Finance Act 1996

(3) Neither the clearing of a cheque, nor the arranging for the clearing of a cheque, shall of itself be a relevant function. (4) The chargeable date, in relation to a relevant receipt, is— (a) in the case of a relevant receipt falling within paragraph 4 or 5 of Table B above, the date on which the sale or realisation is effected, and (b) in any other case, the date on which the dividends are paid. (5) For the purposes of paragraph 1 of Table B above, a person acts as a custodian of relevant holdings if he holds them, or an entitlement to them, for another person. (6) The Board may by regulations provide for the application of the provisions of this Chapter relating to collecting agents where— (a) a person in the United Kingdom— (i) holds, beneficially or otherwise, a right (the relevant right) which is a right to delivery of, or to amounts representing the whole or substantially the whole of the value of, a specified quantity of shares or securities comprised in a relevant holding which is held by a person outside the United Kingdom, and (ii) is entitled to receive income (the relevant income) which is derived from, or which represents, foreign dividends or quoted Eurobond interest on that quantity of shares or securities; and (b) apart from the provisions of the regulations, the relevant right is not a relevant holding, or the relevant income does not constitute foreign dividends or quoted Eurobond interest. (7) Regulations under subsection (6) above may— (a) treat the relevant right as a foreign holding or, as the case may be, a holding of quoted Eurobonds (the notional holding); and (b) treat the relevant income as foreign dividends or, as the case may be, quoted Eurobond interest paid on the notional holding. (118D) (1) For the purposes of this Chapter, every relevant payment shall be a chargeable payment unless— (a) it is made in respect of a foreign dividend— (i) which is payable on foreign holdings held in a recognised clearing system; and (ii) in respect of which any conditions imposed by virtue of subsection (8) below are satisfied; or (b) it is a payment of interest on an exempted certificate of deposit; or (c) the making of the payment is excluded from being a chargeable payment by subsections (4), (5) or (6) below or by section 118G. (2) For the purposes of this Chapter, every relevant receipt shall be a chargeable receipt, unless— (a) it arises in respect of relevant holdings which are held in a recognised clearing system and— (i) the collecting agent pays or accounts for the relevant receipt directly or indirectly to the recognised clearing system, and (ii) any conditions imposed by virtue of subsection (8) below are satisfied; or (b) it arises in respect of relevant holdings which are held in a recognised clearing system for which the collecting agent is acting as depositary; or (c) it is excluded from being a chargeable receipt by subsection (7) below or by section 118G. (3) In subsection (1)(b) above, “exempted certificate of deposit” means a certificate of deposit (within the meaning of section 56(5)) issued by a person in the United Kingdom relating to a deposit with a branch in the United Kingdom through which a company resident outside, and not resident in, the United Kingdom carries on a trade. (4) The payment of United Kingdom public revenue dividends on securities the interest on which is, by virtue of directions given (or treated by section 51 as having been given) under section 50(1), payable without deduction of income tax shall not be a chargeable payment unless the interest is for the time being payable under deduction of income tax pursuant to an application made (or treated by section 51 as having been made) under section 50(2). (5) The payment of United Kingdom public revenue dividends in respect of securities standing in the name of the official custodian for charities, or in respect of which there is given to the paying agent a certificate from the Board to the effect that the dividends are subject only to charitable trusts and are exempt from tax, shall not be a chargeable payment. (6) In a case where— (a) foreign dividends are entrusted by a company which at the time they are entrusted (the “relevant time”) is not resident in the United Kingdom, (b) they are entrusted for payment to a company which at the relevant time is resident in the United Kingdom, and (c) at the relevant time the company mentioned in paragraph (b) above directly or indirectly controls not less than 10 per cent. of the voting power in the company mentioned in paragraph (a) above, the payment of those dividends shall not be a chargeable payment. (7) In a case where— (a) foreign dividends are payable by a company which at the time of the payment (the “relevant time”) is not resident in the United Kingdom, (b) payment of those dividends is collected, received or secured, or coupons for those dividends are realised, on behalf of a company which at the relevant time is resident in the United Kingdom, and (c) at the relevant time the company mentioned in paragraph (b) above directly or indirectly controls not less than 10 per cent. of the voting power in the company mentioned in paragraph (a) above, those dividends or, as the case may be, the proceeds of realisation of those coupons shall not be a chargeable receipt. (8) The Board may by regulations provide that subsection (1)(a) above does not apply in respect of a relevant payment, or that subsection (2)(a) above does not apply in respect of a relevant receipt, unless the paying agent or, as the case may be, the collecting agent has obtained a declaration from the recognised clearing system or its depositary in such form, and containing such information, as may be required by those regulations. (9) The Board may by regulations make such provision as they may consider appropriate for requiring paying agents and collecting agents to deliver returns setting out particulars of— (a) any relevant payments made by them which would have been chargeable payments but for the provisions of section 118D(1)(a); (b) any relevant receipts which would have been chargeable receipts but for the provisions of section 118D(2)(a) or (b); and for the keeping and production to, or to an officer of, the Board of any document in which any such declaration as is mentioned in subsection (8) above is contained. (118E) (1) Subject to subsection (2) below, where a paying agent makes a chargeable payment— (a) he shall, on making the payment, deduct from it a sum representing the amount of income tax thereon; (b) he shall become liable to account for that sum; (c) the person to whom the chargeable payment is made shall allow the deduction on receipt of the residue of the payment, and the paying agent shall be acquitted and discharged of so much money as is represented by the deduction, as if that sum had actually been paid; and (d) the deduction shall be treated as income tax paid by the person entitled to the chargeable payment. (2) In relation to United Kingdom public revenue dividends payable to the Bank of Ireland out of the public revenue of the United Kingdom, or which are entrusted to the Bank of Ireland for payment and distribution and are not payable by that Bank out of its principal office in Belfast, subsection (1) above shall not apply, but— (a) the money which, apart from this subsection, would be issuable to the Bank of Ireland under section 14 of the National Debt Act 1870, or otherwise payable to the Bank of Ireland for the purpose of dividends on securities of the United Kingdom government entered in the register of the Bank of Ireland in Dublin, shall be issued and paid to the Bank of England; (b) the Bank of England shall deduct from the money so issued and paid to it a sum representing the amount of income tax on the dividends payable to the Bank of Ireland, and on the dividends on the securities of the United Kingdom government entered in the register of the Bank of Ireland in Dublin, and shall become liable to account for the same under section 118F(1); (c) the Bank of England shall pay to the Bank of Ireland the residue of the money so issued and paid to it, to be applied by the Bank of Ireland in payment of the dividends; and (d) the deduction shall be treated as income tax paid by the person entitled to the dividends, and the Bank of England and the Bank of Ireland shall be acquitted and discharged of so much money as is represented by the deduction, as if that sum had actually been paid. (3) Where a collecting agent performs a relevant function— (a) he shall on the chargeable date become liable to account for a sum representing the amount of income tax on any chargeable receipt in relation to which he is the collecting agent; (b) he shall be entitled— (i) to be indemnified by the person entitled to the chargeable receipt against the income tax for which he is liable to account in accordance with paragraph (a) above; and (ii) to deduct out of the chargeable receipt or to retain from any other sums otherwise due from him to the person entitled to the chargeable receipt, or received by him on behalf of that person, amounts sufficient for meeting any liability to account for such income tax which he has discharged or to which he is subject; (c) the person entitled to the chargeable receipt shall allow the deduction or retention on receipt of the residue of the chargeable receipt, and the collecting agent shall be acquitted and discharged of so much money as is represented by the deduction, as if that sum had actually been paid; and (d) the amount for which the collecting agent is liable to account shall be treated as income tax paid by the person entitled to the chargeable receipt. (4) A paying agent who makes a chargeable payment, or a collecting agent who is required to account for tax on a chargeable receipt, shall, if the person entitled to the chargeable payment or, as the case may be, the chargeable receipt so requests in writing, furnish him within thirty days after receiving that request with a certificate showing— (a) the gross amount of the payment or receipt; (b) the amount of income tax treated as paid by him; (c) the actual amount actually paid or accounted for to him; and (d) the chargeable date. (5) The Board may by regulations— (a) require a certificate furnished pursuant to subsection (4) above to contain information additional to that set out in paragraphs (a) to (d) of that subsection or a declaration made by or on behalf of the paying agent or collecting agent; (b) make provision for the form of such a certificate or declaration. (6) The duty imposed by subsection (4) above shall be enforceable at the suit or instance of the person requesting the certificate. (118F) (1) Income tax in respect of United Kingdom public revenue dividends for which the Bank of England, the Bank of Ireland, the National Debt Commissioners or any public office or department of the Crown are liable to account pursuant to section 118E(1) or (2) shall become due and payable on the seventh day after the chargeable date and shall be paid into the general account of the Board at the Bank of England or, in the case of the Bank of Ireland, at the Bank of Ireland. (2) Any other income tax for which a paying agent is liable to account under section 118E(1), and any income tax for which a collecting agent is liable to account under section 118E(3), shall become due and payable on the fourteenth day from the end of the month in which the chargeable date falls. (3) Any tax due under subsection (1) or (2) above shall carry interest, at the rate applicable under section 178 of the Finance Act 1989, from the date on which it becomes due until it is paid. (4) The Board may by regulations make such provision as they may consider appropriate— (a) for requiring paying agents and collecting agents to deliver returns setting out particulars of— (i) chargeable payments made by them; (ii) chargeable receipts in respect of which they are liable to account for tax; (iii) any relevant payments made by them which would have been chargeable payments but for the provisions of section 118G; (iv) any relevant receipts which would have been chargeable receipts but for the provisions of section 118G; (v) the amount of any tax accounted for by them, or for which they are liable to account, in relation to chargeable payments or chargeable receipts; (vi) in the case of relevant payments falling within sub-paragraph (iii) above, the paragraphs of subsection (3) or (4) of section 118G that applied to them; (vii) in the case of relevant receipts falling within sub-paragraph (iv) above, the paragraphs of subsection (4) of section 118G that applied to them; (viii) the names and addresses of the persons entitled to the relevant payments or relevant receipts; (b) with respect to the furnishing of information by paying agents or collecting agents, including the inspection of books, documents and other records on behalf of the Board; (c) for the assessment under the regulations of amounts due and for appeals against such assessments; (d) for the repayment in specified circumstances of amounts paid (or purporting to be paid) under this Chapter. (118G) (1) Subject to subsection (2) below, and to the provisions of any regulations under section 118H— (a) any relevant payment to which subsection (3) or (4) below applies shall not be a chargeable payment; and (b) any relevant receipt to which subsection (4) below applies shall not be a chargeable receipt. (2) Regulations made under paragraph (g), (h) or (i) of subsection (4) below may provide that only one of paragraphs (a) and (b) of subsection (1) above is to apply by virtue of those regulations in relation to relevant payments or relevant receipts of a particular kind or from a particular source. (3) This subsection applies to payments of United Kingdom public revenue dividends so long as— (a) they are exempt from tax by virtue of section 46, 49, 516 or 517; (b) they are payable in respect of gilt-edged securities which for the time being are treated by section 51A as issued subject to the condition that interest on them is paid without deduction of income tax; (c) they are payable in respect of securities which have been issued with such a condition as is authorised by section 22(1) of the Finance (No. 2) Act 1931 and which are for the time being beneficially owned by a person who is not ordinarily resident in the United Kingdom; (d) they are eligible for relief from tax by virtue of section 505(1)(c) or (d), or would be so eligible but for section 505(3); (e) they are eligible for relief from tax by virtue of section 592(2), 608(2)(a), 613(4), 614(2), (3) or (4) or 643(2); or (f) they are payable in respect of securities held by or on behalf of a person of such a description as may be prescribed. (4) This subsection applies to relevant payments (not being payments of United Kingdom public revenue dividends) and relevant receipts— (a) to which a person who, at the chargeable date— (i) is not resident in the United Kingdom, and (ii) beneficially owns the relevant holdings from which they are derived, is beneficially entitled; (b) which consist of, or of the proceeds of sale or other realisation of coupons for, interest (other than quoted Eurobond interest) to which a bank which, at the chargeable date— (i) is resident in the United Kingdom, and (ii) beneficially owns the foreign holdings from which they are derived, is beneficially entitled; (c) which arise to the trustees of a qualifying discretionary or accumulation trust in their capacity as such in respect of relevant holdings held on the trusts thereof; (d) which are eligible for relief from tax by virtue of section 505(1)(c) or (d), or would be so eligible but for section 505(3); (e) which are eligible for relief from tax by virtue of section 592(2), 608(2)(a), 613(4), 614(2), (3) or (4), 620(6) or 643(2); (f) which consist of, or of the proceeds of sale or other realisation of coupons for, dividends payable out of the public revenue of the Republic of Ireland or out of or in respect of shares or securities issued by or on behalf of any Republic of Ireland company, society, adventure or concern; (g) to which a person of such a description as may be prescribed and who, at the chargeable date, beneficially owns the securities from which they are derived, is beneficially entitled; (h) which are derived from relevant holdings held by or on behalf of a person of such a description as may be prescribed; (i) which are of such a description as may be prescribed; or (j) which fall to be treated as the income of, or of the government of, a sovereign power or of an international organisation. (5) For the purposes of subsection (4)(c) above, a trust is a qualifying discretionary or accumulation trust if— (a) it is such that some or all of any income arising to the trustees would fall (unless treated as income of the settlor or applied in defraying expenses of the trustees) to be comprised for the year of assessment in which it arises in income to which section 686 (liability to additional rate tax of certain income of discretionary trusts) applies; (b) the trustees are not resident in the United Kingdom; and (c) none of the beneficiaries of the trust is resident in the United Kingdom. (6) The persons who are to be taken for the purposes of subsection (5) above to be the beneficiaries of a discretionary or accumulation trust shall be every person who, as a person falling wholly or partly within any description of actual or potential beneficiaries, is either— (a) a person who is, or will or may become, entitled under the trust to receive the whole or any part of any income under the trust; or (b) a person to or for the benefit of whom the whole or any part of such income may be paid or applied in exercise of any discretion conferred by the trust; and for the purposes of this subsection references, in relation to a trust, to income under the trust shall include references to so much (if any) of any property falling to be treated as capital under the trust as represents amounts originally received by the trustees as income. (7) The Board may by regulations provide that a paying agent who is entrusted with the payment or distribution of— (a) United Kingdom public revenue dividends on securities which are held by a nominee approved for the purposes of this subsection, or (b) foreign dividends on foreign holdings held by such a nominee, shall treat those dividends as not being chargeable payments. (8) For the purpose of giving relief from tax pursuant to arrangements which have effect by virtue of section 788, the Board may by regulations provide that a paying agent who is entrusted with the payment or distribution of United Kingdom public revenue dividends on gilt-edged securities held by a nominee approved for the purposes of this subsection shall— (a) treat those dividends as not being chargeable payments, or (b) deduct tax from them at such reduced rates (being lower than the rate that would otherwise be applicable by virtue of section 118E(1)) as may be prescribed. (9) Where, pursuant to subsection (7) or (8) above, dividends are paid without deduction of tax, or subject to deduction of tax at a reduced rate, the provisions of this Chapter shall apply, subject to subsection (10) below and to the provisions of regulations under section 118H, as though the nominee was the paying agent in relation to those dividends and the chargeable date was the date on which he received them. (10) Where tax has been deducted from dividends at a reduced rate pursuant to regulations under subsection (8) above, the tax for which the nominee is liable to account by virtue of subsection (9) above shall not exceed the difference between the amount of tax on those dividends at the rate that is applicable by virtue of section 118E(1) and the tax already deducted from them. (118H) (1) The Board may by regulations provide that section 118G(1) shall not apply as regards relevant payments or relevant receipts— (a) unless such conditions as may be prescribed are fulfilled; (b) where the Board have reason to believe that section 118G(3) does not apply to, or to the whole of, any relevant payments; or (c) where the Board have reason to believe that section 118G(4) does not apply to, or to the whole of, any relevant payments or relevant receipts. (2) In subsection (3) below, references to the relevant exclusion are to exclusion from being a chargeable payment or chargeable receipt pursuant to section 118G(1) or regulations made under section 118G(7) or (8), or to the deduction of tax at a reduced rate pursuant to regulations under section 118G(8), as the case may be; and references to the agent concerned are to the paying agent or collecting agent or, as the case may be, to the nominee approved for the purpose of section 118G(7) or (8). (3) Regulations under this section or section 118G(7) or (8) may— (a) disapply the relevant exclusion in respect of any relevant payments or relevant receipts derived from any securities or relevant holdings unless the appropriate person has made a declaration in writing to the agent concerned, in such form as may be prescribed or authorised by the Board, confirming that the requirements for the exclusion are satisfied; (b) require the person who makes such a declaration to undertake in the declaration to notify the agent concerned if the circumstances set out in the declaration change; (c) require the agent concerned to consider the accuracy of any declaration made pursuant to a requirement imposed by virtue of paragraph (a) above; (d) impose obligations— (i) on persons having any rights in relation to relevant payments or relevant receipts in respect of which the relevant exclusion applies or is claimed to apply; and (ii) on persons who are the agents concerned in relation to such relevant payments or relevant receipts as are mentioned in sub-paragraph (i) above as to the provision of information, and the production of documents, to the Board or, on request, to an officer of the Board; (e) provide for notices to be issued by the Board to persons who fail to comply with requirements for the provision of information or documents mentioned in paragraph (d) above, disapplying the relevant exclusion in relation to relevant payments or relevant receipts in relation to which they have any rights or in relation to which they are the agents concerned; (f) impose requirements as to— (i) the form and contents of any declaration to be made in accordance with the regulations under this section; (ii) the appropriate person to make such a declaration; (iii) the form and manner in which, and the time at which, any declaration is to be made or provided; and (iv) the keeping and production to, or to an officer of, the Board of any document in which any such declaration is contained; (g) provide for notices to be issued by the Board to such persons as may be described in the regulations where the Board are satisfied that the relevant exclusion applies, or where the Board are satisfied or have reason to believe that the relevant exclusion does not apply. (4) Regulations under section 118G(7) or (8) may— (a) prescribe conditions for the inclusion of securities or foreign holdings in arrangements established under that subsection; (b) set out procedures for the approval of nominees for the purpose of that subsection and for the withdrawal of such approval. (118I) The Board may make regulations which provide for the amount of any income tax which a paying agent would otherwise be liable to deduct under section 118E(1)(a), or for which a collecting agent would otherwise be liable to account under section 118E(3)(a), to be reduced by reference to liabilities for such tax paid under the law of a territory outside the United Kingdom as may be prescribed. (118J) (1) A relevant dividend the payment of which is a chargeable payment shall not be a chargeable receipt for the purpose of this Chapter. (2) Subsection (1) above does not prevent the proceeds of sale or other realisation of a coupon from being a chargeable receipt. (3) The Board may make regulations— (a) for preventing more than one collecting agent from being liable to account for tax on the same dividend; or (b) which provide that— (i) where more than one person is a collecting agent in relation to a dividend, those persons may agree between themselves which one of their number shall be treated as the collecting agent in relation to that dividend; and (ii) the person so identified shall for all the purposes of this Chapter be treated as the sole collecting agent in relation to that dividend. (118K) (1) Any power to make regulations under this Chapter— (a) may be exercised as regards prescribed cases or descriptions of case; and (b) may be exercised differently in relation to different cases or descriptions of case, or in relation to different persons or descriptions of person. (2) Regulations under this Chapter may include such supplementary, incidental, consequential or transitional provisions as appear to the Board to be necessary or expedient. (3) No specific provision of this Chapter about regulations shall prejudice the generality of subsections (1) and (2) above.

Part II — Other Provisions

Penalties

2

• (1) In section 98 of the Taxes Management Act 1970 (penalties in respect of certain information provisions) the words “regulations under section 118D, 118F, 118G, 118H or 118I;” shall be inserted—

• (a) in column 1 of the Table, after “regulations under section 42A”; and

• (b) in column 2 of the Table, after “regulations under section 51B”.

• (2) In the same section—

• (a) the words “ regulations under section 124(3); ” shall be inserted in column 1 of the Table after the words inserted by sub-paragraph (1)(a) above; and

• (b) for the words “section 124(3)” in column 2 of the Table there shall be substituted “ regulations under section 124(3) ”.

Amendments of the Taxes Act 1988

3

The Taxes Act 1988 shall be amended in accordance with paragraphs 4 to 7 below.

4

For section 124(2) to (5) there shall be substituted—

(2) The conditions are— (a) that a person who— (i) is not resident in the United Kingdom, and (ii) beneficially owns the quoted Eurobond is beneficially entitled to the interest; (b) that the quoted Eurobond is held in a recognised clearing system. (3) The Board may by regulations provide that subsection (1)(b) above shall be taken not to apply to a payment of interest unless— (a) the person by or through whom the payment is made (the relevant payer) has received a declaration confirming that one of the conditions of subsection (2) above is satisfied, or (b) they have issued a notice to the relevant payer stating that they consider that one (or both) of those conditions is satisfied. (4) Regulations under subsection (3) above may— (a) impose requirements as to— (i) the contents of any declaration to be made in accordance with regulations under subsection (3)(a) above, (ii) the form and manner in which any declaration is to be provided in accordance with any such regulations, and (iii) the keeping and production to, or to an officer of, the Board of any document in which any such declaration is contained; (b) make provision for any such declaration to be made by the person entitled to the interest (or, as the case may be, the depositary for the recognised clearing system) or by such other person as may be prescribed by the regulations; (c) require the relevant payer to consider the accuracy of any such declaration; (d) make provision for notices to be issued by the Board to such persons as may be described in the regulations where the Board consider that (i) one (or both) of the conditions of subsection (2) above, or (ii) neither of those conditions is satisfied in relation to interest paid on any holding of quoted Eurobonds; (e) make provision with respect to the furnishing of information by relevant payers, including the inspection of books and other records on behalf of the Board; (f) require relevant payers to deliver returns setting out particulars of payments made by them to which subsection (1)(b) above applies and the names and addresses of the persons entitled to them; (g) contain such supplementary, incidental, consequential or transitional provisions as appear to the Board to be necessary or expedient.

5

• (1) In section 348(3) and in section 349(1), at the end there shall be inserted “ or to any payment which is a relevant payment for the purposes of Chapter VIIA of Part IV ”.

• (2) In section 349(3), the following paragraph shall be inserted after paragraph (d)—

(e) to any payment which is a relevant payment for the purposes of Chapter VIIA of Part IV; or

6

In section 582A (designated international organisations: miscellaneous exemptions), in subsection (1) for “(2) to (6) below” there shall be substituted “ (2) and (4) to (6) below and section 118B(4) ”.

7

In paragraph 4(8) of Schedule 23A (manufactured overseas dividends), for the words “subsection (2) or (3) of section 123 or under Part III, as the case may be, and for Parts III and IV of Schedule 3” there shall be substituted “ Chapter VIIA of Part IV and for that Chapter ”.

Amendment of the Finance Act 1989

8

In section 178 of the Finance Act 1989 (setting rates of interest), in subsection (2)(m), before “160” there shall be inserted “ 118F, ”.

SCHEDULE 30

Reduced rate of corporation tax

1

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

Investments in housing by investment trusts

2

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

Commencement

3

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

SCHEDULE 31

Expenses of management

1

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

Computation of losses and limitation on relief

2

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

Spreading of relief for acquisition expenses

3

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

Ascertainment of losses

4

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

Application of surplus in reduction of certain losses

5

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

Meaning of “brought into account” in sections 83AA and 83AB

6

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

Enactments disapplying section 83(3) of the Finance Act 1989

7

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

Overseas life insurance companies

8

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

Transitional provisions

9

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

Commencement

10

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

SCHEDULE 32

1

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

2

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

SCHEDULE 33

Amendment of section 76 of Taxes Act

1

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

Treatment of capital redemption business

2

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

Overseas life insurance companies

3

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

Commencement

4

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

SCHEDULE 34

Part I — Amendments of Schedule 19AB to the Taxes Act 1988

1

• (1) Paragraph 1 (entitlement to certain payments on account) shall be amended in accordance with the following provisions of this paragraph.

• (2) In sub-paragraph (1) (entitlement to payment of an amount equal to the aggregate there mentioned) after “equal” there shall be inserted “ , subject to paragraph 2 below, ”.

• (3) For sub-paragraphs (3) and (4) (ascertainment of the “provisional fraction”) there shall be substituted—

(3) In the application of subsections (5) to (9) of section 432A for the purpose of determining the amounts to which a company is entitled by way of provisional repayments in the case of any accounting period of the company, the reference in subsection (5) to “the relevant fraction” shall be taken as a reference to the provisional fraction for that accounting period. (4) For the purposes of this paragraph— (a) the provisional fraction for an accounting period of a company is the fraction which would, on the basis of the company’s latest section 11 return, be the relevant fraction for the purposes of section 432A(5) for the accounting period to which that return relates; but (b) if there is no section 11 return on the basis of which that fraction can be ascertained, the provisional fraction shall be taken to be nil; but this sub-paragraph is subject to paragraph 2 below.

• (4) In sub-paragraph (5) (meaning of “the appropriate portion”) in paragraph (b) (company carrying on more than one category of long term business) for sub-paragraph (ii) (income arising from assets not linked to pension business) there shall be substituted—

(ii) if and to the extent that the payment or distribution in question is income which is not referable to a category of business by virtue of subsection (3) or (4) of section 432A, the provisional fraction; and (iii) except as provided by sub-paragraph (i) or (ii) above, none.

• (5) For sub-paragraph (6) (inspector not to give effect to claim unless he is satisfied he has been given sufficient information) there shall be substituted—

(6) Section 42 of the Management Act (claims) shall not apply to a claim for a provisional repayment. (6A) A claim for a provisional repayment shall be in such form as the Board may determine and the form of claim shall provide for a declaration to the effect that all the particulars given in the form are correctly stated to the best of the knowledge and belief of the person making the claim.

• (6) For sub-paragraph (7) (provisional repayments to be treated as payments on account of certain payments or repayments which will eventually fall to be made in respect of income tax and tax credits) there shall be substituted—

(7) A provisional repayment for a provisional repayment period shall be regarded as a payment on account of the amounts (if any) which the company would, apart from this Schedule, be entitled to be paid or repaid in respect of its pension business for the accounting period in which that provisional repayment period falls, in respect of— (a) income tax borne by deduction on payments received by the company in that accounting period and referable to its pension business, and (b) tax credits in respect of distributions received by the company in that accounting period and referable to its pension business, on a claim such as is mentioned in section 7 of this Act or section 42(4) of the Management Act in respect of that accounting period.

• (7) Sub-paragraph (8) (which relates to any case where an election is made under section 438(6) as respects franked investment income and which, having regard to amendments made by this Schedule, is unnecessary) shall cease to have effect.

• (8) For sub-paragraph (10) (definitions) there shall be substituted—

(10) In this paragraph— “latest section 11 return”, in the case of an accounting period of a company (“the current accounting period”), means, subject to sub-paragraph (11) below, the section 11 return for the latest preceding accounting period of the company for which such a return has been delivered before the making of the first claim for a provisional repayment for the current accounting period; “section 11 return”, in the case of any company, means a return delivered by the company pursuant to section 11 of the Management Act and includes a reference to any accounts, statements or reports delivered pursuant to that section together with the return; “self-assessment” means an assessment included in a return under section 11 of the Management Act by virtue of section 11AA of that Act and includes a reference to such an assessment as amended under section 11AA(2) or 28A(3) or (4) of that Act. (11) In any case where— (a) there is a section 11 return which would, apart from this sub-paragraph, be the latest section 11 return in the case of an accounting period of a company, (b) the self-assessment required to be included in that return pursuant to section 11AA of the Management Act has been amended under section 11AA(2) or 28A(3) or (4) of that Act, and (c) that amendment was made before the making of the first claim for a provisional repayment for the accounting period mentioned in paragraph (a) above, the return which is to be regarded as the latest section 11 return in the case of that accounting period shall be that return as it stands amended immediately after the making of that amendment of the self-assessment (or, if the self-assessment has been so amended more than once, that return as it stands amended immediately after the making of the last such amendment) but ignoring amendments which do not give rise to any change in the fraction which, on the basis of the return as it has effect from time to time, would be the relevant fraction for the purposes of section 432A(5) for the accounting period to which the return relates.

2

• (1) Paragraph 2 (changes in the provisional fraction) shall be amended in accordance with the following provisions of this paragraph.

• (2) For sub-paragraphs (1) and (2) (cases where the paragraph applies, and consequences of its application) there shall be substituted—

(1) This paragraph applies in any case where— (a) a claim has been made for a provisional repayment for at least one provisional repayment period in an accounting period of a company; (b) subsequently, a further such claim is made for a provisional repayment period falling within that accounting period; and (c) had that further claim been the first claim made for a provisional repayment for that accounting period, the provisional fraction for the accounting period would have been a different fraction (whether in consequence of the delivery of a section 11 return for a later preceding accounting period or the application of paragraph 1(11) above); and in this paragraph the “substituted provisional fraction” means the different fraction mentioned in paragraph (c) above. (2) Where this paragraph applies— (a) the amount of any provisional repayment to which the company is entitled for the provisional repayment period mentioned in sub-paragraph (1)(b) above shall be an amount determined in accordance with sub-paragraph (3) below or such lesser amount as may be specified in the claim; and (b) in relation to any later provisional repayment period in the same accounting period, the substituted provisional fraction shall, subject to any further application of this paragraph, be treated as the provisional fraction for the accounting period.

• (3) In sub-paragraph (3), in the definition of “total entitlement”, for the words following paragraph (b) there shall be substituted—

had the substituted provisional fraction been the provisional fraction for the accounting period as from the beginning of that period; and

.

3

• (1) Paragraph 3 (repayment, with interest, of excessive provisional repayments) shall be amended in accordance with the following provisions of this paragraph.

• (2) In sub-paragraph (1), for paragraphs (a) and (b) (which respectively refer to the company’s assessment to corporation tax being finally determined and the amount referred to in paragraph 1(7)) there shall be substituted—

(a) an insurance company’s self-assessment for an accounting period becomes final, and (b) the aggregate amount of the provisional repayments made to the company for that accounting period exceeds the appropriate amount,

.

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

(1A) For the purposes of sub-paragraph (1)(b) above, the appropriate amount for an accounting period of a company is the amount (if any) which, on the assumptions in sub-paragraphs (1B) and (1C) below and disregarding any provisional repayments, the company would be entitled to be paid or repaid, when its self-assessment for the period becomes final, in respect of its pension business for that accounting period on a claim such as is mentioned in section 7 of this Act or section 42(4) of the Management Act in respect of— (a) income tax borne by deduction on payments received by the company in that accounting period and referable to its pension business, and (b) tax credits in respect of distributions received by the company in that accounting period and referable to its pension business. (1B) The first assumption is that no payments or repayments have been made to the company in respect of— (a) income tax such as is mentioned in paragraph (a) of sub-paragraph (1A) above, or (b) tax credits such as are mentioned in paragraph (b) of that sub-paragraph, before the company’s self-assessment for the accounting period in question becomes final. (1C) The second assumption is that in making any set off under— (a) section 7(2), (b) paragraph 5 of Schedule 16, or (c) regulations made by virtue of section 51B, income tax borne by deduction on income which is not referable to pension business is set off before income tax so borne on income which is referable to pension business. (1D) In its application by sub-paragraph (1) above, section 30 of the Management Act shall have effect as if, instead of the provision made by subsection (5), it provided that an assessment under that section by virtue of sub-paragraph (1) above is not out of time under section 34 of that Act if it is made no later than the end of the accounting period following that in which the self-assessment mentioned in paragraph (a) of that sub-paragraph becomes final.

• (4) In sub-paragraph (3) (application of section 87A of the Taxes Management Act 1970) in paragraph (b) (which provides for the specified words in subsection (1) of that section to be disregarded) for “ “(in accordance with section 10 of the principal Act)”” there shall be substituted “ “(in accordance with section 59D of this Act)” ”.

• (5) In sub-paragraph (4) (amount of principal outstanding to be determined in accordance with sub-paragraphs (5) to (7)) for “(7)” there shall be substituted “ (8) ”.

• (6) After sub-paragraph (7) there shall be added—

(8) For the purposes of sub-paragraph (7) above, any repayment made by the company in respect of an amount paid or repaid to it in respect of— (a) income tax such as is mentioned in paragraph (a) of sub-paragraph (1A) above, or (b) tax credits such as are mentioned in paragraph (b) of that sub-paragraph, shall be treated as a repayment in respect of the principal, taking an earlier such repayment by the company before a later. (9) In this paragraph “self-assessment” means an assessment included in a return under section 11 of the Management Act by virtue of section 11AA of that Act and includes a reference to such an assessment as amended.

4

• (1) Paragraph 6 (interpretation) shall be amended in accordance with the following provisions of this paragraph.

• (2) In sub-paragraph (1), for the definition of “provisional fraction” there shall be substituted—

“provisional fraction” shall be construed in accordance with paragraphs 1(4) and 2 above;

.

• (3) Sub-paragraph (3) (which makes transitional provision for cases where an insurance company has not made a return under section 11 of the Taxes Management Act 1970 as amended by section 82 of the Finance (No.2) Act 1987) shall cease to have effect.

• (4) After that sub-paragraph there shall be added—

(4) Sub-paragraph (5) below applies in any case where an insurance company— (a) which has delivered a return under section 11 of the Management Act for an accounting period ending before the self-assessment appointed day, but (b) which has not delivered its first return under that section for an accounting period ending on or after that day, makes the first claim for a provisional repayment for a particular accounting period ending on or after that day. (5) Where this sub-paragraph applies— (a) the provisional fraction for the accounting period to which the claim mentioned in sub-paragraph (4) above relates shall be determined in accordance with paragraph 1(3), (4), and (6) and sub-paragraph (3) above, as they have effect in relation to accounting periods ending before that day; and (b) paragraph 2 above, as originally enacted, shall have effect in relation to that accounting period as it has effect in relation to accounting periods ending before that day. (6) In this paragraph “the self-assessment appointed day” means 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).

Part II — Amendments of Schedule 19AC to the Taxes Act 1988

5

• (1) Paragraph 15 (modification of Schedule 19AB) shall be amended in accordance with the following provisions of this paragraph.

• (2) Sub-paragraph (1) (which relates to paragraph 1(8) of Schedule 19AB) shall cease to have effect.

• (3) At the end there shall be added—

• (3) In paragraph 3(1C) of Schedule 19AB, for paragraph (a) there shall be substituted—

(a) section 11(3),

.

SCHEDULE 35

Preliminary

1

The Capital Allowances Act 1990 shall be amended as follows.

Amendment of provisions relating to roll-over relief in respect of ships

2

• (1) In subsection (3) of section 33A (relief limited to expenditure on new shipping incurred or to be incurred by the shipowner), for paragraph (b) there shall be substituted the following paragraph—

(b) the amount of any expenditure incurred or to be incurred by qualifying persons in the period of six years beginning with the day on which the event mentioned in subsection (1)(b) above occurs, so far as that expenditure is, or (when incurred) will be, expenditure to which an addition made under this section in respect of that event may be attributed in accordance with subsection (5) below;

.

• (2) In subsection (4) of that section (relief not to apply where expenditure on new shipping not incurred by the shipowner within six years), for the words from the beginning of paragraph (b) onwards there shall be substituted the following—

(b) circumstances arise in which the whole or any part of the addition ceases (otherwise than by being attributed) to be an amount that may be attributed, in accordance with subsection (5) below, to expenditure on new shipping incurred by qualifying persons in the period of six years mentioned in subsection (3)(b) above, the shipowner shall be assumed not to have been entitled to so much of the addition as will not be so attributed.

• (3) For subsection (5) of that section (attribution of relief to expenditure on new shipping) there shall be substituted the following subsections—

(5) Subject to subsection (5A) below and to section 33D(6), where— (a) an addition is made under this section to the shipowner’s qualifying expenditure for the relevant period in respect of his actual trade, and (b) expenditure on new shipping is incurred by a qualifying person in the period of six years mentioned in subsection (3)(b) above, the shipowner may, by notice to an officer of the Board, attribute to that expenditure so much of the addition as is equal to so much of the expenditure as is not already the subject of an attribution under this subsection. (5A) A notice under subsection (5) above shall not have effect in a case where the shipowner and the qualifying person to whose expenditure the notice relates are not the same person unless that person joins with the shipowner in the giving of that notice.

• (4) After subsection (7) of that section there shall be inserted the following subsection—

(8) In this section and the following provisions of this Chapter references to a qualifying person, in relation to any expenditure, are references to— (a) the shipowner; and (b) where the shipowner is a company, any company which, at the time when the expenditure is or is to be incurred, is or (as the case may be) would be a member of the same group of companies as the shipowner; and for the purposes of this subsection two companies are members of the same group of companies at any time if, at that time, they are treated as members of the same group of companies for the purposes of Chapter IV of Part X of the principal Act (group relief).

3

• (1) In subsection (1) of section 33C (re-imposition of deferred charge)—

• (a) in paragraph (b), for “the shipowner” there shall be substituted “ a qualifying person ”; and

• (b) for paragraph (c) there shall be substituted the following paragraph—

(c) the expenditure is expenditure the whole or any part of which is expenditure to which the whole or any part of the addition is attributed in accordance with section 33A(5).

• (2) In subsection (2) of that section—

• (a) the words “to be”, in the first place where they occur, shall be omitted; and

• (b) in paragraph (b), for “the shipowner” there shall be substituted “ the qualifying person in question ”.

4

• (1) In section 33D (definition of expenditure on new shipping), in subsection (1)—

• (a) in paragraph (a), for “the shipowner’s actual trade” there shall be substituted “ a trade carried on by the person who incurs that expenditure ”; and

• (b) in paragraph (b), for “the shipowner” there shall be substituted “ that person ”.

• (2) In subsection (2) of that section—

• (a) in paragraph (a), for “the shipowner” there shall be substituted “ the person who incurred the expenditure ”; and

• (b) in paragraph (c)(ii), for “the shipowner” there shall be substituted “ the person who incurred the expenditure ”.

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

(2A) Subject to subsection (2B) below, expenditure incurred by a qualifying person other than the shipowner on the provision of a ship shall not be, and shall be deemed never to have been, expenditure on new shipping if— (a) at any time after the time when the ship first belongs to that person in consequence of that expenditure, it ceases to belong to that person without having been brought into use for the purposes of a trade of that person; (b) the ship is brought into use for the purposes of a trade of that person and an event falling within section 24(6)(c) occurs with respect to the ship before the end of the period of three years beginning with the time when it is first so brought into use; or (c) there is a time falling— (i) after the expenditure is incurred, and (ii) where the ship is brought into use for the purposes of a trade of that person, before the end of the period of three years beginning with the time when it is first so brought into use, when the shipowner and that person do not fall to be treated as members of the same group of companies for the purposes of Chapter IV of Part X of the principal Act (group relief). (2B) Subsection (2A) above shall not apply by virtue of paragraph (a) or (b) of that subsection in any case if the event by virtue of which the case falls within that paragraph is, or is the result of— (a) the total loss of the ship; or (b) damage to the ship that puts it in a condition in which it is impossible, or not commercially worthwhile, for the repair required for restoring it to its previous use to be undertaken; and that subsection shall have effect, where anything falling within paragraph (a) or (b) above occurs, as if times falling after the occurrence of the total loss or, as the case may be, after the occurrence of the damage were to be disregarded for the purposes of paragraph (c) of that subsection.

• (4) In subsection (4) of that section—

• (a) in paragraphs (a) and (b), for the words “the shipowner”, in each place where they occur, there shall be substituted “ the person who incurred the expenditure ”; and

• (b) in paragraph (c)(i), for “the shipowner’s actual trade” there shall be substituted “ a trade carried on by the person who incurred that expenditure ”.

• (5) In subsection (6) of that section, for “by the shipowner” there shall be substituted “ by a qualifying person ”.

• (6) In subsection (7) of that section—

• (a) for “any trade previously carried on by the shipowner” there shall be substituted “ the shipowner’s actual trade ”; and

• (b) in paragraph (a), for the words “by the persons for the time being carrying on that trade” there shall be substituted “ for the purposes of that trade by the persons for the time being carrying it on ”.

• (7) For subsection (8) of that section there shall be substituted the following subsection—

(8) For the purposes of this section a person is connected with another person at any time if, at that time— (a) he is, within the terms of section 839 of the principal Act, connected either with that other person or with a person who is connected with that other person by virtue of paragraph (b) below; or (b) he is carrying on a trade previously carried on by that other person in a case in which the only changes in the persons engaged in carrying on that trade between— (i) the time when it was previously carried on by that other person, and (ii) the time in question, are changes in respect of which the trade is to be treated by virtue of section 113(2) or 343(2) of the principal Act as not having been discontinued; and the persons who shall be taken for the purposes of this section, in relation to expenditure incurred by a person who is not the shipowner, to be connected at any time with the person by whom the expenditure is or has been incurred shall include every person who at that time is connected (in accordance with the preceding provisions of this subsection) with the shipowner.

5

• (1) In section 33E (definition of a qualifying ship), after subsection (8) there shall be inserted the following subsection—

(9) Subsections (5), (6) and (8) above shall have effect for the purposes of section 33D in relation to any ship on the provision of which expenditure is incurred on or after the passing of the Finance Act 1996 as if the references in those subsections to the shipowner included references to the person incurring that expenditure.

6

• (1) In section 33F (procedural provisions), in subsection (4)—

• (a) for “An attribution made for the purposes of section 33A(5) or 33C” there shall be substituted “ Subject to subsection (4A) below, an attribution in accordance with section 33A(5) ”; and

• (b) for “the person giving the notice” there shall be substituted “ the shipowner ”.

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

(4A) A notice by the shipowner under subsection (4) above shall not have effect in a case where the shipowner and the qualifying person to whose expenditure the notice relates are not the same person unless that person joins with the shipowner in the giving of that notice.

Commencement

7

• (1) Subject to sub-paragraph (2) below, this Schedule shall have effect in relation to any case in which the event mentioned in section 33A(1)(b) occurs on or after the day on which this Act is passed.

• (2) Subject to sub-paragraph (3) below, this Schedule shall not apply for the purposes of claims, assessments and adjustments made on or after the day on which this Act is passed but before such day as the Treasury may by order appoint.

• (3) Sub-paragraph (2) above shall not prevent the making on or after the day appointed under that sub-paragraph of any claims, assessments or adjustments in respect of the application of this Schedule, in accordance with sub-paragraph (1) above, in relation to times before that day; and nothing in any provision relating to the period within which any claim or assessment must be made shall prevent any such claim, assessment or adjustment from being made by reference to this Schedule if it is made no more than twelve months after the day so appointed.

SCHEDULE 36

1

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

2

In section 748(3) of the Taxes Act 1988 (direction under section 747(1) not to be given in cases where reduction in United Kingdom tax was not the main purpose etc) in paragraph (a), for “or any two or more of those transactions taken together” there shall be substituted “ or any two or more transactions taken together, the results of at least one of which are so reflected, ”.

3

• (1) Schedule 24 to the Taxes Act 1988 (assumptions for calculating chargeable profits etc) shall be amended in accordance with the following provisions of this paragraph.

• (2) In paragraph 1 (general) after sub-paragraph (3) there shall be inserted—

(3A) In any case where— (a) it is at any time necessary for any purpose of Chapter IV of Part XVII to determine the chargeable profits of the company for an accounting period, and (b) at that time— (i) no direction has been given under section 747(1) with respect to that or any earlier accounting period of the company, and (ii) it has not been established that that or any earlier accounting period of the company is an ADP exempt period, in determining the chargeable profits of the company for the accounting period mentioned in paragraph (a) above it shall be assumed, for the purpose of any of the following provisions of this Schedule which refer to the first accounting period in respect of which a direction is given under section 747(1) or which is an ADP exempt period, that that period (but not any earlier period) is an accounting period in respect of which such a direction is given or which is an ADP exempt period.

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

• (4) In paragraph 2(1) (company assumed to have become resident in the United Kingdom at the beginning of the first accounting period in respect of which a direction is given under section 747(1) and to have continued so resident etc) for “in respect of which a direction is given under section 747(1) and” there shall be substituted—

(a) in respect of which a direction is given under section 747(1), or (b) which is an ADP exempt period, and .

• (5) In paragraph 4 (maximum reliefs assumed to have been claimed etc unless notice requesting other treatment is given by UK resident company or companies with a majority interest) after sub-paragraph (1) there shall be inserted—

(1A) Sub-paragraph (2) below applies to any accounting period of the company— (a) in respect of which a direction is given under section 747(1); or (b) which is an ADP exempt period.

• (6) In sub-paragraph (2) of that paragraph (notice to be given not later than the expiry of the time for making an appeal under s.753 or within such longer period as the Board may allow)—

• (a) at the beginning there shall be inserted “ Where this sub-paragraph applies to an accounting period of the company, then ”; and

• (b) for “the time for the making of an appeal under section 753” there shall be substituted “ the appropriate period ”.

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

(2A) For the purposes of sub-paragraph (2) above, “the appropriate period”— (a) in the case of an accounting period in respect of which a direction is given under section 747(1), means the time for the making of an appeal under section 753; and (b) in the case of an accounting period which is an ADP exempt period, means the period of twenty months following the end of the accounting period.

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

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

• (10) In paragraph 10 (capital allowances for expenditure incurred on machinery or plant before the first accounting period in respect of which a direction is given under section 747(1)) for “in respect of which a direction is given under section 747(1), the” there shall be substituted—

(a) in respect of which a direction is given under section 747(1), or (b) which is an ADP exempt period, the

.

• (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

• (1) Schedule 25 to the Taxes Act 1988 (cases excluded from direction-making powers) shall be amended as follows.

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

• (3) In paragraph 2A (further provisions to determine whether a controlled foreign company which is not a trading company pursues an acceptable distribution policy)—

• (a) in sub-paragraph (1) (application) the words “which is not a trading company” shall be omitted;

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

• (c) sub-paragraphs (6) and (7) (which are superseded by amendments made to paragraph 2 by this Schedule) shall be omitted.

• (4) In paragraph 3 (“available profits” and “net chargeable profits” for purposes of Part I of the Schedule)—

• (a) sub-paragraphs (1) to (4) (ascertainment of “available profits”) shall be omitted;

• (b) in sub-paragraph (5) (certain dividends to be left out of account in determining available profits or, where the company is not a trading company, chargeable profits) the words “the available profits or, where the company is not a trading company,” shall be omitted.

• (5) In paragraph 6 (exempt activities) in sub-paragraph (2)(b) (less than 50 per cent. of gross trading receipts from wholesale, distributive or financial business to be derived from connected or associated persons) after “connected or associated persons” there shall be added “ or persons who have an interest in the company at any time during that accounting period. ”

• (6) In paragraph 16(2) (reductions in United Kingdom tax: extended meaning of “transaction” in paragraphs 17 and 18)—

• (a) in paragraph (a), after “transaction” there shall be inserted “ the results of which are ”; and

• (b) in paragraph (b), for “two or more such transactions taken together” there shall be substituted “ two or more transactions taken together, the results of at least one of which are so reflected ”.

SCHEDULE 37

Part I — “Bank” re-defined for certain purposes

1

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

• (2) In section 828 of the Taxes Act 1988 (regulations and orders), in subsection (4), for “or 791” there shall be substituted “ 791 or 840A(1)(d) ”.

Part II — Amendments of the Taxes Act 1988

Provisions in which new meaning of “bank” applies

2

• (1) The following subsection—

(0) In this section “bank” has the meaning given by section 840A.

,

shall be inserted in the Taxes Act 1988 in accordance with sub-paragraph (2) below.

• (2) The subsection shall be inserted—

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

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

• (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

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

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

Related amendments

3

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

4

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

5

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

Application

6

The amendments of the Taxes Act 1988 made by paragraphs 2 to 5 above apply as mentioned in paragraphs 7 to 10 below.

7

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

8

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

9

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

10

The amendments of paragraphs 7 and 10 of Schedule 20 apply in relation to deposits made or, as the case may be, money placed on or after the day on which this Act is passed.

Part III — Other amendments

Amendments of the Management Act

11

• (1) The following subsection—

(0) In this section “bank” has the meaning given by section 840A of the principal Act.

,

shall be inserted in the Taxes Management Act 1970 in accordance with sub-paragraph (2) below.

• (2) The subsection shall be inserted—

• (a) in section 17 (returns from banks etc.), after subsection (1), as subsection (1A);

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

• (c) in section 24 (obligation to disclose certain particulars not to apply to banks), after subsection (3), as subsection (3A).

• (3) In section 17(1) of that Act, for “person carrying on the trade or business of banking” there shall be substituted “ such person who is a bank ”.

• (4) In section 18(3) of that Act for the words from “carrying on” to the end there shall be substituted “ in respect of any interest paid by the bank in the ordinary course of its business ”.

• (5) This paragraph applies as follows—

• (a) the amendments of section 17 apply in relation to interest paid on or after the day on which this Act is passed; and

• (b) the amendments of sections 18 and 24 apply in relation to requirements imposed on or after the day on which this Act is passed.

Amendments of the Inheritance Tax Act 1984

12

• (1) In section 157 of the Inheritance Tax Act 1984 (non-residents’ bank accounts), in subsection (5), for “the Bank of England, the Post Office or an authorised institution” there shall be substituted “ a bank or the Post Office ”.

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

(6) In this section “bank” has the meaning given by section 840A of the Taxes Act 1988.

• (3) This paragraph applies in relation to deaths occurring on or after the day on which this Act is passed.

SCHEDULE 38

The Finance Act 1973

1

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

The Inheritance Tax Act 1984

2

• (1) For the second and the last occurrences of the word “quoted” in each of—

• (a) sections 105(1ZA) and 113A(3B) of the Inheritance Tax Act 1984 (meaning of “quoted” etc.), and

• (b) the paragraph in section 272 of that Act (general interpretation) which defines “quoted” and “unquoted”,

there shall be substituted “ listed ”.

• (2) This paragraph has effect—

• (a) in relation to transfers of value on or after 1st April 1996; and

• (b) for the purposes of any charge to tax by reason of an event occurring on or after 1st April 1996, in relation to transfers of value before that date.

3

• (1) In section 180(3) of that Act (whether two investments are of the same description), for “quoted” there shall be substituted “ listed ”.

• (2) This paragraph has effect in relation to any time falling on or after 1st April 1996.

4

• (1) In section 178(2) of that Act (shares or investments whose quotation is suspended at time of death)—

• (a) for “quotation” there shall be substituted “ listing ”; and

• (b) for “quoted” there shall be substituted “ so listed or dealt in ”.

• (2) In section 186B(1) of that Act (shares or investments whose quotation is suspended at the end of the relevant period), for “quotation” there shall be substituted “ listing ”.

• (3) This paragraph has effect in relation to investments sold, or treated as sold, on or after 1st April 1996.

5

• (1) In each of sections 227(1AA) and 228(5) of that Act (meaning of “unquoted”), for the word “quoted” there shall be substituted “ listed ”.

• (2) This paragraph has effect—

• (a) in relation to transfers of value on or after 1st April 1996; and

• (b) for the purposes of any charge to tax by reason of an event occurring on or after 1st April 1996, in relation to transfers of value before that date.

The Taxes Act 1988

6

• (1) In each of the provisions of the Taxes Act 1988 listed in sub-paragraph (2) below, for “quoted” (wherever occurring) there shall be substituted “ listed ”.

• (2) The provisions referred to in sub-paragraph (1) above are—

• (a) paragraph (b) of the definition of “quoted Eurobond” in section 124(6);

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

• (c) section 246S(3)(c) and (e);

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

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

• (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (j) paragraph 11(a) and (c) of Schedule 9;

• (k) paragraph (c) of paragraph 1(5C) of Schedule 18;

• (l) paragraph 5 of Schedule 20; ...

• (m) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) So far as relating to the provision mentioned in sub-paragraph (2)(a) above, sub-paragraph (1) above has effect in relation to any interest paid on a quoted Eurobond on or after 1st April 1996.

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

• (5) So far as relating to the provisions mentioned in sub-paragraph (2)(c) ... above, sub-paragraph (1) above has effect in relation to accounting periods ending on or after 1st April 1996.

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

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

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

• (9) So far as relating to the provision mentioned in sub-paragraph (2)(h) above, sub-paragraph (1) above has effect in relation to relevant periods ending on or after 1st April 1996.

• (10) So far as relating to the provisions mentioned in sub-paragraph (2)(j) and (k) above, sub-paragraph (1) above has effect in relation to any time falling on or after 1st April 1996.

• (11) So far as relating to the provision mentioned in sub-paragraph (2)(l) above, sub-paragraph (1) above has effect in relation to chargeable periods ending on or after 1st April 1996.

7

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

8

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

9

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

The Taxation of Chargeable Gains Act 1992

10

• (1) In each of the provisions of the Taxation of Chargeable Gains Act 1992 listed in sub-paragraph (2) below, for the word “quoted” (wherever occurring) there shall be substituted “ listed ”.

• (2) The provisions referred to in sub-paragraph (1) above are—

• (a) section 144(8)(b);

• (b) the definition of “unquoted company” in section 164N(1);

• (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (d) section 276(2)(c) and (6);

• (e) section 281(3)(c); and

• (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) So far as relating to the provisions mentioned in sub-paragraph (2)(a) and (c) to (f) above, sub-paragraph (1) above has effect in relation to disposals on or after 1st April 1996.

• (4) So far as relating to the provision mentioned in sub-paragraph (2)(b) above, sub-paragraph (1) above has effect in relation to acquisitions of qualifying investments (within the meaning of section 164A of that Act) on or after 1st April 1996.

11

• (1) In section 146(4)(b) of that Act (definition of “quoted shares and securities”), for the words “have a quoted market value” there shall be substituted the words “ are listed ”.

• (2) This paragraph has effect in relation to disposals of options on or after 1st April 1996.

12

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

• (2) In Schedule 11 to that Act (transitional provisions and savings), in paragraph 7(1)(a) (modification of section 272(3) when ascertaining market values before 25th March 1973), for “listed” there shall be substituted “ quoted ”.

• (3) This paragraph has effect where the relevant date falls on or after 1st April 1996.

SCHEDULE 39

Part I — Income Tax and Corporation Tax

Capital Allowances

1

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

• (2) The following section shall be inserted after section 15 of the 1990 Act:

(15A) (1) This section applies where: (a) a balancing charge falls to be made as provided in section 15 on any person in respect of a building or structure which is temporarily out of use but is deemed by virtue of subsection (1) of that section still to be an industrial building or structure; and (b) when the building or structure was last in use, it was in use as an industrial building or structure for the purposes of a trade which was carried on by that person but which has since been permanently discontinued. (2) Where this section applies, the amount of the balancing charge shall be treated for the purposes of section 105 of the principal Act (allowable deductions) as a sum received by that person which is chargeable to tax under section 103 or 104(1) of the principal Act (charges on receipts after discontinuance), and accordingly any loss, expense, debit or capital allowance such as is referred to in section 105(1) may be deducted from the amount of the balancing charge. (3) Nothing in subsection (2) above shall prevent any amounts allowable under any other provisions of the Tax Acts from being deducted from the amount of the balancing charge. (4) Section 15(3) shall apply for the purposes of this section.

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

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

Contributions to overseas pension schemes

2

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

Part II — Chargeable Gains

Treatment of compensation and insurance money

3

• (1) Section 23 of the Taxation of Chargeable Gains Act 1992 (receipt of compensation and insurance money not treated as a disposal) shall be amended as follows.

• (2) The following subsections shall be substituted for subsection (6):

(6) If a building (“the old building”) is destroyed or irreparably damaged, and all or part of a capital sum received by way of compensation for the destruction or damage, or under a policy of insurance of the risk of the destruction or damage, is applied by the recipient in constructing or otherwise acquiring a replacement building situated on other land (“the new building”), then for the purposes of subsections (4) and (5) above each of the old building and the new building shall be regarded as an asset separate from the land on which it is or was situated and the old building shall be treated as lost or destroyed. (7) For the purposes of subsection (6) above: (a) references to a building include references to any permanent or semi-permanent structure in the nature of a building; and (b) the reference to a sum applied in acquiring the new building does not include a reference to a sum applied in acquiring the land on which the new building is situated; and (c) all necessary apportionments shall be made of any expenditure, compensation or consideration, and the method of apportionment shall be such as is just and reasonable. (8) This section shall apply in relation to a wasting asset with the following modifications: (a) paragraphs (b) and (c) of subsection (1) above, and subsection (2) above, shall not apply; and (b) in subsections (1) and (3) above, the amount of the expenditure from which the deduction is to be made shall be the amount which would have been allowable under Chapter III of this Part if the asset had been disposed of immediately after the application of the capital sum.

• (3) The amendments made by this paragraph shall have effect in relation to capital sums received on or after 6th April 1996.

Assets of negligible value

4

• (1) Section 24 of the Taxation of Chargeable Gains Act 1992 (disposals where assets lost or destroyed, or become of negligible value) shall be amended by the substitution of the following subsection for subsection (2):

(2) Where the owner of an asset which has become of negligible value makes a claim to that effect: (a) this Act shall apply as if the claimant had sold, and immediately reacquired, the asset at the time of the claim or (subject to paragraphs (b) and (c) below) at any earlier time specified in the claim, for a consideration of an amount equal to the value specified in the claim. (b) An earlier time may be specified in the claim if: (i) the claimant owned the asset at the earlier time; and (ii) the asset had become of negligible value at the earlier time; and either (iii) for capital gains tax purposes the earlier time is not more than two years before the beginning of the year of assessment in which the claim is made; or (iv) for corporation tax purposes the earlier time is on or after the first day of the earliest accounting period ending not more than two years before the time of the claim. (c) Section 93 of and Schedule 12 to the Finance Act 1994 (indexation losses and transitional relief) shall have effect in relation to an asset to which this section applies as if the sale and reacquisition occurred at the time of the claim and not at any earlier time.

• (2) The amendment made by this paragraph shall have effect in relation to claims made on or after 6th April 1996.

Settled Property

5

• (1) Section 72 of the Taxation of Chargeable Gains Act 1992 (termination of life interest on death of person entitled) shall be amended as follows.

• (2) In subsections (1), (2) and (5), for the words “a life” wherever they occur, there shall be substituted “ an ” and, in subsection (5), the word “life”, in the third place where it occurs, shall be omitted.

• (3) For subsections (3) and (4) there shall be substituted the following subsections:

(3) This section shall apply on the death of the person entitled to any annuity payable out of, or charged on, settled property or the income of settled property as it applies on the death of a person whose interest in possession in the whole or any part of settled property terminates on his death. (4) Where, in the case of any entitlement to an annuity created by a settlement some of the settled property is appropriated by the trustees as a fund out of which the annuity is payable, and there is no right of recourse to, or to the income of, settled property not so appropriated, then without prejudice to subsection (5) below, the settled property so appropriated shall, while the annuity is payable, and on the occasion of the death of the person entitled to the annuity, be treated for the purposes of this section as being settled property under a separate settlement.

• (4) The amendments made by this paragraph shall have effect in relation to deaths occurring on or after 6th April 1996.

6

• (1) Section 73 of the Taxation of Chargeable Gains Act 1992 (death of life tenant: exclusion of chargeable gain) shall be amended as follows.

• (2) In subsection (1), for the words from “termination” to “that interest” there shall be substituted “ death of a person entitled to an interest in possession in the settled property ”.

• (3) In subsection (2), the word “life” shall be omitted.

• (4) In subsection (3), for the words from “subsection (5)” to “subsection (2) above” there shall be substituted “ subsections (3) to (5) of that section shall apply for the purposes of this section ”.

• (5) The amendments made by this paragraph shall have effect in relation to deaths occurring on or after 6th April 1996.

Retirement Relief

7

• (1) Paragraph 14 of Schedule 6 to the Taxation of Chargeable Gains Act 1992 shall be amended as follows.

• (2) In subparagraph (2), the word “original” shall be inserted before “ qualifying period ”.

• (3) The following subparagraphs shall be inserted at the end:

(7) In relation to the expression “the original qualifying period”, the questions whether a disposal is a qualifying disposal and whether the period relating to that disposal is a qualifying period shall be determined without regard to the requirement that the length of the period be at least one year. (8) This paragraph shall not apply if the extended qualifying period resulting from the operation of subparagraphs (1) to (7) would be a period of less than one year.

• (4) The amendments made by this paragraph shall have effect in relation to disposals made on or after 6th April 1996.

Relief for loans to traders

8

• (1) Section 253 of the Taxation of Chargeable Gains Act 1992 (relief for loans to traders) shall be amended as follows.

• (2) In subsection (3):

• (a) for the words from the beginning until “is satisfied that” there shall be substituted “ Where a person who has made a qualifying loan makes a claim and at that time ”; and

• (b) for the words “when the claim was made” there shall be substituted “ at the time of the claim or (subject to subsection (3A) below) any earlier time specified in the claim. ”

• (3) The following subsection shall be inserted after subsection (3):

(3A) For the purposes of subsection (3) above, an earlier time may be specified in the claim if: (a) the amount to which that subsection applies was also irrecoverable at the earlier time; and either (b) for capital gains tax purposes the earlier time falls not more than two years before the beginning of the year of assessment in which the claim is made; or (c) for corporation tax purposes the earlier time falls on or after the first day of the earliest accounting period ending not more than two years before the time of the claim.

• (4) In subsection (4) for the words from the beginning until “is satisfied that” there shall be substituted “ Where a person who has guaranteed the repayment of a loan which is, or but for subsection (1)(c) above would be, a qualifying loan makes a claim and at that time ”.

• (5) The amendments made by this paragraph shall have effect in relation to claims made on or after 6th April 1996.

Relief for debts on qualifying corporate bonds

9

• (1) Section 254 of the Taxation of Chargeable Gains Act 1992 (relief for debts on qualifying corporate bonds) shall be amended as follows.

• (2) In subsection (2):

• (a) for the words from the beginning until “is satisfied that” there shall be substituted “ Where a person who has made a qualifying loan makes a claim and at that time ”; and

• (b) for the words “when the claim was made” there shall be substituted “ at the time of the claim or (subject to subsection (8A) below) any earlier time specified in the claim ”.

• (3) In subsections (6) and (7), the words “the inspector is satisfied that” shall be omitted.

• (4) In subsection (8), the words “in the inspector’s opinion” shall be omitted.

• (5) The following subsection shall be inserted after subsection (8):

(8A) For the purposes of subsection (2) above, an earlier time may be specified in the claim if: (a) the condition which was fulfilled at the time of the claim was also fulfilled at the earlier time; and either (b) for capital gains tax purposes the earlier time falls not more than two years before the beginning of the year of assessment in which the claim is made; or (c) for corporation tax purposes the earlier time falls on or after the first day of the earliest accounting period ending not more than two years before the time of the claim.

• (6) In subsection (11), the words “the inspector was satisfied that”, “by the inspector” and “he was satisfied that” shall be omitted.

• (7) The amendments made by this paragraph shall have effect in relation to claims made on or after 6th April 1996.

Part III — Stamp Duty

Lost or spoiled instruments

10

• (1) The Stamp Duties Management Act 1891 (“the Management Act”) shall be amended as follows.

• (2) In section 9 of the Management Act (procedure for obtaining allowance), subsection (7), paragraph (e), the words “which is inadvertently and undesignedly spoiled, and in lieu whereof another instrument made between the same parties and for the same purpose is executed and duly stamped, or” shall be omitted.

• (3) The following section shall be inserted after section 12 of the Management Act:

(12A) (1) This section applies where the Commissioners are satisfied that: (a) an instrument which was executed and duly stamped (“the original instrument”) has been accidentally lost or spoiled; and (b) in place of the original instrument, another instrument made between the same persons and for the same purpose (“the replacement instrument”) has been executed; and (c) an application for relief under this section is made to the Commissioners; and either (d) where the original instrument has been lost, the applicant undertakes to deliver it up to the Commissioners to be cancelled if it is subsequently found; or (e) where the original instrument has been spoiled: (i) the application is made within two years after the date of the original instrument, or if it is not dated, within two years after the time when it was executed, or within such further time as the Commissioners may allow; and (ii) no legal proceeding has been commenced in which the original instrument has been or could or would have been given or offered in evidence; and (iii) the original instrument is delivered up to the Commissioners to be cancelled. (2) Where this section applies: (a) the replacement instrument shall not be chargeable with any duty, but shall be stamped with the duty with which it would otherwise have been chargeable in accordance with the law in force at the time when it was executed, and shall be deemed for all purposes to be duly stamped; and (b) if any duty, interest, fine or penalty was paid in respect of the replacement instrument before the application was made, the Commissioners shall pay to such person as they consider appropriate an amount equal to the duty, interest, fine or penalty so paid. (3) For the purposes of this section the Commissioners may require the applicant to produce such evidence by statutory declaration or otherwise as they think fit.

• (4) Subject to subparagraph (5) below, the amendments made by this paragraph shall have effect from the day on which this Act is passed.

• (5) The amendments made by this paragraph shall not apply in relation to an instrument which has been accidentally spoiled if an application for allowance under section 9 of the Management Act was made before the day on which this Act is passed.

SCHEDULE 40

The Stamp Act 1891 (c. 39)

1

In the definition of “stock” in section 122(1) of the Stamp Act 1891, after “Bank of Ireland,” there shall be inserted “ any strip (within the meaning of section 47 of the Finance Act 1942) of any such stocks or funds, ”.

2

• (1) At the end of paragraph (1) of the general exemptions at the end of Schedule 1 to the Stamp Act 1891 (exemption for Government stocks etc.) there shall be inserted “ or strips (within the meaning of section 47 of the Finance Act 1942) of such stocks or funds ”.

• (2) Where any day is appointed as the abolition day for the purposes of sections 107 to 110 of the Finance Act 1990, sub-paragraph (1) above shall cease to have effect in accordance with the provisions of that Act for the coming into force of the repeal of the paragraph mentioned in that sub-paragraph.

The Taxes Act 1988

3

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

4

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

5

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

6

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

7

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

The Taxation of Chargeable Gains Act 1992 (c. 12)

8

In Schedule 9 to the Taxation of Chargeable Gains Act 1992 (gilt-edged securities), after paragraph 1 there shall be inserted the following paragraph—

(1A) (1) Any security which is a strip of a security which is a gilt-edged security for the purposes of this Act is also itself a gilt-edged security for those purposes. (2) In this paragraph “strip” has the same meaning as in section 47 of the Finance Act 1942.

SCHEDULE 41

Part I — Hydrocarbon Oil Duty: relief for marine voyages

Part II — Vehicle Excise and Registration

Part III — Excise duties: repeal of drawbacks etc.

Part IV — Value Added Tax

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

Part VI — Inheritance Tax