officer or, as the case may be, the Board may, subject to subsections (2) and (3) below, make an assessment in the amount, or the further amount, which ought in his or their opinion to be charged in order to make good to the Crown the loss of tax. (2) Where— (a) the taxpayer has made and delivered a return under section 8, 8A or 11 of this Act in respect of the relevant chargeable period, and (b) the situation mentioned in subsection (1) above is attributable to an error or mistake in the return as to the basis on which his liability ought to have been computed, the taxpayer shall not be assessed under that subsection in respect of the chargeable period there mentioned if the return was in fact made on the basis or in accordance with the practice generally prevailing at the time when it was made. (3) Where the taxpayer has made and delivered a return under section 8, 8A or 11 of this Act in respect of the relevant chargeable period, he shall not be assessed under subsection (1) above— (a) in respect of the chargeable period mentioned in that subsection; and (b) in the case of a return under section 8 or 8A, in the same capacity as that in which he made and delivered the return, unless one of the two conditions mentioned below is fulfilled. (4) The first condition is that the situation mentioned in subsection (1) above is attributable to fraudulent or negligent conduct on the part of the taxpayer or a person acting on his behalf. (5) The second condition is that at the time when an officer of the Board— (a) ceased to be entitled to give notice of his intention to enquire into the taxpayer’s return under section 8, 8A or 11 of this Act in respect of the relevant chargeable period; or (b) informed the taxpayer that he had completed his enquiries into that return, the officer could not have been reasonably expected, on the basis of the information made available to him before that time, to be aware of the situation mentioned in subsection (1) above. (6) For the purposes of subsection (5) above, information is made available to an officer of the Board if— (a) it is contained in the taxpayer’s return under section 8, 8A or 11 of this Act in respect of the relevant chargeable period (the return), or in any accounts, statements or documents accompanying the return; (b) it is contained in any claim made as regards the relevant chargeable period by the taxpayer acting in the same capacity as that in which he made the return, or in any accounts, statements or documents accompanying any such claim; (c) it is contained in any documents, accounts or particulars which, for the purposes of any enquiries into the return or any such claim by an officer of the Board, are produced or furnished by the taxpayer to the officer, whether in pursuance of a notice under section 19A of this Act or otherwise; or (d) it is information the existence of which, and the relevance of which as regards the situation mentioned in subsection (1) above— (i) could reasonably be expected to be inferred by an officer of the Board from information falling within paragraphs (a) to (c) above; or (ii) are notified in writing by the taxpayer to an officer of the Board. (7) In subsection (6) above— (a) any reference to the taxpayer’s return under section 8, 8A or 11 of this Act in respect of the relevant chargeable period includes— (i) a reference to any return of his under that section for either of the two immediately preceding chargeable periods; and (ii) where the return is under section 8 and the taxpayer carries on a trade, profession or business in partnership, a reference to any return with respect to the partnership under section 12AA of this Act for the relevant chargeable period or either of those periods; and (b) any reference in paragraphs (b) to (d) to the taxpayer includes a reference to a person acting on his behalf. (8) An objection to the making of an assessment under this section on the ground that neither of the two conditions mentioned above is fulfilled shall not be made otherwise than on an appeal against the assessment. (9) Any reference in this section to the relevant chargeable period is a reference to— (a) in the case of the situation mentioned in paragraph (a) or (b) of subsection (1) above, the chargeable period mentioned in that subsection; and (b) in the case of the situation mentioned in paragraph (c) of that subsection, the chargeable period in respect of which the claim was made. (10) In this section “profits”— (a) in relation to income tax, means income, (b) in relation to capital gains tax, means chargeable gains, and (c) in relation to corporation tax, means profits as computed for the purposes of that tax.

• (2) This section, so far as it relates to partnerships whose trades, professions or businesses are set up and commenced before 6th April 1994, has effect as respects the year 1997-98 and subsequent years of assessment.

Payment of tax

Payments on account of income tax.

192

After Part V of the Management Act there shall be inserted the following section—

(59A) (1) This section applies to any person (the taxpayer) as regards a year of assessment if as regards the immediately preceding year— (a) he has been assessed to income tax under section 9 of this Act in any amount, and (b) that amount (the assessed amount) exceeds the amount of any income tax which has been deducted at source, and (c) the amount of the excess (the relevant amount) is not less than such amount as may be prescribed by regulations made by the Board, and (d) the proportion which the relevant amount bears to the assessed amount is not less than such proportion as may be so prescribed. (2) Subject to subsection (3) below, the taxpayer shall make two payments on account of his liability to income tax for the year of assessment— (a) the first on or before the 31st January in that year, and (b) the second on or before the next following 31st July; and, subject to subsection (4) below, each of those payments on account shall be of an amount equal to 50 per cent. of the relevant amount. (3) If, at any time before the 31st January next following the year of assessment, the taxpayer makes a claim under this subsection stating— (a) his belief that he will not be assessed to income tax for that year, or that the amount in which he will be so assessed will not exceed the amount of income tax deducted at source, and (b) his grounds for that belief, each of the payments on account shall not be, and shall be deemed never to have been, required to be made. (4) If, at any time before the 31st January next following the year of assessment, the taxpayer makes a claim under this subsection stating— (a) his belief that the amount in which he will be assessed to income tax for that year will exceed the amount of income tax deducted at source by a stated amount which is less than the relevant amount, and (b) his grounds for that belief, the amount of each of the payments on account required to be made shall be, and shall be deemed always to have been, equal to 50 per cent. of the stated amount. (5) Where the taxpayer makes a claim under subsection (3) or (4) above, there shall be made all such adjustments, whether by the repayment of amounts paid on account or otherwise, as may be required to give effect to the provisions of that subsection. (6) Where the taxpayer fraudulently or negligently makes any incorrect statement in connection with a claim under subsection (3) or (4) above, he shall be liable to a penalty not exceeding the difference between— (a) the amount which would have been payable on account if he had made a correct statement, and (b) the amount of the payment on account (if any) made by him. (7) The provisions of the Income Tax Acts as to the recovery of income tax shall apply to an amount falling to be paid on account of tax in the same manner as they apply to an amount of tax. (8) In this section any reference to income tax deducted at source is a reference to— (a) income tax deducted or treated as deducted from any income or treated as paid on any income, or (b) any amount which, in respect of the year of assessment, is to be deducted at source under section 203 of the principal Act in a subsequent year, or is a tax credit to which section 231 of that Act applies.

Payment of income tax and capital gains tax.

193

After section 59A of the Management Act there shall be inserted the following section—

(59B) (1) Subject to subsection (2) below, the difference between— (a) the amount of income tax and capital gains tax contained in a person’s self-assessment under section 9 of this Act for any year of assessment, and (b) the aggregate of any payments on account made by him in respect of that year (whether under section 59A of this Act or otherwise) and any income tax which in respect of that year has been deducted at source, shall be payable by him or (as the case may be) repayable to him as mentioned in subsection (3) or (4) below. (2) The following, namely— (a) any amount which, in the year of assessment, is deducted at source under section 203 of the principal Act in respect of a previous year, and (b) any amount which, in respect of the year of assessment, is to be deducted at source under that section in a subsequent year, or is a tax credit to which section 231 of that Act applies, shall be respectively deducted from and added to the aggregate mentioned in subsection (1)(b) above. (3) In a case where the person— (a) gave the notice required by section 7 of this Act within six months from the end of the year of assessment, but (b) was not given notice under section 8 or 8A of this Act until after the 31st October next following that year, the difference shall be payable or repayable at the end of the period of three months beginning with the day on which the notice under section 8 or 8A was given. (4) In any other case, the difference shall be payable or repayable on or before the 31st January next following the year of assessment. (5) Where a person’s self-assessment under section 9 of this Act is amended under section 9(4), section 28A(2), (3) or (4) or section 30B(2) of this Act, any amount of tax which is payable or repayable by virtue of the amendment shall, subject to section 55(6) and (9) of this Act, be payable or (as the case may be) repayable— (a) in a case where notice of the amendment is given after, or less than 30 days before, the day given by subsection (3) or (4) above, on or before the day following the end of the period of 30 days beginning with the day on which notice is given; and (b) in any other case, on or before the day given by subsection (3) or (4) above. (6) Any amount of income tax or capital gains tax which is payable by virtue of an assessment made under section 29 of this Act shall be payable on the day following the end of the period of 30 days beginning with the day on which the notice of assessment is given. (7) In this section any reference to income tax deducted at source is a reference to income tax deducted or treated as deducted from any income or treated as paid on any income.

Surcharges on unpaid income tax and capital gains tax.

194

After section 59B of the Management Act there shall be inserted the following section—

(59C) (1) This section applies in relation to any income tax or capital gains tax which has become payable by a person (the taxpayer) in accordance with section 55 or 59B of this Act. (2) Where any of the tax remains unpaid on the day following the expiry of 28 days from the due date, the taxpayer shall be liable to a surcharge equal to 5 per cent. of the unpaid tax. (3) Where any of the tax remains unpaid on the day following the expiry of 6 months from the due date, the taxpayer shall be liable to a further surcharge equal to 5 per cent. of the unpaid tax. (4) Where the taxpayer has incurred a penalty under section 7, 93(5) or 95 of this Act, no part of the tax by reference to which that penalty was determined shall be regarded as unpaid for the purposes of subsection (2) or (3) above. (5) An officer of the Board may impose a surcharge under subsection (2) or (3) above; and notice of the imposition of such a surcharge— (a) shall be served on the taxpayer, and (b) shall state the day on which it is issued and the time within which an appeal against the imposition of the surcharge may be brought. (6) A surcharge imposed under subsection (2) or (3) above shall carry interest at the rate applicable under section 178 of the Finance Act 1989 from the end of the period of 30 days beginning with the day on which the surcharge is imposed until payment. (7) An appeal may be brought against the imposition of a surcharge under subsection (2) or (3) above within the period of 30 days beginning with the date on which the surcharge is imposed. (8) Subject to subsection (9) below, the provisions of this Act relating to appeals shall have effect in relation to an appeal under subsection (7) above as they have effect in relation to an appeal against an assessment to tax. (9) On an appeal under subsection (7) above section 50(6) to (8) of this Act shall not apply but the Commissioners may— (a) if it appears to them that, throughout the period of default, the taxpayer had a reasonable excuse for not paying the tax, set aside the imposition of the surcharge; or (b) if it does not so appear to them, confirm the imposition of the surcharge. (10) Inability to pay the tax shall not be regarded as a reasonable excuse for the purposes of subsection (9) above. (11) The Board may in their discretion— (a) mitigate any surcharge under subsection (2) or (3) above, or (b) stay or compound any proceedings for the recovery of any such surcharge, and may also, after judgment, further mitigate or entirely remit the surcharge. (12) In this section— - “the due date”, in relation to any tax, means the date on which the tax becomes due and payable; - “the period of default”, in relation to any tax which remained unpaid after the due date, means the period beginning with that date and ending with the day before that on which the tax was paid.

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195

Miscellaneous and supplemental

Management: other amendments.

196

Schedule 19 to this Act (which makes other amendments relating to the management of tax) shall have effect.

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197

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198

Interpretation and commencement of Chapter III.

199

• (1) In this Chapter “the Management Act” means the Taxes Management Act 1970.

• (2) Unless the contrary intention appears, this Chapter—

• (a) so far as it relates to income tax and capital gains tax, has effect as respects the year 1996-97 and subsequent years of assessment, and

• (b) so far as it relates to corporation tax, has effect as respects accounting periods ending on or after the appointed day.

• (3) For the purposes of this Chapter the appointed day is such day, not earlier than 1st April 1996, as the Treasury may by order appoint.

Chapter IV — Changes for Facilitating Self-Assessment

Assessment under Cases I and II of Schedule D

Assessment on current year basis.

200

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Basis of assessment at commencement.

201

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Change of basis period.

202

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Conditions for such a change.

203

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Basis of assessment on discontinuance.

204

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Overlap profits and overlap losses.

205

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Assessment under Cases III to VI of Schedule D

Basis of assessment under Case III.

206

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Basis of assessment under Cases IV and V.

207

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Basis of assessment under Case VI.

208

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Loss relief

Loss relief: general.

209

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Relief for losses on unquoted shares.

210

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Capital allowances

Income tax allowances and charges in taxing a trade etc.

211

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

• (2) Subject to section 214(7) below, this section and sections 212 to 214 below, in their application to trades, professions or vocations set up and commenced before 6th April 1994 or employments or offices entered into before that date, have effect as respects the year 1997-98 and subsequent years of assessment.

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212

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213

Amendments of other enactments.

214

• (1) In the Taxes Act 1988, the following provisions shall cease to have effect, namely—

• (a) in section 96 (farming and market gardening: relief for fluctuating profits), in subsection (7), paragraph (b);

• (b) section 383 (extension of right to set-off to capital allowances);

• (c) in section 384 (restrictions on right of set-off), in subsection (1), the words “(including any amount in respect of capital allowances which, by virtue of section 383, is to be treated as a loss)”, and in subsection (2), the words “or an allowance in respect of expenditure incurred”, paragraph (b) and the word “or” immediately preceding that paragraph;

• (d) in section 388 (carry-back of terminal losses), in subsection (6), paragraphs (b) and (d) and the word “and” immediately preceding paragraph (d), and in subsection (7), the words from the beginning to “an earlier year: and”; and

• (e) in section 389 (supplementary provisions relating to carry-back of terminal losses), subsections (5) to (7).

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

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

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

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

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

• (7) Subsection (1)(a) above—

• (a) except in its application to a trade set up and commenced on or after 6th April 1994, has effect where the first of the two years of assessment to which the claim relates is the year 1996-97 or any subsequent year, and

• (b) in its application to a trade so set up and commenced, has effect where the first of those two years of assessment is the year 1995-96 or any subsequent year.

Miscellaneous and supplemental

Treatment of partnerships.

215

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

Effect of change in ownership of trade, profession or vocation.

216

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

• (2) Subsections (3) to (5) of that section and, in subsection (6) of that section, the words from “and where” to the end shall cease to have effect.

• (3) The following provisions of that Act shall cease to have effect, namely—

• (a) in section 96 (farming and market gardening: relief for fluctuating profits), in subsection (6) the words from “except that” to the end;

• (b) in section 380 (set-off against general income), subsection (3);

• (c) in section 381 (further relief in early years of trade), subsection (6);

• (d) in section 384 (restrictions on right of set-off), subsection (5);

• (e) in section 385 (carry-forward against subsequent profits), subsections (2) and (5);

• (f) in section 386 (carry-forward where business transferred to a company), subsection (4); and

• (g) in section 389 (supplementary provisions relating to carry-back of terminal losses), subsection (3).

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

• (5) Subsection (3)(a) above—

• (a) except in its application to a trade set up and commenced on or after 6th April 1994, has effect where the first of the two years of assessment to which the claim relates is the year 1996-97 or any subsequent year, and

• (b) in its application to a trade so set up and commenced, has effect where the first of those two years of assessment is the year 1995-96 or any subsequent year.

Double taxation relief in respect of overlap profits.

217

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

Commencement, transitional provisions and savings.

218

• (1) Unless the contrary intention appears, this Chapter—

• (a) except in its application to a trade set up and commenced on or after 6th April 1994 or income from a source arising to a person on or after that date, has effect as respects the year 1996-97 and subsequent years of assessment, and

• (b) in its application to a trade so set up and commenced or income from a source so arising, has effect as respects the year 1994-95 and subsequent years of assessment.

• (1A) In a case where—

• (a) a trade is set up and commenced by a company, and

• (b) it is not set up and commenced before 6th April 1994,

sections 213(4) and (8) and 214(4) and (6) have effect only if it is set up and commenced on or after 6th April 1995.

• (2) Any reference in subsection (1) above to a trade includes a reference to a profession, vocation, employment or office.

• (3) Where the first underwriting year of the underwriting business of a member of Lloyd’s is the year 1994, subsection (1) above shall have effect in relation to that business as if it had been set up and commenced on 6th April 1994.

• (4) Where, as respects income from any source, income tax is to be charged under Case IV or V of Schedule D by reference to the amounts of income received in the United Kingdom, the source shall be treated for the purposes of subsection (1) above as arising on the date on which the first amount of income is so received.

• (5) This Chapter shall have effect subject to the transitional provisions and savings contained in Schedule 20 to this Act.

Chapter V — Lloyd’s Underwriters: Corporations etc.

Main provisions

Taxation of profits.

219

• (1) Corporation tax for any accounting period on the profits arising from a corporate member’s underwriting business shall be computed on the profits of that accounting period.

• (2) As respects the profits arising to a corporate member for any accounting period directly from its membership of one or more syndicates, or from assets forming part of a premium trust fund—

• (a) the aggregate of those profits shall be computed for tax purposes under Part 3 of the Corporation Tax Act 2009 ; and

• (b) accordingly, no part of those profits shall be computed for those purposes otherwise than under Part 3 of the Corporation Tax Act 2009 .

• (3) ... The profits arising to a corporate member for any accounting period—

• (a) from assets forming part of an ancillary trust fund; or

• (b) from assets employed by it in, or in connection with, its underwriting business,

shall be computed for tax purposes under Part 3 of the Corporation Tax Act 2009 if, and to the extent that, they do not fall to be computed for those purposes otherwise than under Part 3 of that Act .

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

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

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

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

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

Accounting period in which certain profits or losses arise.

220

• (1) For the purposes of section 219 above and all other purposes of the Corporation Tax Acts, the profits or losses arising to a corporate member in any accounting period directly from its membership of one or more syndicates, or from assets forming part of a premium trust fund, shall be taken to be—

• (a) if two underwriting years each fall partly within that period, the aggregate of the apportioned parts of those profits or losses in those years; and

• (b) if a single underwriting year falls wholly or partly within that period, those profits or losses or (as the case may be) the apportioned part of those profits or losses in that year.

• (2) Subject to the provisions of this Chapter, for the purposes of subsection (1) above and all other purposes of the Corporation Tax Acts—

• (a) the profits or losses arising to a corporate member in any underwriting year directly from its membership of one or more syndicates shall be taken to be those of any previous year or years which are declared in that year; and

• (b) the profits or losses arising to a corporate member from assets forming part of a premium trust fund which shall be taken to be profits or losses of any underwriting year are—

• (i) those allocated under the rules or practice of Lloyd’s to any previous year or years the profits or losses of which are declared in that year, and

• (ii) those arising in that year and not so allocated to any previous year or years.

• (3) In this section “apportioned part”, in relation to the profits or losses of an underwriting year, means a part apportioned under section 52 of the Corporation Tax Act 2009 .

Assessment and collection of tax.

221

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

Trust funds

Premium trust funds.

222

• (1) For the purposes of the Corporation Tax Acts—

• (a) a corporate member shall be treated as absolutely entitled as against the trustees to the assets forming part of a premium trust fund belonging to it; and

• (b) where a deposit required by a regulatory authority in a country or territory outside the United Kingdom is paid out of such a fund, the money so paid shall be treated as still forming part of that fund.

• (2) Where an asset forms part of a corporate member’s premium trust fund at the beginning of any underwriting year, for the purposes of the Corporation Tax Acts—

• (a) the trustees of the fund shall be treated as acquiring it on that day, and

• (b) they shall be treated as paying in respect of the acquisition an amount equal to the value of the asset at the time of the acquisition.

• (3) Where an asset forms part of a corporate member’s premium trust fund at the end of any underwriting year, for the purposes of the Corporation Tax Acts—

• (a) the trustees of the fund shall be treated as disposing of it on that day, and

• (b) they shall be treated as obtaining in respect of the disposal an amount equal to the value of the asset at the time of the disposal.

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

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

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

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

Ancillary trust funds.

223

A corporate member shall be treated for the purposes of the Corporation Tax Acts as absolutely entitled as against the trustees to the assets forming part of an ancillary trust fund belonging to it.

Other special cases

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

224

Stop-loss and quota share insurance.

225

• (1) In computing for the purposes of corporation tax the profits of a corporate member’s underwriting business, each of the following shall be deductible as an expense, namely—

• (a) any premium payable by it under a stop-loss insurance, and any repayment of insurance money paid to it under such an insurance; and

• (b) where an amount is payable by it under a quota share contract—

• (i) so much of that amount as exceeds the amount of transferred losses that are declared on or before the date the contract takes effect (“the declared amount”), or

• (ii) if the contract does not take effect, the amount so payable under the contract.

• (2) Subject to subsection (3) below, the following provisions apply where any insurance money is payable to a corporate member under a stop-loss insurance in respect of a loss in its underwriting business—

• (a) if the underwriting year in which the loss is declared falls within two or more accounting periods, the apportioned part of the insurance money shall be treated as a trading receipt in computing the profits arising from the business for each of those periods; and

• (b) if the underwriting year in which the loss is declared falls within a single accounting period, the insurance money shall be treated as a trading receipt in computing the profits arising from the business for that period.

• (3) Where, as respects the payment of any such insurance money as is mentioned in subsection (2) above—

• (a) the inspector is not notified of the payment at least 30 days before the time after which any assessment or further assessment of profits for any of the accounting periods or (as the case may be) the accounting period is precluded by section 34 of the Management Act (ordinary time limit), and

• (b) the inspector is not entitled, after that time, to make any such assessment or further assessment by virtue of section 36 ( loss of tax brought about carelessly or deliberately ) of that Act,

that subsection shall have effect in relation to the apportioned part of that insurance money or (as the case may be) that insurance money as if, instead of that accounting period, it referred to the accounting period in which the payment is made.

• (3A) Where the amount payable by a corporate member under a quota share contract is less than the declared amount—

• (a) if the underwriting year in which the contract takes effect falls within a single accounting period, the difference between the two amounts (“the surplus”) shall be treated as a trading receipt in computing the profits arising from the member’s underwriting business for that period, and

• (b) if that underwriting year falls within two or more accounting periods, the apportioned part of the surplus shall be treated as a trading receipt in computing the profits arising from the member’s underwriting business for each of those periods.

• (3B) Where a corporate member has entered a quota share contract, any amount paid by it to cover a cash call in respect of transferred losses that are not declared at the time the contract takes effect shall be treated, for the purposes of subsections (1)(b)(i) and (3A) above, as an amount payable under the contract at that time.

• (3C) Subsection (3D) applies to any premium which is payable by a corporate member under a stop-loss insurance taken out in respect of its underwriting business and in relation to which section 220(2)(a) does not apply.

• (3D) The premium is to be treated for the purposes of the Corporation Tax Acts—

• (a) as an amount that arises to the member directly from its membership of the syndicate or syndicates in relation to the activities of which the stop-loss insurance was taken out, and

• (b) as if it were payable in the underwriting year in which the profits or losses arising to the member directly from its membership of the syndicate or syndicates concerned are declared.

• (3E) If a premium is payable under a stop-loss insurance in respect of two or more underwriting years, the amount of the premium treated, as a result of subsection (3D)(b), as payable in each of those years is to be determined on a just and reasonable basis.

• (3F) If—

• (a) a corporate member enters into a quota share contract, and

• (b) the main purpose, or one of the main purposes, of entering into it was to secure that amounts payable by the member under the contract were not dealt with on the basis set out in subsection (3G),

the contract is treated for the purposes of subsections (3C) to (3E) as if it were a stop-loss insurance (and, accordingly, the amounts payable under it are treated for those purposes as premiums).

• (3G) Amounts are dealt with on the basis set out in this subsection if they are treated as payable in the underwriting year in which the profits or losses arising to a corporate member directly from its membership of one or more syndicates are declared.

• (4) In this section—

• “apportioned part”, in relation to any insurance money or other amount, means a part apportioned under section 52 of the Corporation Tax Act 2009 ;

• “cash call” means a request for funds which, in pursuance of a contract made in accordance with the rules and practices of Lloyd’s, is made to a corporate member by the agent of a syndicate of which it is a member;

• “quota share contract” means any contract between a corporate member and another person which—is made in accordance with the rules or practice of Lloyd’s; andprovides for that other person to take over any rights and liabilities of the member under any of the syndicates of which it is a member;and where the taking over of a member’s rights and liabilities is conditional upon the occurrence of any event, the contract does not take effect until that event occurs; and

• “transferred loss”, in relation to such a contract, means a loss for which that other person takes over liability under the contract (disregarding, in the case of a loss that has been declared at the time it is taken over, any part of it in respect of which the member has paid a cash call before that time).

Miscellaneous

Provisions which are not to apply.

226

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

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

• (3) No relevant contract (within the meaning of Part 7 of the Corporation Tax Act 2009 ) forming part of a premium trust fund of a corporate member shall be a derivative contract.

Cessation: final underwriting year.

227

• (1) This section applies where a corporate member ceases to carry on its underwriting business, whether by reason of being wound up or otherwise.

• (2) Subject to the provisions of any regulations made by the Board—

• (a) the member’s final underwriting year shall be that in which its deposit at Lloyd’s is paid over to it or its liquidator, and

• (b) the member’s underwriting business shall be treated as continuing until the end of that year.

Restriction of group relief

227A

• (1) Losses of the last active underwriting year of a corporate member are not eligible for surrender by the corporate member as group relief to another company unless the group-relief continuity condition is satisfied.

• (2) In this section “last active underwriting year”, in relation to a corporate member, means—

• (a) if the corporate member writes insurance business in only one underwriting year, that underwriting year, and

• (b) otherwise, the last underwriting year in which the corporate member writes insurance business.

• (3) Where in an underwriting year—

• (a) the corporate member writes an amount of insurance business which is insignificant when compared with that written by it in the preceding underwriting year, or

• (b) the only insurance business written by the corporate member consists of the acceptance of reinsurance to close premiums,

the underwriting year is not to be regarded for the purposes of subsection (2)(b) above as an underwriting year in which the corporate member writes insurance business.

• (4) In subsection (3)(b) above “reinsurance to close premium” means a premium or other consideration under a contract in pursuance of which, in accordance with the rules or practice of Lloyd's, one underwriting member agrees with another to meet liabilities arising from the latter's underwriting business in an underwriting year so that the accounts of the business for that year may be closed.

• (5) The group-relief continuity condition is satisfied if the corporate member (as the surrendering company) and the other company (as the claimant company) meet the conditions in section 131 (the group condition), section 132 (consortium condition 1) or section 133 (consortium conditions 2 and 3) of the Corporation Tax Act 2010 throughout the period—

• (a) beginning with the last day of the last active underwriting year of the corporate member, and

• (b) ending with the first day of the first underwriting year in which losses of the last active underwriting year are declared.

Transfer of underwriting business without change of ownership

227B

• (1) This section applies where, in accordance with the rules or practice of Lloyd's, a corporate member (“the successor”) has taken up the syndicate capacity of another corporate member (“the predecessor”).

• (2) Chapter 1 of Part 22 of the Corporation Tax Act 2010 (transfers of trade without a change of ownership) applies as if—

• (a) the transferred trade referred to in that Chapter were the underwriting business of the predecessor,

• (b) the predecessor ceases to carry it on, and the successor begins to carry it on, at the end of the first underwriting year in which profits or losses of the predecessor's last active underwriting year are declared, and

• (c) sections 951 and 952 were omitted.

• (3) For the purposes of subsection (1) above the successor has taken up the predecessor's syndicate capacity if it has taken up the rights to participate in syndicates which were (or otherwise would be) offered to the predecessor.

• (4) In subsection (2)(b) above “last active underwriting year” has the same meaning as in section 227A above (see subsections (2) to (4) of that section).

Exemption for profits or losses of foreign permanent establishments

227C

• (1) This section applies for the purposes of section 18A(6) and (7) of the Corporation Tax Act 2009 (exemption for profits or losses of foreign permanent establishments: “relevant profits amount” and “relevant losses amount”).

• (2) Any regulations made under section 229(1)(d) below are to be ignored.

• (3) Profits or losses which are taken to arise to a corporate member in an underwriting year from its membership of one or more syndicates are to be left out of account in relation to any relevant accounting period so far as they are profits or losses of a previous underwriting year which began before the relevant day (as defined in section 18F of the 2009 Act (effect of election under section 18A)).

• (4) Profits or losses arising to a corporate member from assets forming part of a premium trust fund which are taken to be profits or losses of an underwriting year are to be left out of account in relation to any relevant accounting period so far as they are allocated under the rules or practice of Lloyds to a previous underwriting year which began before the relevant day (as defined in section 18F of the 2009 Act).

Lloyd’s underwriters: individuals.

228

• (1) Chapter III of Part II of the 1993 Act (Lloyd’s underwriters: individuals) shall have effect subject to the amendments specified in Schedule 21 to this Act.

• (2) The following provisions shall cease to have effect, namely—

• (a) section 627 of the Taxes Act 1988 (elections by Lloyd’s underwriters with respect to retirement annuities);

• (b) in section 641 of that Act, subsection (2) (elections by Lloyd’s underwriters with respect to carry-back of contributions); and

• (c) in section 183 of the 1993 Act, subsection (3) (amendments of sections 627(5) and 641(2) of the Taxes Act 1988).

• (3) Subject to any provision to the contrary, the provisions of Schedule 21 to this Act have effect for the year 1994-95 and subsequent years of assessment.

• (4) Subsection (2) above has effect for the year 1997-98 and subsequent years of assessment.

Supplemental

Regulations.

229

• (1) The Board may by regulations provide—

• (a) for the assessment and collection of tax charged in accordance with section 219 above ...;

• (b) for making, in the event of any changes in the rules or practice of Lloyd’s, such amendments of this Chapter as appear to the Board to be expedient having regard to those changes;

• (c) for modifying the application of this Chapter in cases where a syndicate continues after the end of its closing year or a corporate member becomes insolvent or otherwise ceases to carry on its underwriting business;

• (ca) for modifying the application of this Chapter in relation to cases where assets forming part of a premium trust fund are the subject of—

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

• (ii) arrangements involving repos (within the meaning given by section 554(4) of the Corporation Tax Act 2009); or

• (iii) arrangements meeting the conditions in section 554(2) of that Act (redemption arrangements);

• (d) for giving credit for foreign tax.

• (2) Any power to make regulations conferred by this section includes power to make—

• (a) different provision for different cases or different purposes, and

• (b) incidental, supplemental or transitional provision and savings.

Interpretation and commencement.

230

• (1) In this Chapter, unless the context otherwise requires—

• “the 1993 Act” means the Finance Act 1993;

• “ancillary trust fund”, in relation to a corporate member, does not include a premium trust fund but, subject to that, means any trust fund required or authorised by the rules of Lloyd’s, or required by a members’ agent or regulating trustee of the corporate member;

• “closing year”—in relation to an underwriting year, means the underwriting year next but one following that year; andin relation to a syndicate, means the closing year of the underwriting year for which it was formed;

• “corporate member” means a body corporate which is a member of Lloyd’s and is or has been an underwriting member;

• “inspector” includes any officer of the Board;

• “the Management Act” means the Taxes Management Act 1970;

• “managing agent”, in relation to a syndicate and an underwriting year, means—the person registered as a managing agent at Lloyd’s who was acting as such an agent for the syndicate at the end of that year, orsuch other person as may be determined in accordance with regulations made by the Board;

• “member” means a member of Lloyd’s who is or has been an underwriting member;

• “members’ agent”, in relation to a corporate member, means a person registered as a members’ agent at Lloyd’s who has been appointed by the corporate member to act as its members’ agent in respect of all or any part of its underwriting business;

• “premium trust fund” means a trust fund into which premiums receivable by members are paid in compliance with a trust deed under Rule 8.2.19 of the Prudential Sourcebook for Insurers made by the Prudential Regulation Authority under the Financial Services and Markets Act 2000;

• “prescribed” means prescribed by regulations made by the Board;

• “profits” includes gains;

• “regulating trustee”, in relation to a corporate member, means a person designated as such by the terms of any trust deed by which a premiums trust fund of the corporate member is constituted;

• “stop-loss insurance” means any insurance taken out by a corporate member against losses in its underwriting business , except insurance taken out by entering a quota share contract (within the meaning of section 225 above);

• “syndicate” means a syndicate of underwriting members of Lloyd’s formed for an underwriting year;

• “underwriting business”, in relation to a corporate member, means its underwriting business as a member of Lloyd’s;

• “underwriting year” means the calendar year.

• (2) For the purposes of this Chapter, unless the contrary intention appears—

• (a) the profits or losses of a corporate member’s underwriting business include profits or losses arising to it—

• (i) from assets forming part of a premium trust fund or an ancillary trust fund; or

• (ii) from assets employed by it in, or in connection with, its underwriting business; and

• (b) any charge made on a corporate member by the managing agent of a syndicate of which it is a member, and any expense incurred on its behalf by the managing agent of such a syndicate, shall be treated as expenses arising directly from its membership of that syndicate.

• (3) Subject to any provision to the contrary, the provisions of this Chapter have effect for accounting periods ending on or after 1st January 1994 or, as the case may require, for the underwriting year 1994 and subsequent underwriting years.

Part V — Oil Taxation

Chapter I — Election by Reference to Pipe-Line Usage

Election by reference to pipe-line with excess capacity.

231

• (1) The provisions of this Chapter apply where, on or before 1st January 1996, a participator in a taxable field makes, in accordance with Part I of Schedule 22 to this Act, an election with respect to that field by reference to a pipe-line—

• (a) which is a qualifying asset;

• (b) which is used or intended to be used for transporting oil in circumstances which give rise or are expected to give rise to tariff receipts;

• (c) which, at the date of the election, is at least 25 kilometres in length; and

• (d) for which the initial usage fraction does not exceed one-half.

• (2) A participator may not make an election—

• (a) unless the field to which the election applies is (or, as the case may be, is intended to be) the chargeable field in relation to the tariff receipts referred to in subsection (1)(b) above; or

• (b) if the first chargeable period of that field ended on or before 30th June 1982; or

• (c) if the participator’s net profit period with respect to that field ended on or before 30th June 1993;

and for the purposes of paragraph (c) above no account shall be taken of the operation of section 113 of the Finance Act 1981 (loss following net profit period).

• (3) If there is more than one pipe-line by reference to which the electing participator could, apart from this subsection, make an election (with respect to the same field) he may make an election only by reference to that pipe-line which is the longer or longest.

• (4) In this Chapter, in relation to a pipe-line or an election made by reference to a pipe-line, “the initial usage fraction” means the fraction of which—

• (a) the numerator is the daily contracted and production throughput of oil in relation to the pipe-line on 16th March 1993; and

• (b) the denominator is the design capacity of the pipe-line, expressed on a daily basis.

• (5) Subject to subsection (6) below, where an election is in operation it shall apply to all those assets which, by reference to the field to which the election applies, are at the date of the election or subsequently become—

• (a) qualifying assets in relation to the electing participator; and

• (b) assets to which are or are expected to be referable any tariff receipts of the electing participator attributable to that field.

• (6) If the electing participator specifies in his election that the election is to be limited to oil which is, or is expected to be, transported by the pipe-line by reference to which the election is made, the election shall apply only to such of the assets referred to in subsection (5) above as, in whole or in part, are or subsequently become used in connection with that oil.

• (7) For the purposes of this Chapter, unless it is just and reasonable to determine some other quantity of oil, the daily contracted and production throughput of oil in relation to a pipe-line on 16th March 1993 is the aggregate of—

• (a) the maximum daily capacity specified in contracts then in force for the use of the pipe-line (whether at that date or in the future) for transporting oil won from any taxable field (including the field to which the election applies); and

• (b) the maximum expected daily throughput, otherwise than pursuant to such contracts, of oil transported by the pipe-line and won from the field to which the election applies or any other taxable field, being the throughput ascertained by reference to what was at that date the most recent development plan applicable to the field to which the election applies or, as the case may be, the other taxable field.

• (8) For the purposes of this Chapter, unless it is just and reasonable to determine some other capacity, the design capacity of a pipe-line is that which is specified for the pipe-line as a whole in what was, on 16th March 1993, the most recent development plan applicable to the field to which the election applies or, as the case may be, the pipe-line itself.

Restriction on electing participator’s allowable expenditure on elected assets.

232

• (1) This section has effect in relation to expenditure which is incurred on an asset to which an election applies; and in this section “allowable or allowed”, in relation to any expenditure, means allowable or allowed under any of the expenditure relief provisions.

• (2) Subject to the following provisions of this section, in the case of expenditure incurred before the date of the election, the amount which, apart from this section, would be allowable or allowed in the case of the electing participator shall be reduced by multiplying it by the initial usage fraction.

• (3) Subject to subsection (5) below, in the case of expenditure incurred on or after the date of the election, the amount which, apart from this section, would be allowable or allowed in the case of the electing participator shall be reduced to nil.

• (4) Where, after 30th November 1993 and before the date of the election, expenditure was incurred on an asset to which the election applies and—

• (a) apart from this section, that expenditure would have qualified for supplement by virtue of paragraph (c) or paragraph (d) of subsection (5) of section 3 of the principal Act, and

• (b) the effect of the expenditure is to increase the maximum capacity of the pipe-line by reference to which the election was made above its design capacity or to increase the capacity of any asset used or to be used for the initial treatment or initial storage of oil transported by the pipe-line above its development plan capacity,

that expenditure shall be treated for the purposes of the application of subsections (2) and (3) above as if it had been incurred after the date of the election.

• (5) Where, at the date of the election, an asset to which the election applies is for the time being leased or hired under a contract which was entered into before 16th March 1993, any expenditure—

• (a) which is incurred on or after the date of the election on the leasing or hiring of the asset under the contract, and

• (b) which is not of a description falling within paragraphs (a) and (b) of subsection (4) above,

shall be treated for the purposes of the application of subsections (2) and (3) above as if it had been incurred before the date of the election.

• (6) For the purposes of subsection (4)(b) above, the development plan capacity of any asset used or to be used for the initial treatment or initial storage of oil transported by a pipe-line is—

• (a) the maximum capacity of that asset as specified in what, on 16th March 1993, was the most recent development plan applicable to the field to which the election applies or, as the case may be, to the asset itself; or

• (b) if no such maximum capacity was so specified in relation to an asset, its actual maximum capacity on that date or, if there was no such capacity on that date, nil.

• (7) Where a claim under Schedule 5 or Schedule 6 to the principal Act relates to the allowance of any expenditure to which subsection (2) above applies, the amount claimed shall take account of the operation of that subsection; and where subsection (3) above applies to any expenditure, no such claim shall be made with respect to it.

• (8) Where a claim has been made under Schedule 5 or Schedule 6 to the principal Act with respect to any expenditure and, subsequently, an election is made which has the effect of altering the amount of expenditure which is allowable or allowed,—

• (a) a notice of variation such as is mentioned in paragraph 9 of Schedule 5 to the principal Act may be served after the end of the period referred to in sub-paragraph (1) of that paragraph if it is served before the expiry of the period of three years beginning on the date of the election; and

• (b) if the effect of such a notice is that the net profit period with respect to the field to which the election applies is changed, the change shall not (by virtue of section 231(2) above) affect the validity of the election.

• (9) Nothing in this section affects the determination of the question whether an asset is a qualifying asset for the purposes of the 1983 Act and, accordingly, for that purpose, the preceding provisions of this section shall be disregarded in determining whether any expenditure is allowable or allowed.

Tax relief for certain receipts of an electing participator.

233

• (1) If any sum—

• (a) is received or receivable by the electing participator on or after the date of an election, and

• (b) is so received or receivable from any person in respect of the use, otherwise than in connection with a taxable field, of an asset to which the election applies or the provision of services or other business facilities of whatever kind in connection with that use, and

• (c) would, apart from this section, constitute a tariff receipt attributable to the field to which the election applies,

that sum shall not be regarded as a tariff receipt for the purposes of the Oil Taxation Acts.

• (2) If any sum—

• (a) is received or receivable by the electing participator on or after the date of an election, and

• (b) is so received or receivable in respect of the disposal of an asset to which the election applies or of an interest in such an asset, and

• (c) constitutes a disposal receipt of the electing participator attributable to the field to which to the election applies,

that sum shall, for the purposes of the Oil Taxation Acts, be taken to be reduced in accordance with subsection (4) below.

• (3) Any reference in subsection (1) or subsection (2) above to a sum received or receivable includes a reference to an amount which (apart from this section) would be treated as a tariff receipt or disposal receipt by virtue of paragraph 5 of Schedule 2 to the 1983 Act (acquisition and disposal of qualifying assets otherwise than at arm’s length).

• (4) Unless it is just and reasonable to make a different reduction, the reduction referred to in subsection (2) above shall be determined by reference to that applicable under subsection (2) or subsection (3) of section 232 above to the expenditure incurred on the asset concerned so that if, for the purposes of determining under those subsections the amount of that expenditure which was allowed or allowable,—

• (a) the whole or any part of that expenditure was reduced by multiplying it by the initial usage fraction, or

• (b) the whole or any part of that expenditure was reduced to nil,

a similar reduction shall apply to the whole or, as the case may require, to each correspondingly proportionate part of any sum falling within subsection (2) above.

• (5) In this section “the Oil Taxation Acts” means Parts I and III of the principal Act, the 1983 Act and any other enactment relating to petroleum revenue tax.

Interpretation of Chapter and supplementary provisions.

234

• (1) In this Chapter “the 1983 Act” means the Oil Taxation Act 1983 and expressions used in this Chapter have the same meaning as in that Act.

• (2) In this Chapter—

• (a) “election” means an election under section 231 above and “electing participator” means a participator who makes or has made an election;

• (b) “the expenditure relief provisions” means sections 3 and 4 of the principal Act and section 3 of the 1983 Act; and

• (c) “the initial usage fraction” shall be construed in accordance with section 231(4) above.

• (3) In this Chapter—

• (a) any reference to the assets to which an election applies is a reference to the pipe-line by reference to which the election is made together with the assets determined in accordance with subsections (5) and (6) of section 231 above;

• (b) any reference to the net profit period is a reference to the chargeable period which is the net profit period for the purposes of section 111 of the Finance Act 1981 (restriction of expenditure supplement); and

• (c) any reference to a development plan is a reference to a consent for, or programme of, development granted, served or approved by the Secretary of State.

• (4) Any reference in this Chapter to expenditure incurred on an asset is a reference to expenditure (whether or not of a capital nature) which—

• (a) is incurred in acquiring, bringing into existence or enhancing the value of the asset, or

• (b) is incurred (for any of the purposes mentioned in section 3(1) of the principal Act) by reference to the use of the asset in connection with a taxable field,

other than expenditure which, in the hands of the recipient, constitutes a tariff receipt.

• (5) For the purposes of this Chapter—

• (a) an election is “in operation” if it has been accepted by the Board; and

• (b) the date of an election which is in operation is the date on which the election was received by the Board.

• (6) The provisions of Part II of Schedule 22 to this Act shall have effect for supplementing the preceding provisions of this Chapter.

• (7) The Board may make all such amendments of assessments or determinations or of decisions on claims as may be necessary in consequence of the provisions of this Chapter.

Chapter II — Miscellaneous

Valuation of oil.

235

• (1) With respect to chargeable periods ending after 31st December 1993, subsection (5A) of section 2 of the Oil Taxation Act 1975 (special rules for valuation of oil consisting of gas which is disposed of in a sale at arm’s length on terms including transportation costs etc.) shall be amended as follows—

• (a) for the words “oil consisting of gas” there shall be substituted “ oil ”;

• (b) for the word “gas”, in each place where it subsequently occurs, there shall be substituted “ oil ”;

• (c) for the words “for delivery at a place” there shall be substituted “ or another country for delivery at another place in or ”; and

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

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

• (3) In Schedule 10 to the Finance Act 1987 (nomination scheme for disposals and appropriations of oil), in paragraph 4 (timing of nominations)—

• (a) in sub-paragraph (1) for the words “sub-paragraph (2)” there shall be substituted “ sub-paragraphs (2) and (2A) ”; and

• (b) after sub-paragraph (2) there shall be inserted—

(2A) Where the proposed transaction has a transaction base date later than 31st December 1993, sub-paragraph (1) above has effect with the substitution for the reference to the second business day of a reference to the first business day.

• (4) In paragraph 11 of that Schedule (a participator’s aggregate nominated proceeds for a month), in sub-paragraph (2) for the words “sub-paragraph (2A)” there shall be substituted “ sub-paragraphs (2A) and (2B) ” and after sub-paragraph (2A) there shall be inserted the following sub-paragraph—

(2B) In the case of a nominated transaction which is a disposal to which subsection (5A) of section 2 of the principal Act applies, for the amount which, apart from this sub-paragraph, would be the nominated price for the purposes of sub-paragraph (2) above there shall be substituted the amount which, under that subsection, is deemed to be the price received or receivable for the oil in question.

Valuation of certain light gases.

236

• (1) Subject to subsection (2) below, the principal Act shall have effect subject to the amendments in Schedule 23 to this Act, being—

• (a) amendments altering the rules for determining the market value of certain light gases for the purposes of petroleum revenue tax; and

• (b) amendments consequential upon, or incidental to, those amendments.

• (2) The amendments in Schedule 23 to this Act do not have effect in relation to any light gases if, before 1st January 1994, an election was made under section 134 of the Finance Act 1982 (alternative valuation of certain ethane) or section 109 of the Finance Act 1986 (alternative valuation of certain light gases) and the election applies to those gases.

• (3) No election may be made after 31st December 1993 under section 134 of the Finance Act 1982 or section 109 of the Finance Act 1986; and, accordingly—

• (a) in subsection (2) of the said section 134, after the word “section” there shall be inserted “ must be made before 1st January 1994 and ”; and

• (b) in subsection (1) of the said section 109, after the word “section” there shall be inserted “ before 1st January 1994 ”.

• (4) In section 12 of the principal Act (interpretation), in subsection (1) after the definition of “licensee” there shall be inserted—

“light gases”, except in relation to an election under section 134 of the Finance Act 1982 or section 109 of the Finance Act 1986, means oil consisting of gas of which the largest component by volume over any chargeable period, measured at a temperature of 15 degrees centigrade and a pressure of one atmosphere, is methane or ethane or a combination of those gases

.

Abortive exploration expenditure.

237

• (1) In section 5 of the principal Act (allowance of abortive exploration expenditure incurred before 16th March 1983), after subsection (2) there shall be inserted the following subsection—

(2A) For the purpose only of determining under paragraph (c) of subsection (1) above whether expenditure is or is likely to become allowable for any oil field, it shall be assumed that any oil field which, apart from this subsection, would be a non-taxable field is or, as the case may be, will be a taxable field and, accordingly, that section 185(4)(e) of the Finance Act 1993 (no expenditure allowable for non-taxable fields) does not apply.

• (2) Subsection (1) above shall be deemed to have come into force at the same time as Part III of the Finance Act 1993 (27th July 1993).

• (3) The Board may make all such amendments of assessments or determinations or of decisions on claims as may be necessary in consequence of the preceding provisions of this section.

Disposals of assets producing tariff receipts.

238

• (1) With respect to disposals made after 30th November 1993, paragraph 5 of Schedule 2 to the Oil Taxation Act 1983 (acquisition and disposal of qualifying assets otherwise than at arm’s length: limit on tariff and disposal receipts) shall be amended in accordance with subsections (2) and (3) below; and in this subsection “disposal” has the same meaning as in that paragraph.

• (2) In sub-paragraph (1) of paragraph 5, at the end of paragraph (c), and in place of the amendment made by section 190(5)(b) of the Finance Act 1993, there shall be inserted

and (d) the use of the asset will be wholly by that person in connection with a taxable field in which he is a participator (and accordingly, and in particular, there will be no use giving rise to tariff receipts)

; and for the words “those receipts”, where they next occur, there shall be substituted “ the receipts referred to in paragraphs (b) and (c) above ”.

• (3) In sub-paragraph (3) of paragraph 5, for paragraph (b) there shall be substituted the following paragraph—

(b) the disposal does not fall within sub-paragraph (1) above, and

.

• (4) The Board may make all such amendments of assessments or determinations or of decisions on claims as may be necessary in consequence of the preceding provisions of this section.

Part VI — Stamp duty

Execution of deeds.

239

• (1) In section 122 of the Stamp Act 1891 (definitions)—

• (a) after subsection (1) there shall be inserted—

(1A) For the purposes of this Act a deed (or, in Scotland, a deed for which delivery is required) shall be treated as executed when it is delivered or, if it is delivered subject to conditions, when the conditions are fulfilled

, and

• (b) at the end of the definition of “executed” and “execution” in subsection (1) there shall be added “ (but subject to subsection (1A) of this section) ”.

• (2) In section 27 of the Stamp Duties Management Act 1891 (definitions), in the definition of “executed” and “execution”, for the words following “execution” there shall be substituted “ have the same meaning as in the Stamp Act 1891 ”.

• (3) This section shall apply to any instrument except one which, on or before 7th December 1993, has been executed for the purposes of the Stamp Act 1891 as that Act has effect before amendment by this section.

Time for presenting agreement for lease.

240

• (1) This section applies if there are presented for stamping at the same time in pursuance of Schedule 13 to the Finance Act 1999—

• (a) an agreement for a lease, and

• (b) the lease which gives effect to the agreement,

and the duty (if any) chargeable on the agreement is paid.

• (2) Section 15A of that Act (interest payable on late stamping) applies in relation to the agreement as if the reference to the day on which the instrument was executed were to the day on which the lease was executed.

• (3) For the purposes of section 15B of that Act (penalty on late stamping) the agreement is treated—

• (a) as if it had been executed at the same time and place as the lease, and

• (b) where the lease was executed outside the United Kingdom, as if it had been first received in the United Kingdom at the same time as the lease.

• (4) For the purposes of this section a lease gives effect to an agreement if the lease is granted subsequent to the agreement and either is in conformity with the agreement or relates to substantially the same property and term as the agreement.

• (5) References in this section to an agreement for a lease include missives of let in Scotland.

Requirements before lease treated as duly stamped.

240A

• (1) A lease shall not be treated as duly stamped unless—

• (a) it contains a certificate that there is no agreement to which it gives effect, or

• (b) it is stamped with a stamp denoting—

• (i) that there is an agreement to which it gives effect which is not chargeable with duty, or

• (ii) the duty paid on the agreement to which it gives effect.

• (2) For the purposes of this section a lease gives effect to an agreement if the lease is granted subsequent to the agreement and either is in conformity with the agreement or relates to substantially the same property and term as the agreement.

• (3) References in this section to a lease do not include, and references in this section to an agreement do include, missives of let in Scotland.

Exchange, partition, etc.

241

• (1) Where—

• (a) the consideration for the transfer or vesting of any estate or interest in land or the grant of any lease consists of or includes any property, and

• (b) for the purposes of stamp duty chargeable under or by reference to Part I of Schedule 13 to the Finance Act 1999 (conveyance or transfer on sale) no amount or value is, apart from this section, attributed to that property on that transfer, vesting or grant,

then, for those purposes, the consideration or, as the case may be, the consideration so far as relating to that property shall be taken to be the market value of the property immediately before the instrument in question is executed and accordingly the instrument shall be charged with ad valorem duty under that heading.

• (2) For the purposes of this section the market value of property at any time is the price which that property might reasonably be expected to fetch on a sale at that time in the open market.

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

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

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

• (6) This section shall apply to instruments executed after 7th December 1993, not being instruments executed in pursuance of a contract made before 30th November 1993.

Where consideration not ascertainable from conveyance or lease.

242

• (1) Where, for the purposes of stamp duty chargeable under or by reference to Part I of Schedule 13 to the Finance Act 1999 (conveyance or transfer on sale), the consideration, or any part of the consideration, for—

• (a) the transfer or vesting of any estate or interest in land, or

• (b) the grant of any lease,

cannot, apart from this subsection, be ascertained at the time the instrument in question is executed, the consideration for the transfer, vesting or grant shall for those purposes be taken to be the market value immediately before the instrument is executed of the estate or interest transferred or vested or, as the case may be, the lease granted.

• (2) Where, for the purposes of stamp duty chargeable under paragraph 12 of Schedule 13 to the Finance Act 1999, the rent, or any part of the rent, payable under any lease cannot, apart from this subsection, be ascertained at the time it is executed, the rent shall for those purposes be taken to be the market rent at that time.

• (3) For the purposes of this section—

• (a) the cases where consideration or rent cannot be ascertained at any time do not include cases where the consideration or rent could be ascertained on the assumption that any future event mentioned in the instrument in question were or were not to occur, and

• (b) the market rent of a lease at any time is the rent which the lease might reasonably be expected to fetch at that time in the open market,

and in this section “market value” has the same meaning as in section 241 above.

• (4) This section shall apply to instruments executed after 7th December 1993.

Agreements to surrender leases.

243

• (1) Where, in pursuance of any agreement, any lease is surrendered (or, in Scotland, renounced) at any time otherwise than by deed, the agreement shall be treated for the purposes of stamp duty as if it were a deed executed at that time effecting the surrender (or, as the case may be, renunciation).

• (2) This section shall apply to any agreement made after 7th December 1993.

Production of documents on transfer of land in Northern Ireland.

244

• (1) Subject to section 245 below, on the occasion of—

• (a) any transfer on sale of any freehold interest in land in Northern Ireland, or

• (b) the grant, or any transfer on sale, of any lease of such land,

the transferee, lessee or proposed lessee shall produce to the Commissioners the instrument by means of which the transfer is effected or the lease granted or agreed to be granted, as the case may be.

• (2) Any transferee, lessee or proposed lessee required to produce any instrument under subsection (1) above shall produce with it a document (signed by him or by some person on his behalf and showing his address) giving such particulars as may be prescribed.

• (3) Any person who, within thirty days—

• (a) after the execution of an instrument which he is required under subsection (1) above to produce, or

• (b) in the case of such an instrument executed at a place outside Northern Ireland, after it is first received in Northern Ireland,

fails to comply with that subsection or subsection (2) above shall be liable on summary conviction to a fine not exceeding level 1 on the standard scale.