Finance Act 1996

(11AC) (1) This section applies in any case where a company carrying on insurance business in any period delivers a return for that period under section 11 of this Act which is based wholly or partly on accounts which the company is required or permitted to draw up using the method described in paragraph 52 of Schedule 9A to the Companies Act 1985 (accounting for general insurance business on a non-annual basis). (2) Where this section applies, section 11AA(2) of this Act shall have effect as if after paragraph (b) there were added “and (c1) where a company has delivered a return which is based wholly or partly on accounts drawn up as mentioned in section 11AC(1) of this Act, then, at any time before the end of the period of twelve months beginning with the date on which any particular technical provision constituted in the case of those accounts as described in paragraph 52 of Schedule 9A to the Companies Act 1985 is replaced as described in sub-paragraph (4) of that paragraph, the company may by notice to an officer of the Board so amend its self-assessment as to give effect to any amendments to the return— (i) which arise from the replacement of that technical provision, and (ii) which the company has notified to such an officer.” (3) Where this section applies, section 11AB of this Act shall have effect— (a) as if in subsection (1)(b) after “subsection (2)(b)” there were inserted “or (c1)”; and (b) as if in subsection (2) for the words from “is” to the end of paragraph (b) there were substituted— (“) in the case of a return (whenever delivered) which is based wholly or partly on accounts drawn up as mentioned in section 11AC(1) of this Act, is whichever of the following periods ends the later, that is to say— (i) the period of two years beginning with the date (or, if there is more than one such date, the latest date) on which any technical provision constituted in the case of those accounts as described in paragraph 52 of Schedule 9A to the Companies Act 1985 is replaced as mentioned in sub-paragraph (4) of that paragraph; or (ii) the period ending with the quarter day next following the first anniversary of the day on which the return was delivered; and (b1) in the case of an amendment of such a return— (i) if the amendment is made on or before the filing date, is the period of twelve months beginning with that date; or (ii) if the amendment is made after that date, is the period ending with the quarter day next following the first anniversary of the day on which the amendment was made;”. (11AD) (1) This section applies in any case where a return under section 11 of this Act is delivered by an insurance company which is permitted by an order under section 68 of the Insurance Companies Act 1982 to cause investigations to be made into its financial condition less frequently than is required by section 18 of that Act. (2) Where this section applies, section 11AA(2) of this Act shall have effect as if, after paragraph (b), there were added “and (c2) where a company falling within section 11AD(1) of this Act has delivered a return for any period, then, at any time before the end of the period of twelve months beginning with the date as at which the relevant investigation is carried out, that is to say— (i) if the return is for a period as at the end of which there is carried out an investigation under section 18 of the Insurance Companies Act 1982 into the financial condition of the company, that investigation, or (ii) if the return is not for such a period, the first such investigation to be made into the financial condition of the company as at the end of a subsequent period, the company may by notice to an officer of the Board so amend its self-assessment as to give effect to any amendments to its return which arise from that investigation and which the company has notified to such an officer.” (3) Where this section applies, section 11AB of this Act shall have effect— (a) as if in subsection (1)(b) after “subsection (2)(b)” there were inserted “or (c2)”; and (b) as if in subsection (2) for the words from “is” to the end of paragraph (b) there were substituted— (“) in the case of a return delivered at any time by a company falling within section 11AD(1) of this Act, is the period of two years beginning with the date as at which the relevant investigation, as defined in section 11AA(2)(c2) of this Act, is carried out; and (b2) in the case of an amendment of such a return— (i) if the amendment is made on or before the filing date, is the period of twelve months beginning with that date; or (ii) if the amendment is made after that date, is the period ending with the quarter day next following the first anniversary of the day on which the amendment was made;”. (11AE) (1) This section applies in any case where a return under section 11 of this Act is delivered by a friendly society which is required by section 47 of the Friendly Societies Act 1992 to cause an investigation to be made into its financial condition at least once in every period of three years. (2) Where this section applies, section 11AA(2) of this Act shall have effect as if, after paragraph (b), there were added “and (c3) where a friendly society falling within section 11AE(1) of this Act has delivered a return for any period, then, at any time before the end of the period of fifteen months beginning with the date as at which the relevant investigation is carried out, that is to say— (i) if the return is for a period as at the end of which there is carried out an investigation under section 47 of the Friendly Societies Act 1992 into the financial condition of the society, that investigation, or (ii) if the return is not for such a period, the first such investigation to be made into the financial condition of the society as at the end of a subsequent period, the society may by notice to an officer of the Board so amend its self-assessment as to give effect to any amendments to its return which arise from that investigation and which the society has notified to such an officer.” (3) Where this section applies, section 11AB of this Act shall have effect— (a) as if in subsection (1)(b) after “subsection (2)(b)” there were inserted “or (c3)”; and (b) as if in subsection (2) for the words from “is” to the end of paragraph (b) there were substituted— (“) in the case of a return delivered at any time by a friendly society falling within section 11AE(1) of this Act, is the period of twenty seven months beginning with the date as at which the relevant investigation, as defined in section 11AA(2)(c3) of this Act, is carried out; and (b3) in the case of an amendment of such a return— (i) if the amendment is made on or before the filing date, is the period of twelve months beginning with that date; or (ii) if the amendment is made after that date, is the period ending with the quarter day next following the first anniversary of the day on which the amendment was made;”.

• (2) The amendment made by subsection (1) above 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).

Friendly societies

Life or endowment business

171

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Personal pension schemes

Return of contributions on or after death of member

172

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Participators in close companies

Loans to participators etc

173

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

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

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

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

• (5) In section 826(4) of that Act (interest on repayment of tax by virtue of section 419), for paragraph (a) there shall be substituted the following paragraph—

(a) the date when the entitlement to relief in respect of the repayment accrued, that is to say— (i) where the repayment of the loan or advance (or part thereof) occurred on or after the day mentioned in section 419(4A), the date nine months after the end of that accounting period; and (ii) in any other case, the date nine months after the end of the accounting period in which the loan or advance was made; or

.

• (6) This section has effect in relation to any loan or advance made in an accounting period ending on or after 31st March 1996.

Attribution of gains to participators in non-resident companies

174

• (1) Section 13 of the Taxation of Chargeable Gains Act 1992 (attribution of gains to members of non-resident companies) shall be amended in accordance with subsections (2) to (9) below.

• (2) In subsection (2) (persons subject to charge on gain to company), for “holds shares” there shall be substituted “ is a participator ”.

• (3) For subsections (3) and (4) (part of gain attributed to person subject to charge) there shall be substituted the following subsections—

(3) That part shall be equal to the proportion of the gain that corresponds to the extent of the participator’s interest as a participator in the company. (4) Subsection (2) above shall not apply in the case of any participator in the company to which the gain accrues where the aggregate amount falling under that subsection to be apportioned to him and to persons connected with him does not exceed one twentieth of the gain.

• (4) In subsection (5), paragraph (a) (section not to apply where gain distributed within two years) shall be omitted; and after that subsection there shall be inserted the following subsection—

(5A) Where— (a) any amount of capital gains tax is paid by a person in pursuance of subsection (2) above, and (b) an amount in respect of the chargeable gain is distributed (either by way of dividend or distribution of capital or on the dissolution of the company) within 2 years from the time when the chargeable gain accrued to the company, that amount of tax (so far as neither reimbursed by the company nor applied as a deduction under subsection (7) below) shall be applied for reducing or extinguishing any liability of that person to income tax in respect of the distribution or (in the case of a distribution falling to be treated as a disposal on which a chargeable gain accrues to that person) to any capital gains tax in respect of the distribution.

• (5) In subsection (7) (deduction of tax paid in computing gain on shares in the company)—

• (a) for “not reimbursed by the company)” there shall be inserted “ neither reimbursed by the company nor applied under subsection (5A) above for reducing any liability to tax) ”; and

• (b) for “the shares by reference to which the tax was paid” there shall be substituted “ any asset representing his interest as a participator in the company. ”

• (6) After subsection (7) there shall be inserted the following subsection—

(7A) In ascertaining for the purposes of subsection (5A) or (7) above the amount of capital gains tax or income tax chargeable on any person for any year on or in respect of any chargeable gain or distribution— (a) any such distribution as is mentioned in subsection (5A)(b) above and falls to be treated as income of that person for that year shall be regarded as forming the highest part of the income on which he is chargeable to tax for the year; (b) any gain accruing in that year on the disposal by that person of any asset representing his interest as a participator in the company shall be regarded as forming the highest part of the gains on which he is chargeable to tax for that year; (c) where any such distribution as is mentioned in subsection (5A)(b) above falls to be treated as a disposal on which a gain accrues on which that person is so chargeable, that gain shall be regarded as forming the next highest part of the gains on which he is so chargeable, after any gains falling within paragraph (b) above; and (d) any gain treated as accruing to that person in that year by virtue of subsection (2) above shall be regarded as the next highest part of the gains on which he is so chargeable, after any gains falling within paragraph (c) above.

• (7) In subsection (9) (cases where person charged is a company)—

• (a) for “the person owning any of the shares in the company” there shall be substituted “ a person who is a participator in the company ”; and

• (b) for the words from “to the shares” onwards there shall be substituted “ to the participating company’s interest as a participator in the company to which the gain accrues shall be further apportioned among the participators in the participating company according to the extent of their respective interests as participators, and subsection (2) above shall apply to them accordingly in relation to the amounts further apportioned, and so on through any number of companies. ”

• (8) In subsection (10) (application to trustees), for “owning shares in the company” there shall be substituted “ who are participators in the company, or in any company amongst the participators in which the gain is apportioned under subsection (9) above, ”.

• (9) After subsection (11) there shall be inserted the following subsections—

(12) In this section “participator”, in relation to a company, has the meaning given by section 417(1) of the Taxes Act for the purposes of Part XI of that Act (close companies). (13) In this section— (a) references to a person’s interest as a participator in a company are references to the interest in the company which is represented by all the factors by reference to which he falls to be treated as such a participator; and (b) references to the extent of such an interest are references to the proportion of the interests as participators of all the participators in the company (including any who are not resident or ordinarily resident in the United Kingdom) which on a just and reasonable apportionment is represented by that interest. (14) For the purposes of this section, where— (a) the interest of any person in a company is wholly or partly represented by an interest which he has under any settlement (“his beneficial interest”), and (b) his beneficial interest is the factor, or one of the factors, by reference to which that person would be treated (apart from this subsection) as having an interest as a participator in that company, the interest as a participator in that company which would be that person’s shall be deemed, to the extent that it is represented by his beneficial interest, to be an interest of the trustees of the settlement (and not of that person), and references in this section, in relation to a company, to a participator shall be construed accordingly. (15) Any appeal under section 31 of the Management Act involving any question as to the extent for the purposes of this section of a person’s interest as a participator in a company shall be to the Special Commissioners.

• (10) In paragraph 1(3) of Schedule 5 to the Taxation of Chargeable Gains Act 1992 (application of section 86 to section 13 gains)—

• (a) in paragraph (a), for “hold shares in a company which originate” there shall be substituted “ are participators in a company in respect of property which originates ”;

• (b) in paragraph (b), for “the shares” there shall be substituted “ so much of their interest as participators as arises from that property ”; and

• (c) at the end there shall be added—

Subsections (12) and (13) of section 13 shall apply for the purposes of this sub-paragraph as they apply for the purposes of that section.

• (11) This section applies to gains accruing on or after 28th November 1995.

Cancellation of tax advantages

Transactions in certain securities

175

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Chargeable gains: reliefs

Retirement relief: age limits

176

• (1) In each of sections 163 and 164 of, and paragraph 5 of Schedule 6 to, the Taxation of Chargeable Gains Act 1992 (retirement relief), for “the age of 55”, wherever occurring, there shall be substituted “ the age of 50 ”.

• (2) The amendments made by this section shall apply in relation to disposals on or after 28th November 1995.

Reinvestment relief on disposal of qualifying corporate bond

177

Section 164A of the Taxation of Chargeable Gains Act 1992 (re-investment relief) shall have effect, and be deemed always to have had effect, as if the following subsections were inserted after subsection (2)—

(2A) Where the chargeable gain referred to in subsection (1)(a) above is one which (apart from this section) would be deemed to accrue by virtue of section 116(10)(b)— (a) any reduction falling to be made by virtue of subsection (2)(a) above shall be treated as one made in the consideration mentioned in section 116(10)(a), instead of in the consideration for the disposal of the asset disposed of; but (b) if the disposal on which that gain is deemed to accrue is a disposal of only part of the new asset, it shall be assumed, for the purpose only of making a reduction affecting the amount of that gain— (i) that the disposal is a disposal of the whole of a new asset, (ii) that the gain accruing on that disposal relates to an old asset consisting in the corresponding part of what was in fact the old asset, and (iii) that the corresponding part of the consideration deemed to be given for what was in fact the old asset is taken to be the consideration by reference to which the amount of that gain is computed; and in this subsection “new asset” and “old asset” have the same meanings as in section 116. (2B) Where a chargeable gain accrues in accordance with subsection (12) of section 116, this Chapter shall have effect— (a) as if that gain were a gain accruing on the disposal of an asset; and (b) in relation to that deemed disposal, as if references in this Chapter to the consideration for the disposal were references to the sum of money falling, apart from this Chapter, to be used in computing the gain accruing under that subsection.

Special cases

Sub-contractors in the construction industry

178

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Roll-over relief in respect of ships

179

Scientific research expenditure: oil licences

180

Overseas petroleum

181

• (1) In subsection (1) of section 196 of the Taxation of Chargeable Gains Act 1992 (interpretation of sections 194 and 195), for “licence” there shall be substituted “ UK licence ”.

• (2) After subsection (1) of section 196 of that Act there shall be inserted the following subsection—

(1A) For the purposes of section 194 a licence other than a UK licence relates to an undeveloped area at any time if, at that time— (a) no development has actually taken place in any part of the licensed area; and (b) no condition for the carrying out of development anywhere in that area has been satisfied— (i) by the grant of any consent by the authorities of a country or territory exercising jurisdiction in relation to the area; or (ii) by the approval or service on the licensee, by any such authorities, of any programme of development.

;

and in subsection (2) of that section for “subsection (1) above” there shall be substituted “ subsections (1) and (1A) above ”.

• (3) For subsection (5) of section 196 of that Act there shall be substituted the following subsections—

(5) In sections 194 and 195 and this section— - “foreign oil concession” means any right to search for or win overseas petroleum, being a right conferred or exercisable (whether or not by virtue of a licence) in relation to a particular area; - “interest” in relation to a licence, includes, where there is an agreement which— 1. relates to oil from the whole or any part of the licensed area, and 2. was made before the extraction of the oil to which it relates, - “licence” means any UK licence or foreign oil concession; - “licensed area” (subject to subsection (4) above)— 1. in relation to a UK licence, has the same meaning as in Part I of the Oil Taxation Act 1975; and 2. in relation to a foreign oil concession, means the area to which the concession applies; - “licensee”— 1. in relation to a UK licence, has the same meaning as in Part I of the Oil Taxation Act 1975; and 2. in relation to a foreign oil concession, means the person with the concession or any person having an interest in it; - “oil”— 1. except in relation to a UK licence, means any petroleum (within the meaning of the Petroleum (Production) Act 1934); and 2. in relation to such a licence, has the same meaning as in Part I of the Oil Taxation Act 1975; - “overseas petroleum” means any oil that exists in its natural condition at a place to which neither the Petroleum (Production) Act 1934 nor the Petroleum (Production) Act (Northern Ireland) 1964 applies; and - “UK licence” means a licence within the meaning of Part I of the Oil Taxation Act 1975. (5A) References in sections 194 and 195 to a part disposal of a licence shall include references to the disposal of any interest in a licence.

• (4) Subsections (1) to (3) above shall have effect in relation to any disposal on or after 13th September 1995 and subsection (3) shall also have effect, and be deemed always to have had effect, for the construction of section 195 of the Taxation of Chargeable Gains Act 1992 in its application to disposals before that date.

• (5) Where enactments re-enacted in the Taxation of Chargeable Gains Act 1992 apply, instead of that Act, in the case of any disposal before 13th September 1995, this section shall have effect as if it required amendments equivalent to those made by subsection (3) above to have effect, and be deemed always to have had effect, for the construction of any enactment corresponding to section 195 of that Act.

Controlled foreign companies

182

Schedule 36 to this Act (which contains amendments of Chapter IV of Part XVII of the Taxes Act 1988) shall have effect in relation to accounting periods of a controlled foreign company, within the meaning of that Chapter, beginning on or after 28th November 1995.

Part V — Inheritance tax

Rate bands

183

• (1) For the Table in Schedule 1 to the Inheritance Tax Act 1984 there shall be substituted—

Table of Rates of Tax	Table of Rates of Tax	Table of Rates of Tax
Portion of value	Portion of value	Rate of tax
Lower limit	Upper limit	Per cent.
£	£	£
0	200,000	Nil
200,000		40

• (2) Subsection (1) above shall apply to any chargeable transfer made on or after 6th April 1996; and section 8 of that Act (indexation of rate bands) shall not have effect as respects any difference between the retail prices index for the month of September 1994 and that for the month of September 1995.

Business property relief

184

• (1) The Inheritance Tax Act 1984 shall be amended as follows.

• (2) In section 105(1) (relevant business property for the purposes of business property relief)—

• (a) in paragraph (b) (unquoted shares and securities attracting 100 per cent. relief where they gave the transferor control of a company)—

• (i) the words “ shares in or ” shall be omitted; and

• (ii) for the words “shares or securities owned by the transferor” there shall be substituted “ securities owned by the transferor and any unquoted shares so owned ”;

• (b) for paragraph (bb) (unquoted shares attracting 100 per cent. relief in other cases) there shall be substituted the following paragraph—

(bb) any unquoted shares in a company;

• (c) paragraph (c) (unquoted shares attracting 50 per cent. relief) shall be omitted.

• (3) In section 107(4) (replacement of property with unquoted shares), for the words from the beginning to “such shares” there shall be substituted—

(4) Without prejudice to subsection (1) above, where any shares falling within section 105(1)(bb) above which are

.

• (4) In section 113A(3A)(b) (which contains a reference to shares and securities falling within paragraph (b) of section 105(1)), after “(b)” there shall be inserted “ or (bb) ”.

• (5) For the removal of any doubt, the following subsection shall be inserted in section 113A (provisions applying to business property relief where there is a transfer within seven years of death) after subsection (7)—

(7A) The provisions of this Chapter for the reduction of value transferred shall be disregarded in any determination for the purposes of this section of whether there is a potentially exempt or chargeable transfer in any case.

• (6) This section—

• (a) so far as it inserts a new subsection (7A) in section 113A, has effect in relation to any transfer of value on or after 28th November 1995; and

• (b) so far as it makes any other provision, has effect—

• (i) in relation to any transfer of value on or after 6th April 1996, and

• (ii) for the purposes of any charge to tax by reason of an event occurring on or after 6th April 1996, in relation to transfers of value before that date.

Agricultural property relief

185

• (1) Chapter II of Part V of the Inheritance Tax Act 1984 (agricultural property) shall be amended as follows.

• (2) In section 116 (relief for transfers of agricultural property) after subsection (5) there shall be inserted—

(5A) Where, in consequence of the death on or after 1st September 1995 of the tenant or, as the case may be, the last surviving tenant of any property, the tenancy— (a) becomes vested in a person, as a result of his being a person beneficially entitled under the deceased tenant’s will or other testamentary writing or on his intestacy, and (b) is or becomes binding on the landlord and that person as landlord and tenant respectively, subsection (2)(c) above shall have effect as if the tenancy so vested had been a tenancy beginning on the date of the death. (5B) Where in consequence of the death on or after 1st September 1995 of the tenant or, as the case may be, the last surviving tenant of any property, a tenancy of the property or of any property comprising the whole or part of it— (a) is obtained by a person under or by virtue of an enactment, or (b) is granted to a person in circumstances such that he is already entitled under or by virtue of an enactment to obtain such a tenancy, but one which takes effect on a later date, or (c) is granted to a person who is or has become the only or only remaining applicant, or the only or only remaining person eligible to apply, under a particular enactment for such a tenancy in the particular case, subsection (2)(c) above shall have effect as if the tenancy so obtained or granted had been a tenancy beginning on the date of the death. (5C) Subsection (5B) above does not apply in relation to property situate in Scotland. (5D) If, in a case where the transferor dies on or after 1st September 1995,— (a) the tenant of any property has, before the death, given notice of intention to retire in favour of a new tenant, and (b) the tenant’s retirement in favour of the new tenant takes place after the death but not more than thirty months after the giving of the notice, subsection (2)(c) above shall have effect as if the tenancy granted or assigned to the new tenant had been a tenancy beginning immediately before the transfer of value which the transferor is treated by section 4(1) above as making immediately before his death. (5E) In subsection (5D) above and this subsection— - “the new tenant” means— 1. the person or persons identified in a notice of intention to retire in favour of a new tenant as the person or persons who it is desired should become the tenant of the property to which that notice relates; or 2. the survivor or survivors of the persons so identified, whether alone or with any other person or persons; - “notice of intention to retire in favour of a new tenant” means, in the case of any property, a notice or other written intimation given to the landlord by the tenant, or (in the case of a joint tenancy or tenancy in common) all of the tenants, of the property indicating, in whatever terms, his or their wish that one or more persons identified in the notice or intimation should become the tenant of the property; - “the retiring tenant’s tenancy” means the tenancy of the person or persons giving the notice of intention to retire in favour of a new tenant; - “the tenant’s retirement in favour of the new tenant” means— 1. the assignment, or (in Scotland) assignation, of the retiring tenant’s tenancy to the new tenant in circumstances such that the tenancy is or becomes binding on the landlord and the new tenant as landlord and tenant respectively; or 2. the grant of a tenancy of the property which is the subject of the retiring tenant’s tenancy, or of any property comprising the whole or part of that property, to the new tenant and the acceptance of that tenancy by him;

• (3) In consequence of subsection (2) above, subsection (2A) of that section (which made, in relation to Scotland, provision which is superseded by the subsection (5A) inserted by subsection (2) above) shall cease to have effect.

• (4) For the removal of any doubt, the following subsection shall be inserted in section 124A (provisions applying to agricultural property relief where there is a transfer within seven years of death) after subsection (7)—

(7A) The provisions of this Chapter for the reduction of value transferred shall be disregarded in any determination for the purposes of this section of whether there is a potentially exempt or chargeable transfer in any case.

• (5) Subsection (2) above—

• (a) so far as relating to subsections (5A) to (5C) of section 116 of the Inheritance Tax Act 1984, has effect in any case where the death of the tenant or, as the case may be, the sole surviving tenant, occurs on or after 1st September 1995; and

• (b) so far as relating to subsections (5D) and (5E) of that section, has effect in any case where the death of the transferor occurs on or after 1st September 1995.

• (6) Subsection (3) above has effect in any case where the death of the tenant or, as the case may be, the sole surviving tenant, occurs on or after 1st September 1995.

• (7) Subsection (4) above has effect in relation to any transfer of value on or after 28th November 1995.

Part VI — Stamp Duty and Stamp Duty Reserve Tax

Stamp duty

Transfers of securities to members of electronic transfer systems etc

186

• (1) Stamp duty shall not be chargeable on an instrument effecting a transfer of securities if the transferee is a member of an electronic transfer system and the instrument is in a form which will, in accordance with the rules of the system, ensure that the securities are changed from being held in certificated form to being held in uncertificated form so that title to them may become transferable by means of the system.

• (2) In this section—

• “certificated form” has the same meaning as in the relevant regulations;

• “electronic transfer system” means a system and procedures which, in accordance with the relevant regulations, enable title to securities to be evidenced and transferred without a written instrument;

• “member”, in relation to an electronic transfer system, means a person who is permitted by the operator of the system to transfer by means of the system title to securities held by him in uncertificated form;

• “operator” means a person approved by the Treasury under the relevant regulations as operator of an electronic transfer system;

• “the relevant regulations” means regulations under section 785 of the Companies Act 2006 (transfer without written instrument);

• “securities” means stock or marketable securities;

• “uncertificated form” has the same meaning as it has in the relevant regulations.

• (3) This section applies in relation to instruments executed on or after 1st July 1996.

• (4) This section shall be construed as one with the Stamp Act 1891.

Stamp duty reserve tax

Territorial scope of the tax

187

• (1) In section 86 of the Finance Act 1986 (introduction) after subsection (3) there shall be added—

(4) Stamp duty reserve tax shall be chargeable in accordance with the provisions of this Part of this Act— (a) whether the agreement, transfer, issue or appropriation in question is made or effected in the United Kingdom or elsewhere, and (b) whether or not any party is resident or situate in any part of the United Kingdom.

• (2) The amendment made by subsection (1) above shall have effect—

• (a) in relation to an agreement, if—

• (i) the agreement is conditional and the condition is satisfied on or after 1st July 1996; or

• (ii) the agreement is not conditional and is made on or after that date; and

• (b) in relation to a transfer, issue or appropriation made or effected on or after that date.

Removal of the two month period

188

• (1) In section 87 of the Finance Act 1986 (the principal charge) in subsection (2) (tax charged on the expiry of the period of two months beginning with the relevant day unless the first and second conditions are fulfilled before that period expires) the following shall be omitted—

• (a) the words “ the expiry of the period of two months beginning with ”, and

• (b) the words from “ unless ” to the end.

• (2) In section 88 of that Act (special cases) in subsection (1) (which provides for instruments on which stamp duty is not chargeable by virtue of certain enactments to be disregarded for the purposes of section 87(4) and (5)) before paragraph (a) there shall be inserted—

(aa) section 65(1) of the Finance Act 1963 (renounceable letters of allotment etc), (ab) section 14(1) of the Finance Act (Northern Ireland) 1963 (renounceable letters of allotment etc.),

.

• (3) Subsections (2) and (3) of that section (which are superseded by subsection (2) above) shall cease to have effect.

• (4) In section 92(1) of that Act (repayment or cancellation of tax where the conditions in section 87(4) and (5) are shown to have been fulfilled after the expiry of the period of two months beginning with the relevant day but before the expiry of six years so beginning)—

• (a) for “after the expiry of the period of two months (beginning with the relevant day, as defined in section 87(3))” there shall be substituted “ on or after the relevant day (as defined in section 87(3)) ”; and

• (b) for “(so beginning)” there shall be substituted “ (beginning with that day) ”.

• (5) The amendments made by this section shall have effect in relation to an agreement to transfer securities if—

• (a) the agreement is conditional and the condition is satisfied on or after 1st July 1996; or

• (b) the agreement is not conditional and is made on or after that date.

Transfers to members of electronic transfer systems etc

189

• (1) In section 88 of the Finance Act 1986 (special cases) after subsection (1) there shall be inserted—

(1A) An instrument on which stamp duty is not chargeable by virtue of section 186 of the Finance Act 1996 (transfers of securities to members of electronic transfer systems etc) shall be disregarded in construing section 87(4) and (5) above unless— (a) the transfer is made by a stock exchange nominee; and (b) the maximum stamp duty chargeable on the instrument, apart from section 186 of the Finance Act 1996, would be 50p; and in this subsection “stock exchange nominee” means a person designated for the purposes of section 127 of the Finance Act 1976 as a nominee of The Stock Exchange by an order made by the Secretary of State under subsection (5) of that section.

• (2) This section has effect in relation to an agreement to transfer securities if an instrument is executed on or after 1st July 1996 in pursuance of the agreement.

Transfers between associated bodies

190

• (1) In section 88 of the Finance Act 1986 (special cases) after subsection (1A) there shall be inserted—

(1B) An instrument on which stamp duty is not chargeable by virtue of section 42 of the Finance Act 1930 or section 11 of the Finance Act (Northern Ireland) 1954 (transfer between associated bodies corporate) shall be disregarded in construing section 87(4) and (5) above in any case where— (a) the property mentioned in section 42(2)(a) of the Finance Act 1930 or, as the case may be, section 11(2)(a) of the Finance Act (Northern Ireland) 1954 consists of chargeable securities of any particular kind acquired in the period of two years ending with the day on which the instrument was executed; and (b) the body corporate from which the conveyance or transfer there mentioned is effected acquired the chargeable securities— (i) in a transaction which was given effect by an instrument of transfer on which stamp duty was not chargeable by virtue of section 81 above; (ii) in pursuance of an agreement to transfer securities as regards which section 87 above did not apply by virtue of section 89 below; or (iii) in circumstances with regard to which the charge to stamp duty or stamp duty reserve tax was treated as not arising by virtue of regulations under section 116 or 117 of the Finance Act 1991.

• (2) At the end of that section there shall be added—

(4) For the purposes of subsection (1B) above, if the securities mentioned in paragraph (a) of that subsection cannot (apart from this subsection) be identified, securities shall be taken as follows, that is to say, securities of the same kind acquired later in the period of two years there mentioned (and not taken under this subsection for the purposes of any earlier instrument) shall be taken before securities acquired earlier in that period. (5) If, in a case where subsection (4) above applies, some, but not all, of the securities taken in accordance with that subsection were acquired as mentioned in paragraph (b) of subsection (1B) above by the body corporate mentioned in that paragraph, the stamp duty reserve tax chargeable under section 87 above by virtue of subsection (1B) above shall not exceed the tax that would have been so chargeable had the agreement to transfer the securities related only to such of the securities so taken as were so acquired. (6) Where a person enters into an agreement for securities to be transferred to him or his nominee, the securities shall be treated for the purposes of subsections (1B)(a) and (4) above as acquired by that person at the time when he enters into the agreement, unless the agreement is conditional, in which case they shall be taken to be acquired by him when the condition is satisfied.

• (3) This section has effect where the instrument on which stamp duty is not chargeable by virtue of section 42 of the Finance Act 1930 or section 11 of the Finance Act (Northern Ireland) 1954 is executed on or after 4th January 1996 in pursuance of an agreement to transfer securities made on or after that date.

Stock lending and collateral security arrangements

191

• (1) After section 89A of the Finance Act 1986 (exceptions from section 87 for public issues) there shall be inserted—

(89B) (1) Where a person (P) has contracted to sell chargeable securities of a particular kind in the ordinary course of his business as a market maker in chargeable securities of that kind and, to enable him to fulfil the contract, he enters into an arrangement under which— (a) another person (Q) is to transfer chargeable securities to P or his nominee, and (b) in return, chargeable securities of the same kind and amount are to be transferred (whether or not by P or his nominee) to Q or his nominee, section 87 above shall not apply as regards an agreement to transfer chargeable securities which is made for the purpose of performing the obligation to transfer chargeable securities described in paragraph (a) or (b) above. (2) Where the arrangement mentioned in subsection (1) above is also one under which— (a) an amount of chargeable securities of some other kind is to be transferred by P or his nominee to Q or his nominee by way of security for the performance of the obligation described in paragraph (b) of that subsection, and (b) on performance of that obligation, the securities mentioned in paragraph (a) above, or chargeable securities of the same kind and amount as those securities, are to be transferred to P or his nominee, section 87 above shall also not apply as regards an agreement to transfer chargeable securities which is made for the purpose of performing the obligation to transfer chargeable securities described in paragraph (a) or (b) above. (3) Where, to enable Q to make the transfer to P or his nominee which is mentioned in paragraph (a) of subsection (1) above, Q enters into an arrangement under which— (a) another person (R) is to transfer chargeable securities to Q or his nominee, and (b) in return, chargeable securities of the same kind and amount are to be transferred (whether or not by Q or his nominee) to R or his nominee, section 87 above shall not apply as regards an agreement to transfer chargeable securities which is made for the purpose of performing the obligation to transfer chargeable securities described in paragraph (a) or (b) above. (4) Where the arrangement mentioned in subsection (3) above is also one under which— (a) an amount of chargeable securities of some other kind is to be transferred by Q or his nominee to R or his nominee by way of security for the performance of the obligation described in paragraph (b) of that subsection, and (b) on performance of that obligation, the securities mentioned in paragraph (a) above, or chargeable securities of the same kind and amount as those securities, are to be transferred to Q or his nominee, section 87 above shall also not apply as regards an agreement to transfer chargeable securities which is made for the purpose of performing the obligation to transfer chargeable securities described in paragraph (a) or (b) above. (5) For the purposes of this section a person is a market maker in chargeable securities of a particular kind if he— (a) holds himself out at all normal times in compliance with the rules of The Stock Exchange as willing to buy and sell chargeable securities of that kind at a price specified by him, and (b) is recognised as doing so by The Stock Exchange. (6) The Treasury may by regulations provide that for subsection (5) above (as it has effect for the time being) there shall be substituted a subsection containing a different definition of a market maker for the purposes of this section. (7) Regulations under subsection (6) above shall apply in relation to any agreement to transfer chargeable securities in pursuance of an arrangement entered into on or after such day after 1st July 1996 as is specified in the regulations. (8) The power to make regulations under subsection (6) above shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons.

• (2) This section applies in relation to agreements to transfer chargeable securities in pursuance of an arrangement entered into on or after 1st July 1996.

Repayment or cancellation of tax

192

• (1) In consequence of section 188(1) above, subsections (4), (5) and (8) of section 87 of the Finance Act 1986 (exemption from stamp duty reserve tax where an instrument is executed etc) shall cease to have effect.

• (2) In section 88 of that Act (which provides for instruments on which stamp duty is not chargeable by virtue of certain enactments to be disregarded for the purposes of section 87(4) and (5)) in subsections (1), (1A) and (1B) for “section 87(4) and (5) above” there shall be substituted “ section 92(1A) and (1B) below ”.

• (3) In section 92 of that Act (repayment or cancellation of tax) in subsection (1) (which refers to the conditions in section 87(4) and (5))—

• (a) for “section 87(4) and (5)” there shall be substituted “ subsections (1A) and (1B) below ”; and

• (b) for “the following provisions of this section shall apply” there shall be substituted “ subsections (2) to (4A) of this section shall apply ”.

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

(1A) The first condition is that an instrument is (or instruments are) executed in pursuance of the agreement and the instrument transfers (or the instruments between them transfer) to B or, as the case may be, to his nominee all the chargeable securities to which the agreement relates. (1B) The second condition is that the instrument (or each instrument) transferring the chargeable securities to which the agreement relates is duly stamped in accordance with the enactments relating to stamp duty if it is an instrument which, under those enactments, is chargeable with stamp duty or otherwise required to be stamped.

• (5) At the end of that section there shall be added—

(6) In this section “the enactments relating to stamp duty” means the Stamp Act 1891 and any enactment which amends or is required to be construed together with that Act.

• (6) The amendments made by this section shall have effect in relation to an agreement to transfer securities if—

• (a) the agreement is conditional and the condition is satisfied on or after 1st July 1996; or

• (b) the agreement is not conditional and is made on or after that date.

Depositary receipts

193

• (1) Section 93 of the Finance Act 1986 (depositary receipts) shall be amended in accordance with the following provisions of this section.

• (2) In subsection (1) (charge to stamp duty reserve tax where certain things are done in pursuance of an arrangement) in paragraph (b) (transfer or issue to, or appropriation by, a person falling within subsection (3))—

• (a) after “transferred or issued to” there shall be inserted “ the person mentioned in paragraph (a) above or ”; and

• (b) for “such a person” there shall be substituted “ the person mentioned in paragraph (a) above or a person falling within subsection (3) below ”.

• (3) In subsection (6) (payment by instalments) in paragraph (d) (instrument received by person falling within subsection (3)) for “subsection (3)” there shall be substituted “ subsection (2) or (3) ”.

• (4) This section has effect—

• (a) so far as relating to the charge to tax under section 93(1) of the Finance Act 1986, where securities are transferred, issued or appropriated on or after 1st July 1996 (whenever the arrangement was made);

• (b) so far as relating to the charge to tax under section 93(10) of that Act, in relation to instalments payable on or after 1st July 1996.

Rates of charge expressed as percentages

194

• (1) In section 87 of the Finance Act 1986, in subsection (6) (which specifies the rate at which stamp duty reserve tax under that section is charged) for “50p for every £100 or part of £100” there shall be substituted “ 0.5 per cent. ”

• (2) In section 93 of that Act (depositary receipts)—

• (a) in subsection (4) (rate of charge) for “£1.50 for every £100 or part of £100” there shall be substituted “ 1.5 per cent. ”;

• (b) in subsection (5) (which applies subsection (4) with modifications in certain cases where the securities are transferred by a chargeable instrument) for the words from “as if “£1.50” read” onwards there shall be substituted “ as if “1.5 per cent.” read “1 per cent.” ”; and

• (c) in subsection (10) (payment in instalments etc) in paragraph (b), for “£1.50 for every £100 or part of £100” there shall be substituted “ 1.5 per cent. of the amount ”.

• (3) Section 94(8) of that Act (which defines “the day of The Stock Exchange reforms” for the purposes of section 93(5) and which becomes unnecessary in consequence of the amendment made by subsection (2)(b) above) shall be omitted.

• (4) In section 96 of that Act (clearance services)—

• (a) in subsection (2) (rate of charge) for “£1.50 for every £100 or part of £100” there shall be substituted “ 1.5 per cent. ”;

• (b) in subsection (3) (which applies subsection (2) with modifications in certain cases where the securities are transferred by a chargeable instrument) for the words from “as if “£1.50” read” onwards there shall be substituted “ as if “1.5 per cent.” read “1 per cent.” ”; and

• (c) in subsection (8) (payment in instalments etc) in paragraph (b), for “£1.50 for every £100 or part of £100” there shall be substituted “ 1.5 per cent. of the amount ”.

• (5) Section 96(12) of that Act (which defines “the day of The Stock Exchange reforms” for the purposes of subsection (3) and which becomes unnecessary in consequence of the amendment made by subsection (4)(b) above) shall be omitted.

• (6) In section 99 of that Act (interpretation) after subsection (12) there shall be added—

(13) Where the calculation of any tax in accordance with the provisions of this Part results in an amount which is not a multiple of one penny, the amount so calculated shall be rounded to the nearest penny, taking any½p as nearest to the next whole penny above.

• (7) Subsections (1) to (5) above have effect in accordance with the following provisions of this subsection, that is to say—

• (a) in relation to the charge to tax under section 87 of the Finance Act 1986, subsection (1) above applies where—

• (i) the agreement to transfer is conditional and the condition is satisfied on or after 1st July 1996; or

• (ii) the agreement is not conditional and is made on or after 1st July 1996;

• (b) in relation to the charge to tax under section 93(1) of that Act, paragraphs (a) and (b) of subsection (2) above apply where securities are transferred, issued or appropriated on or after 1st July 1996 (whenever the arrangement was made) and subsection (3) above has effect accordingly;

• (c) in relation to the charge to tax under section 93(10) of that Act, paragraph (c) of subsection (2) above applies in relation to instalments payable on or after 1st July 1996;

• (d) in relation to the charge to tax under section 96(1) of that Act, paragraphs (a) and (b) of subsection (4) above apply where securities are transferred or issued on or after 1st July 1996 (whenever the arrangement was made) and subsection (5) above has effect accordingly;

• (e) in relation to the charge to tax under section 96(8) of that Act, paragraph (c) of subsection (4) above applies in relation to instalments payable on or after 1st July 1996.

Regulations concerning administration: sub-delegation to the Board

195

In section 98 of the Finance Act 1986 (Treasury regulations with respect to administration etc) after subsection (1) there shall be inserted—

(1A) The power conferred on the Treasury by subsection (1) above includes power to make provision conferring or imposing on the Board functions which involve the exercise of a discretion.

Clearance services

Election by operator for alternative system of charge

196

• (1) In section 70 of the Finance Act 1986 (clearance services) in subsection (1) (which, subject to subsection (9), makes provision with respect to stamp duty on transfers into clearance services) after “Subject to subsection (9)” there shall be inserted “ and section 97A ”.

• (2) In section 96 of that Act (clearance services) in subsection (1) (which, subject to subsection (5) and section 97, provides for stamp duty reserve tax to be chargeable on transfers into clearance services) for “section 97” there shall be substituted “ sections 97 and 97A ”.

• (3) After section 97 of that Act (exceptions) there shall be inserted—

(97A) (1) A person whose business is or includes the provision of clearance services for the purchase and sale of chargeable securities or relevant securities (an “operator”) may, with the approval of the Board, elect that stamp duty and stamp duty reserve tax shall be chargeable in accordance with this section in connection with those clearance services. (2) An election under subsection (1) above— (a) shall come into force on such date as may be notified to the operator by the Board in giving their approval; and (b) shall continue in force unless and until it is terminated in accordance with the following provisions of this section. (3) If and so long as an election under subsection (1) above is in force, stamp duty or stamp duty reserve tax (as the case may require) shall, in connection with the clearance services to which the election relates, be chargeable in relation to— (a) a transfer or issue falling within section 70(1) or 96(1) above, (b) an agreement falling within section 90(4) above by virtue of section 96(1) above, or (c) an agreement falling within section 90(5) above, as it would be chargeable apart from sections 70, 90(4) and (5) and 96 above. (4) Where stamp duty or stamp duty reserve tax is chargeable by virtue of subsection (3) above in relation to a transfer, issue or agreement, sections 70, 90(4) and (5) and 96 above shall not have effect in relation to that transfer, issue or agreement. (5) Nothing in subsection (3) or (4) above affects the application of section 70 or 96 above in relation to a transfer falling within section 70(1) or 96(1) above by the operator or his nominee to, or to a nominee of, another operator in relation to whom no election under subsection (1) above is for the time being in force. (6) The Board may require the operator, as a condition of the approval of his election under subsection (1) above, to make and maintain such arrangements as they may consider satisfactory— (a) for the collection of stamp duty reserve tax chargeable in accordance with this section, and (b) for complying, or securing compliance, with the provisions of this Part and of regulations under section 98 below, so far as relating to such tax. (7) Where the operator is not resident in the United Kingdom and has no branch or agency in the United Kingdom, the Board may require him, as a condition of the approval of his election under subsection (1) above, to appoint and, so long as the election remains in force, maintain a tax representative. (8) A person shall not be an operator’s tax representative under this section unless that person— (a) has a business establishment in the United Kingdom, and (b) is approved by the Board. (9) A person who is at any time an operator’s tax representative under this section— (a) shall be entitled to act on the operator’s behalf for the purposes of stamp duty and stamp duty reserve tax in connection with the clearance services to which the operator’s election under subsection (1) above relates, (b) shall secure (where appropriate by acting on the operator’s behalf) the operator’s compliance with and discharge of the obligations and liabilities to which the operator is subject, in connection with the clearance services to which the operator’s election under subsection (1) above relates, by virtue of legislation relating to stamp duty or stamp duty reserve tax (including obligations and liabilities arising before he became the operator’s tax representative), and (c) shall be personally liable in respect of any failure to secure the operator’s compliance with or discharge of any such obligation or liability, and in respect of anything done for purposes connected with acting on the operator’s behalf, as if the obligations and liabilities imposed on the operator were imposed jointly and severally on the tax representative and the operator. (10) An election under subsection (1) above may be terminated— (a) by not less than thirty days’ notice given by the operator to the Board or by the Board to the operator; or (b) if there is or has been a breach of a condition of the approval of the election imposed by virtue of subsection (6) or (7) above, by a notice— (i) given by the Board to the operator, (ii) taking effect on the giving of the notice or at such later time as may be specified in the notice, and (iii) stating that it is given by reason of the breach of condition. (11) Where an election under subsection (1) above is terminated, section 96 above shall have effect as if chargeable securities of the same amounts and kinds as are, immediately before the termination, held by the operator or his nominee in connection with the provision of the clearance services, had, immediately after the termination, been transferred to the operator or, as the case may be, to the nominee by a transfer falling within subsection (1) of that section. (12) In this section “relevant securities” has the same meaning as in section 70 above.

• (4) Section 97(2) of that Act (no charge to tax under section 96 on transfers to a stock exchange nominee or to, or to a nominee of, a recognised investment exchange or recognised clearing house) shall not have effect in relation to any transfer effected on or after 1st July 1996.

• (5) In section 99(10) of that Act (interpretation of “chargeable securities” in sections 93, 94 and 96) for “and 96” there shall be substituted “ , 96 and 97A ”.

• (6) Subsections (1), (2), (3) and (5) above shall come into force on 1st July 1996.

Part VII — Miscellaneous and supplemental

Miscellaneous: indirect taxation

Setting of rates of interest

197

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

• (2) This section applies to—

• (a) paragraphs 7 and 8(1) of Schedule 6 to the Finance Act 1994 (interest payable to the Commissioners of Customs and Excise in connection with air passenger duty);

• (b) sections 60(6), (7) and (8) of and paragraphs 21 and 22 of Schedule 7 to that Act (interest on amounts of insurance premium tax and on amounts payable by the Commissioners in respect of that tax);

• (c) sections 74, 78 and 85A(2) and (3) of the Value Added Tax Act 1994 (interest on VAT recovered or recoverable by assessment and interest payable in cases of official error); . . .

• (d) sections 56(3) to (5) of and paragraphs 26 and 29 of Schedule 5 to this Act (interest payable to or by the Commissioners in connection with landfill tax)and

• (e) paragraph 17 of Schedule 5 to the Finance Act 1997 (interest on amounts repayable in respect of overpayments by the Commissioners in connection with excise duties, insurance premium tax and landfill tax).

• (f) sections 126 and 127 of the Finance Act 1999 (interest on overdue customs duty and on repayments of amounts paid by way of customs duty).

• (g) the following provisions of Schedule 6 to the Finance Act 2000 (interest payable to or by the Commissioners in connection with climate change levy), that is to say, paragraphs 41(2)(f), 62(3)(f), 66, 70(1)(b) , 81(3) and 123(4) to (6) .

• (h) the following provisions of the Finance Act 2001 (interest payable to or by the Commissioners in connection with aggregates levy), that is to say—

• (i) sections 25(2)(f) , 30(3)(f) and 42(4) to (6) ;

• (ii) paragraphs 6 and 8(3)(a) of Schedule 5; and

• (iii) paragraphs 2 and 6(1)(b) of Schedule 8.

• (i) Parts 2 and 3 of Schedule 3 to the Finance Act 2001 (interest payable on repayments etc.).

• (3) Regulations under this section may—

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

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

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

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

• (e) provide for circumstances in which changes of rates of interest are or are not to take place, and

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

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

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

• (6) The words “ the rate applicable under section 197 of the Finance Act 1996 ” shall be substituted—

• (a) for the words “the specified rate” in each of paragraphs 7(1) and (3) and 9(1) of Schedule 6 to the Finance Act 1994 (air passenger duty);

• (b) for the words “the prescribed rate” in each of sub-paragraphs (1) and (3) of paragraph 21 of Schedule 7 to that Act (insurance premium tax);

• (c) for the words from “such rate” onwards in sub-paragraph (2) of paragraph 22 of that Schedule; and

• (d) in the Value Added Tax Act 1994—

• (i) for the words “the prescribed rate” in each of subsections (1), (2) and (4) of section 74, and

• (ii) for the words from “such rates” onwards in subsection (3) of section 78.

• (7) Subsections (1) and (6) above shall have effect for periods beginning on or after such day as the Treasury may by order made by statutory instrument appoint and shall have effect in relation to interest running from before that day, as well as in relation to interest running from, or from after, that day; and different days may be appointed under this subsection for different purposes.

Miscellaneous: direct taxation

Banks

198

Schedule 37 to this Act (which re-defines “bank” for certain purposes, and makes related amendments) shall have effect.

Quotation or listing of securities

199

Schedule 38 to this Act (which contains amendments of enactments referring to the quotation or listing of securities) shall have effect.

Domicile for tax purposes of overseas electors

200

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

Enactment of Inland Revenue concessions

201

Schedule 39 to this Act has effect for the purpose of enacting certain extra-statutory concessions relating to income tax, corporation tax, capital gains tax, and stamp duty.

Miscellaneous: other matters

Gilt stripping

202

• (1) In section 47 of the Finance Act 1942 (Treasury regulations with respect to the transfer and registration of Government stock), after paragraph (bb) of subsection (1) there shall be inserted the following paragraphs—

(bc) for the exchange of any such stock and bonds (whenever issued) for strips thereof; (bd) for exchanges by which such strips (whether deriving from the same security or from different securities) are consolidated into a single security of a description so specified;

.

• (2) After subsection (1A) of that section (transfer of deceased persons’ stocks and bonds) there shall be inserted the following subsections—

(1B) In this section “strip”, in relation to any stock or bond, means a security issued under the National Loans Act 1968 which— (a) is issued for the purpose of representing the right to, or of securing— (i) a payment corresponding to a payment of interest or principal remaining to be made under the stock or bond, or (ii) two or more payments each corresponding to a different payment remaining to be so made; (b) is issued in conjunction with the issue of one or more other securities which, together with that security, represent the right to, or secure, payments corresponding to every payment remaining to be made under the stock or bond; and (c) is not itself a security that represents the right to, or secures, payments corresponding to a part of every payment so remaining. (1C) For the purposes of subsection (1B) of this section, where the balance has been struck for a dividend on any stock or bond, any payment to be made in respect of that dividend shall, at times falling after that balance has been struck, be treated as not being a payment remaining to be made under the stock or bond. (1D) Without prejudice to the generality of the powers conferred by the preceding provisions of this section (but subject to subsection (1E) of this section), regulations made by virtue of paragraph (bc) or (bd) of subsection (1) of this section may— (a) provide, for the purpose of authorising the making of exchanges, for any stock or bonds to be treated as issued on such terms as may be specified in the regulations; (b) contain such provision as the Treasury think fit about the circumstances in which and the conditions subject to which exchanges may be effected; and (c) contain any such provision as could be contained in rules made under section 14(3) of the National Loans Act 1968 (Treasury rules as to exchange of securities). (1E) Regulations made by virtue of subsection (1)(bc) or (bd) of this section shall not make provision for the exchange of any stock or bonds, or of any strips, in any cases other than those where the exchange is at the request of the holder or in accordance with an order made by a court. (1F) Regulations under this section may make different provision for different cases and contain such exceptions and exclusions as the Treasury think fit; and the powers of the Treasury to make regulations under this section are without prejudice to any of their powers under the National Loans Act 1968.

• (3) After section 2 of the National Debt (Stockholders Relief) Act 1892 (date for striking balance for a dividend on stock) there shall be inserted the following section—

(2A) (1) Where— (a) any stock is exchanged for strips of that stock, and (b) that exchange takes place after the balance has been struck for a dividend on that stock but before the day on which that dividend is payable, any person who would have been entitled to that dividend but for the exchange shall remain entitled to that dividend notwithstanding the exchange. (2) The Treasury may by order made by statutory instrument provide that for the purposes of this section and section 47(1C) of the Finance Act 1942, the balance for any dividend on any stock is to be deemed to be struck at a time which, by such a period as is specified in the order, precedes the time when the balance is actually struck. (3) A period specified in an order under subsection (2) above shall not exceed 7 days; and an order made under that subsection may make different provision for different cases. (4) In this section “strip”, in relation to any stock, has the meaning given by section 47 of the Finance Act 1942.

• (4) In section 16 of the National Loans Act 1968 (supplemental provisions as to national debt), after subsection (4) there shall be inserted the following subsection—

(4A) In subsections (3) and (4) above the references to stock or registered bonds issued under this Act include references to a strip (within the meaning of section 47 of the Finance Act 1942) of any stock or bond (whether the stock or bond is issued under this Act or otherwise).

• (5) The Treasury may by regulations make provision for securing that enactments and subordinate legislation which—

• (a) apply in relation to government securities or to any description of such securities, or

• (b) for any other purpose refer (in whatever terms) to such securities or to any description of them,

have effect with such modifications as the Treasury may think appropriate in consequence of the making of any provision or arrangements for, or in connection with, the issue or transfer of strips of government securities or the consolidation of such strips into other securities.

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

• (a) impose a charge to income tax, corporation tax, capital gains tax, inheritance tax, stamp duty or stamp duty reserve tax;

• (b) include provision applying generally to, or to any description of, enactments or subordinate legislation;

• (c) make different provision for different cases; and

• (d) contain such incidental, supplemental, consequential and transitional provision as the Treasury think appropriate.

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

• (8) Schedule 40 to this Act (which makes provision in relation to strips for taxation purposes) shall have effect.

• (9) The enactments that may be modified by regulations under this section shall include section 95 above and the enactments contained in Schedule 40 to this Act.

• (10) In this section—

• “government securities” means any securities included in Part I of Schedule 11 to the Finance Act 1942;

• “modifications” includes amendments, additions and omissions; and

• “subordinate legislation” has the same meaning as in the Interpretation Act 1978;

and expressions used in this section and in section 47 of the Finance Act 1942 have the same meanings in this section as in that section.

Modification of the Agriculture Act 1993

203

• (1) Part I of Schedule 2 to the Agriculture Act 1993 (taxation provisions applying to the reorganisation of the milk marketing boards) shall have effect, and be deemed always to have had effect, in accordance with subsections (2) to (4) below where—