Finance Act 1996

• (3) Qualifying material is material for the time being listed for the purposes of this section in an order.

• (3A) Qualifying fines are a mixture of—

• (a) fines that consist of such qualifying material as is prescribed by order, and

• (b) fines that consist of material that is not qualifying material,

that satisfies all the requirements prescribed in an order.

• (3B) An order under subsection (3A) relating to the mixture of fines may require, in particular—

• (a) that fines that consist of material that is not qualifying material do not exceed a prescribed proportion;

• (b) that the mixture of fines does not include prescribed materials or prescribed descriptions of materials;

• (c) that the mixture of fines is such that, if subjected to a prescribed test, it would give a prescribed result;

• (d) that the mixture of fines originates, or does not originate, in a prescribed way.

• (4) The Treasury must—

• (a) set criteria to be considered in determining from time to time what material is to be listed or what fines are to be qualifying fines,

• (b) keep those criteria under review, and

• (c) revise them whenever they consider they should be revised.

• (5) The Commissioners must publish the criteria (and any revised criteria) set by the Treasury.

• (6) In determining from time to time what material is to be listed, or what fines are to be qualifying fines, the Treasury must have regard to—

• (a) the criteria (or revised criteria) published under subsection (5), and

• (b) any other factors they consider relevant.

Exemptions

Material removed from water

43

• (1) A disposal made at a landfill site is not a taxable disposal for the purposes of this Part if it is shown to the satisfaction of the Commissioners that the disposal is of material all of which—

• (a) has been removed (by dredging or otherwise) from water falling within subsection (2) below, and

• (b) formed part of or projected from the bed of the water concerned before its removal.

• (2) Water falls within this subsection if it is—

• (a) a river, canal or watercourse (whether natural or artificial), or

• (b) a dock or harbour (whether natural or artificial).

• (3) A disposal made at a landfill site is not a taxable disposal for the purposes of this Part if it is shown to the satisfaction of the Commissioners that the disposal is of material all of which—

• (a) has been removed (by dredging or otherwise) from water falling within the approaches to a harbour (whether natural or artificial),

• (b) has been removed in the interests of navigation, and

• (c) formed part of or projected from the bed of the water concerned before its removal.

• (4) A disposal made at a landfill site is not a taxable disposal for the purposes of this Part if it is shown to the satisfaction of the Commissioners that the disposal is of material all of which—

• (a) consists of naturally occurring mineral material, and

• (b) has been removed (by dredging or otherwise) from the sea in the course of commercial operations carried out to obtain substances such as sand or gravel from the seabed.

• (5) A disposal made at a landfill site is not a taxable disposal for the purposes of this Part if it is shown to the satisfaction of the Commissioners that the disposal is of material all of which comprises material falling within subsection (1) or (3) and other material which has been added to that material for the purpose of securing that it is not liquid waste.

Mining and quarrying

44

• (1) A disposal made at a landfill site is not a taxable disposal for the purposes of this Part if it is shown to the satisfaction of the Commissioners that the disposal is of material all of which fulfils each of the conditions set out in subsections (2) to (4) below.

• (2) The material must result from commercial mining operations (whether the mining is deep or open-cast) or from commercial quarrying operations.

• (3) The material must be naturally occurring material extracted from the earth in the course of the operations.

• (4) The material must not have been subjected to, or result from, a non-qualifying process carried out at any stage between the extraction and the disposal.

• (5) A non-qualifying process is—

• (a) a process separate from the mining or quarrying operations, or

• (b) a process forming part of those operations and permanently altering the material’s chemical composition.

Pet cemeteries

45

• (1) A disposal made at a landfill site is not a taxable disposal for the purposes of this Part if—

• (a) the disposal is of material consisting entirely of the remains of dead domestic pets, and

• (b) the landfill site at which the disposal is made fulfils the test set out in subsection (2) below.

• (2) The test is that during the relevant period—

• (a) no disposal of material was made at the site, or

• (b) the only disposals of material made at the site were of material consisting entirely of the remains of dead domestic pets.

• (3) For the purposes of subsection (2) above the relevant period—

• (a) begins with 1st October 1996 or (if later) with the coming into force in relation to the site of the licence , resolution or permit mentioned in section 66 below, and

• (b) ends immediately before the disposal mentioned in subsection (1) above.

Power to vary

46

• (1) Provision may be made by order to produce the result that—

• (a) a disposal which would otherwise be a taxable disposal (by virtue of this Part as it applies for the time being) is not a taxable disposal;

• (b) a disposal which would otherwise not be a taxable disposal (by virtue of this Part as it applies for the time being) is a taxable disposal.

• (2) Without prejudice to the generality of subsection (1) above, an order under this section may—

• (za) confer exemption by reference to guidance (as it has effect from time to time) issued by—

• (i) a body established by or under any enactment, or

• (ii) a government department or an agency of a government department,

to the effect that particular kinds of disposal do not require a permit or licence mentioned in section 40(4);

• (a) confer exemption by reference to certificates issued by the Commissioners and to conditions set out in certificates;

• (b) allow the Commissioners to direct requirements to be met before certificates can be issued;

• (c) provide for reviews and appeals relating to decisions about certificates.

• (3) Provision may be made under this section in such way as the Treasury think fit (whether by amending this Part or otherwise).

Administration

Registration

47

• (1) The register kept under this section may contain such information as the Commissioners think is required for the purposes of the care and management of the tax.

• (2) A person who—

• (a) carries out taxable activities at a landfill site, and

• (b) is not registered,

is liable to be registered.

• (3) Where—

• (a) a person at any time forms the intention of carrying out taxable activities, and

• (b) he is not registered,

he shall notify the Commissioners of his intention.

• (3A) A registered person who forms the intention of carrying out taxable activities elsewhere than at a landfill site shall notify the Commissioners of that intention.

• (4) A person who at any time ceases to have the intention of carrying out taxable activities at a landfill site shall notify the Commissioners of that fact.

• (5) Where a person is liable to be registered by virtue of subsection (2) above the Commissioners shall register him with effect from the time when he begins to carry out taxable activities; and this subsection applies whether or not he notifies the Commissioners under subsection (3) above.

• (5A) Where a person who is not registered carries out taxable activities elsewhere than at a landfill site, the Commissioners may register the person with effect from the date when the person begins carrying out those activities.

• (5B) Subsections (2) to (5A) do not apply to a person within subsection (6) of section 41 who, but for that subsection, would not be treated as carrying out taxable activities.

• (6) Where the Commissioners are satisfied that a registered person has ceased to carry out taxable activities at a landfill site they may cancel his registration with effect from the earliest practicable time after he so ceased; and this subsection applies whether or not he notifies the Commissioners under subsection (4) above.

• (7) Where—

• (a) a person notifies the Commissioners under subsection (4) above,

• (b) they are satisfied that he will not carry out taxable activities,

• (c) they are satisfied that no tax which he is liable to pay is unpaid,

• (d) they are satisfied that no credit to which he is entitled under regulations made under section 51 below is outstanding, and

• (e) subsection (8) below does not apply,

the Commissioners shall cancel his registration with effect from the earliest practicable time after he ceases to carry out taxable activities.

• (8) Where—

• (a) a person notifies the Commissioners under subsection (4) above, and

• (b) they are satisfied that he has not carried out, and will not carry out, taxable activities,

the Commissioners shall cancel his registration with effect from the time when he ceased to have the intention to carry out taxable activities.

• (9) For the purposes of this section regulations may make—

• (a) provision as to the time within which a notification is to be made (including provision enabling the Commissioners to grant an extension of time);

• (b) provision as to the form and manner in which any notification is to be made and as to the information to be contained in or provided with it;

• (c) provision as to the criteria that the Commissioners are to apply in deciding whether to register a person under subsection (5A);

• (d) provision under which, in prescribed circumstances, taxable activities at a site within subsection (9B) may, on a provisional or conditional basis, be treated as carried out at a landfill site;

• (e) provision requiring a person who has made a notification to notify the Commissioners if any information contained in or provided in connection with it is or becomes inaccurate;

• (f) provision as to the correction of entries in the register (including provision for a person provisionally or conditionally registered by virtue of paragraph (d) to be treated, in prescribed circumstances, as never having been so registered).

• (9A) Provision made by regulations under subsection (9)(c) may be supplemented by provision made by notice published by the Commissioners in accordance with the regulations.

• (9B) A site is within this subsection if—

• (a) it is not a landfill site, or

• (b) it not known at the relevant time whether it is a landfill site or not.

• (10) In this Part—

• “registered person” means—a person registered under subsection (5) or (5A), anda person who was registered under this section before the passing of FA 2018 and who remains registered;

• “registrable person” means a person who carries out taxable activities (whether registered or not), excluding a person within subsection (6) of section 41 who, but for that subsection, would not be treated as carrying out taxable activities.

Information required to keep register up to date

48

• (1) Regulations may make provision requiring a registrable person to notify the Commissioners of particulars which—

• (a) are of changes in circumstances relating to the registrable person or any business carried on by him,

• (b) appear to the Commissioners to be required for the purpose of keeping the register kept under section 47 above up to date, and

• (c) are of a prescribed description.

• (2) Regulations may make provision—

• (a) as to the time within which a notification is to be made;

• (b) as to the form and manner in which a notification is to be made;

• (c) requiring a person who has made a notification to notify the Commissioners if any information contained in it is inaccurate.

Accounting for tax and time for payment

49

Regulations may provide that a registered person shall—

• (a) account for tax by reference to such periods (accounting periods) as may be determined by or under the regulations;

• (b) make, in relation to accounting periods, returns in such form ... and at such times as may be so determined;

• (c) pay tax at such times and in such manner as may be so determined.

Power to assess

50

• (1) Where—

• (a) a registered person has failed to make any returns required to be made under this Part,

• (b) a registered person has failed to keep any documents necessary to verify returns required to be made under this Part,

• (c) a registered person has failed to afford the facilities necessary to verify returns required to be made under this Part, or

• (d) it appears to the Commissioners that returns required to be made by a registered person under this Part are incomplete or incorrect,

the Commissioners may assess the amount of tax due from the person concerned to the best of their judgment and notify it to him.

• (2) Where a registered person has for an accounting period been paid an amount to which he purports to be entitled under regulations made under section 51 below, then, to the extent that the amount ought not to have been paid or would not have been paid had the facts been known or been as they later turn out to be, the Commissioners may assess the amount as being tax due from him for that period and notify it to him accordingly.

• (3) Where a person is assessed under subsections (1) and (2) above in respect of the same accounting period the assessments may be combined and notified to him as one assessment.

• (4) Where the person failing to make a return, or making a return which appears to the Commissioners to be incomplete or incorrect, was required to make the return as a personal representative, trustee in bankruptcy, receiver, liquidator or person otherwise acting in a representative capacity in relation to another person, subsection (1) above shall apply as if the reference to tax due from him included a reference to tax due from that other person.

• (5) An assessment under subsection (1) or (2) above of an amount of tax due for an accounting period shall not be made after the later of the following—

• (a) two years after the end of the accounting period;

• (b) one year after evidence of facts, sufficient in the Commissioners’ opinion to justify the making of the assessment, comes to their knowledge;

but where further such evidence comes to their knowledge after the making of an assessment under subsection (1) or (2) above another assessment may be made under the subsection concerned in addition to any earlier assessment.

• (6) Where—

• (a) as a result of a person’s failure to make a return in relation to an accounting period the Commissioners have made an assessment under subsection (1) above for that period,

• (b) the tax assessed has been paid but no proper return has been made in relation to the period to which the assessment related, and

• (c) as a result of a failure to make a return in relation to a later accounting period, being a failure by the person referred to in paragraph (a) above or a person acting in a representative capacity in relation to him, as mentioned in subsection (4) above, the Commissioners find it necessary to make another assessment under subsection (1) above,

then, if the Commissioners think fit, having regard to the failure referred to in paragraph (a) above, they may specify in the assessment referred to in paragraph (c) above an amount of tax greater than that which they would otherwise have considered to be appropriate.

• (7) Where an amount has been assessed and notified to any person under subsection (1) or (2) above it shall be deemed to be an amount of tax due from him and may be recovered accordingly unless, or except to the extent that, the assessment has subsequently been withdrawn or reduced.

• (8) For the purposes of this section notification to—

• (a) a personal representative, trustee in bankruptcy, receiver or liquidator, or

• (b) a person otherwise acting in a representative capacity in relation to another person,

shall be treated as notification to the person in relation to whom the person mentioned in paragraph (a) above, or the first person mentioned in paragraph (b) above, acts.

• (9) Subsection (5) above has effect subject to paragraph 33 of Schedule 5 to this Act.

• (10) In this section “trustee in bankruptcy” means, as respects Scotland, a trustee or interim trustee in the sequestration, under the Bankruptcy (Scotland) Act 2016, of a person’s estate or a trustee acting under a trust deed (within the meaning of that Act).

Credit

Credit: general

51

• (1) Regulations may provide that where—

• (a) a person has paid or is liable to pay tax in respect of the disposal of material at a landfill site, and

• (b) prescribed conditions are fulfilled,

the person shall be entitled to credit of such an amount as is found in accordance with prescribed rules.

• (2) Regulations may make provision as to the manner in which a person is to benefit from credit, and in particular may make provision—

• (a) that a person shall be entitled to credit by reference to accounting periods;

• (b) that a person shall be entitled to deduct an amount equal to his total credit for an accounting period from the total amount of tax due from him for the period;

• (c) that if no tax is due from a person for an accounting period but he is entitled to credit for the period, the amount of the credit shall be paid to him by the Commissioners;

• (d) that if the amount of credit to which a person is entitled for an accounting period exceeds the amount of tax due from him for the period, an amount equal to the excess shall be paid to him by the Commissioners;

• (e) for the whole or part of any credit to be held over to be credited for a subsequent accounting period;

• (f) as to the manner in which a person who has ceased to be registrable is to benefit from credit.

• (3) Regulations under subsection (2)(c) or (d) above may provide that where at the end of an accounting period an amount is due to a person who has failed to submit returns for an earlier period as required by this Part, the Commissioners may withhold payment of the amount until he has complied with that requirement.

• (4) Regulations under subsection (2)(e) above may provide for credit to be held over either on the person’s application or in accordance with directions given by the Commissioners from time to time; and the regulations may allow directions to be given generally or with regard to particular cases.

• (5) Regulations may provide that—

• (a) no benefit shall be conferred in respect of credit except on a claim made in such manner and at such time as may be determined by or under regulations;

• (b) payment in respect of credit shall be made subject to such conditions (if any) as the Commissioners think fit to impose, including conditions as to repayment in specified circumstances;

• (c) deduction in respect of credit shall be made subject to such conditions (if any) as the Commissioners think fit to impose, including conditions as to the payment to the Commissioners, in specified circumstances, of an amount representing the whole or part of the amount deducted.

• (6) Regulations may require a claim by a person to be made in a return required by provision made under section 49 above.

• (7) Nothing in section 52 or 53 below shall be taken to derogate from the power to make regulations under this section (whether with regard to bad debts, the environment or any other matter).

Bad debts

52

• (1) Regulations may be made under section 51 above with a view to securing that a person is entitled to credit if—

• (a) he carries out a taxable activity at a landfill site as a result of which he becomes entitled to a debt which turns out to be bad (in whole or in part), and

• (b) such other conditions as may be prescribed are fulfilled.

• (2) The regulations may include provision under section 51(5)(b) or (c) above requiring repayment or payment if it turns out that it was not justified to regard a debt as bad (or to regard it as bad to the extent that it was so regarded).

• (3) The regulations may include provision for determining whether, and to what extent, a debt is to be taken to be bad.

Bodies concerned with the environment

53

• (1) Regulations may be made under section 51 above with a view to securing that a person is entitled to credit if—

• (a) he pays a sum to a body whose objects are or include the protection of the environment, and

• (b) such other conditions as may be prescribed are fulfilled.

• (2) The regulations may in particular prescribe conditions—

• (a) requiring bodies to which sums are paid (environmental bodies) to be approved by another body (the regulatory body);

• (b) requiring the regulatory body to be approved by the Commissioners;

• (c) requiring sums to be paid with the intention that they be expended on such matters connected with the protection of the environment as may be prescribed.

• (3) The regulations may include provision under section 51(5)(b) or (c) above requiring repayment or payment if—

• (a) a sum is not in fact expended on matters prescribed under subsection (2)(c) above, or

• (b) a prescribed condition turns out not to have been fulfilled.

• (4) The regulations may include—

• (a) provision for determining the amount of credit (including provision for limiting it);

• (b) provision that matters connected with the protection of the environment include such matters as overheads (including administration) of environmental bodies and the regulatory body;

• (c) provision as to the matters by reference to which an environmental body or the regulatory body can be, and remain, approved (including matters relating to the functions and activities of any such body);

• (ca) provision for an environmental body to be and remain approved only if it complies with conditions imposed from time to time by the regulatory body or for the regulatory body to be and remain approved only if it complies with conditions imposed from time to time by the Commissioners (including provision for the variation or revocation of such conditions);

• (d) provision allowing the withdrawal of approval of an environmental body by the Commissioners or by the regulatory body, and the withdrawal of approval of the regulatory body by the Commissioners, (whether prospectively or retrospectively);

• (e) provision that, if approval of the regulatory body is withdrawn, another body may be approved in its place or its functions may be performed by the Commissioners;

• (f) provision allowing the Commissioners to disclose to the regulatory body information which relates to the tax affairs of persons carrying out taxable activities and which is relevant to the credit scheme established by the regulations.

Review and appeal

Review of Commissioners' decisions

54

• (1) Subject to section 55, an appeal shall lie to an appeal tribunal from any person who is or will be affected by any of the following decisions—

• (a) a decision as to the registration or cancellation of registration of any person under this Part;

• (b) a decision as to whether tax is chargeable in respect of a disposal or as to how much tax is chargeable;

• (ba) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

• (c) a decision as to whether a person is entitled to credit by virtue of regulations under section 51 above or as to how much credit a person is entitled to or as to the manner in which he is to benefit from credit;

• (ca) a decision to withdraw approval of an environmental body under any provision contained in regulations by virtue of section 53(4)(d) above;

• (d) a decision as to an assessment falling within subsection (2) below or as to the amount of such an assessment;

• (e) a decision to refuse a request under section 58(3) below;

• (f) a decision to refuse an application under section 59 below;

• (g) a decision as to whether conditions set out in a specification under the authority of provision made under section 68(4)(b) below are met in relation to a disposal;

• (h) a decision to give a direction under any provision contained in regulations by virtue of section 68(5) below;

• (i) a decision as to a claim for the repayment of an amount under paragraph 14 of Schedule 5 to this Act;

• (j) a decision as to liability to a penalty under Part V of that Schedule or as to the amount of such a penalty;

• (k) a decision under paragraph 19 of that Schedule (as mentioned in paragraph 19(5));

• (l) a decision as to any liability to pay interest under paragraph 26 or 27 of that Schedule or as to the amount of the interest payable;

• (m) a decision as to any liability to pay interest under paragraph 29 of that Schedule or as to the amount of the interest payable;

• (n) a decision to require any security under paragraph 31 of that Schedule or as to its amount;

• (o) a decision as to the amount of any penalty or interest specified in an assessment under paragraph 32 of that Schedule.

• (2) An assessment falls within this subsection if it is—

• (a) an assessment under section 50 above in respect of an accounting period in relation to which a return required to be made by virtue of regulations under section 49 above has been made , or

• (b) an assessment under section 50A.

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

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

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

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

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

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

Appeals: general

55

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

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

• (3) Subject to subsections (3A) and (3B), where an appeal under section 54 relates to a decision falling within section 54(1)(b) or (d), it shall not be entertained unless the amount which HMRC have determined to be payable as tax has been paid or deposited with them.

• (3A) In a case where the amount determined to be payable as tax has not been paid or deposited an appeal may be entertained if—

• (a) HMRC are satisfied (on the application of the appellant), or

• (b) the appeal tribunal decides (HMRC not being so satisfied and on the application of the appellant),

• that the requirement to pay or deposit the amount determined would cause the appellant to suffer hardship.

• (3B) Notwithstanding the provisions of sections 11 and 13 of the Tribunals, Courts and Enforcement Act 2007, the decision of the tribunal as to the issue of hardship is final.

• (4) On an appeal under this section against an assessment to a penalty under paragraph 18 of Schedule 5 to this Act, the burden of proof as to the matters specified in paragraphs (a) and (b) of sub-paragraph (1) of paragraph 18 shall lie upon the Commissioners.

Appeals: other provisions

56

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

• (2) Where on an appeal under section 54 —

• (a) it is found that the amount specified in the assessment is less than it ought to have been, and

• (b) the tribunal gives a direction specifying the correct amount,

the assessment shall have effect as an assessment of the amount specified in the direction and that amount shall be deemed to have been notified to the appellant.

• (3) Where on an appeal under section 55 above it is found that the whole or part of any amount paid or deposited in pursuance of section 55(3) above is not due, so much of that amount as is found not to be due shall be repaid with interest at the rate applicable under section 197 of this Act .

• (4) Where on an appeal under section 55 above it is found that the whole or part of any amount due to the appellant by virtue of regulations under section 51(2)(c) or (d) or (f) above has not been paid, so much of that amount as is found not to have been paid shall be paid with interest at the rate applicable under section 197 of this Act .

• (5) Where an appeal under section 55 above has been entertained notwithstanding that an amount determined by the Commissioners to be payable as tax has not been paid or deposited and it is found on the appeal that that amount is due it shall be paid with interest at the rate applicable under section 197 of this Act.

• (5A) Interest under subsection (5) shall be paid without any deduction of income tax.

• (6) Without prejudice to paragraph 25 of Schedule 5 to this Act, nothing in section 55 above shall be taken to confer on a tribunal any power to vary an amount assessed by way of penalty except in so far as it is necessary to reduce it to the amount which is appropriate under paragraphs 18 to 24 of that Schedule.

• (7) Without prejudice to paragraph 28 of Schedule 5 to this Act, nothing in section 55 above shall be taken to confer on a tribunal any power to vary an amount assessed by way of interest except in so far as it is necessary to reduce it to the amount which is appropriate under paragraph 26 or 27 of that Schedule.

• (8) Sections 85 and 85B of the Value Added Tax Act 1994 (settling of appeals by agreement and payment of tax where there is a further appeal) shall have effect as if—

• (a) the references to section 83 of that Act included references to section 54 of this Act, and

• (b) the references to value added tax included references to landfill tax.

Review and appeal: commencement

57

Sections 54 to 56 above shall come into force on—

• (a) 1st October 1996, or

• (b) such earlier day as may be appointed by order.

Miscellaneous

Partnership, bankruptcy, transfer of business, etc

58

• (1) As regards any case where a business is carried on in partnership or by another unincorporated body, regulations may make provision for determining by what persons anything required by this Part to be done by a person is to be done.

• (2) The registration under this Part of an unincorporated body other than a partnership may be in the name of the body concerned; and in determining whether taxable activities are carried out by such a body no account shall be taken of any change in its members.

• (3) The registration under this Part of a body corporate carrying on a business in several divisions may, if the body corporate so requests and the Commissioners see fit, be in the names of those divisions.

• (4) As regards any case where a person carries on a business of a person who has died or become bankrupt or incapacitated or whose estate has been sequestrated, or of a person which is in liquidation or receivership or administration , regulations may—

• (a) require the first-mentioned person to inform the Commissioners of the fact that he is carrying on the business and of the event that has led to his carrying it on;

• (b) make provision allowing the person to be treated for a limited time as if he were the other person;

• (c) make provision for securing continuity in the application of this Part where a person is so treated.

• (5) Regulations may make provision for securing continuity in the application of this Part in cases where a business carried on by a person is transferred to another person as a going concern.

• (6) Regulations under subsection (5) above may in particular—

• (a) require the transferor to inform the Commissioners of the transfer;

• (b) provide for liabilities and duties under this Part of the transferor to become, to such extent as may be provided by the regulations, liabilities and duties of the transferee;

• (c) provide for any right of either of them to repayment or credit in respect of tax to be satisfied by making a repayment or allowing a credit to the other;

but the regulations may provide that no such provision as is mentioned in paragraph (b) or (c) of this subsection shall have effect in relation to any transferor and transferee unless an application in that behalf has been made by them under the regulations.

Groups of companies

59

• (1) Where under the following provisions of this section any bodies corporate are treated as members of a group, for the purposes of this Part—

• (a) any liability of a member of the group to pay tax shall be taken to be a liability of the representative member;

• (b) the representative member shall be taken to carry out any taxable activities which a member of the group would carry out (apart from this section) by virtue of section 69 below;

• (c) all members of the group shall be jointly and severally liable for any tax due from the representative member.

• (2) Two or more bodies corporate are eligible to be treated as members of a group if the conditions mentioned in subsection (3) below are fulfilled and—

• (a) one of them controls each of the others,

• (b) one person (whether a body corporate or an individual) controls all of them, or

• (c) two or more individuals carrying on a business in partnership control all of them.

• (3) The conditions are that—

• (a) each of the bodies corporate is a registered person, and

• (b) the prospective representative member has an established place of business in the United Kingdom.

• (4) Where an application to that effect is made to the Commissioners with respect to two or more bodies corporate eligible to be treated as members of a group, then—

• (a) from the beginning of an accounting period they shall be so treated, and

• (b) one of them shall be the representative member,

unless the Commissioners refuse the application; and the Commissioners shall not refuse the application unless it appears to them necessary to do so for the protection of the revenue.

• (5) Where any bodies corporate are treated as members of a group and an application to that effect is made to the Commissioners, then, from the beginning of an accounting period—

• (a) a further body eligible to be so treated shall be included among the bodies so treated,

• (b) a body corporate shall be excluded from the bodies so treated,

• (c) another member of the group shall be substituted as the representative member, or

• (d) the bodies corporate shall no longer be treated as members of a group,

unless the application is to the effect mentioned in paragraph (a) or (c) above and the Commissioners refuse the application.

• (6) The Commissioners may refuse an application under subsection (5)(a) or (c) above only if it appears to them necessary to do so for the protection of the revenue.

• (7) Where a body corporate is treated as a member of a group as being controlled by any person and it appears to the Commissioners that it has ceased to be so controlled, they shall, by notice given to that person, terminate that treatment from such date as may be specified in the notice.

• (8) An application under this section with respect to any bodies corporate must be made by one of those bodies or by the person controlling them and must be made not less than 90 days before the date from which it is to take effect, or at such later time as the Commissioners may allow.

• (9) For the purposes of this section a body corporate shall be taken to control another body corporate if it is empowered by statute to control that body’s activities or if it is that body’s holding company within the meaning of section 1159 of and Schedule 6 to the Companies Act 1985; and an individual or individuals shall be taken to control a body corporate if he or they, were he or they a company, would be that body’s holding company within the meaning of those provisions.

Information, powers, penalties, etc

60

Schedule 5 to this Act (which contains provisions relating to information, powers, penalties , secondary liability and other matters) shall have effect.

Taxable disposals: special provisions

61

• (1) Where—

• (a) a taxable disposal is in fact made on a particular day,

• (b) within the period of 14 days beginning with that day the person liable to pay tax in respect of the disposal issues a landfill invoice in respect of the disposal, and

• (c) he has not notified the Commissioners in writing that he elects not to avail himself of this subsection,

for the purposes of this Part the disposal shall be treated as made at the time the invoice is issued.

• (2) The reference in subsection (1) above to a landfill invoice is to a document containing such particulars as regulations may prescribe for the purposes of that subsection.

• (3) The Commissioners may at the request of a person direct that subsection (1) above shall apply—

• (a) in relation to disposals in respect of which he is liable to pay tax, or

• (b) in relation to such of them as may be specified in the direction,

as if for the period of 14 days there were substituted such longer period as may be specified in the direction.

Taxable disposals: regulations

62

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

Qualifying material: special provisions

63

• (1) This section applies for the purposes of section 42 above.

• (2) The Commissioners may direct that where material is disposed of it must be treated as qualifying material if it would in fact be such material but for a small quantity of non-qualifying material; and whether a quantity of non-qualifying material is small must be determined in accordance with the terms of the direction.

• (3) The Commissioners may at the request of a person direct that where there is a disposal in respect of which he is liable to pay tax the material disposed of must be treated as qualifying material if it would in fact be such material but for a small quantity of non-qualifying material, and—

• (a) a direction may apply to all disposals in respect of which a person is liable to pay tax or to such of them as are identified in the direction;

• (b) whether a quantity of non-qualifying material is small must be determined in accordance with the terms of the direction.

• (4) If a direction under subsection (3) above applies to a disposal any direction under subsection (2) above shall not apply to it.

• (4A) Subsections (2) to (4) do not apply where the material disposed of consists of qualifying fines.

• (5) An order may provide that material must not be treated as qualifying material unless prescribed conditions are met.

• (6) A condition may relate to any matter the Treasury think fit (such as the production of a document which includes a statement of the nature of the material).

Interpretation

Disposal of material as waste

64

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

Disposal by way of landfill

65

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

Landfill sites

66

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

Operators of landfill sites

67

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

Weight of material disposed of

68

• (1) The weight of the material disposed of on a taxable disposal shall be determined in accordance with regulations.

• (2) The regulations may—

• (a) prescribe rules for determining the weight;

• (b) authorise rules for determining the weight to be specified by the Commissioners in a prescribed manner;

• (c) authorise rules for determining the weight to be agreed by the person liable to pay the tax and an authorised person.

• (3) The regulations may in particular prescribe, or authorise the specification or agreement of, rules about—

• (a) the method by which the weight is to be determined;

• (b) the time by reference to which the weight is to be determined;

• (c) the discounting of constituents (such as water).

• (4) The regulations may include provision that a specification authorised under subsection (2)(b) above may provide—

• (a) that it is to have effect only in relation to disposals of such descriptions as may be set out in the specification;

• (b) that it is not to have effect in relation to particular disposals unless the Commissioners are satisfied that such conditions as may be set out in the specification are met in relation to the disposals;

and the conditions may be framed by reference to such factors as the Commissioners think fit (such as the consent of an authorised person to the specification having effect in relation to disposals).

• (5) The regulations may include provision that—

• (a) where rules are agreed as mentioned in subsection (2)(c) above, and

• (b) the Commissioners believe that they should no longer be applied because they do not give an accurate indication of the weight or they are not being fully observed or for some other reason,

the Commissioners may direct that the agreed rules shall no longer have effect.

• (6) The regulations shall be so framed that where in relation to a given disposal—

• (a) no specification of the Commissioners has effect, and

• (b) no agreed rules have effect,

the weight shall be determined in accordance with rules prescribed in the regulations.

Taxable activities

69

• (1) A person carries out a taxable activity if the person—

• (a) makes a taxable disposal (whether or not at a landfill site),

• (b) permits a taxable disposal to be made at a landfill site, or

• (c) knowingly causes or knowingly permits a taxable disposal to be made elsewhere than at a landfill site,

and the person is liable to pay tax in respect of the disposal.

• (2) Where—

• (a) a taxable disposal is made at a landfill site, and

• (b) it is made without the knowledge of the person who is liable to pay tax in respect of it,

that person shall for the purposes of subsection (1)(b) be taken to permit the disposal.

Interpretation: other provisions

70

• (1) Unless the context otherwise requires—

• “accounting period” shall be construed in accordance with section 49 above;

• “appeal tribunal” means the First-tier Tribunal or, where determined by or under Tribunal Procedure Rules, the Upper Tribunal;

• “authorised person” means any person acting under the authority of the Commissioners;

• “the Commissioners” means the Commissioners of Customs and Excise;

• “conduct” includes any act, omission or statement;

• “disposal” and “dispose of” shall be construed in accordance with section 40A;

• “the Environment Agency” means the body established by section 1 of the Environment Act 1995;

• “fines” means particles produced by a waste treatment process that involves an element of mechanical treatment;

• “HMRC” means Her Majesty’s Revenue and Customs;

• “landfill site” has the meaning given by section 40(4);

• “material” means material of all kinds, including objects, substances and products of all kinds;

• “the Natural Resources Body for Wales” means the body established by article 3 of the Natural Resources Body for Wales (Establishment) Order 2012 (S.I. 2012/1903);

• “operator”, in relation to a landfill site, means the person who at the relevant time is the holder of the permit (where section 40(4)(a) applies) or the licence (where section 40(4)(b) or (c) applies);

• “prescribed” means prescribed by an order or regulations under this Part;

• “registered person” and “registrable person” have the meaning given by section 47(10) above;

• ...

• “tax” means landfill tax;

• “taxable disposal” has the meaning given by section 40 above.

• “taxable person” means a person who is liable to pay tax on a taxable disposal.

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

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

• (3) A reference to this Part includes a reference to any order or regulations made under it and a reference to a provision of this Part includes a reference to any order or regulations made under the provision, unless otherwise required by the context or any order or regulations.

• (4) This section and sections 68 and 69 above apply for the purposes of this Part.

Supplementary

Orders and regulations

71

• (1) The power to make an order under section 57 above shall be exercisable by the Commissioners, and the power to make an order under any other provision of this Part shall be exercisable by the Treasury.

• (2) Any power to make regulations under this Part shall be exercisable by the Commissioners.

• (3) Any power to make an order or regulations under this Part shall be exercisable by statutory instrument.

• (4) An order to which this subsection applies shall be laid before the House of Commons; and unless it is approved by that House before the expiration of a period of 28 days beginning with the date on which it was made it shall cease to have effect on the expiration of that period, but without prejudice to anything previously done under the order or to the making of a new order.

• (5) In reckoning any such period as is mentioned in subsection (4) above no account shall be taken of any time during which Parliament is dissolved or prorogued or during which the House of Commons is adjourned for more than four days.

• (6) A statutory instrument containing an order or regulations under this Part (other than an order under section 57 above or an order to which subsection (4) above applies) shall be subject to annulment in pursuance of a resolution of the House of Commons.

• (7) Subsection (4) above applies to—

• (za) an order under section 40A which has the result that anything which would not otherwise be a taxable disposal is a taxable disposal;

• (a) an order under section 42(3) above providing for material which would otherwise be qualifying material not to be qualifying material;

• (aa) an order under section 42(3A) providing for fines which would otherwise be qualifying fines not to be qualifying fines;

• (b) an order under section 46 above which produces the result that a disposal which would otherwise not be a taxable disposal is a taxable disposal;

• (c) an order under section 63(5) above other than one which provides only that an earlier order under section 63(5) is not to apply to material;

• (cza) an order under section 63A(2) other than one which provides only that an earlier order under section 63A(2) is not to apply to fines;

• (ca) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (cb) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

• (8) Any power to make an order or regulations under this Part—

• (a) may be exercised as regards prescribed cases or descriptions of case;

• (b) may be exercised differently in relation to different cases or descriptions of case.

• (9) An order or regulations under this Part may include such supplementary, incidental, consequential or transitional provisions as appear to the Treasury or the Commissioners (as the case may be) to be necessary or expedient.

• (10) No specific provision of this Part about an order or regulations shall prejudice the generality of subsections (8) and (9) above.

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

Chapter I — Principal provisions

Income tax charge, rates and reliefs

Charge and rates of income tax for 1996-97

72

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

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

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

Application of lower rate to income from savings

73

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

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

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

• (4) Schedule 6 to this Act (which makes further amendments in connection with the charge at the lower rate on income from savings etc.) shall have effect.

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

Personal allowances for 1996-97

74

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

Blind person’s allowance

75

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

Limit on relief for interest

76

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

Corporation tax charge and rate

Charge and rate of corporation tax for 1996

77

Corporation tax shall be charged for the financial year 1996 at the rate of 33 per cent.

Small companies

78

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

Abolition of Schedule C charge etc.

Abolition of Schedule C charge etc

79

• (1) The charge to tax under Schedule C is abolished—

• (a) for the purposes of income tax, for the year 1996-97 and subsequent years of assessment;

• (b) for the purposes of corporation tax, for accounting periods ending after 31st March 1996.

• (2) Schedule 7 to this Act (which, together with Chapter II of this Part of this Act, makes provision for imposing a charge under Schedule D on descriptions of income previously charged under Schedule C, and makes connected amendments) shall have effect.

Chapter II — Loan relationships

Introductory provisions

Taxation of loan relationships

80

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

Meaning of “loan relationship” etc

81

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

Taxation of profits and gains and relief for deficits

Method of bringing amounts into account

82

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

Non-trading deficit on loan relationships

83

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

Computational provisions etc.

Debits and credits brought into account

84

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

Authorised accounting methods

85

• (1) Subject to the following provisions of this Chapter, the alternative accounting methods that are authorised for the purposes of this Chapter are—

• (a) an accruals basis of accounting; and

• (b) a mark to market basis of accounting under which any loan relationship to which that basis is applied is brought into account in each accounting period at a fair value.

• (2) An accounting method applied in any case shall be treated as authorised for the purposes of this Chapter only if—

• (a) subject to paragraphs (b) to (c) below, it is in conformity with generally accepted accounting practice to use that method in that case;

• (b) it contains proper provision for allocating payments under a loan relationship , or arising as a result of a related transaction, to accounting periods; . . .

• (bb) it contains proper provision for determining exchange gains and losses from loan relationships for accounting periods; and

• (c) where it is an accruals basis of accounting, it does not contain any provision (other than provision in respect of exchange losses or provision comprised in authorised arrangements for bad debt) that gives debits by reference to the valuation at different times of any asset representing a loan relationship.

• (3) In the case of an accruals basis of accounting, proper provision for allocating payments under a loan relationship to accounting periods is provision which—

• (a) allocates payments to the period to which they relate, without regard to the periods in which they are made or received or in which they become due and payable;

• (b) includes provision which, where payments relate to two or more periods, apportions them on a just and reasonable basis between the different periods;

• (c) assumes, subject to authorised arrangements for bad debt, that, so far as any company in the position of a creditor is concerned, every amount payable under the relationship will be paid in full as it becomes due;

• (d) secures the making of the adjustments required in the case of the relationship by authorised arrangements for bad debt; and

• (e) provides, subject to authorised arrangements for bad debt and for writing off government investments, that, where there is a release of any liability under the relationship, the appropriate amount in respect of the release is credited to the debtor in the accounting period in which the release takes place.

• (4) In the case of a mark to market basis of accounting, proper provision for allocating payments under a loan relationship to accounting periods is provision which allocates payments to the accounting period in which they become due and payable.

• (5) In this section—

• (a) the references to authorised arrangements for bad debt are references to accounting arrangements under which debits and credits are brought into account in conformity with the provisions of paragraph 5 of Schedule 9 to this Act; and

• (b) the reference to authorised arrangements for writing off government investments is a reference to accounting arrangements that give effect to paragraph 7 of that Schedule.

• (6) In this section “fair value”, in relation to any loan relationship of a company, means the amount which, at the time as at which the value falls to be determined, is the amount that the company would obtain from or, as the case may be, would have to pay to an independent person for—

• (a) the transfer of all the company’s rights under the relationship in respect of amounts which at that time are not yet due and payable; and

• (b) the release of all the company’s liabilities under the relationship in respect of amounts which at that time are not yet due and payable.

Application of accounting methods

86

• (1) This section has effect, subject to the following provisions of this Chapter, for the determination of which of the alternative authorised accounting methods that are available by virtue of section 85 above is to be used as respects the loan relationships of a company.

• (2) Different methods may be used as respects different relationships or, as respects the same relationship, for different accounting periods or for different parts of the same accounting period.

• (3) If a basis of accounting which is or equates with an authorised accounting method is used as respects any loan relationship of a company in a company’s statutory accounts, then the method which is to be used for the purposes of this Chapter as respects that relationship for the accounting period, or part of a period, for which that basis is used in those accounts shall be—

• (a) where the basis used in those accounts is an authorised accounting method, that method; and

• (b) where it is not, the authorised accounting method with which it equates.

but this subsection is subject to subsections (3A) and (3D) below.

• (3A) If, in the case of a company falling within subsection (8)(c) or (d) below, an authorised mark to market basis of accounting—

• (a) would be used as respects some or all of the company’s loan relationships, were the company a UK company following generally accepted accounting practice, but

• (b) is not the basis of accounting used as respects those loan relationships in the company’s statutory accounts,

the company may elect to use an authorised mark to market basis of accounting as its authorised accounting method for the purposes of this Chapter in relation to every loan relationship as respects which that basis would be used if the company were a UK company following generally accepted accounting practice.

• (3B) Any election under subsection (3A) above—

• (a) must be made before the expiration of the period of two years following the end of the company’s first accounting period beginning on or after 1st October 2002 in which it is party to a loan relationship in relation to which such an election may be made;

• (b) has effect for that accounting period and all subsequent accounting periods of the company; and

• (c) is irrevocable.

• (3C) A company which makes an election under sub-paragraph (3A) above as respects its loan relationships shall be taken for the purposes of Schedule 26 to the Finance Act 2002 (derivative contracts) to have at the same time made an election under sub-paragraph (2) of paragraph 19 of that Schedule having effect—

• (a) for the accounting periods mentioned in subsection (3B)(b) above, and

• (b) as respects any derivative contracts to which the company is or may become party in any of those accounting periods,

and that election shall so have effect notwithstanding anything in paragraph (a) or (b) of sub-paragraph (3) of that paragraph.

• (3D) If, in the case of a company falling within subsection (8)(c) or (d) below which has not made an election under subsection (3A) above,—

• (a) an authorised mark to market basis of accounting would be used for an accounting period—

• (i) as respects some or all of the company’s loan relationships, and

• (ii) as respects some or all of the company’s derivative contracts,

were the company a UK company following generally accepted accounting practice, and

• (b) that basis of accounting—

• (i) is used in the company’s statutory accounts as respects those derivative contracts for that accounting period, but

• (ii) is not the basis of accounting used in those accounts as respects those loan relationships for that accounting period,

the company must for that accounting period use an authorised mark to market basis of accounting as its authorised accounting method for the purposes of this Chapter in relation to every loan relationship as respects which that basis would be used if the company were a UK company following generally accepted accounting practice.

• (4) For any period or part of a period for which the authorised accounting method to be used as respects a loan relationship of a company is not

• (a) a method determined under subsection (3) above,

• (b) an authorised mark to market method in accordance with an election under subsection (3A) above, or

• (c) an authorised mark to market method in accordance with subsection (3D) above,

an authorised accruals basis of accounting shall be used for the purposes of this Chapter as respects that loan relationship.

• (5) For the purposes of this section (but subject to subsection (6) below)—

• (a) a basis of accounting equates with an authorised accruals basis of accounting if it purports to allocate payments under a loan relationship to accounting periods according to when they are taken to accrue; and

• (b) a basis of accounting equates with an authorised mark to market basis of accounting if (without equating with an authorised accruals basis of accounting) it purports in respect of a loan relationship—

• (i) to produce credits or debits computed by reference to the determination, as at different times in an accounting period, of a fair value; and

• (ii) to produce credits or debits relating to payments under that relationship according to when they become due and payable.

• (6) An accounting method which purports to make any such allocation of payments under a loan relationship as is mentioned in subsection (5)(a) above shall be taken for the purposes of this section to equate with an authorised mark to market basis of accounting (rather than with an authorised accruals basis of accounting) if—

• (a) it purports to bring that relationship into account in each accounting period at a value which would be a fair value if the valuation were made on the basis that interest under the relationship were to be disregarded to the extent that it has already accrued; and

• (b) the credits and debits produced in the case of that relationship by that method (when it is properly applied) correspond, for all practical purposes, to the credits and debits produced in the case of that relationship, and for the same accounting period, by an authorised mark to market basis of accounting.

• (7) In this section

• “fair value” has the same meaning as in section 85 above.

• “UK company” means a company incorporated or formed under the law of a part of the United Kingdom.

• (8) In this Chapter“statutory accounts”, in relation to a company, means—

• (a) any accounts relating to that company that are drawn up in accordance with any requirements of the Companies Act 1985 or the Companies (Northern Ireland) Order 1986 that apply in relation to that company;

• (b) any accounts relating to that company that are drawn up in accordance with any requirements of regulations under section 70 of the Friendly Societies Act 1992 that apply in relation to that company;

• (c) any accounts relating to that company which are accounts to which Part I of Schedule 21C to the Companies Act 1985 or Part I of Schedule 21D to that Act (companies with UK branches) applies;

• (d) in the case of a company which—

• (i) is not subject to any such requirements as are mentioned in paragraphs (a) or (b) above, and

• (ii) is a company in whose case there are no accounts for the period in question that fall within paragraph (c) above,

any accounts relating to the company drawn up in accordance with requirements imposed in relation to that company under the law of its home State; and

• (e) in the case of a company which—

• (i) is not subject to any such requirements as are mentioned in paragraphs (a), (b) or (d) above, and

• (ii) is a company in whose case there are no accounts for the period in question that fall within paragraph (c) above,

the accounts relating to the company that most closely correspond to the accounts which, in the case of a company formed and registered under the Companies Act 1985, are required under that Act.

• (9) For the purposes of subsection (8) above the home State of a company is the country or territory under whose law the company is incorporated.

Accounting method where parties have a connection

87

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

Exemption from section 87 in certain cases

88

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

Inconsistent application of accounting methods

89

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

Changes of accounting method

90

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

Payments subject to deduction of tax

91

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

Special cases

Convertible securities etc

92

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

Relationships linked to the value of chargeable assets

93

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

Indexed gilt-edged securities

94

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

Gilt strips

95

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

Special rules for certain other gilts

96

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

Manufactured interest

97

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

Collective investment schemes

98

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

Insurance companies

99

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

Miscellaneous other provisions

Interest on judgments, imputed interest, etc

100

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

Financial instruments

101

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

Discounted securities: income tax provisions

102

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

Supplemental

Interpretation of Chapter

103

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

Minor and consequential amendments

104

Schedule 14 to this Act (which, for the purposes of both corporation tax and income tax, makes certain minor and consequential amendments in connection with the provisions of this Chapter) shall have effect.

Commencement and transitional provisions

105

• (1) Subject to Schedule 15 to this Act, this Chapter has effect—

• (a) for the purposes of corporation tax, in relation to accounting periods ending after 31st March 1996; and

• (b) so far as it makes provision for the purposes of income tax, in relation to the year 1996-97 and subsequent years of assessment.

• (2) Schedule 15 to this Act (which contains transitional provisions and savings in connection with the coming into force of this Chapter) shall have effect.

Chapter III — Provisions relating to the Schedule E charge

Living accommodation provided for employees

106

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

Beneficial loans

107

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

Incidental benefits for holders of certain offices etc

108

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

Charitable donations: payroll deduction schemes

109

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

PAYE settlement agreements

110

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

Chapter IV — Share Options, Profit Sharing and Employee Share Ownership

Share options

Amount or value of consideration for option

111

• (1) Section 149A of the Taxation of Chargeable Gains Act 1992 (consideration for grant of option under approved share option schemes not to be deemed to be equal to market value of option) shall be amended as follows.

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

• (3) In subsection (2) (grantor to be treated as if the amount or value of the consideration was its actual amount or value) for “The grantor of the option” there shall be substituted “ Both the grantor of the option and the person to whom the option is granted ”.

• (4) Subsection (4) (section not to affect treatment under that Act of person to whom option granted) shall cease to have effect.

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

• (6) This section has effect in relation to any right to acquire shares in a body corporate obtained on or after 28th November 1995 by an individual by reason of his office or employment as a director or employee of a body corporate.

Release and replacement

112

• (1) After section 237 of the Taxation of Chargeable Gains Act 1992 there shall be inserted—

(237A) (1) This section applies in any case where a right to acquire shares in a body corporate (“the old right”) which was obtained by an individual by reason of his office or employment as a director or employee of that or any other body corporate is released in whole or in part for a consideration which consists of or includes the grant to that individual of another right (“the new right”) to acquire shares in that or any other body corporate. (2) As respects the person to whom the new right is granted— (a) without prejudice to subsection (1) above, the new right shall not be regarded for the purposes of capital gains tax as consideration for the release of the old right; (b) the amount or value of the consideration given by him or on his behalf for the acquisition of the new right shall be taken for the purposes of section 38(1) to be the amount or value of the consideration given by him or on his behalf for the old right; and (c) any consideration paid for the acquisition of the new right shall be taken to be expenditure falling within section 38(1)(b). (3) As respects the grantor of the new right, in determining for the purposes of this Act the amount or value of the consideration received for the new right, the release of the old right shall be disregarded.

• (2) Section 238(4) of that Act (which provides that the release of an option under an approved share option scheme in exchange for another option, in connection with a company take-over, is not to involve a disposal, and which is superseded by subsection (1) above) shall cease to have effect.

• (3) This section has effect in relation to transactions effected on or after 28th November 1995.

Savings-related share option schemes

Exercise of rights by employees of non-participating companies

113

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

Other share option schemes

Requirements to be satisfied by approved schemes

114

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

Transitional provisions

115

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

Profit sharing schemes

The release date

116

• (1) In section 187(2) of the Taxes Act 1988 (interpretation of sections 185 and 186 of, and Schedules 9 and 10 to, that Act) in the definition of “release date” (the fifth anniversary of the date on which shares were appropriated to a participant in a profit sharing scheme) for “fifth” there shall be substituted “ third ”.

• (2) The amendment made by subsection (1) above shall have effect in relation to shares of a participant in a profit sharing scheme if the third anniversary of the appropriation of the shares to the participant occurs on or after the day on which this Act is passed.

• (3) If the third anniversary of the appropriation of any shares to a participant in a profit sharing scheme has occurred, but the fifth anniversary of their appropriation to him has not occurred, before the passing of this Act, then, in the application of sections 186 and 187 of, and Schedules 9 and 10 to, the Taxes Act 1988 in relation to those shares, the release date shall be the day on which this Act is passed.

The appropriate percentage

117

• (1) In Schedule 10 to the Taxes Act 1988 (further provisions relating to profit sharing schemes) for paragraph 3 (the appropriate percentage) there shall be substituted—

(3) (1) For the purposes of any of the relevant provisions charging an individual to income tax under Schedule E by reason of the occurrence of an event relating to any of his shares, the “appropriate percentage” in relation to those shares is 100 per cent., unless sub-paragraph (2) below applies. (2) Where the individual— (a) ceases to be a director or employee of the grantor or, in the case of a group scheme, a participating company as mentioned in paragraph 2(a) above, or (b) reaches the relevant age, before the event occurs, the “appropriate percentage” is 50 per cent., unless paragraph 6(4) below applies.