Finance Act 1996

• (2) In section 187(8) of that Act (determination of certain values and percentages where shares are appropriated to a participant at different times) paragraph (b) (which relates to the appropriate percentage), and the word “and” immediately preceding it, shall cease to have effect.

• (3) Subsections (1) and (2) above have effect in relation to the occurrence, on or after the day on which this Act is passed, of events by reason of whose occurrence any provision of section 186 or 187 of, or Schedule 9 or 10 to, the Taxes Act 1988 charges an individual to income tax under Schedule E.

The appropriate allowance

118

• (1) In section 186(12) of the Taxes Act 1988 (determination of the appropriate allowance for the purposes of the charge to tax on capital receipts by a participant in an approved profit sharing scheme)—

• (a) for “£100” there shall be substituted “ £60 ”; and

• (b) for “five years” there shall be substituted “ three years ”.

• (2) Subsection (1) above has effect for the year 1997-98 and subsequent years of assessment.

Employee share ownership trusts

Removal of requirement for at least one year’s service

119

• (1) In Schedule 5 to the Finance Act 1989 (employee share ownership trusts) in paragraph 4(5)(a) (for a trust to be a qualifying ESOT, its beneficiaries must have been employees or directors of the company for at least one year) the words “not less than one year and” shall cease to have effect.

• (2) This section applies to trusts established on or after the day on which this Act is passed.

Grant and exercise of share options

120

• (1) In Schedule 5 to the Finance Act 1989 (employee share ownership trusts), in paragraph 4 (the trust deed must contain provision as to the beneficiaries) after sub-paragraph (2) there shall be inserted—

(2A) The trust deed may provide that a person is a beneficiary at a given time if at that time he is eligible to participate in a savings-related share option scheme within the meaning of Schedule 9 to the Taxes Act 1988— (a) which was established by a company within the founding company’s group, and (b) which is approved under that Schedule. (2B) Where a trust deed contains a rule conforming with sub-paragraph (2A) above it must provide that the only powers and duties which the trustees may exercise in relation to persons who are beneficiaries by virtue only of that rule are those which may be exercised in accordance with the provisions of a scheme such as is mentioned in that sub-paragraph.

• (2) In consequence of the amendment made by subsection (1) above, section 69 of, and Schedule 5 to, the Finance Act 1989 (which respectively make provision about chargeable events in relation to the trustees of qualifying employee share ownership trusts and the requirements to be satisfied by such trusts) shall be amended in accordance with the following provisions of this section.

• (3) In subsection (4) of that section (meaning of “qualifying terms” for the purposes of the provision that the transfer of securities to beneficiaries is a chargeable event if it is not on qualifying terms)—

• (a) in paragraph (a) (securities which are transferred at the same time must be transferred on similar terms) after “time” there shall be inserted “ other than those transferred on a transfer such as is mentioned in subsection (4ZA) below ”;

• (b) in paragraph (b) (securities must have been offered to all the persons who are beneficiaries), after “trust deed” there shall be inserted “ by virtue of a rule which conforms with paragraph 4(2), (3) or (4) of Schedule 5 to this Act ”; and

• (c) in paragraph (c) (securities must be transferred to all such beneficiaries who have accepted the offer) for “beneficiaries” there shall be substituted “ persons ”.

• (4) After subsection (4) of that section there shall be inserted—

(4ZA) For the purposes of subsection (1)(b) above a transfer of securities is also made on qualifying terms if— (a) it is made to a person exercising a right to acquire shares, and (b) that right was obtained in accordance with the provisions of a savings-related share option scheme within the meaning of Schedule 9 to the Taxes Act 1988— (i) which was established by, or by a company controlled by, the company which established the trust, and (ii) which is approved under that Schedule, and (c) that right is being exercised in accordance with the provisions of that scheme, and (d) the consideration for the transfer is payable to the trustees.

• (5) In sub-paragraph (4) of paragraph 4 of that Schedule (trust deed may provide for charity to be beneficiary if there are no beneficiaries falling within a rule conforming with sub-paragraph (2) or (3)) after “sub-paragraph (2)” there shall be inserted “ , (2A) ”.

• (6) In sub-paragraph (7) of that paragraph (trust deed must not provide for a person to be a beneficiary unless he falls within a rule conforming with sub-paragraph (2), (3) or (4)) after “sub-paragraph (2)” there shall be inserted “ , (2A) ”.

• (7) In sub-paragraph (8) of that paragraph (trust deed must provide that person with material interest in founding company cannot be a beneficiary) after “at a particular time (the relevant time)” there shall be inserted “ by virtue of a rule which conforms with sub-paragraph (2), (3) or (4) above ”.

• (8) In paragraph 5(2) of that Schedule (trust deed must be so expressed that it is apparent that the general functions of the trustees are as mentioned in paragraphs (a) to (e)) after paragraph (c) there shall be inserted—

(cc) to grant rights to acquire shares to persons who are beneficiaries under the terms of the trust deed;

.

• (9) In paragraph 9 of that Schedule (trust deed must provide that transfers of securities to beneficiaries must be on qualifying terms and within the qualifying period) in sub-paragraph (2) (meaning of qualifying terms)—

• (a) in paragraph (a) (securities which are transferred at the same time must be transferred on similar terms) after “time” there shall be inserted “ other than those transferred on a transfer such as is mentioned in sub-paragraph (2ZA) below ”;

• (b) in paragraph (b) (securities must have been offered to all the persons who are beneficiaries) after “trust deed” there shall be inserted “ by virtue of a rule which conforms with paragraph 4(2), (3) or (4) above ”; and

• (c) in paragraph (c) (securities must be transferred to all such beneficiaries who have accepted the offer) for “beneficiaries” there shall be substituted “ persons ”.

• (10) After sub-paragraph (2) of that paragraph there shall be inserted—

(2ZA) For the purposes of sub-paragraph (1) above a transfer of securities is also made on qualifying terms if— (a) it is made to a person exercising a right to acquire shares, and (b) that right was obtained in accordance with the provisions of a savings-related share option scheme within the meaning of Schedule 9 to the Taxes Act 1988— (i) which was established by, or by a company controlled by, the founding company, and (ii) which is approved under that Schedule, and (c) that right is being exercised in accordance with the provisions of that scheme, and (d) the consideration for the transfer is payable to the trustees.

• (11) In paragraph 10 of that Schedule (trust deed must not contain features not essential or reasonably incidental to purposes mentioned in that paragraph)—

• (a) after “acquiring sums and securities,” there shall be inserted “ granting rights to acquire shares to persons who are eligible to participate in savings-related share option schemes approved under Schedule 9 to the Taxes Act 1988, transferring shares to such persons, ”; and

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

• (12) This section has effect in relation to trusts established on or after the day on which this Act is passed.

Chapter V — Self Assessment, General Management etc.

General

Returns and self assessment

121

• (1) In subsection (1) of section 8 of the Taxes Management Act 1970 (personal return), and in subsection (1) of section 8A of that Act (trustee’s return), after the words “year of assessment,” there shall be inserted the words “ and the amount payable by him by way of income tax for that year, ”.

• (2) In subsection (1A) of each of those sections, the words from “and the amounts referred to” to the end shall cease to have effect.

• (3) After that subsection of each of those sections there shall be inserted the following subsection—

(1AA) For the purposes of subsection (1) above— (a) the amounts in which a person is chargeable to income tax and capital gains tax are net amounts, that is to say, amounts which take into account any relief or allowance a claim for which is included in the return; and (b) the amount payable by a person by way of income tax is the difference between the amount in which he is chargeable to income tax and the aggregate amount of any income tax deducted at source and any tax credits to which section 231 of the principal Act applies.

• (4) For subsection (1) of section 9 of that Act (returns to include self-assessment) there shall be substituted the following subsection—

(1) Subject to subsection (2) below, every return under section 8 or 8A of this Act shall include a self-assessment, that is to say— (a) an assessment of the amounts in which, on the basis of the information contained in the return and taking into account any relief or allowance a claim for which is included in the return, the person making the return is chargeable to income tax and capital gains tax for the year of assessment; and (b) an assessment of the amount payable by him by way of income tax, that is to say, the difference between the amount in which he is assessed to income tax under paragraph (a) above and the aggregate amount of any income tax deducted at source and any tax credits to which section 231 of the principal Act applies.

• (5) In subsection (1)(b) of section 11AA of that Act (return of profits to include self-assessment), for the words “, allowance or repayment of tax” there shall be substituted the words “ or allowance ”.

• (6) In subsection (1)(a) of section 12AA of that Act (partnership return), after the words “so chargeable” there shall be inserted the words “ and the amount payable by way of income tax by each such partner ”.

• (7) For subsection (1A) of that section there shall be substituted the following subsection—

(1A) For the purposes of subsection (1) above— (a) the amount in which a partner is chargeable to income tax or corporation tax is a net amount, that is to say, an amount which takes into account any relief or allowance for which a claim is made; and (b) the amount payable by a partner by way of income tax is the difference between the amount in which he is chargeable to income tax and the aggregate amount of any income tax deducted at source and any tax credits to which section 231 of the principal Act applies.

• (8) This section and sections 122, 123, 125 to 127 and 141 below—

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

• (b) so far as they relate to corporation tax, have effect as respects accounting periods ending on or after the appointed day for the purposes of Chapter III of Part IV of the Finance Act 1994.

Notional tax deductions and payments

122

• (1) At the end of subsection (1) of section 9 of the Taxes Management Act 1970 (as substituted by section 121(4) above) there shall be inserted the words “ but nothing in this subsection shall enable a self-assessment to show as repayable any income tax treated as deducted or paid by virtue of section 233(1), 246D(1), 249(4), 421(1), 547(5) or 599A(5) of the principal Act. ”

• (2) At the end of subsection (1) of section 59B of that Act (payment of income tax and capital gains tax) there shall be inserted the words “ but nothing in this subsection shall require the repayment of any income tax treated as deducted or paid by virtue of section 233(1), 246D(1), 249(4), 421(1), 547(5) or 599A(5) of the principal Act. ”

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

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

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

• (6) In subsection (1)(b) of section 421 of that Act (taxation of borrower when loan released), for the words “no assessment shall be made on him in respect of” there shall be substituted the words “ he shall not be liable to pay ”.

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

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

• (b) in subsection (6) of section 599A of that Act (charge to tax: payments out of surplus funds), the words from “subject” to “and”; and

• (c) subsection (7) of that section.

Liability of partners

123

• (1) In subsection (2) of section 12AA of the Taxes Management Act 1970 (partnership return) after the words “with the notice” there shall be inserted the words “ or a successor of his ”.

• (2) In subsection (3) of that section after the words “the partner” there shall be inserted the words “ or a successor of his ”.

• (3) In subsection (7)(a) of that section, the words “any part of” shall cease to have effect.

• (4) At the end of that section there shall be inserted the following subsections—

(11) In this Act “successor”, in relation to a person who is required to make and deliver, or has made and delivered, a return in pursuance of a notice under subsection (2) or (3) above, but is no longer available, means— (a) where a partner is for the time being nominated for the purposes of this subsection by a majority of the relevant partners, that partner; and (b) where no partner is for the time being so nominated, such partner as— (i) in the case of a notice under subsection (2) above, is identified in accordance with rules given with that notice; or (ii) in the case of a notice under subsection (3) above, is nominated for the purposes of this subsection by an officer of the Board; and “predecessor” and “successor”, in relation to a person so nominated or identified, shall be construed accordingly. (12) For the purposes of subsection (11) above a nomination under paragraph (a) of that subsection, and a revocation of such a nomination, shall not have effect in relation to any time before notice of the nomination or revocation is given to an officer of the Board. (13) In this section “relevant partner” means a person who was a partner at any time during the period for which the return was made or is required, or the personal representatives of such a person.

• (5) In subsection (1) of section 12AB of that Act (partnership return to include partnership statement)—

• (a) in paragraph (a), for the words “each period of account ending within the period in respect of which the return is made” there shall be substituted the words “ the period in respect of which the return is made and each period of account ending within that period ”;

• (b) in sub-paragraph (i) of that paragraph, for the words “that period” there shall be substituted the words “ the period in question ”;

• (c) after that sub-paragraph there shall be inserted the following sub-paragraph—

(ia) the amount of the consideration which, on that basis, has accrued to the partnership in respect of each disposal of partnership property during that period,

;

• (d) in paragraph (b), after the words “such period” there shall be inserted the words “ as is mentioned in paragraph (a) above ” and after the word “loss,” there shall be inserted the word “ consideration, ”.

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

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

• (8) In subsection (1)(b) of section 93A of that Act (failure to make partnership return), after the word “he” there shall be inserted the words “ or a successor of his ”.

• (9) In subsections (3) and (4) of that section, after the words “the representative partner” there shall be inserted the words “ or a successor of his ”.

• (10) In subsection (6) of that section—

• (a) after the words “the representative partner” there shall be inserted the words “ or a successor of his ”; and

• (b) after the words “that partner”, in both places where they occur, there shall be inserted the words “ or successor ”.

• (11) In subsection (7) of that section, for the words “the representative partner had a reasonable excuse for not delivering the return” there shall be substituted the words “ the person for the time being required to deliver the return (whether the representative partner or a successor of his) had a reasonable excuse for not delivering it ”.

• (12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (14) In subsection (1) of section 118 of that Act (interpretation), for the definition of “successor” there shall be substituted the following definition—

“successor”, in relation to a person who is required to make and deliver, or has made and delivered, a return under section 12AA of this Act, and “predecessor” and “successor”, in relation to the successor of such a person, shall be construed in accordance with section 12AA(11) of this Act;

.

Retention of original records

124

• (1) The Taxes Management Act 1970, as it has effect—

• (a) for the purposes of income tax and capital gains tax, as respects the year 1996-97 and subsequent years of assessment, and

• (b) for the purposes of corporation tax, as respects accounting periods ending on or after the day appointed under section 199 of the Finance Act 1994 for the purposes of Chapter III of Part IV of that Act (self-assessment management provisions),

shall be amended in accordance with the following provisions of this section.

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

• (3) After that subsection there shall be inserted—

(4A) The records which fall within this subsection are— (a) any statement in writing such as is mentioned in— (i) subsection (1) of section 234 of the principal Act (amount of qualifying distribution and tax credit), or (ii) subsection (1) of section 352 of that Act (gross amount, tax deducted, and actual amount paid, in certain cases where payments are made under deduction of tax), which is furnished by the company or person there mentioned, whether after the making of a request or otherwise; (b) any certificate or other record (however described) which is required by regulations under section 566(1) of the principal Act to be given to a sub-contractor (within the meaning of Chapter IV of Part XIII of that Act) on the making of a payment to which section 559 of that Act (deductions on account of tax) applies; (c) any such record as may be requisite for making a correct and complete claim in respect of, or otherwise requisite for making a correct and complete return so far as relating to, an amount of tax— (i) which has been paid under the laws of a territory outside the United Kingdom, or (ii) which would have been payable under the law of such a territory but for a relief to which section 788(5) of the principal Act (relief for promoting development and relief contemplated by double taxation arrangements) applies.

• (4) In subsection (5) of that section (penalty for failure to comply with section 12B(1) or (2A)) for “Subject to subsection (5A)” there shall be substituted “ Subject to subsections (5A) and (5B) ”.

• (5) After subsection (5A) of that section there shall be inserted—

(5B) Subsection (5) above also does not apply where— (a) the records which the person fails to keep or preserve are records falling within paragraph (a) of subsection (4A) above; and (b) an officer of the Board is satisfied that any facts which he reasonably requires to be proved, and which would have been proved by the records, are proved by other documentary evidence furnished to him.

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

• (7) In sub-paragraph (4) of that paragraph (penalty for failure to comply with paragraph 2A(1)) at the beginning there shall be inserted “ Subject to sub-paragraph (5) below, ”.

• (8) After that sub-paragraph there shall be inserted—

(5) Sub-paragraph (4) above does not apply where— (a) the records which the person fails to keep or preserve are records falling within paragraph (a) of section 12B(4A) of this Act; and (b) an officer of the Board is satisfied that any facts which he reasonably requires to be proved, and which would have been proved by the records, are proved by other documentary evidence furnished to him.

• (9) The amendments made by this section shall not have effect in relation to—

• (a) any time before this Act is passed, or

• (b) any records which a person fails to preserve before this Act is passed.

Determination of tax where no return delivered

125

• (1) For subsection (1) of section 28C of the Taxes Management Act 1970 (determination of tax where no return delivered) there shall be substituted the following subsections—

(1) This section applies where— (a) a notice has been given to any person under section 8 or 8A of this Act (the relevant section), and (b) the required return is not delivered on or before the filing date. (1A) An officer of the Board may make a determination of the following amounts, to the best of his information and belief, namely— (a) the amounts in which the person who should have made the return is chargeable to income tax and capital gains tax for the year of assessment; and (b) the amount which is payable by him by way of income tax for that year; and subsection (1AA) of section 8 or, as the case may be, section 8A of this Act applies for the purposes of this subsection as it applies for the purposes of subsection (1) of that section.

• (2) In subsection (3) of that section the words “or 11AA” shall cease to have effect.

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

• (4) After subsection (5) of section 59B of that Act (payment of income tax and capital gains tax) there shall be inserted the following subsection—

(5A) Where a determination under section 28C of this Act which has effect as a person’s self-assessment is superseded by his self-assessment under section 9 of this Act, any amount of tax which is payable or repayable by virtue of the supersession shall be payable or (as the case may be) repayable on or before the day given by subsection (3) or (4) above.

PAYE regulations

126

• (1) After subsection (9) of section 59A of the Taxes Management Act 1970 (payments on account of income tax) there shall be inserted the following subsection—

(10) Regulations under section 203 of the principal Act (PAYE) may provide that, for the purpose of determining the amount of any such excess as is mentioned in subsection (1) above, any necessary adjustments in respect of matters prescribed by the regulations shall be made to the amount of tax deducted at source under that section.

• (2) After subsection (7) of section 59B of that Act (payment of income tax and capital gains tax) there shall be inserted the following subsection—

(8) Regulations under section 203 of the principal Act (PAYE) may provide that, for the purpose of determining the amount of the difference mentioned in subsection (1) above, any necessary adjustments in respect of matters prescribed by the regulations shall be made to the amount of tax deducted at source under that section.

Repayment postponed pending completion of enquiries

127

After subsection (4) of section 59B of the Taxes Management Act 1970 (payment of income tax and capital gains tax) there shall be inserted the following subsection—

(4A) Where in the case of a repayment the return on the basis of which the person’s self-assessment was made under section 9 of this Act is enquired into by an officer of the Board— (a) nothing in subsection (3) or (4) above shall require the repayment to be made before the day on which, by virtue of section 28A(5) of this Act, the officer’s enquiries are treated as completed; but (b) the officer may at any time before that day make the repayment, on a provisional basis, to such extent as he thinks fit.

Claims for reliefs involving two or more years

128

• (1) In section 42 of the Taxes Management Act 1970 (procedure for making claims etc.)—

• (a) subsections (3A) and (3B) (which are superseded by subsection (2) below) shall cease to have effect;

• (b) in subsection (7)(a), the words “534, 535, 537A, 538” shall cease to have effect; and

• (c) after subsection (11) there shall be inserted the following subsection—

(11A) Schedule 1B to this Act shall have effect as respects certain claims for relief involving two or more years of assessment.

• (2) After Schedule 1A to that Act there shall be inserted, as Schedule 1B, the provisions set out in Schedule 17 to this Act (claims for reliefs involving two or more years).

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

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

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

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

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

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

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

• (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (11) This section (except subsections (1)(b) and (6) above) and Schedule 17 to this Act have effect as respects claims made (or deemed to be made) in relation to the year 1996-97 or later years of assessment.

• (12) Subsection (1)(b) above has effect as respects claims made in relation to the year 1997-98 or later years of assessment.

Claims for medical insurance and vocational training relief

129

• (1) Nothing in section 42 of the Taxes Management Act 1970 (procedure for making claims etc.), or Schedule 1A to that Act (claims etc. not included in returns), shall apply in relation to—

• (a) any claim under subsection (6)(b) of section 54 (medical insurance relief) of the Finance Act 1989 (“the 1989 Act”); or

• (b) any claim under subsection (5)(b) of section 32 (vocational training relief) of the Finance Act 1991 (“the 1991 Act”).

• (2) In section 54(6)(b) of the 1989 Act andsection 32(5)(b) of the 1991 Act, after the words “on making a claim” there shall be inserted the words “ in accordance with regulations ”.

• (3) In section 57(1) of the 1989 Act (medical insurance relief: supplementary), after paragraph (a) there shall be inserted the following paragraph—

(aa) make provision for and with respect to appeals against a decision of an officer of the Board or the Board with respect to a claim under section 54(6)(b) above;

.

• (4) In section 33(1) of the 1991 Act (vocational training relief: supplementary), after paragraph (a) there shall be inserted the following paragraph—

(aa) make provision for and with respect to appeals against a decision of an officer of the Board or the Board with respect to a claim under section 32(5)(b) above;

.

• (5) Subsection (1)(a) above shall not apply in relation to claims made before the coming into force of regulations made by virtue of section 57(1)(aa) of the 1989 Act.

• (6) Subsection (1)(b) above shall not apply in relation to claims made before the coming into force of regulations made by virtue of section 33(1)(aa) of the 1991 Act.

Procedure for giving notices

130

• (1) Section 42 of, and Schedule 1A to, the Taxes Management Act 1970, as they have effect—

• (a) for the purposes of income tax and capital gains tax, as respects the year 1996-97 and subsequent years of assessment, and

• (b) for the purposes of corporation tax, as respects accounting periods ending on or after the day appointed under section 199 of the Finance Act 1994 for the purposes of Chapter III of Part IV of that Act (self-assessment management provisions),

shall be amended in accordance with the following provisions of this section.

• (2) In subsection (7) of section 42 (which contains a list of provisions, claims under which must be made in accordance with subsection (6)) the following words shall cease to have effect, that is to say—

• (a) in paragraph (a), “62A,” and “401,”; and

• (b) in paragraph (c), “30,”, “33,”, “48, 49,” and “124A,”.

• (3) In subsection (10) of that section (section 42 to apply in relation to elections and notices as it applies in relation to claims) the words “and notices” shall cease to have effect.

• (4) In subsection (11) of that section (Schedule 1A to apply as respects any claim, election or notice made otherwise than in a return under section 8 etc) for the words “, election or notice” there shall be substituted “ or election ”.

• (5) In paragraph 1 of Schedule 1A (claims etc. not included in returns), in the definition of “claim”, for the words “means a claim, election or notice” there shall be substituted “ means a claim or election ”.

Interest on overdue tax

131

• (1) Section 110 of the Finance Act 1995 (interest on overdue tax) shall be deemed to have been enacted with the insertion after subsection (3) of the following subsection—

(4) So far as it relates to partnerships whose trades, professions or businesses were set up and commenced before 6th April 1994, subsection (1) above has effect as respects the year 1997-98 and subsequent years of assessment.

• (2) In subsection (3) of section 86 of the Taxes Management Act 1970 (which was substituted by the said section 110), for the words “section 93” there shall be substituted the words “ section 92 ”.

• (3) In Schedule 19 to the Finance Act 1994, paragraph 23 (which is superseded by the said section 110) shall cease to have effect.

Overdue tax and excessive payments by the Board

132

Schedule 18 to this Act (which amends enactments relating to overdue tax or excessive payments by the Board) shall have effect.

Claims and enquiries

133

Schedule 19 to this Act (which, for purposes connected with self-assessment, further amends provisions relating to claims and enquiries) shall have effect.

Discretions exercisable by the Board etc

134

• (1) Schedule 20 to this Act (which in connection with self-assessment modifies enactments by virtue of which a decision or other action affecting an assessment may be or is required to be taken by the Board, or one of their officers, before the making of the assessment) shall have effect.

• (2) Subject to subsection (3) below, the amendments made by that Schedule shall have effect—

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

• (b) for the purposes of corporation tax, as respects accounting periods ending on or after the day appointed under section 199 of the Finance Act 1994 for the purposes of Chapter III of Part IV of that Act (self-assessment management provisions).

• (3) Paragraphs 22 and 23 of that Schedule shall have effect in relation to shares issued on or after 6th April 1996.

Time limits for claims etc

135

• (1) Schedule 21 to this Act (which in connection with self-assessment modifies enactments which impose time limits on the making of claims, elections, adjustments and assessments and the giving of notices, and enactments which provide for the giving of notice to the inspector) shall have effect.

• (2) Subject to subsections (3) to (5) below, the amendments made by that Schedule shall have effect—

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

• (b) for the purposes of corporation tax, as respects accounting periods ending on or after the day appointed under section 199 of the Finance Act 1994 for the purposes of Chapter III of Part IV of that Act (self-assessment management provisions).

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

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

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

Appeals

136

Schedule 22 to this Act (which makes provision, in connection with self-assessment, about appeals) shall have effect.

Companies

Schedules 13 and 16 to the Taxes Act 1988

137

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

Accounting periods

138

Schedule 24 to this Act (which makes provision, in connection with self-assessment, in relation to accounting periods) shall have effect.

Surrenders of advance corporation tax

139

Schedule 25 to this Act (which makes provision, in connection with self-assessment, about surrenders of advance corporation tax) shall have effect.

Chargeable gains

Transfer of company’s assets to investment trust

140

• (1) In section 101 of the Taxation of Chargeable Gains Act 1992 (transfer of company’s assets to investment trust) after subsection (1) there shall be inserted—

(1A) Any chargeable gain or allowable loss which, apart from this subsection, would accrue to the company on the sale referred to in subsection (1) above shall be treated as accruing to the company immediately before the end of the last accounting period to end before the beginning of the accounting period mentioned in that subsection.

• (2) This section shall have effect as respects accounting periods ending on or after the day appointed under section 199 of the Finance Act 1994 for the purposes of Chapter III of Part IV of that Act (self-assessment management provisions).

Roll-over relief

141

• (1) In subsection (4) of section 152 of the Taxation of Chargeable Gains Act 1992 (roll-over relief)—

• (a) after the word “making” there shall be inserted the words “ or amending ”; and

• (b) after the word “assessments”, in the second place where it occurs, there shall be inserted the words “ or amendments ”.

• (2) After section 153 of that Act there shall be inserted the following section—

(153A) (1) This section applies where a person carrying on a trade who for a consideration disposes of, or of his interest in, any assets (“the old assets”) declares, in his return for the chargeable period in which the disposal takes place— (a) that the whole or any specified part of the consideration will be applied in the acquisition of, or of an interest in, other assets (“the new assets”) which on the acquisition will be taken into use, and used only, for the purposes of the trade; (b) that the acquisition will take place as mentioned in subsection (3) of section 152; and (c) that the new assets will be within the classes listed in section 155. (2) Until the declaration ceases to have effect, section 152 or, as the case may be, section 153 shall apply as if the acquisition had taken place and the person had made a claim under that section. (3) The declaration shall cease to have effect as follows— (a) if and to the extent that it is withdrawn before the relevant day, or is superseded before that day by a valid claim made under section 152 or 153, on the day on which it is so withdrawn or superseded; and (b) if and to the extent that it is not so withdrawn or superseded, on the relevant day. (4) On the declaration ceasing to have effect in whole or in part, all necessary adjustments— (a) shall be made by making or amending assessments or by repayment or discharge of tax; and (b) shall be so made notwithstanding any limitation on the time within which assessments or amendments may be made. (5) In this section “the relevant day” means— (a) in relation to capital gains tax, the third anniversary of the 31st January next following the year of assessment in which the disposal of, or of the interest in, the old assets took place; (b) in relation to corporation tax, the fourth anniversary of the last day of the accounting period in which that disposal took place. (6) Subsections (6), (8), (10) and (11) of section 152 shall apply for the purposes of this section as they apply for the purposes of that section.

• (3) In section 175 of that Act (replacement of business assets by members of a group)—

• (a) in subsections (2A) and (2B), after the words “Section 152” there shall be inserted the words “ or 153 ”; and

• (b) in subsection (2C), for the words “Section 152 shall not” there shall be substituted the words “ Neither section 152 nor section 153 shall ”.

• (4) In section 246 of that Act (time of disposal or acquisition), the words from “or, if earlier” to the end shall cease to have effect.

• (5) In subsection (5)(b) of section 247 of that Act (roll-over relief on compulsory acquisition), for the words “subsection (3)” there shall be substituted the words “ subsections (3) and (4) ”.

• (6) After that section there shall be inserted the following section—

(247A) (1) This section applies where a person who disposes of land (“the old land”) to an authority exercising or having compulsory powers declares, in his return for the chargeable period in which the disposal takes place— (a) that the whole or any specified part of the consideration for the disposal will be applied in the acquisition of other land (“the new land”); (b) that the acquisition will take place as mentioned in subsection (3) of section 152; and (c) that the new land will not be land excluded from section 247(1)(c) by section 248. (2) Until the declaration ceases to have effect, section 247 shall apply as if the acquisition had taken place and the person had made a claim under that section. (3) For the purposes of this section, subsections (3) to (5) of section 153A shall apply as if the reference to section 152148. or 153 were a reference to section 247 and the reference to the old assets were a reference to the old land. (4) In this section “land” and “authority exercising or having compulsory powers” have the same meaning as in section 247.

Premiums for leases

142

• (1) Paragraph 3 of Schedule 8 to the Taxation of Chargeable Gains Act 1992 (premiums for leases) shall be amended as follows.

• (2) In sub-paragraph (2), for the words “for the period” to the end there shall be substituted the words

, being a premium which— (a) is due when the sum is payable by the tenant; and (b) where the sum is payable in lieu of rent, is in respect of the period in relation to which the sum is payable.

• (3) In sub-paragraph (3), for the words “for the period” to the end there shall be substituted the words

, being a premium which— (a) is due when the sum is payable by the tenant; and (b) is in respect of the period from the time when the variation or waiver takes effect to the time when it ceases to have effect.

• (4) For sub-paragraphs (4) to (6) there shall be substituted the following sub-paragraphs—

(4) Where under sub-paragraph (2) or (3) above a premium is deemed to have been received by the landlord, that shall not be the occasion of any recomputation of the gain accruing on the receipt of any other premium, and the premium shall be regarded— (a) in the case of a premium deemed to have been received for the surrender of a lease, as consideration for a separate transaction which is effected when the premium is deemed to be due and consists of the disposal by the landlord of his interest in the lease; and (b) in any other case, as consideration for a separate transaction which is effected when the premium is deemed to be due and consists of a further part disposal of the freehold or other asset out of which the lease is granted. (5) If under sub-paragraph (2) or (3) above a premium is deemed to have been received by the landlord, otherwise than as consideration for the surrender of the lease, and the landlord is a tenant under a lease the duration of which does not exceed 50 years, this Schedule shall apply— (a) as if an amount equal to the amount of that premium deemed to have been received had been given by way of consideration for the grant of the part of the sublease covered by the period in respect of which the premium is deemed to have been paid; and (b) as if that consideration were expenditure incurred by the sublessee and attributable to that part of the sublease under section 38(1)(b).

• (5) This section has effect as respects sums payable on or after 6th April 1996.

Chapter VI — Miscellaneous provisions

Reliefs

Annual payments under certain insurance policies

143

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

Vocational training

144

• (1) Section 32 of the Finance Act 1991 (vocational training relief) shall be amended in accordance with the following provisions of this section.

• (2) In subsection (1) (application of section) for paragraph (ca) (individual has attained school leaving age etc at time of paying for the course) there shall be substituted—

(ca) at the time the payment is made, the individual— (i) in a case where the qualifying course of vocational training is such a course by virtue only of paragraph (b) of subsection (10) below, has attained the age of thirty, or (ii) in any other case, has attained school-leaving age and, if under the age of nineteen, is not a person who is being provided with full-time education at a school,

.

• (3) For subsection (10) (meaning of “qualifying course of vocational training”) there shall be substituted—

(10) In this section “qualifying course of vocational training” means— (a) any programme of activity capable of counting towards a qualification— (i) accredited as a National Vocational Qualification by the National Council for Vocational Qualifications; or (ii) accredited as a Scottish Vocational Qualification by the Scottish Vocational Education Council; or (b) any course of training which— (i) satisfies the conditions set out in the paragraphs of section 589(1) of the Taxes Act 1988 (qualifying courses of training etc), (ii) requires participation on a full-time or substantially full-time basis, and (iii) extends for a period which consists of or includes four consecutive weeks, but treating any time devoted to study in connection with the course as time devoted to the practical application of skills or knowledge.

• (4) This section applies to payments made on or after 6th May 1996.

Personal reliefs for non-resident EEA nationals

145

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

Exemptions for charities

146

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

Withdrawal of relief for Class 4 contributions

147

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

• (2) In consequence of the provision made by subsection (1) above, in paragraph 3(2) of Schedule 2 to—

• (a) the Social Security Contributions and Benefits Act 1992, and

• (b) the Social Security Contributions and Benefits (Northern Ireland) Act 1992,

the words “ (e) section 617(5) (relief for Class 4 contributions); ” shall be omitted.

• (3) This section shall have effect in relation to the year 1996-97 and subsequent years of assessment.

Mis-sold personal pensions etc

148

• (1) Income tax shall not be chargeable on any payment falling within subsection (3) or (5) below.

• (2) Receipt of a payment falling within subsection (3) below shall not be regarded for the purposes of capital gains tax as the disposal of an asset.

• (3) A payment falls within this subsection if it is a capital sum by way of compensation for loss suffered, or reasonably likely to be suffered, by a person in a case where that person, or some other person, acting in reliance on bad investment advice at least some of which was given during the period beginning with 29th April 1988 and ending with 30th June 1994,—

• (a) has, while eligible, or reasonably likely to become eligible, to be a member of an occupational pension scheme, instead become a member of a personal pension scheme or entered into a retirement annuity contract;

• (b) has ceased to be a member of, or to pay contributions to, an occupational pension scheme and has instead become a member of a personal pension scheme or entered into a retirement annuity contract;

• (c) has transferred to a personal pension scheme accrued rights of his under an occupational pension scheme; or

• (d) has ceased to be a member of an occupational pension scheme and has instead (by virtue of such a provision as is mentioned in section 591(2)(g) of the Taxes Act 1988) entered into arrangements for securing relevant benefits by means of an annuity contract.

• (4) A payment chargeable to income tax apart from subsection (1) above may nevertheless be regarded as a capital sum for the purpose of determining whether it falls within subsection (3) above.

• (5) A payment falls within this subsection if and to the extent that it is a payment of interest, on the whole or any part of a capital sum such as is mentioned in subsection (3) above, for a period ending on or before the earliest date on which a determination (whether or not subsequently varied on an appeal or in any other proceedings) of the amount of the particular capital sum in question is made, whether by agreement or by a decision of—

• (a) a court, tribunal or commissioner,

• (b) an arbitrator or (in Scotland) arbiter, or

• (c) any other person appointed for the purpose.

• (6) In this section—

• “bad investment advice” means investment advice in respect of which an action against the person who gave it has been, or may be, brought—in or for negligence;for breach of contract;by reason of a breach of a fiduciary obligation; orby reason of a contravention which is actionable—under section 62 of the Financial Services Act 1986; orunder section 150 of the Financial Services and Markets Act 2000;

• “investment advice”—in relation to a time before 1st December 2001, means advice such as is mentioned in paragraph 15 of Schedule 1 to the Financial Services Act 1986; andin relation to a time on or after that date, means advice such as is mentioned in Article 53 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001;

• “occupational pension scheme” means—a scheme approved, or being considered for approval, under Chapter I of Part XIV of the Taxes Act 1988 (retirement benefit schemes);a relevant statutory scheme, as defined in section 611A(1) of that Act; ora fund to which section 608 of that Act applies (superannuation funds approved before 6th April 1980 etc);

• “personal pension scheme” has the meaning given by section 630(1) of the Taxes Act 1988;

• “relevant benefits” has the meaning given by section 612(1) of the Taxes Act 1988;

• “retirement annuity contract” means a contract made before 1st July 1988 and approved by the Board under or by virtue of any provision of Chapter III of Part XIV of the Taxes Act 1988.

• (6A) References in subsections (3)(d) and (6) to provisions of Part 14 of the Taxes Act 1988 are to those provisions as they had effect at the time in question.

• (7) This section shall have effect, and be taken always to have had effect, in relation to any payment falling within subsection (3) or (5) above, whether made before or after the passing of this Act.

Annual payments in residuary cases

149

• (1) Section 347A of the Taxes Act 1988 (annual payments not a charge on the income of a payer) shall apply to any payment made on or after 6th April 1996—

• (a) in pursuance of any obligation which falls within section 36(4)(a) of the Finance Act 1988 (existing obligations under certain court orders), and

• (b) for the benefit, maintenance or education of a person (whether or not the person to whom the payment is made) who attained the age of 21 before 6th April 1994,

as if that obligation were not an existing obligation within the definition contained in section 36(4) of the Finance Act 1988.

• (2) Subsection (1) above does not apply to any payment to which section 38 of the Finance Act 1988 (treatment of certain maintenance payments under existing obligations) applies.

Income tax exemption for periodical payments of damages and compensation for personal injury

150

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

Taxation of benefits

Benefits under pilot schemes

151

• (1) The Treasury may by order make provision for the Income Tax Acts to have effect in relation to any amount of benefit payable by virtue of a Government pilot scheme as if it was, as they think fit, either—

• (a) wholly or partly exempt from income tax and, accordingly, to be disregarded in computing the amount of any receipts brought into account for income tax purposes; or

• (b) to the extent specified in the order, to be brought into account for the purposes of income tax as income of a description so specified or as a receipt of a description so specified.

• (2) The Treasury may by order provide for any amount of benefit payable by virtue of a Government pilot scheme to be left out of account, to the extent specified in the order, in the determination for the purposes of section 532 of the Capital Allowances Act (exclusion of expenditure met by contributions) of how far any expenditure has been or is to be met directly or indirectly by the Crown or by an authority or person other than the person actually incurring it.

• (3) In this section “Government pilot scheme” means any arrangements (whether or not contained in a scheme) which—

• (a) are made, under any enactment or otherwise, by the Secretary of State or any Northern Ireland department;

• (b) make provision for or about the payment of amounts of benefit either—

• (i) for purposes that are similar to those for which any social security or comparable benefit is payable; or

• (ii) for purposes connected with the carrying out of any functions of the Secretary of State or any such department in relation to employment or training for employment;

• (c) are arrangements relating to a temporary experimental period; and

• (d) are made wholly or partly for the purpose of facilitating a decision as to whether, or to what extent, it is desirable for provision to be made on a permanent basis for or in relation to any benefit.

• (4) In subsection (3)(b) above the reference to making provision for or about the payment of amounts of benefit for purposes that are similar to those for which any social security or comparable benefit is payable shall include a reference to making provision by virtue of which there is a modification of the conditions of entitlement to, or the conditions for the payment of, an existing social security or comparable benefit.

• (5) An order under this section may—

• (a) make different provision for different cases, and

• (b) contain such incidental, supplemental, consequential and transitional provision (including provision modifying provision made by or under the Income Tax Acts) as the Treasury may think fit.

• (6) In this section “benefit” includes any allowance, grant or other amount the whole or any part of which is payable directly or indirectly out of public funds.

• (7) The power to make an order under this section—

• (a) shall be exercisable for the year 1996-97 and subsequent years of assessment; and

• (b) so far as exercisable for the year 1996-97, shall be exercisable in relation to benefits, allowances and other amounts paid at times on or after 6th April 1996 but before the making of the order.

• (8) The Treasury shall not make an order under this section containing any such provision as is mentioned in subsection (1)(b) above unless a draft of the order has been laid before, and approved by a resolution of, the House of Commons.

Jobfinder’s grant

152

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

Investments

Foreign income dividends

153

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

FOTRA securities

154

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

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

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

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

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

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

• (7) Schedule 28 to this Act (which contains amendments consequential on the provisions of this section) shall have effect.

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

• (9) This section and Schedule 28 to this Act shall have effect—

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

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

Directions for payment without deduction of tax

155

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

Paying and collecting agents etc

156

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

Stock lending fees

157

• (1) After section 129A of the Taxes Act 1988 (interest on cash collateral paid in connection with stock lending arrangements) there shall be inserted the following section—

(129B) (1) The income which, as income deriving from investments of a description specified in any of the relevant provisions, is eligible for relief from tax by virtue of that provision shall be taken to include any relevant stock lending fee. (2) For the purposes of this section the relevant provisions are sections 592(2), 608(2)(a), 613(4), 614(3), 620(6) and 643(2). (3) In this section “relevant stock lending fee”, in relation to investments of any description, means any amount, in the nature of a fee, which is payable in connection with an approved stock lending arrangement relating to investments which, but for any transfer under the arrangement, would be investments of that description. (4) In this section “approved stock lending arrangement” has the same meaning as in Schedule 5A.

• (2) This section has effect in relation to any arrangements entered into on or after 2nd January 1996.

Transfers on death under the accrued income scheme

158

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

Manufactured payments, repos, etc

159

• (1) Sections 729, 737A(2)(b) and 786(4) of the Taxes Act 1988 (provisions applying to sale and repurchase agreements) shall cease to have effect except in relation to cases where the initial agreement to sell or transfer the securities or other property was made before the appointed day.

• (2) In section 737 of that Act—

• (a) in subsection (5) (manufactured dividends paid to UK residents by non-residents), for the words from “a person resident in the United Kingdom” to “the United Kingdom recipient shall” there shall be substituted “ a United Kingdom recipient, that recipient shall ”; and

• (b) after that subsection there shall be inserted the following subsection—

(5AAA) For the purposes of subsection (5) above a person who receives a manufactured dividend is a United Kingdom recipient if— (a) he is resident in the United Kingdom; or (b) he is not so resident but receives that dividend for the purposes of a trade carried on through a branch or agency in the United Kingdom.

• (3) In section 737C of that Act (deemed manufactured payments), the following subsection shall be inserted after subsection (11A) in relation to cases where the initial agreement to sell the securities is made on or after the appointed day, that is to say—

(11B) The preceding provisions of this section shall have effect in cases where paragraph 2, 3 or 4 of Schedule 23A would apply by virtue of section 737A(5) but for paragraph 5 of that Schedule as they have effect in a case where the paragraph in question is not disapplied by paragraph 5; and where— (a) the gross amount of the deemed manufactured interest, or (b) the gross amount of the deemed manufactured overseas dividend, falls to be calculated in such a case under subsection (8) or (11) above, it shall be so calculated by reference to the provisions of paragraph 3 or 4 of Schedule 23A that would have applied but for paragraph 5 of that Schedule.

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

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

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

• (7) In sub-paragraph (1) of paragraph 8 of that Schedule (power to modify provisions of Schedule)—

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

• (b) in the words after paragraph (b), for “paragraph 2, 3 or 4 above” there shall be substituted “ paragraphs 2 to 5 above ”.

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

• (9) Subsections (2), (4) and (5) above have effect—

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

• (b) for the purposes of income tax, in relation to the year 1996-97 and subsequent years of assessment.

• (10) In this section “the appointed day” means such day as the Treasury may by order appoint, and different days may be appointed under this subsection for different purposes.

Investments in housing

160

Schedule 30 to this Act (which makes provision conferring relief from corporation tax on companies that invest in housing) shall have effect.

Venture capital trusts: control of companies etc

161

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

Insurance policies

Qualifying life insurance policies: certification

162

• (1) Section 55 of the Finance Act 1995 (removal of certification requirements for qualifying policies with respect to any time on or after 5th May 1996 etc) shall have effect—

• (a) with the substitution for “5th May 1996”, wherever occurring, of “the appointed date”; and

• (b) with the addition of the following subsection after subsection (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.

• (2) In Schedule 15 to the Taxes Act 1988 (qualifying policies) paragraphs 24(2A) and 25(2) shall have effect with the substitution for “5th May 1996” of “ the appointed date for the purposes of section 55 of the Finance Act 1995 (removal of certification requirements) ”.

Insurance companies

Life assurance business losses

163

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

Limits on relief for expenses

164

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

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

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

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

• (5) Subject to subsection (6) below, this section has effect in relation to accounting periods beginning on or after 1st January 1996.

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

Annual payments under insurance policies: deductions

165

• (1) In section 337 of the Taxes Act 1988 (deductions in computing income), the following subsections shall be inserted after subsection (2)—

(2A) In computing any profits or losses of a company in accordance with the provisions of this Act applicable to Case I of Schedule D, subsection (2)(b) above shall not prevent the deduction of any annuity or other annual payment which is payable by a company wholly or partly in satisfaction of any claim under an insurance policy in relation to which the company is the insurer. (2B) The reference in subsection (2A) above to an annuity payable wholly or partly in satisfaction of a claim under an insurance policy shall be taken, in relation to an insurance company (within the meaning of Chapter I of Part XII), to include a reference to every annuity payable by that company; and the references in sections 338(2) and 434B(2) to an annuity paid wholly or partly as mentioned in subsection (2A) above shall be construed accordingly.

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

• (3) In section 434B of that Act (treatment of interest and annuities in the case of insurance companies), subsection (1) shall cease to have effect; and in subsection (2), for the words from the beginning to “mentioned in subsection (1) above” there shall be substituted—

(2) Nothing in section 337(2A) or 338(2) shall be construed as preventing any annuity or other annual payment which is paid wholly or partly as mentioned in section 337(2A)

.

• (4) Subject to subsection (5) below, this section has effect in relation to accounting periods beginning on or after 1st January 1996.

• (5) In relation to any accounting period beginning on or after 1st January 1996 but ending before 1st April 1996, this section shall have effect as if any reference in provisions inserted by this section to an annuity payable or paid by an insurance company included a reference to any such interest as was mentioned in section 434B(1) of the Taxes Act 1988 before its repeal by virtue of this section.

Equalisation reserves

166

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

Industrial assurance business

167

• (1) In section 432 of the Taxes Act 1988, subsection (2) (industrial assurance business treated as separate business for the purposes of Chapter I of Part XII) shall cease to have effect.

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

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

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

• (5) In Schedule 14 to the Taxes Act 1988 (ancillary provisions about relief in respect of life assurance premiums), in paragraph 8, at the beginning of sub-paragraph (4) (policy which is varied so as to increase benefits, etc. to be treated as issued after 13th March 1984) there shall be inserted “ Subject to sub-paragraph (8) below, ”.

• (6) After sub-paragraph (7) of that paragraph there shall be inserted the following sub-paragraph—

(8) Sub-paragraph (4) above does not apply in the case of a variation so as to increase the benefits secured, if the variation is made— (a) on or after such day as the Board may by order appoint, and (b) in consideration of a change in the method of payment of premiums from collection by a person collecting premiums from house to house to payment by a different method.

• (7) In Schedule 15 to the Taxes Act 1988 (qualifying policies)—

• (a) in paragraph 1(6) (calculation of amount included in premiums of whole life and term insurances in respect of their payment otherwise than annually), for “and if the policy is issued in the course of an industrial assurance business,” there shall be substituted “ sand if the policy provides for payment otherwise than annually without providing for the amount of the premiums if they are paid annually, ”; and

• (b) in paragraph 2(2) (the equivalent calculation for endowment assurances), for “issued in the course of an industrial assurance business” there shall be substituted “ that provides for the payment of premiums otherwise than annually without providing for the amount of the premiums if they are paid annually, ”.

• (8) After paragraph 8 of that Schedule there shall be inserted the following paragraph—

(8A) (1) Paragraphs 7 and 8 above shall have effect in relation to any policy issued on or after the appointed day as if the references to the issue of a policy in the course of an industrial assurance business were references to the issue of a policy by any company in a case in which— (a) the company, before that day and in the course of such a business, issued any policy which was a qualifying policy by virtue of either of those paragraphs; and (b) the policies which on 28th November 1995 were being offered by the company as available to be issued included policies of the same description as the policy issued on or after the appointed day. (2) In this paragraph “the appointed day” means such day as the Board may by order appoint.

• (9) In paragraph 18(3) of that Schedule (certain variations of a policy not to affect whether policy is a qualifying policy), after paragraph (b) there shall be inserted

or (c) any variation so as to increase the benefits secured or reduce the premiums payable which is effected— (i) on or after such day as the Board may by order appoint, and (ii) in consideration of a change in the method of payment of premiums from collection by a person collecting premiums from house to house to payment by a different method.

• (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (11) Subsection (4) above shall come into force on such day as the Board may by order appoint.

• (12) Subsection (7) above shall have effect in relation to policies issued on or after such day as the Board may by order appoint.

Capital redemption business

168

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

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

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

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

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

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

Provisional repayments in connection with pension business

169

Time for amending and enquiring into returns

170

• (1) After section 11AB of the Taxes Management Act 1970 there shall be inserted the following sections—