Legalize / United Kingdom / Public General Act

Finance Act 1995

Type Public General Act

Publication 1995-05-01

Last updated 2021-08-01

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

Part I — Duties of Excise

Alcoholic liquor duties

Increased rates on 30th November 1994.

1

(1) The Alcoholic Liquor Duties Act 1979 shall be amended as follows.

(2) In section 1 (the alcoholic liquors dutiable under the Act) in subsections (4) and (5) (definitions of “wine” and “made-wine”) after the words “any liquor” there shall in both cases be inserted “ which is of a strength exceeding 1.2 per cent and which is ”.

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

(4) In section 59(1) (prohibition on rendering wine and made-wine sparkling) for paragraph (b) there shall be substituted the following paragraph—

(b) is wine or made-wine of a strength exceeding 5.5 per cent.

(5) Subsections (2) and (4) above—

(a) shall apply in relation to liquor imported into, or produced in, the United Kingdom on or after 1st January 1995, and

(b) as regards any provision about liquor removed to the United Kingdom from the Isle of Man, shall also apply in relation to liquor so removed on or after that date.

(6) Subsection (3) above shall apply in relation to liquor imported into, or made in, the United Kingdom on or after 1st January 1995.

Records for purposes of returns.

2

(1) For the Table of rates of duty in Schedule 1 to the Alcoholic Liquor Duties Act 1979 (wine and made-wine) there shall be substituted the Table in Schedule 1 to this Act.

(2) This section shall be deemed to have come into force on 1st January 1995.

Part-time workers: miscellaneous provisions.

3

(1) In section 5 of the Alcoholic Liquor Duties Act 1979 (spirits) for “£19.81” there shall be substituted “ £20.60 ”.

(2) In section 36(1) of that Act (beer) for “£10.45” there shall be substituted “ £10.82 ”.

(3) In section 62(1) of that Act (cider) for “£22.82” there shall be substituted “ £23.78 ”.

(4) This section shall be deemed to have come into force on 1st January 1995.

Transfer: associated bodies.

4

(1) Subject to the following provisions of this section, where any person proves to the satisfaction of the Commissioners that any dutiable alcoholic liquor on which duty has been paid has been—

(a) used as an ingredient in the production or manufacture of a product falling within subsection (2) below, or

(b) converted into vinegar,

he shall be entitled to obtain from the Commissioners the repayment of the duty paid thereon.

(2) The products falling within this subsection are—

(a) any beverage of an alcoholic strength not exceeding 1.2 per cent.,

(b) chocolates for human consumption which contain alcohol such that 100 kilograms of the chocolates would not contain more than 8.5 litres of alcohol, or

(c) any other food for human consumption which contains alcohol such that 100 kilograms of the food would not contain more than 5 litres of alcohol.

(3) A repayment of duty shall not be made under this section in respect of any liquor except to a person who—

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

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

(d) makes a claim for the repayment in accordance with the following provisions of this section; and

(e) satisfies the Commissioners ...that the repayment claimed does not relate to any duty which has been repaid or drawn back prior to the making of the claim.

(4) A claim for repayment under this section shall take such form and be made in such manner, and shall contain such particulars, as the Commissioners may direct, either generally or in a particular case.

(5) Except so far as the Commissioners otherwise allow, a person shall not make a claim for a repayment under this section unless—

(a) the claim relates to duty paid on liquor used as an ingredient or, as the case may be, converted into vinegar in the course of a period of three months ending not more than three years before the making of the claim; ...

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

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

(7) There may be remitted by the Commissioners any duty charged either—

(a) on any dutiable alcoholic liquor imported into the United Kingdom at a time when it is contained as an ingredient in any chocolates or food falling within subsection (2)(b) or (c) above; or

(b) on any dutiable alcoholic liquor used as an ingredient in the manufacture or production in an excise warehouse of any such chocolates or food.

(8) This section shall be construed as one with the Alcoholic Liquor Duties Act 1979, and references in this section to chocolates or food do not include references to any beverages.

Denatured alcohol

5

(1) The liquors on which duty is charged under the Alcoholic Liquor Duties Act 1979 shall not include any denatured alcohol; and any duty so charged on liquor which has become denatured alcohol before the requirement to pay the duty takes effect shall be remitted.

(2) In this section—

“denatured alcohol” means any dutiable alcoholic liquor which has been subjected to the process of being mixed in the prescribed manner with a prescribed substance; and

“prescribed” means prescribed by the Commissioners by regulations made by statutory instrument.

(3) The power of the Commissioners to make regulations defining denatured alcohol for the purposes of this section shall include—

(a) power, in prescribing any substance or any manner of mixing a substance with a liquor, to do so by reference to such circumstances or other factors, or to the approval or opinion of such persons (including the authorities of another member State), as they may consider appropriate;

(b) power to make different provision for different cases; and

(c) power to make such supplemental, incidental, consequential and transitional provision as the Commissioners think fit;

and a statutory instrument containing any regulations under this section shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(4) Sections 13A to 16 of the Finance Act 1994 (review and appeals) shall have effect in relation to any decision which—

(a) is made under or for the purposes of any regulations under this section, and

(b) is a decision given to any person as to whether a manner of mixing any substance with any liquor is to be, or to continue to be, approved in his case, or as to the conditions subject to which it is so approved,

as if that decision were a decision falling within section 13A(2)(j) of that Act.

(5) Schedule 2 to this Act (which contains amendments for or in connection with the application to all denatured alcohol of provisions of the Alcoholic Liquor Duties Act 1979 relating to methylated spirits and also makes a consequential amendment of the Finance Act 1994) shall have effect.

(6) This section and Schedule 2 to this Act shall come into force on such day as the Commissioners may by order made by statutory instrument appoint, and different days may be appointed under this subsection for different purposes.

(7) An order under subsection (6) above may make such transitional provisions and savings as appear to the Commissioners to be appropriate in connection with the bringing into force by such an order of any provision for any purposes.

(8) This section shall be construed as one with the Alcoholic Liquor Duties Act 1979.

Hydrocarbon oil duties

Rates of duty

6

(1) In section 6(1) of the Hydrocarbon Oil Duties Act 1979 for “£0.3314” (duty on light oil) and “£0.2770” (duty on heavy oil) there shall be substituted “ £0.3526 ” and “ £0.3044 ” respectively.

(2) In section 8 of that Act (duty on road fuel gas) the following subsection shall be substituted for subsections (3) to (5)—

(3) The rate of the duty under this section shall be £0.3314 a kilogram.

(3) In section 11(1) of that Act (rebate on heavy oil) for “£0.0116” (fuel oil) and “£0.0164” (gas oil) there shall be substituted “ £0.0166 ” and “ £0.0214 ” respectively.

(4) In section 14(1) of that Act (rebate on light oil for use as furnace fuel) for “£0.0116” there shall be substituted “ £0.0166 ”.

(5) This section shall be deemed to have come into force at 6 o’clock in the evening of 29th November 1994.

Rates of duty: further provisions

7

(1) In section 6(1) of the Hydrocarbon Oil Duties Act 1979, as amended by section 6 above, for “£0.3526” (duty on light oil) and “£0.3044” (duty on heavy oil) there shall be substituted “ £0.3614 ” and “ £0.3132 ” respectively.

(2) This section shall be deemed to have come into force on 1st January 1995.

Hydrocarbon oil: “road vehicle”

8

(1) In the definition of “road vehicle” in section 27(1) of the Hydrocarbon Oil Duties Act 1979 (road vehicle not to include vehicle of a kind specified in Schedule 1) for the words “of a kind specified in Schedule 1 to this Act” there shall be substituted “ which is an excepted vehicle within the meaning given by Schedule 1 to this Act. ”

(2) The following Schedule shall be substituted for Schedule 1 to that Act—

SCHEDULE 1 (1) (1) A vehicle is an excepted vehicle while— (a) it is not used on a public road, and (b) no licence under the Vehicle Excise and Registration Act 1994 is in force in respect of it. (2) A vehicle in respect of which there is current a certificate or document in the form of a licence issued under regulations under section 22(2) of the Vehicle Excise and Registration Act 1994 shall be treated for the purposes of sub-paragraph (1) above as a vehicle in respect of which a licence under that Act is in force. (2) (1) A vehicle is an excepted vehicle if it is— (a) an agricultural tractor, or (b) an off-road tractor. (2) In sub-paragraph (1) above “agricultural tractor” means a tractor used on public roads solely for purposes relating to agriculture, horticulture, forestry or activities falling within sub-paragraph (3) below. (3) The activities falling within this sub-paragraph are— (a) cutting verges bordering public roads; (b) cutting hedges or trees bordering public roads or bordering verges which border public roads. (4) In sub-paragraph (1) above “off-road tractor” means a tractor which is not an agricultural tractor (within the meaning given by sub-paragraph (2) above) and which is— (a) designed and constructed primarily for use otherwise than on roads, and (b) incapable by reason of its construction of exceeding a speed of twenty-five miles per hour on the level under its own power. (3) (1) A vehicle is an excepted vehicle if it is a light agricultural vehicle. (2) In sub-paragraph (1) above “light agricultural vehicle” means a vehicle which— (a) has a revenue weight not exceeding 1,000 kilograms, (b) is designed and constructed so as to seat only the driver, (c) is designed and constructed primarily for use otherwise than on roads, and (d) is used solely for purposes relating to agriculture, horticulture or forestry. (3) In sub-paragraph (2)(a) above “revenue weight” has the meaning given by section 60A of the Vehicle Excise and Registration Act 1994. (4) An agricultural engine is an excepted vehicle. (5) A vehicle is an excepted vehicle if— (a) it is used only for purposes relating to agriculture, horticulture or forestry, (b) it is used on public roads only in passing between different areas of land occupied by the same person, and (c) the distance it travels on public roads in passing between any two such areas does not exceed 1.5 kilometres. (6) A mowing machine is an excepted vehicle. (7) A vehicle is an excepted vehicle when it is— (a) being used, or (b) going to or from the place where it is to be or has been used, for the purpose of clearing snow from public roads by means of a snow plough or similar device (whether or not forming part of the vehicle). (8) A vehicle is an excepted vehicle if it is constructed or adapted, and used, solely for the conveyance of machinery for spreading material on roads to deal with frost, ice or snow (with or without articles or material used for the purposes of the machinery). (9) (1) A mobile crane is an excepted vehicle. (2) In sub-paragraph (1) above “mobile crane” means a vehicle which is designed and constructed as a mobile crane and which— (a) is used on public roads only as a crane in connection with work carried on at a site in the immediate vicinity or for the purpose of proceeding to and from a place where it is to be or has been used as a crane, and (b) when so proceeding does not carry any load except such as is necessary for its propulsion or equipment. (10) (1) A digging machine is an excepted vehicle. (2) In sub-paragraph (1) above “digging machine” means a vehicle which is designed, constructed and used for the purpose of trench digging, or any kind of excavating or shovelling work, and which— (a) is used on public roads only for that purpose or for the purpose of proceeding to and from the place where it is to be or has been used for that purpose, and (b) when so proceeding does not carry any load except such as is necessary for its propulsion or equipment. (11) (1) A works truck is an excepted vehicle. (2) In sub-paragraph (1) above “works truck” means a goods vehicle which is designed for use in private premises and is used on public roads only— (a) for carrying goods between private premises and a vehicle on a road within one kilometre of those premises, (b) in passing from one part of private premises to another, (c) in passing between private premises and other private premises in a case where the premises are within one kilometre of each other, or (d) in connection with road works at the site of the works or within one kilometre of the site of the works. (3) In sub-paragraph (2) above “goods vehicle” means a vehicle constructed or adapted for use and used for the conveyance of goods or burden of any description, whether in the course of trade or not. (12) (1) A vehicle is an excepted vehicle if it is— (a) a road construction vehicle, and (b) used or kept solely for the conveyance of built-in road construction machinery (with or without articles or material used for the purposes of the machinery). (2) In sub-paragraph (1) above “road construction vehicle” means a vehicle— (a) which is constructed or adapted for use for the conveyance of built-in road construction machinery, and (b) which is not constructed or adapted for the conveyance of any other load except articles and material used for the purposes of such machinery. (3) In sub-paragraphs (1) and (2) above “built-in road construction machinery”, in relation to a vehicle, means road construction machinery built in as part of, or permanently attached to, the vehicle. (4) In sub-paragraph (3) above “road construction machinery” means a machine or device suitable for use for the construction or repair of roads and used for no purpose other than the construction or repair of roads. (13) A road roller is an excepted vehicle. (14) In this Schedule “public road” means a road which is repairable at the public expense.

(3) This section shall come into force on 1st July 1995.

Road fuel gas: old stock

9

In section 8 of the Hydrocarbon Oil Duties Act 1979 (road fuel gas) subsection (7) (no charge on use of gas if delivered or stocked before 3rd July 1972) shall be omitted.

Tobacco products duty

Rates of duty

10

(1) For the Table of rates of duty in Schedule 1 to the Tobacco Products Duty Act 1979 there shall be substituted—

1. Cigarettes	An amount equal to 20 per cent. of the retail price plus £55.58 per thousand cigarettes.
2. Cigars	£82.56 per kilogram.
3. Hand-rolling tobacco	£85.94 per kilogram.
4. Other smoking tobacco and chewing tobacco	£36.30 per kilogram.

(2) This section shall be deemed to have come into force at 6 o’clock in the evening of 29th November 1994.

Rates of duty: further provisions

11

(1) For the Table of rates of duty in Schedule 1 to the Tobacco Products Duty Act 1979, as substituted by section 10 above, there shall be substituted—

1. Cigarettes	An amount equal to 20 per cent. of the retail price plus £57.64 per thousand cigarettes.
2. Cigars	£85.61 per kilogram.
3. Hand-rolling tobacco	£85.94 per kilogram.
4. Other smoking tobacco and chewing tobacco	£37.64 per kilogram.

(2) This section shall be deemed to have come into force on 1st January 1995.

Pool betting duty

12

(1) In section 7(1) of the Betting and Gaming Duties Act 1981 (which specifies 37.50 per cent. as the rate of pool betting duty) for “37.50 per cent.” there shall be substituted “ 32.50 per cent. ”

(2) This section shall apply in relation to any pool betting duty the requirement to pay which takes effect on or after 6th May 1995.

Gaming machine licence duty

Rates of duty

13

(1) In the Betting and Gaming Duties Act 1981 for the Table set out at the end of section 23 (amount of duty) there shall be substituted—

(1) Period (in months) for which licence granted	(2) Small prize or five-penny machines	(3) Other machines
	£	£
1	60	150
2	105	275
3	155	400
4	205	520
5	250	645
6	295	755
7	340	880
8	390	1,005
9	435	1,115
10	480	1,235
11	510	1,305
12	535	1,375

(2) This section shall apply in relation to any gaming machine licence for which an application is made on or after 1st December 1994.

Extension of duty to amusement machines

14

(1) Schedule 3 to this Act (which contains amendments for or in connection with the application of the provisions of the Betting and Gaming Duties Act 1981 relating to gaming machine licence duty to amusement machines that are not gaming machines and also makes a consequential amendment of the Customs and Excise Management Act 1979) shall have effect.

(2) Schedule 3 to this Act shall have effect (subject to subsection (3) below) in relation only to the provision of a machine at a time on or after 1st November 1995 and to licences for periods beginning on or after that date and the duty on such licences.

(3) Where a gaming machine licence has been granted before 1st November 1995 for a period ending on or after that date, that licence shall have effect on and after that date, for so long as it remains in force, as an amusement machine licence authorising the provision, in accordance with the licence, of the machines the provision of which was authorised by the licence immediately before that date.

Air passenger duty

Rates of duty

15

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Assessment of interest on duty

16

(1) In Schedule 6 to the Finance Act 1994 (air passenger duty: administration and enforcement) after paragraph 11 there shall be inserted—

(11A) (1) Where by virtue of paragraph 7 above duty due from any person for an accounting period carries interest, the Commissioners may assess that person to an amount of interest in accordance with this paragraph. (2) Notice of the assessment shall be given to the person liable for the interest or a representative of his. (3) The amount of the interest shall be calculated by reference to a period ending on a date (“the due date”) no later than the date of the notice. (4) The notice shall specify— (a) the amount of the duty which carries the interest assessed (“the specified duty”); (b) the amount of the interest assessed (“the specified interest”); (c) the due date; and (d) a date by which that amount is required to be paid (“the payment date”). (5) Sub-paragraphs (6) and (7) below apply where the specified duty or any part of it is unpaid on the date of the notice. (6) If the unpaid amount or any part of it is paid by the payment date, the payment shall be treated for the purposes of paragraph 7 above as made on the due date. (7) To the extent that the unpaid amount is not paid by the payment date, an assessment may be made under this paragraph in respect of any interest on the unpaid amount which accrues after the due date. (8) For the purposes of sub-paragraphs (6) and (7) above, a payment— (a) which purports to be a payment of the unpaid amount or any part of it, but (b) which is insufficient to discharge both the liability to pay the unpaid amount and the liability to pay the specified interest, shall be treated as made in discharge (or partial discharge) of the liability to pay the specified interest before it is treated as discharging to any extent the liability to pay the unpaid amount. (9) A notice of interest assessed under this paragraph may be combined in one document with notification of an assessment under section 12 of this Act which relates to the specified duty. (10) A notice which is so combined must comply with the requirements of this paragraph which relate to a notice which is not so combined. (11) The specified interest shall be recoverable as if it were duty due from the person assessed to that interest. (12) For the purposes of this paragraph a person is a representative of another if— (a) he is that other’s personal representative; (b) he is that other’s trustee in bankruptcy or is a receiver or liquidator appointed in relation to that other or in relation to any of his property; or (c) he is a person acting in some other representative capacity in relation to that other.

(2) In Schedule 5 to the 1994 Act (decisions subject to review and appeal) in paragraph 9 (decisions under Chapter IV of Part I of that Act) the word “and” immediately preceding sub-paragraph (d) shall be omitted and after that sub-paragraph there shall be inserted—

(e) any decision with respect to the amount of any interest specified in an assessment under paragraph 11A of Schedule 6;

(3) In section 16 of the 1994 Act (appeals to a tribunal) at the beginning of subsection (8) (meaning of “ancillary matter” for the purposes of that section) there shall be inserted “ Subject to subsection (9) below ” and after that subsection there shall be inserted—

(9) References in this section to a decision as to an ancillary matter do not include a reference to a decision of a description specified in paragraph 9(e) of Schedule 5 to this Act. (10) Nothing in this section shall be taken to confer on an appeal tribunal any power to vary an amount of interest specified in an assessment under paragraph 11A of Schedule 6 to this Act except in so far as it is necessary to reduce it to the amount which is appropriate under paragraph 7 of that Schedule.

(4) This section shall apply in relation to accounting periods ending on or after 1st January 1995.

Preferential debts

17

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Vehicle excise duty

Increased rates on 30th November 1994

18

(1) Schedule 1 to the Vehicle Excise and Registration Act 1994 (annual rates of duty) shall be amended as follows.

(2) In paragraph 1(b) (rate for vehicle constructed after 1946 and for which no other rate is specified) for “£130” there shall be substituted “ £135 ”.

(3) In paragraph 3(1)(a) (rate for hackney carriage with seating capacity under nine) for “£130” there shall be substituted “ £135 ”.

(4) In paragraph 10 (trailer supplement)—

(a) in sub-paragraph (2) for “£130” there shall be substituted “ £135 ”;

(b) in sub-paragraph (3) for “£360” there shall be substituted “ £370 ”.

(5) This section shall apply in relation to licences taken out on or after 30th November 1994.

Vehicle excise and registration: other provisions

19

Schedule 4 to this Act (which contains other provisions relating to vehicle excise and registration) shall have effect.

Recovery of overpaid duty

Recovery of overpaid excise duty

20

(1) In Part X of the Customs and Excise Management Act 1979, after section 137 (recovery of duties, &c.) insert—

(137A) (1) Where a person pays to the Commissioners an amount by way of excise duty which is not due to them, the Commissioners are liable to repay that amount. (2) The Commissioners shall not be required to make any such repayment unless a claim is made to them in such form, and supported by such documentary evidence, as may be prescribed by them by regulations; and regulations under this subsection may make different provision for different cases. (3) It is a defence to a claim for repayment that the repayment would unjustly enrich the claimant. (4) No claim for repayment may be made after the expiry of the period of six years beginning with the date of the payment or, if later, the date on which the claimant (or, where the right to repayment has been assigned or otherwise transmitted, any predecessor in title of his) discovered, or could with reasonable diligence have discovered, that the amount was not due. (5) Except as provided by this section the Commissioners are not liable to repay an amount paid to them by way of excise duty by reason of the fact that it was not due to them.

(2) In section 17(5) of the Customs and Excise Management Act 1979, after paragraph (b) (restriction on repayment of sums overpaid in error) insert—

Paragraph (b) above does not apply to a claim for repayment under section 137A below.

(3) Section 29 of the Finance Act 1989 (recovery of overpaid excise duty and car tax) shall cease to have effect so far as it relates to excise duty.

(4) In section 14(1) of the Finance Act 1994 (decisions subject to review and appeal), after paragraph (b) insert—

(bb) any decision of the Commissioners on a claim under section 137A of the Customs and Excise Management Act 1979 for repayment of excise duty;

(5) The provisions of this section have effect in relation to payments made on or after such date as the Commissioners of Customs and Excise may appoint by order made by statutory instrument.

Part II — Value Added Tax and Insurance Premium Tax

Value added tax

Fuel and power for domestic or charity use.

21

Imported works of art, antiques, etc

22

(1) In subsection (1) of section 21 of the Value Added Tax Act 1994 (value of imported goods), for “and (3)” there shall be substituted “ to (4) ”; and after subsection (3) there shall be inserted the following subsections—

(4) For the purposes of this Act, the value of any goods falling within subsection (5) below which are imported from a place outside the member States shall be taken to be an amount equal to 14.29 per cent. of the amount which, apart from this subsection, would be their value for those purposes. (5) The goods which fall within this subsection are— (a) any work of art which was obtained by any person before 1st April 1973 otherwise than by his producing it himself or by succession on the death of the person who produced it; (b) any work of art which was— (i) exported from the United Kingdom before 1st April 1973, (ii) exported from the United Kingdom on or after that date and before 1st January 1993 by a person who, had he supplied it in the United Kingdom at the date when it was exported, would not have had to account for VAT on the full value of the supply, or (iii) exported from the United Kingdom on or after 1st January 1993 by such a person to a place which, at the time, was outside the member States, being, in each case, a work of art which has not been imported between the time when it was exported and the importation in question; (c) any antique more than one hundred years old, being neither a work of art nor pearls or loose gem stones; and (d) collectors’ pieces of zoological, botanical, mineralogical, anatomical, historical, archaeological, paleontological or ethnographic interest. (6) In this section “work of art” means goods falling within any of the following descriptions, that is to say— (a) paintings, drawings and pastels executed by hand but not comprised in manufactured articles that have been hand-painted or hand-decorated; (b) original engravings, lithographs and other prints; (c) original sculptures and statuary, in any material. (7) An order under section 2(2) may contain provision making such alteration of the percentage for the time being specified in subsection (4) above as the Treasury consider appropriate in consequence of any increase or decrease by that order of the rate of VAT.

(2) This section shall have effect in relation to goods imported at any time on or after the day on which this Act is passed.

Agents acting in their own names

23

(1) In subsection (1) of section 47 of the Value Added Tax Act 1994 (agents etc.), for “the goods may” there shall be substituted “ then, if the taxable person acts in relation to the supply in his own name, the goods shall ”.

(2) After subsection (2) of that section there shall be inserted the following subsection—

(2A) Where, in the case of any supply of goods to which subsection (1) above does not apply, goods are supplied through an agent who acts in his own name, the supply shall be treated both as a supply to the agent and as a supply by the agent.

(3) In subsection (3) of that section, the words “goods or” shall be omitted.

(4) This section shall have effect—

(a) so far as it amends section 47(1) of that Act, in relation to goods acquired or imported on or after the day on which this Act is passed; and

(b) for other purposes, in relation to any supply taking place on or after that day.

Margin schemes

24

(1) After section 50 of the Value Added Tax Act 1994 there shall be inserted the following section—

(50A) (1) The Treasury may by order provide, in relation to any such description of supplies to which this section applies as may be specified in the order, for a taxable person to be entitled to opt that, where he makes supplies of that description, VAT is to be charged by reference to the profit margin on the supplies, instead of by reference to their value. (2) This section applies to the following supplies, that is to say— (a) supplies of works of art, antiques or collectors’ items; (b) supplies of motor vehicles; (c) supplies of second-hand goods; and (d) any supply of goods through a person who acts as an agent, but in his own name, in relation to the supply. (3) An option for the purposes of an order under this section shall be exercisable, and may be withdrawn, in such manner as may be required by such an order. (4) Subject to subsection (7) below, the profit margin on a supply to which this section applies shall be taken, for the purposes of an order under this section, to be equal to the amount (if any) by which the price at which the person making the supply obtained the goods in question is exceeded by the price at which he supplies them. (5) For the purposes of this section the price at which a person has obtained any goods and the price at which he supplies them shall each be calculated in accordance with the provisions contained in an order under this section; and such an order may, in particular, make provision stipulating the extent to which any VAT charged on a supply, acquisition or importation of any goods is to be treated as included in the price at which those goods have been obtained or are supplied. (6) An order under this section may provide that the consideration for any services supplied in connection with a supply of goods by a person who acts as an agent, but in his own name, in relation to the supply of the goods is to be treated for the purposes of any such order as an amount to be taken into account in computing the profit margin on the supply of the goods, instead of being separately chargeable to VAT as comprised in the value of the services supplied. (7) An order under this section may provide for the total profit margin on all the goods of a particular description supplied by a person in any prescribed accounting period to be calculated by— (a) aggregating all the prices at which that person obtained goods of that description in that period together with any amount carried forward to that period in pursuance of paragraph (d) below; (b) aggregating all the prices at which he supplies goods of that description in that period; (c) treating the total profit margin on goods supplied in that period as being equal to the amount (if any) by which, for that period, the aggregate calculated in pursuance of paragraph (a) above is exceeded by the aggregate calculated in pursuance of paragraph (b) above; and (d) treating any amount by which, for that period, the aggregate calculated in pursuance of paragraph (b) above is exceeded by the aggregate calculated in pursuance of paragraph (a) above as an amount to be carried forward to the following prescribed accounting period so as to be included, for the period to which it is carried forward, in any aggregate falling to be calculated in pursuance of paragraph (a) above. (8) An order under this section may— (a) make different provision for different cases; and (b) make provisions of the order subject to such general or special directions as may, in accordance with the order, be given by the Commissioners with respect to any matter to which the order relates.

(2) Section 32 of that Act (relief on supply of certain second-hand goods) shall cease to have effect on such day as the Commissioners of Customs and Excise may by order made by statutory instrument appoint.

Groups of companies

25

(1) Section 43 of the Value Added Tax Act 1994 (groups of companies) shall be amended as follows.

(2) After subsection (1) there shall be inserted the following subsection—

(1A) Paragraph (a) of subsection (1) above shall not apply in relation to any supply of goods or services by one member of a group to another unless both the body making the supply and the body supplied continue to be members of that group until— (a) in the case of a supply of goods which are to be removed in pursuance of the supply, a time after the removal; (b) in the case of any other supply of goods, a time after the goods have been made available, in pursuance of the supply, to the body supplied; or (c) in the case of a supply of services, a time after the services have been performed.

;

and in subsection (1)(b), for “other supply” there shall be substituted “ supply which is a supply to which paragraph (a) above does not apply and is a supply ”.

(3) In subsection (5) (applications to be treated or to cease to be treated as members of a group etc.), for the words after paragraph (d) there shall be substituted—

unless the Commissioners refuse the application under subsection (5A) below.

(4) After subsection (5) there shall be inserted the following subsection—

(5A) If it appears to the Commissioners necessary to do so for the protection of the revenue, they may— (a) refuse any application made to the effect mentioned in paragraph (a) or (c) of subsection (5) above; or (b) refuse any application made to the effect mentioned in paragraph (b) or (d) of that subsection in a case that does not appear to them to fall within subsection (6) below.

(5) Subsection (2) above has effect in relation to—

(a) any supply made on or after 1st March 1995, and

(b) any supply made before that date in the case of which both the body making the supply and the body supplied continued to be members of the group in question until at least that date,

and subsections (3) and (4) above have effect in relation to applications made on or after the day on which this Act is passed.

Co-owners etc. of buildings and land

26

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

Set-off of credits

27

(1) Section 81 of the Value Added Tax Act 1994 (which includes provision as to the setting off of credits) shall be amended as follows.

(2) For subsection (4) there shall be substituted the following subsections—

(4A) Subsection (3) above shall not require any such amount as is mentioned in paragraph (a) of that subsection (“the credit”) to be set against any such sum as is mentioned in paragraph (b) of that subsection (“the debit”) in any case where— (a) an insolvency procedure has been applied to the person entitled to the credit; (b) the credit became due after that procedure was so applied; and (c) the liability to pay the debit either arose before that procedure was so applied or (having arisen afterwards) relates to, or to matters occurring in the course of, the carrying on of any business at times before the procedure was so applied. (4B) Subject to subsection (4C) below, the following are the times when an insolvency procedure is to be taken, for the purposes of this section, to be applied to any person, that is to say— (a) when a bankruptcy order, winding-up order, adminis-tration order or award of sequestration is made in relation to that person; (b) when that person is put into administrative receivership; (c) when that person, being a corporation, passes a resolution for voluntary winding up; (d) when any voluntary arrangement approved in accordance with Part I or VIII of the Insolvency Act 1986, or Part II or Chapter II of Part VIII of the Insolvency (Northern Ireland) Order 1989, comes into force in relation to that person; (e) when a deed of arrangement registered in accordance with the Deeds of Arrangement Act 1914 or Chapter I of Part VIII of that Order of 1989 takes effect in relation to that person; (f) when that person’s estate becomes vested in any other person as that person’s trustee under a trust deed. (4C) In this section references, in relation to any person, to the application of an insolvency procedure to that person shall not include— (a) the making of a bankruptcy order, winding-up order, administration order or award of sequestration at a time when any such arrangement or deed as is mentioned in subsection (4B)(d) to (f) above is in force in relation to that person; (b) the making of a winding-up order at any of the following times, that is to say— (i) immediately upon the discharge of an administration order made in relation to that person; (ii) when that person is being wound up voluntarily; (iii) when that person is in administrative receivership; or (c) the making of an administration order in relation to that person at any time when that person is in administrative receivership. (4D) For the purposes of this section a person shall be regarded as being in administrative receivership throughout any continuous period for which (disregarding any temporary vacancy in the office of receiver) there is an administrative receiver of that person, and the reference in subsection (4B) above to a person being put into administrative receivership shall be construed accordingly.

(3) In subsection (5) (definitions), for “subsection (4) above” there shall be substituted “ this section ”.

(4) This section shall have effect in relation to amounts becoming due from the Commissioners of Customs and Excise at times on or after the day on which this Act is passed.

Transactions treated as supplies for purposes of zero-rating etc

28

(1) In section 30 of the Value Added Tax Act 1994 (zero-rated supplies) for subsection (5) (transactions described in Schedule 8 to the Act to be treated as supplies) there shall be substituted—

(5) The export of any goods by a charity to a place outside the member States shall for the purposes of this Act be treated as a supply made by the charity— (a) in the United Kingdom, and (b) in the course or furtherance of a business carried on by the charity.

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

Goods removed from warehousing regime

29

In section 18 of the Value Added Tax Act 1994 (place and time of acquisition or supply of goods subject to warehousing regime) for subsection (5) (regulations about payment of VAT on supply of such goods) there shall be substituted the following subsections—

(5) The Commissioners may by regulations make provision for enabling a taxable person to pay the VAT he is required to pay by virtue of paragraph (b) of subsection (4) above at a time later than that provided for by that paragraph. (5A) Regulations under subsection (5) above may in particular make provision for either or both of the following— (a) for the taxable person to pay the VAT together with the VAT chargeable on other supplies by him of goods and services; (b) for the taxable person to pay the VAT together with any duty of excise deferment of which has been granted to him under section 127A of the Customs and Excise Management Act 1979; and they may make different provision for different descriptions of taxable person and for different descriptions of goods.

Fuel supplied for private use

30

(1) Section 57 of the Value Added Tax Act 1994 (determination of consideration for fuel supplied for private use) shall be amended as follows.

(2) The following subsection shall be inserted after subsection (1)—

(1A) Where the prescribed accounting period is a period of 12 months, the consideration appropriate to any vehicle is that specified in relation to a vehicle of the appropriate description in the second column of Table A below.

(3) In subsection (2) (consideration where prescribed accounting period is period of 3 months) for “second” there shall be substituted “ third ”.

(4) In subsection (3) (consideration where prescribed accounting period is period of one month) for “third” there shall be substituted “ fourth ”.

(5) The following Table shall be substituted for Table A—

Description of vehicle (Type of engine and cylinder capacity in cubic centimetres)	12 month period	3 month period	1 month period
	£	£	£
Diesel engine 2000 or less	605	151	50
More than 2000	780	195	65
Any other type of engine 1400 or less	670	167	55
More than 1400 but not more than 2000	850	212	70
More than 2000	1260	315	105

(6) This section shall apply in relation to prescribed accounting periods beginning on or after 6th April 1995.

(7) Nothing in this section shall be taken to prejudice any practice by which the consideration appropriate to a vehicle is arrived at where a prescribed accounting period beginning before 6th April 1995 is a period of 12 months.

Appeals: payment of amounts shown in returns

31

(1) In section 84(2) of the Value Added Tax Act 1994 (appeal not to be entertained unless amounts shown in returns paid, except in certain cases) the words “, except in the case of an appeal against a decision with respect to the matter mentioned in section 83(l),” shall be omitted.

(2) This section shall apply in relation to appeals brought after the day on which this Act is passed.

Penalties for failure to notify etc

32

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

Correction of consolidation errors

33

(1) The Value Added Tax Act 1994 shall have effect, and be deemed always to have had effect, as if it had been enacted as follows.

(2) Section 35(1) (refund of VAT to persons constructing certain buildings) shall be deemed to have been enacted with the word “building” substituted for the word “ dwelling ” in each place where it occurs.

(3) Paragraph 5(5) and (6)(b) of Schedule 4 and paragraph 7(b) of Schedule 6 (which contain references to paragraph 5(3) of Schedule 4 which should be references to paragraph 5(4) of that Schedule) shall be deemed to have been enacted—

(a) in the case of paragraph 5(5) and (6)(b), with “sub-paragraph (4) above” substituted for “ sub-paragraph (3) above ”, in each case; and

(b) in the case of paragraph 7(b), with “paragraph 5(4)” substituted for “ paragraph 5(3) ”.

(4) In paragraph 9 of Schedule 13 (which contains transitional provisions relating to bad debt relief), the following sub-paragraph shall be deemed to have been enacted instead of sub-paragraph (2) of that paragraph, that is to say—

(2) Claims for refunds of VAT shall not be made in accordance with section 36 of this Act in relation to— (a) any supply made before 1st April 1989; or (b) any supply as respects which a claim is or has been made under section 22 of the 1983 Act.

(5) In paragraph 13 of Schedule 14 (consequential amendment of the Finance Act 1994), the following sub-paragraph shall be deemed to have been enacted instead of sub-paragraph (a) of that paragraph, that is to say—

(a) in subsection (4) for “25 and 29 of the Finance Act 1985” and “40 of the Value Added Tax Act 1983” there shall be substituted, respectively, “85 and 87 of the Value Added Tax Act 1994” and “83 of that Act”;

Insurance premium tax

34

Schedule 5 to this Act (which relates to insurance premium tax) shall have effect.

Part III — Income Tax, Corporation Tax and Capital Gains Tax

Income tax: charge, rates and reliefs

Charge and rates of income tax for 1995-96

35

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

Personal allowance

36

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

Corporation tax: charge and rate

Charge and rate of corporation tax for 1995

37

Corporation tax shall be charged for the financial year 1995 at the rate of 33 per cent.

Small companies

38

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

Taxation of income from land

Income chargeable under Schedule A

39

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

Non-residents and their representatives

40

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

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

(3) Section 43 of the Taxes Act 1988 (payments to non-residents of amounts chargeable under Schedule A) shall not have effect in relation to any payment made on or after 6th April 1996.

Income from overseas property

41

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

Abolition of interest relief for commercially let property

42

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

(2) That Act shall be further amended as follows—

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

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

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

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

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

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

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

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

Benefits in kind

Cars available for private use

43

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

Cars: accessories for the disabled

44

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

Beneficial loan arrangements: replacement loans

45

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

Chargeable gains

Relief on re-investment: property companies etc

46

(1) Chapter IA of Part V of the Taxation of Chargeable Gains Act 1992 (roll-over relief on re-investment) shall be amended as follows.

(2) In section 164A (relief on re-investment for individuals) the following subsection shall be inserted after subsection (12)—

(13) Where an acquisition is made on or after 29th November 1994 section 164H shall be ignored in deciding whether it is an acquisition of a qualifying investment for the purposes of this section.

(3) In section 164F (failure of conditions of relief) the following subsection shall be inserted after subsection (2)—

(2A) In deciding for the purposes of subsection (2)(b) above whether a company is a qualifying company at a time falling on or after 29th November 1994 section 164H shall be ignored.

(4) In section 164I (qualifying trades) the following subsection shall be inserted after subsection (4)—

(4A) In deciding whether a trade complies with this section at a time falling on or after 29th November 1994 paragraphs (g) and (h) of subsection (2) above shall be ignored.

Relief on re-investment: amount of relief, etc

47

(1) Chapter IA of Part V of the Taxation of Chargeable Gains Act 1992 (roll-over relief on re-investment) shall be amended as follows.

(2) In section 164A after subsection (13) (inserted by section 46 above) there shall be inserted—

(14) This section is subject to sections 164FF and 164FG.

(3) In section 164F after subsection (10B) there shall be inserted—

(10C) Subsection (10A) above is subject to sections 164FF and 164FG.

(4) After section 164F there shall be inserted—

(164FF) (1) This section applies where— (a) a claim is made under subsection (2) of section 164A or subsection (10A) of section 164F; and (b) the qualifying investment as respects which the claim is made is acquired by a disposal to which section 58 applies. (2) The amounts by reference to which the reduction is determined shall be treated as including the amount of the consideration which the claimant would under this Act be treated as having given for the qualifying investment if he had, immediately upon acquiring the qualifying investment, disposed of it on a disposal which was not a no gain/no loss disposal. (3) Where— (a) the claimant makes a disposal, which is not a no gain/no loss disposal, of the qualifying investment, and (b) any disposal after 31st March 1982 and before he acquired the qualifying investment was a no gain/no loss disposal, nothing in paragraph 1 of Schedule 3, section 35 or section 55 shall operate to defeat the reduction falling to be made under section 164A(2)(b) or, as the case may be, section 164F(10A)(b) in the consideration for the acquisition of the qualifying investment. (4) Where— (a) the claimant makes a disposal of the qualifying investment and that disposal is a disposal to which section 58 applies, and (b) any disposal after 31st March 1982 and before the claimant acquired the qualifying investment was a no gain/no loss disposal, nothing in the application of paragraph 1 of Schedule 3, section 35 or section 55 to the person to whom the claimant makes the disposal of the qualifying investment shall operate to defeat the reduction made under section 164A(2)(b) or, as the case may be, section 164F(10A)(b). (5) For the purposes of this section a no gain/no loss disposal is one on which by virtue of any of the enactments specified in section 35(3)(d) neither a gain nor a loss accrues.

(5) After section 164FF (inserted by subsection (4) above) there shall be inserted—

(164FG) (1) This section applies where— (a) a reduction is claimed by a person as respects a qualifying investment under subsection (2) of section 164A or subsection (10A) of section 164F; and (b) any other reduction has been or is being claimed by that person under either subsection as respects that investment. (2) Subject to subsection (5) below, the reductions shall be treated as claimed separately in such sequence as the claimant elects or an officer of the Board in default of an election determines. (3) In relation to a later claim as respects the qualifying investment under either subsection, the subsection shall have effect as if each of the relevant amounts were reduced by the aggregate of any reductions made in the amount or value of the consideration for the acquisition of that investment by virtue of any earlier claims as respects that investment. (4) In subsection (3) above “the relevant amounts” means— (a) if the claim is under section 164A(2), the amounts referred to in subsection (2)(a)(ii) and (iii) and any amount required to be included by virtue of section 164FF(2); and (b) if the claim is under section 164F(10A), the amounts referred to in subsection (10A)(a)(i) and (ii) and any amount required to be included by virtue of section 164FF(2). (5) A claim that has become final shall be treated as made earlier than any claim that has not become final. (6) For the purposes of subsection (5) above, a claim becomes final when— (a) it may no longer be amended, or (b) it is finally determined, whichever occurs first.

(6) Subsection (4) above (and subsections (1) to (3) above so far as relating to subsection (4) above) shall apply to a claim as respects a qualifying investment if—

(a) the qualifying investment is acquired on or after 20th June 1994; or

(b) the claim is under section 164A(2) and relates to a disposal on or after that day; or

(c) the claim is under subsection (10A) of section 164F and relates to a gain which (apart from that subsection) would accrue on or after that day.

(7) Subsection (5) above (and subsections (1) to (3) above so far as relating to subsection (5) above) shall apply to a claim as respects a qualifying investment if—

(a) the qualifying investment is acquired on or after 20th June 1994; or

(b) the claim is under section 164A(2) and relates to a disposal on or after that day; or

(c) the claim is under subsection (10A) of section 164F and relates to a gain which (apart from that subsection) would accrue on or after that day; or

(d) there is another claim as respects that qualifying investment which is under section 164A(2) and which relates to a disposal on or after that day; or

(e) there is another claim as respects that qualifying investment which is under subsection (10A) of section 164F and which relates to a gain which (apart from that subsection) would accrue on or after that day.

(8) Any such adjustment as is appropriate in consequence of this section may be made (whether by discharge or repayment of tax, the making of an assessment or otherwise).

Roll-over relief and groups of companies

48

(1) In section 175 of the Taxation of Chargeable Gains Act 1992 (replacement of business assets by members of a group), after subsection (2) there shall be inserted the following subsections—

(2A) Section 152 shall apply where— (a) the disposal is by a company which, at the time of the disposal, is a member of a group of companies, (b) the acquisition is by another company which, at the time of the acquisition, is a member of the same group, and (c) the claim is made by both companies, as if both companies were the same person. (2B) Section 152 shall apply where a company which is a member of a group of companies but is not carrying on a trade— (a) disposes of assets (or an interest in assets) used, and used only, for the purposes of the trade which (in accordance with subsection (1) above) is treated as carried on by the members of the group which carry on a trade, or (b) acquires assets (or an interest in assets) taken into use, and used only, for those purposes, as if the first company were carrying on that trade. (2C) Section 152 shall not apply if the acquisition of, or of the interest in, the new assets— (a) is made by a company which is a member of a group of companies, and (b) is one to which any of the enactments specified in section 35(3)(d) applies.

(2) In section 247 of the Taxation of Chargeable Gains Act 1992 (roll-over relief on compulsory acquisition of land), after subsection (5) there shall be inserted the following subsection—

(5A) Subsections (2A) and (2C) of section 175 shall apply in relation to this section as they apply in relation to section 152 (but as if the reference in subsection (2C) to the new assets were a reference to the new land).

(3) Subject to subsection (4) below—

(a) the subsection inserted into section 175 of the Taxation of Chargeable Gains Act 1992 by subsection (1) above as subsection (2A) shall be deemed always to have had effect; and

(b) the earlier enactments corresponding to that section shall be deemed to have contained provision to the same effect as that subsection (2A).

(4) Paragraph (c) of that subsection (2A) shall not apply unless the claim is made on or after 29th November 1994.

(5) The subsection inserted into section 175 of the Taxation of Chargeable Gains Act 1992 by subsection (1) above as subsection (2B) shall apply where the disposal or the acquisition is on or after 29th November 1994; and the subsection so inserted as subsection (2C) shall apply where the acquisition is on or after that date.

(6) The subsection inserted into section 247 of the Taxation of Chargeable Gains Act 1992 by subsection (2) above shall apply—

(a) so far as it relates to section 175(2A), where the disposal or the acquisition is on or after 29th November 1994; and

(b) so far as it relates to section 175(2C), where the acquisition is on or after that date.

De-grouping charges

49

(1) In section 179 of the Taxation of Chargeable Gains Act 1992 (de-grouping charges), after subsection (2) there shall be inserted the following subsections—

(2A) Where— (a) a company that has ceased to be a member of a group of companies (“the first group”) acquired an asset from another company which was a member of that group at the time of the acquisition, (b) subsection (2) above applies in the case of that company’s ceasing to be a member of the first group so that subsection (1) above does not have effect as respects the acquisition of that asset, (c) the company that made the acquisition subsequently ceases to be a member of another group of companies (“the second group”), and (d) there is a connection between the two groups, subsection (1) above shall have effect in relation to the company’s ceasing to be a member of the second group as if it had been the second group of which both companies had been members at the time of the acquisition. (2B) For the purposes of subsection (2A) above there is a connection between the first group and the second group if, at the time when the chargeable company ceases to be a member of the second group, the company which is the principal company of that group is under the control of— (a) the company which is the principal company of the first group or, if that group no longer exists, which was the principal company of that group when the chargeable company ceased to be a member of it; (b) any company which controls the company mentioned in paragraph (a) above or which has had it under its control at any time in the period since the chargeable company ceased to be a member of the first group; or (c) any company which has, at any time in that period, had under its control either— (i) a company which would have fallen within paragraph (b) above if it had continued to exist, or (ii) a company which would have fallen within this paragraph (whether by reference to a company which would have fallen within that paragraph or to a company or series of companies falling within this sub-paragraph).

(2) After subsection (9) of that section there shall be inserted the following subsection—

(9A) Section 416(2) to (6) of the Taxes Act (meaning of control) shall have effect for the purposes of subsection (2B) above as it has effect for the purposes of Part XI of that Act; but a person carrying on a business of banking shall not for the purposes of that subsection be regarded as having control of any company by reason only of having, or of the consequences of having exercised, any rights of that person in respect of loan capital or debt issued or incurred by the company for money lent by that person to the company in the ordinary course of that business.

(3) This section has effect in relation to a company in any case in which the time of the company’s ceasing to be a member of the second group is on or after 29th November 1994.

Corporate bonds

50

In section 117 of the Taxation of Chargeable Gains Act 1992 (qualifying corporate bonds) the following subsection shall be inserted after subsection (2)—

(2A) Where it falls to be decided whether at any time on or after 29th November 1994 a security (whenever issued) is a corporate bond for the purposes of this section, a security which falls within paragraph 2(2)(c) of Schedule 11 to the Finance Act 1989 (quoted indexed securities) shall be treated as not being a corporate bond within the definition in subsection (1) above.

Insurance companies and friendly societies

Companies carrying on life assurance business

51

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

Meaning of “insurance company”

52

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

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

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

(4) In section 59(3)(b) of the Inheritance Tax Act 1984 (interests of insurance companies acquired before 14th March 1975 to be qualifying interests in possession), for the words from “if” onwards there shall be substituted

if the company is an insurance company (within the meaning of Chapter I of Part XII of the Taxes Act 1988) and either— (i) is authorised to carry on long term business under section 3 or 4 of the Insurance Companies Act 1982; or (ii) carries on through a branch or agency in the United Kingdom the whole or any part of any long term business which it is authorised to carry on by an authorisation granted outside the United Kingdom for the purposes of the first long term insurance Directive; and in paragraph (b) above “long term business” and “the first long term insurance Directive” have the same meanings as in that Act of 1982.

(5) Subsections (1) to (3) above shall have effect in relation to any accounting period ending after 30th June 1994; and subsection (4) above shall have effect for the purposes of the making, on an anniversary or other occasion after that date, of any charge to tax under section 64 or 65 of the Inheritance Tax Act 1984.

Transfer of life insurance business

53

(1) The amendments specified in Schedule 9 to this Act (which relate to enactments referring to the transfer of the whole or part of the long term business of an insurance company) shall have effect.

(2) This section and that Schedule shall have effect in relation to any transfers sanctioned or authorised after 30th June 1994.

Friendly societies

54

Schedule 10 to this Act (which makes provision about friendly societies) shall have effect.

Insurance policies

Qualifying life insurance policies

55

(1) Subject to subsections (2) and (3) below—

(a) paragraph 21 of Schedule 15 to the Taxes Act 1988 (certification of policies and of standard forms etc.) shall not apply, in relation to any time on or after the appointed date, for determining whether a policy is or would be a qualifying policy at that time; and

(b) no certificate may be issued under that paragraph at any time on or after that date except, in the case of a certificate under sub-paragraph (1)(a) of that paragraph, in relation to a time before that date.

(2) Subsection (1) above shall not affect the right of any person to bring or continue with an appeal under paragraph 21(3) of that Schedule against either a refusal before the appointed date to certify any policy or a refusal on or after that date to certify any policy in relation to times before that date.

(3) A certificate issued—

(a) before the appointed date in pursuance of paragraph 21(1)(a) of that Schedule, or

(b) in pursuance of a determination on an appeal determined after that date by virtue of subsection (2) above,

shall, in relation to any time on or after that date or, as the case may be, the date on which it is issued, be conclusive evidence that the policy to which it relates is (subject to paragraphs A1(2), B2(2) and B3(3) of that Schedule and to any variation of the policy) a qualifying policy.

(4) Paragraph 22 of that Schedule (certificates from body issuing policy) shall cease to have effect in relation to any time on or after the appointed date.

(5) Paragraph 24 of that Schedule (policies issued by non-resident companies) shall have effect in relation to times on or after the appointed date—

(a) with the substitution of the following sub-paragraphs for sub-paragraph (2)—

(2) Subject to section 55(3) of the Finance Act 1995 (transitional provision for the certification of certain policies), a new non-resident policy that falls outside sub-paragraph (2A) below shall not be a qualifying policy until such time as the conditions in sub-paragraph (3) are fulfilled with respect to it. (2A) A policy falls outside this sub-paragraph unless, at the time immediately before the appointed day, it was a qualifying policy by virtue of sub-paragraphs (2)(b) and (4) of this paragraph, as they had effect in relation to that time.

; and

(b) with the omission, in sub-paragraph (3), of the word “first” and of sub-paragraph (4).

(6) In paragraph 25 of that Schedule (policies substituted for policies issued by non-resident companies), for sub-paragraph (2) there shall be substituted the following sub-paragraph—

(2) The modifications are the following— (a) if, apart from paragraph 24, the old policy or any related policy (within the meaning of paragraph 17(2)(b)) of which account falls to be taken would have been a qualifying policy, that policy shall be assumed to have been a qualifying policy for the purposes of paragraph 17(2); and (b) if, apart from this paragraph, the new policy would be a qualifying policy, it shall not be such a policy unless the circumstances are as specified in paragraph 17(3); and (c) in paragraph 17(3)(c) the words “either by a branch or agency of theirs outside the United Kingdom or” shall be omitted; and references in this sub-paragraph to being a qualifying policy shall have effect, in relation to any time before the appointed date, as including a reference to being capable of being certified as such a policy.

(7) In paragraph 27(1) of that Schedule, except so far as it has effect for the purposes of any case to which paragraph 21 of that Schedule applies by virtue of the preceding provisions of this section, for “paragraphs 21 and” there shall be substituted “ paragraph ”.

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

(9) In this section “the appointed date” means such date as may be specified for the purpose in an order made by the Board.

Foreign life policies etc

56

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Duties of insurers in relation to life policies etc

57

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Pensions

Personal pensions: income withdrawals

58

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Pensions: meaning of insurance company etc

59

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Application of section 59

60

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Cessation of approval of certain retirement benefits schemes

61

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Saving and investment: general

Follow-up TESSAs

62

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TESSAs: European institutions

63

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Personal equity plans: tax representatives

64

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Contractual savings schemes

65

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Enterprise investment scheme: ICTA amendments

66

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

Enterprise investment scheme: TCGA amendments

67

Schedule 13 to this Act (which contains amendments relating to chargeable gains as regards the enterprise investment scheme) shall have effect.

Business expansion scheme: ICTA amendments

68

(1) Chapter III of Part VII of the Taxes Act 1988 as it has effect in relation to shares issued before 1st January 1994 (the business expansion scheme) shall be amended as follows.

(2) In section 289 (the relief) the following subsection shall be inserted after subsection (12) (which defines “the relevant period” for the purposes of the Chapter)—

(12A) In arriving at the relevant period for the purposes of sections 294 to 296 any time falling on or after 29th November 1994 shall be ignored; and subsection (12) above shall have effect subject to the preceding provisions of this subsection.

(3) In section 305 (reorganisation of share capital) the following subsections shall be inserted after subsection (4)—

(5) Subsection (2) above shall not apply where the reorganisation occurs on or after 29th November 1994. (6) Subsection (2) above shall not apply by virtue of subsection (3) above where the rights are disposed of on or after 29th November 1994.

Business expansion scheme: TCGA amendments

69

In section 150 of the Taxation of Chargeable Gains Act 1992 (business expansion schemes) the following subsections shall be inserted after subsection (8) (which disapplies provisions about exchanges, reconstructions or amalgamations in certain circumstances)—

(8A) Subsection (8) above shall not have effect to disapply section 135 or 136 where— (a) the new holding consists of new ordinary shares carrying no present or future preferential right to dividends or to a company’s assets on its winding up and no present or future preferential right to be redeemed, (b) the new shares are issued on or after 29th November 1994 and after the end of the relevant period, and (c) the condition in subsection (8B) below is fulfilled. (8B) The condition is that at some time before the issue of the new shares— (a) the company issuing them issued eligible shares, and (b) a certificate in relation to those eligible shares was issued by the company for the purposes of subsection (2) of section 306 of the Taxes Act and in accordance with that section. (8C) In subsection (8A) above— (a) “new holding” shall be construed in accordance with sections 126, 127, 135 and 136; (b) “relevant period” means the period found by applying section 289(12)(a) of the Taxes Act by reference to the company issuing the shares referred to in subsection (8) above and by reference to those shares.

Venture capital trusts

Approval of companies as trusts

70

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Income tax relief

71

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Capital gains

72

(1) The Taxation of Chargeable Gains Act 1992 shall be amended as follows.

(2) In section 100(1) (exemption from charge for gains accruing to authorised unit trusts, investment trusts etc.), after “investment trust” there shall be inserted “ a venture capital trust ”.

(3) In Chapter III of Part IV (miscellaneous provisions relating to securities), after section 151 there shall be inserted the following sections—

(151A) (1) A gain or loss accruing to an individual on a qualifying disposal of any ordinary shares in a company which— (a) was a venture capital trust at the time when he acquired the shares, and (b) is still such a trust at the time of the disposal, shall not be a chargeable gain or, as the case may be, an allowable loss. (2) For the purposes of this section a disposal of shares is a qualifying disposal in so far as— (a) it is made by an individual who has attained the age of eighteen years; (b) the shares disposed of were not acquired in excess of the permitted maximum for any year of assessment; and (c) that individual acquired those shares for bona fide commercial purposes and not as part of a scheme or arrangement the main purpose of which, or one of the main purposes of which, is the avoidance of tax. (3) Schedule 5C shall have effect for providing relief in respect of gains invested in venture capital trusts. (4) In determining for the purposes of this section whether a disposal by any person of shares in a venture capital trust relates to shares acquired in excess of the permitted maximum for any year of assessment, it shall be assumed (subject to subsection (5) below)— (a) as between shares acquired by the same person on different days, that those acquired on an earlier day are disposed of by that person before those acquired on a later day; and (b) as between shares acquired by the same person on the same day, that those acquired in excess of the permitted maximum are disposed of by that person before he disposes of any other shares acquired on that day. (5) It shall be assumed for the purposes of subsection (1) above that a person who disposes of shares in a venture capital trust disposes of shares acquired at a time when it was not such a trust before he disposes of any other shares in that trust. (6) References in this section to shares in a venture capital trust acquired in excess of the permitted maximum for any year of assessment shall be construed in accordance with the provisions of Part II of Schedule 15B to the Taxes Act; and the provisions of that Part of that Schedule shall apply (with subsections (4) and (5) above) for identifying the shares which are, in any case, to be treated as representing shares acquired in excess of the permitted maximum. (7) In this section and section 151B “ordinary shares”, in relation to a company, means any shares forming part of the company’s ordinary share capital (within the meaning of the Taxes Act). (151B) (1) Sections 104, 105 and 107 shall not apply to any shares in a venture capital trust which are eligible for relief under section 151A(1). (2) Subject to the following provisions of this section, where— (a) an individual holds any ordinary shares in a venture capital trust, (b) some of those shares fall within one of the paragraphs of subsection (3) below, and (c) others of those shares fall within at least one other of those paragraphs, then, if there is within the meaning of section 126 a reorganisation affecting those shares, section 127 shall apply separately in relation to the shares (if any) falling within each of the paragraphs of that subsection (so that shares of each kind are treated as a separate holding of original shares and identified with a separate new holding). (3) The kinds of shares referred to in subsection (2) above are— (a) any shares in a venture capital trust which are eligible for relief under section 151A(1) and by reference to which any person has been given or is entitled to claim relief under Part I of Schedule 15B to the Taxes Act; (b) any shares in a venture capital trust which are eligible for relief under section 151A(1) but by reference to which no person has been given, or is entitled to claim, any relief under that Part of that Schedule; (c) any shares in a venture capital trust by reference to which any person has been given, or is entitled to claim, any relief under that Part of that Schedule but which are not shares that are eligible for relief under section 151A(1); and (d) any shares in a venture capital trust that do not fall within any of paragraphs (a) to (c) above. (4) Where— (a) an individual holds ordinary shares in a company (“the existing holding”), (b) there is, by virtue of any such allotment for payment as is mentioned in section 126(2)(a), a reorganisation affecting the existing holding, and (c) immediately following the reorganisation, the shares or the allotted holding are shares falling within any of paragraphs (a) to (c) of subsection (3) above, sections 127 to 130 shall not apply in relation to the existing holding. (5) Sections 135 and 136 shall not apply where— (a) the exchanged holding consists of shares falling within paragraph (a) or (b) of subsection (3) above; and (b) that for which the exchanged holding is or is treated as exchanged does not consist of ordinary shares in a venture capital trust. (6) Where— (a) the approval of any company as a venture capital trust is withdrawn, and (b) the withdrawal of the approval is not one to which section 842AA(8) of the Taxes Act applies, any person who at the time when the withdrawal takes effect is holding shares in that company which (apart from the withdrawal) would be eligible for relief under section 151A(1) shall be deemed for the purposes of this Act, at that time, to have disposed of and immediately re-acquired those shares for a consideration equal to their market value at that time. (7) The disposal that is deemed to take place by virtue of subsection (6) above shall be deemed for the purposes of section 151A to take place while the company is still a venture capital trust; but, for the purpose of applying sections 104, 105 and 107 to the shares that are deemed to be re-acquired, it shall be assumed that the re-acquisition for which that subsection provides takes place immediately after the company ceases to be such a trust. (8) For the purposes of this section— (a) shares are eligible for relief under section 151A(1) at any time when they are held by an individual whose disposal of the shares at that time would (on the assumption, where it is not the case, that the individual attained the age of eighteen years before that time) be a disposal to which section 151A(1) would apply; and (b) shares shall not, in relation to any time, be treated as shares by reference to which relief has been given under Part I of Schedule 15B to the Taxes Act if that time falls after— (i) any relief given by reference to those shares has been reduced or withdrawn, (ii) any chargeable event (within the meaning of Schedule 5C) has occurred in relation to those shares, or (iii) the death of a person who held those shares immediately before his death; and (c) the references, in relation to sections 135 and 136, to the exchanged holding is a reference to the shares in company B or, as the case may be, to the shares or debentures in respect of which shares or debentures are issued under the arrangement in question.

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

(5) In section 257(1) (gifts to charities etc.), after paragraph (b) there shall be inserted—

and the disposal is not one in relation to which section 151A(1) has effect.

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

(7) In section 288(1) (interpretation), after the definition of “trading stock” there shall be inserted the following definition—

“venture capital trust” has the meaning given by section 842AA of the Taxes Act;

(8) Subsection (2) above shall have effect in relation to gains accruing on or after 6th April 1995 and the other provisions of this section have effect for the year 1995-96 and subsequent years of assessment.

Regulations

73

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Settlements and estates

Settlements: liability of settlor

74

(1) Schedule 17 to this Act has effect with respect to settlements and the liability of the settlor, as follows—

Part I inserts new provisions in place of sections 660 to 676 and 683 to 685 of the Taxes Act 1988,

Part II makes minor and consequential amendments of that Act, and

Part III contains consequential amendments of other enactments.

(2) The amendments made by Schedule 17 have effect for the year 1995-96 and subsequent years of assessment and apply to every settlement, wherever and whenever it was made or entered into.

Deceased persons' estates: taxation of beneficiaries

75

Part XVI of the Taxes Act 1988 (deceased persons’ estates) shall have effect with the amendments specified in Schedule 18 to this Act.

Untaxed income of a deceased person’s estate

76

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

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

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

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

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

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

Securities

Interest on gilt-edged securities payable without deduction of tax

77

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

Periodic accounting for tax on interest on gilt-edged securities

78

(1) After the section 51A of the Taxes Act 1988 inserted by section 77 above there shall be inserted the following section—

(51B) (1) The Treasury may by regulations provide for persons to whom payments of interest on relevant gilt-edged securities are made without deduction of tax to be required to make periodic returns to an officer of the Board of— (a) amounts of any payments of such interest made to that person, and (b) amounts of tax for which, assuming the payments to bear tax at the basic rate for the relevant year of assessment, that person is to be accountable under the regulations in respect of those payments; and any such regulations may further provide for the amounts of tax required to be included in any such return to become due, at the time when the return is required to be made, from the person required to make it. (2) Regulations made by the Treasury for the purposes of this section may— (a) specify such periods as the Treasury may consider appropriate as the periods for which returns are to be made, and in respect of which any person is to account for tax, under the regulations; (b) make provision for enabling returns under the regulations to be combined with returns under Schedule 16 and for requiring particulars of claims and calculations made for the purposes of the regulations to be set out in the returns; (c) provide, in respect of any period for which a return is to be made by any person under the regulations, for that person to be obliged, before the end of the period, to make a payment on account of amounts that may become due from him in respect of that period; (d) impose a requirement for a special return to be made for the purposes of any obligation imposed by virtue of paragraph (c) above; (e) provide for the amount which, under the regulations, is to be due from any person in respect of any period to be reduced by reference to amounts which— (i) are paid by or on behalf of that person under contracts or arrangements relating to transfers of gilt-edged securities; and (ii) are or fall to be treated as representative of interest on those securities; (f) authorise amounts in respect of which there is an obligation to account for tax under the regulations to be treated for specified purposes of the Tax Acts as payments on which a person has borne income tax by deduction; (g) make provision for the assessment of amounts due under the regulations and for the repayment in specified circumstances of amounts paid under the regulations; (h) make provision for interest to be payable, at such rate as may be determined by or under the regulations, on amounts that have become due under the regulations but have not been paid; (i) make provision, where payments of interest on any relevant gilt-edged securities would be comprised in the income of a member of Lloyd’s, for obligations that may be imposed by regulations under this section on the person to whom the interest is paid to be imposed, instead, on such other person as may be described in the regulations. (3) Regulations made by the Treasury for the purposes of this section may— (a) include provision which for the purposes of the regulations makes any provision corresponding, with or without modifications, to any of the provisions of Schedule 16; (b) make provision modifying the operation of Schedule 19AB in relation to cases where payments of interest on relevant gilt-edged securities are made without deduction of tax to companies carrying on pension business; (c) include provision which requires obligations and liabilities under the regulations to be treated as obligations and liabilities to which provisions of Schedule 23 to the Finance Act 1995 (UK representatives) apply; and (d) include provision which, for any of the purposes of the regulations, applies provisions of sections 126 and 127 of, and Schedule 23 to, that Act in relation to times before those provisions otherwise come into force. (4) Regulations made by the Treasury for the purposes of this section may— (a) make different provision for different cases; and (b) contain such supplementary, incidental, consequential and transitional provision as appears to the Treasury to be appropriate; and subsection (3) of section 178 of the Finance Act 1989 (extent of powers to set rates of interest) shall apply for the purposes of the power conferred by virtue of subsection (2)(h) above as it applies for the purposes of the power to make regulations under that section. (5) In this section “relevant gilt-edged securities” means securities which are gilt-edged securities within the meaning of section 51A, other than any to which a direction of the Treasury under section 50 relates. (6) In this section “relevant year of assessment”— (a) in relation to a manufactured payment, means the year of assessment in which it is received by the person to whom it is paid; and (b) in relation to any other payment of interest, means the year of assessment in which the payment is made; and in this subsection “manufactured payment” means any payment which for the purposes of Schedule 23A is a payment of manufactured interest.

(2) In the Table in section 98 of the Management Act (penalties in respect of certain information provisions), immediately before the entry in the second column relating to section 124(3) of the Taxes Act 1988 there shall be inserted the following entry—

regulations under section 51B;

Sale and repurchase of securities: exclusion from accrued income scheme

79

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

Treatment of price differential on sale and repurchase of securities

80

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

(2) In section 729 of that Act (sale and repurchase of securities), after subsection (5) there shall be inserted the following subsection—

(5A) This section shall not apply where section 737A applies; and this section shall be disregarded in determining whether the condition in subsection (2)(b) of that section is fulfilled in any case.

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

(4) After section 263 of the Taxation of Chargeable Gains Act 1992 there shall be inserted the following section—

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