Finance (No. 2) Act 1997

• (ii) if it relates to an error or mistake in a claim, at any time after the latest time at which that claim could have been made.

• (3) On receiving a claim under this paragraph, the Board shall—

• (a) inquire into the matter; and

• (b) give, by way of repayment to the claimant, such relief (if any) as, having regard to all the relevant circumstances, they consider just and reasonable in respect of the error or mistake in question.

Appeals against assessments and decisions on claims

9

• (1) An appeal to the Special Commissioners shall lie against each of the following, that is to say—

• (a) an assessment under this Schedule;

• (b) a decision by the Board on a claim under paragraph 7 or 8 above.

• (2) An appeal under sub-paragraph (1) above shall be made by notice to the Board.

• (3) Subject to the following provisions of this paragraph, a notice of appeal under sub-paragraph (2) above—

• (a) shall not be given more than 30 days after the day on which notice of the assessment or decision appealed against was given to the appellant; and

• (b) must specify the grounds of appeal.

• (4) An appeal under this paragraph may be brought out of time if, on an application made for the purpose by the appellant, the Board are satisfied—

• (a) that the appellant has a reasonable excuse for not having brought the appeal within the time allowed by sub-paragraph (3) above; and

• (b) that there was no unreasonable delay in the making of that application;

and, where the Board are not so satisfied, they shall refer the application to the Special Commissioners, who (if they are so satisfied) may themselves allow the appeal to be brought out of time.

• (5) The Special Commissioners—

• (a) may allow grounds in addition to those specified in the notice of appeal to be put forward on an appeal under this paragraph; and

• (b) may take the additional grounds into consideration if they are satisfied that their omission from the notice was neither wilful nor unreasonable.

• (6) Section 55 of the Management Act (postponement of tax to which an appeal relates) shall apply to an appeal under this paragraph against an assessment under this Schedule as it applies to an appeal against an assessment mentioned in subsection (1) of that section but as if, in that section—

• (a) references to tax were references to windfall tax;

• (b) references to the inspector were references to the Board; and

• (c) subsections (6)(a) and (b)(i), (6A) and (9)(a) were omitted.

Powers of Special Commissioners on an appeal

10

• (1) Where there is an appeal to the Special Commissioners against an assessment under this Schedule—

• (a) the Commissioners may, if it appears to them that the amount of the assessment is too much or too little, reduce or increase the amount of the assessment accordingly; and

• (b) the assessment shall stand good if it is not reduced or increased under paragraph (a) above.

• (2) Where an appeal is brought under paragraph 9 above against a decision of the Board on a claim under paragraph 7 or 8 above, the Special Commissioners shall hear and determine that appeal in accordance with the principles to be followed by the Board in determining claims under that paragraph.

• (3) On an appeal to the Special Commissioners against a decision of the Board on a claim under paragraph 7 or 8 above, the powers of the Special Commissioners shall include power, if they think fit, to modify or cancel any decision made by the Board on that claim, including one made in favour of the appellant.

Procedures on appeal

11

• (1) Subject to the following provisions of this paragraph, the following provisions of the Management Act shall apply for the purposes of and in relation to appeals to the Special Commissioners under paragraph 9 above as they apply for the purposes of or in relation to appeals to the Special Commissioners under the Tax Acts, that is to say—

• (a) section 46A (regulations about the jurisdiction of the Special Commissioners);

• (b) section 54 (settling appeals by agreement);

• (c) section 56A (appeals from the Special Commissioners);

• (d) sections 56B to 56D (regulations about practice and procedure etc.).

• (2) The Special Commissioners (Jurisdiction and Procedure) Regulations 1994 shall have effect, with the necessary modifications, in relation to appeals to the Special Commissioners under this Schedule as they have effect in relation to appeals to the Special Commissioners under the Tax Acts; but this sub-paragraph shall be without prejudice to the power of the Lord Chancellor, by virtue of sub-paragraph (1) above, to modify those regulations as applied by this sub-paragraph.

• (3) Subject to paragraph 5 above and the provisions applied by sub-paragraphs (1) and (2) above, the determination of the Special Commissioners on an appeal under this Schedule shall be final and conclusive.

• (4) Where an appeal has been made to the Special Commissioners against a decision of the Board on a claim under paragraph 8 above, neither the appellant nor the Board shall be entitled, by virtue of anything in sub-paragraph (1) above, to appeal except against so much (if any) of the decision of the Special Commissioners as relates to a point of law arising in connection with the computation in accordance with Schedule 1 to this Act of the amount of the windfall from which any company was benefitting on 2nd July 1997.

• (5) Section 53 of the Management Act (appeal against the summary determination of a penalty) shall apply in relation to any summary determination of a penalty pursuant to—

• (a) the regulations applied by sub-paragraph (2) above, or

• (b) any modification of those regulations made by virtue of this Schedule,

as it applies in relation to any other such summary determination as is mentioned in that section.

• (6) Subsections (2B) and (2C) of section 58 of the Management Act (Northern Ireland modifications) shall apply as if the reference to the Taxes Acts included a reference to this Schedule and, accordingly, as if the reference to section 56A of that Act included a reference to that section as applied by this paragraph.

• (7) In the application for the purposes of this Schedule of—

• (a) section 58(2B) and (2C) of the Management Act, and

• (b) the regulations mentioned in sub-paragraph (2) above,

references to proceedings in Northern Ireland shall have effect as references to proceedings on an appeal to the Special Commissioners by a company whose head office or principal place of business is in Northern Ireland.

• (8) Sections 21 and 22 of the Interpretation Act Northern Ireland) 1954 (rules of court and powers of appellate courts) shall apply as if references in those sections to an enactment included a reference to sub-paragraphs (6) and (7) above.

Interest

12

• (1) Where any amount of windfall tax with which a company is charged is not paid before the time by which it is required to be paid under paragraph 3 above, that amount of that tax shall carry interest from that time until payment.

• (2) Sub-paragraph (1) above applies to an amount whether or not the payment of that amount is postponed under section 55 of the Management Act (as applied by paragraph 9(6) above).

• (3) Any amount paid by way of windfall tax which is repayable shall carry interest from whichever is the later of—

• (a) the time by which that amount was required to be paid under paragraph 3 above, and

• (b) the time when that amount was in fact paid,

until the time when that amount is repaid.

• (4) The rate of interest under this paragraph for any period shall be—

• (a) in the case of interest under sub-paragraph (1) above, the rate applicable under section 178 of the Finance Act 1989 for the purposes of section 87A of the Management Act (interest on unpaid corporation tax); and

• (b) in the case of interest under sub-paragraph (3) above, the rate applicable under section 178 of the Finance Act 1989 for the purposes of section 826 of the Taxes Act 1988 (interest on overpaid corporation tax).

• (5) Where any amount paid by way of windfall tax is repayable to a person who has paid interest under sub-paragraph (1) above, that person shall be entitled to a repayment of so much of that interest as would represent the interest paid on that amount if, after—

• (a) making an appropriate apportionment of the payments made to the Board between the instalments due from the person making them, and

• (b) taking account of any previous repayment,

it is assumed that the amount repayable is to be equated with the most recent payment or payments made to the Board.

• (6) Interest under sub-paragraph (1) above—

• (a) shall be paid without any deduction of income tax; and

• (b) shall not be allowed as a deduction in computing income, profits or losses for any of the purposes of the Tax Acts;

and interest paid under sub-paragraph (3) above shall be disregarded in computing income, profits or losses for any such purposes.

Collection of information

13

• (1) For the purposes of this Part, section 20 of the Management Act (power to call for documents of taxpayer and others), together with sections 20B, 20BB and 20D(3) of that Act so far as they relate to section 20, shall be deemed to apply with the modifications set out in sub-paragraph (2) below.

• (2) Those modifications are as follows—

• (a) references to a tax liability shall be deemed to be references to a liability to pay an amount of windfall tax;

• (b) references to an inspector shall be deemed to be references to any officer of the Board and references to the Taxes Acts shall be deemed to be references to this Part;

• (c) in sections 20(7) and (8H) and 20B(1B) and (6)(b), the words “General or” shall be deemed to be omitted.

• (3) For the purposes of this Part subsection (1) of section 98 of the Management Act (failure to comply with notice) shall apply as if this paragraph were included in the reference in column 1 of the Table in that section to Part III of that Act.

Penalties for furnishing false information

14

• (1) Where a chargeable company fraudulently or negligently delivers an incorrect return in response to a requirement under paragraph 1 above, that company shall be liable to a penalty of an amount not exceeding the understated amount.

• (2) In sub-paragraph (1) above “the understated amount”, in relation to a return delivered by a chargeable company, means the amount (if any) by which the amount of windfall tax with which that company is charged exceeds the amount set out in the return as the amount with which it is charged.

• (3) For the purposes of this Part—

• (a) subsection (2) of section 98 of the Management Act (penalties for furnishing incorrect information etc.) shall apply as if the provisions of this Schedule (except paragraph 1) were specified in one of the columns of the Table in that section; and

• (b) section 99 of that Act (penalty for assisting in preparation of incorrect return) shall apply as if the reference in paragraph (a) of that section to tax included a reference to windfall tax.

• (4) Section 97(1) of the Management Act (obligation to correct incorrect return) shall apply for the purposes of this paragraph in relation to a return delivered in response to a requirement under paragraph 1 above as it applies for the purposes of section 96 of that Act in relation to such a return as is mentioned in that section.

Recovery of tax

15

• (1) The provisions of the Management Act which are set out in sub-paragraph (2) below (which all relate to the recovery of tax) shall apply, subject to the modifications set out in sub-paragraph (3) below, in relation to—

• (a) amounts of windfall tax due from any company,

• (b) any penalty under this Schedule, or

• (c) any interest for which a company is liable under paragraph 12 above or 17(5)(g) below,

as they apply in relation to sums charged by way of tax; and, in the case of amounts falling within paragraph (b) or (c) above, those provisions shall so apply as if those amounts were amounts of tax due and payable under an assessment.

• (2) The provisions applied by sub-paragraph (1) above are—

• (a) section 61 (distraint);

• (b) sections 63 and 63A (recovery in Scotland);

• (c) sections 66 to 68 (court proceedings for the recovery of tax);

• (d) section 70(1) (certificate of non-payment); and

• (e) section 70A (payment by cheque).

• (3) The modifications mentioned in that sub-paragraph are as follows—

• (a) in all those provisions references to the collector shall be deemed to include references to any other officer of the Board;

• (b) in section 63, the words “under section 60 of this Act” in subsection (1)(b) shall be deemed to be omitted and so shall subsections (3) and (4); and

• (c) in section 70A—

• (i) the reference in subsection (1) to the purposes of the Management Act and the provisions mentioned in subsection (2) of that section shall be deemed to be a reference to the purposes of this Part; and

• (ii) subsection (2) shall be deemed to be omitted.

Recovery against other group members

16

• (1) Subject to sub-paragraph (3) below, where any amount of windfall tax with which a company is charged is not paid before the end of the period of six months beginning with the time by which it was required to be paid under paragraph 3 above (“the six month period”), any company falling within sub-paragraph (2) below may be assessed (in the name of the chargeable company) to all or any part of the unpaid windfall tax with which the chargeable company is charged.

• (2) A company falls within this sub-paragraph if it is one or other or both of the following, that is to say—

• (a) a member of the same group as the chargeable company at the end of the six month period; or

• (b) a company which has been a member of the same group as the chargeable company at some time on or after 2nd July 1997 and before the end of the six month period.

• (3) A company shall not be assessed under sub-paragraph (1) above to any amount of windfall tax at any time more than two years after that company first became assessable to that amount under that sub-paragraph.

• (4) This Schedule shall have effect for the purposes of, and in relation to, an assessment under sub-paragraph (1) above as if the amount to which a company is assessable under this paragraph were an amount of windfall tax with which that company is charged.

• (5) Where, by virtue of this paragraph, any company (“the group member”) pays any amount of windfall tax with which another company (“the charged company”) is charged—

• (a) that payment shall discharge the liability of the charged company to pay that amount of windfall tax; but

• (b) the group member shall be entitled to recover from the charged company the whole amount paid, together with any interest paid by the group member on that amount by virtue of paragraph 12 above.

General provisions about penalties etc.

17

• (1) Where a company which has become liable to a tax-geared penalty subsequently becomes liable to another such penalty, the amount or, as the case may be, maximum amount of the subsequent penalty shall be treated as reduced so that the aggregate of the tax-geared penalties to which the company has become liable does not exceed the greater or greatest of them.

• (2) In sub-paragraph (1) above “tax-geared penalty” means (subject to sub-paragraph (3) below)—

• (a) a penalty under paragraph 2(1) or 14(1) above, or

• (b) a penalty under paragraph 2(2) above falling within paragraph 2(3)(b) or (c) above.

• (3) Where a company has become liable to both—

• (a) a penalty falling within paragraph 2(3)(b) above, and

• (b) a penalty falling within paragraph 2(3)(c) above,

the aggregate of those penalties shall be treated as only one tax-geared penalty for the purposes of sub-paragraph (1) above.

• (4) The provisions of the Management Act set out in sub-paragraph (5) below shall apply, subject to the modifications set out in sub-paragraph (6) below, in relation to penalties under this Schedule as they apply in relation to the penalties mentioned in those provisions.

• (5) The provisions applied by sub-paragraph (4) above are—

• (a) section 100 (determination of penalties);

• (b) section 100A(2) and (3) (provision supplementary to section 100);

• (c) section 100C (penalty proceedings before Commissioners);

• (d) section 100D (penalty proceedings before courts);

• (e) section 102 (mitigation of penalties);

• (f) section 103 (time limit for penalty proceedings); and

• (g) section 103A (interest on penalties).

• (6) The modifications mentioned in that sub-paragraph are—

• (a) in section 100(2), for the words from “a penalty” onwards there shall be deemed to be substituted a reference to a penalty by virtue of paragraph 13(3) above;

• (b) subsection (6) of section 100 shall be deemed to be omitted;

• (c) in section 100A(3), the reference to tax shall be deemed to be a reference to windfall tax;

• (d) in section 100C(1), the words “General or” shall be deemed to be omitted; and

• (e) in section 103, the references to tax in subsection (1) shall be deemed to be references to windfall tax, and subsection (2) shall be deemed to be omitted.

• (7) An appeal may be brought against any determination under section 100 of the Management Act of a penalty under this Schedule.

• (8) Subject to sub-paragraph (9) below, the provisions of this Schedule relating to an appeal against an assessment to windfall tax shall apply (with the necessary modifications) in relation to any appeal under sub-paragraph (7) above.

• (9) Paragraph 10 above shall not apply to an appeal under sub-paragraph (7) above and the powers of the Special Commissioners on an appeal under that sub-paragraph shall be those set out in section 100B(2)(a) and (b) of the Management Act.

• (10) Subsection (3) of section 100B of the Management Act (further appeals) shall apply where there has been an appeal under sub-paragraph (7) above as it applies where there has been an appeal under subsection (1) of that section.

• (11) The liabilities of any person under this Part shall be without prejudice to any criminal liability arising in relation to the same matter.

Miscellaneous applications

18

• (1) The provisions of the Management Act which are set out in sub-paragraph (2) below shall apply for the purposes of this Schedule—

• (a) as they apply for the purposes of the enactments for the purposes of which they have effect apart from this paragraph; but

• (b) as if any reference in those provisions to a tax included a reference to windfall tax.

• (2) Those provisions are—

• (a) section 75 (receivers);

• (b) section 105 (evidence in cases of fraudulent conduct);

• (c) section 108 (company officers);

• (d) section 112 (lost documents etc.);

• (e) section 113(3) (prescription of form of assessments, penalty determinations);

• (f) section 114 (provision for errors not to invalidate an assessment);

• (g) section 115 (delivery and service of documents) and the regulations made under that section; and

• (h) section 118(2) and (4) (extensions of time, reasonable excuse for delay and finality of assessments).

Interpretation

19

• (1) In this Schedule—

• “the Board” means the Commissioners of Inland Revenue;

• “chargeable company” means a company which, on 2nd July 1997, was benefitting from a windfall from the flotation of an undertaking whose privatisation involved the imposition of economic regulation;

• “group” means a parent undertaking (within the meaning of the Companies Act 1985 or the Companies (Northern Ireland) Order 1986), together with all of its subsidiary undertakings;

• “the Management Act” means the Taxes Management Act 1970;

• “notice” means notice in writing;

• “Special Commissioners” has the same meaning as in the Tax Acts.

• (2) In this Schedule references to the repayment of an amount of windfall tax include references to making an allowance by way of set-off of an amount of windfall tax against any liability.

• (3) References in this Schedule to a penalty under this Schedule include references to a penalty under a provision of the Management Act as applied by this Schedule.

SCHEDULE 3

Section 76 of the Taxes Act 1988

1

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

Section 432E of the Taxes Act 1988

2

• (1) In section 432E of the Taxes Act 1988 (section 432B apportionment: participating funds) paragraph (b) of subsection (6) (which provides for the adjustment of the net amount referable to overseas life assurance business) shall cease to have effect.

• (2) This paragraph has effect in relation to distributions made on or after 2nd July 1997.

Section 434 of the Taxes Act 1988

3

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

Section 434A of the Taxes Act 1988

4

• (1) In section 434A of the Taxes Act 1988 (computation of losses and limitation on relief) subsection (1) (which falls as a result of new section 434(1) to (1B)) shall cease to have effect.

• (2) This paragraph has effect for accounting periods beginning on or after 2nd July 1997.

Section 436 of the Taxes Act 1988

5

• (1) In section 436 of the Taxes Act 1988 (pension business: separate charge on profits) in subsection (3), paragraphs (d) and (e) (which make provision, for the purposes of the computation of profits arising from pension business, for group income and non-qualifying distributions to be left out of account) shall cease to have effect.

• (2) This paragraph has effect in relation to distributions made on or after 2nd July 1997.

Section 438 of the Taxes Act 1988

6

• (1) Section 438 of the Taxes Act 1988 (pension business: exemption from tax) shall be amended as follows.

• (2) Subsections (3) and (3AA) (which fall as a result of new section 434(1) to (1B)) shall cease to have effect.

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

• (4) Subsection (5) (which falls with the substitution of subsection (4)) shall cease to have effect.

• (5) Subsections (6) to (7) (which fall with the repeal of subsections (3), (3AA) and (5) and the substitution of subsection (4)) shall cease to have effect.

• (6) Subsection (9) (which falls with the repeal of subsections (6), (6B) and (6E) and the repeal of section 440B(2)) shall cease to have effect.

• (7) Sub-paragraphs (2) to (4) above have effect in relation to distributions made on or after 2nd July 1997.

• (8) Sub-paragraphs (5) and (6) above have effect for accounting periods beginning on or after 2nd July 1997.

• (9) In determining, for the purposes of subsections (6) to (7) of section 438 of the Taxes Act 1988, the franked investment income of, or foreign income dividends arising to, an insurance company for an accounting period beginning before 2nd July 1997 and ending on or after that date, there shall be left out of account any distributions which are made on or after 2nd July 1997.

Section 439B of the Taxes Act 1988

7

• (1) In section 439B of the Taxes Act 1988 (life reinsurance business: separate charge on profits) subsection (7) (which falls as a result of new section 434(1) to (1B)) shall cease to have effect.

• (2) This paragraph has effect in relation to distributions made on or after 2nd July 1997.

Section 440B of the Taxes Act 1988

8

• (1) Section 440B of the Taxes Act 1988 (modifications where tax charged under Case I of Schedule D) shall be amended as follows.

• (2) Subsection (1A) (which falls as a result of new section 434(1) to (1B)) shall cease to have effect.

• (3) Subsection (2) (which falls with the repeal of section 438(6), (6B) and (6E)) shall cease to have effect.

• (4) Sub-paragraph (2) above has effect in relation to distributions made on or after 2nd July 1997.

• (5) Sub-paragraph (3) above has effect for accounting periods beginning on or after 2nd July 1997.

Section 441A of the Taxes Act 1988

9

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Schedule 19AB to the Taxes Act 1988

10

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11

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12

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Schedule 19AC to the Taxes Act 1988

13

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Section 89 of the Finance Act 1989

14

• (1) Section 89 of the Finance Act 1989 (policy holders’ share of profits) shall be amended as follows.

• (2) In subsection (2)—

• (a) paragraph (a) (which provides for Case I profits to be reduced by unrelieved franked investment income in respect of which an election under section 438(6) has been made) shall cease to have effect;

• (b) in paragraph (b) (which provides for Case I profits to be reduced by the shareholders’ share of any other unrelieved franked investment income from investments held in connection with life assurance business)—

• (i) the words “other unrelieved” shall cease to have effect; and

• (ii) for “from investments held in connection with the company’s life assurance business” there shall be substituted “ which is referable to the company’s basic life assurance and general annuity business ”; and

• (c) in paragraph (c) (which provides for Case I profits to be reduced by the shareholders’ share of foreign income dividends in respect of such investments) for “in respect of investments held in connection with the company’s life assurance business” there shall be substituted “ which are referable to the company’s basic life assurance and general annuity business ”.

• (3) Subsection (8) (meaning of “unrelieved” franked investment income) shall cease to have effect.

• (4) This paragraph has effect in relation to distributions made on or after 2nd July 1997.

Section 65 of the Finance (No.2) Act 1992

15

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SCHEDULE 4

Part I — General

The Taxes Management Act 1970

Section 7

1

• (1) In section 7 of the Taxes Management Act 1970 (notice of liability to income tax and capital gains tax) in subsection (6) (sources of income which fall within that subsection) after the words “other than the basic rate” there shall be inserted “ , the Schedule F ordinary rate ”.

• (2) This paragraph has effect for the year 1999-00 and subsequent years of assessment.

Section 42 (pre-corporation tax self-assessment version)

2

• (1) In section 42 of the Taxes Management Act 1970 (procedure for making claims), as it has effect in relation to corporation tax for accounting periods ending before the day appointed under section 199 of the Finance Act 1994, the following provisions shall cease to have effect—

• (a) in subsection (5) (form of claim) the words “Subject to subsection (5A) below,”;

• (b) subsection (5A) (claims by companies for payment of tax credits); and

• (c) subsection (10A) (extended meaning of terms used in subsection (5A)).

• (2) This paragraph has effect in relation to tax credits in respect of distributions made on or after 6th April 1999.

Section 42 (corporation tax self-assessment version)

3

• (1) In section 42 of the Taxes Management Act 1970 (procedure for making claims), as it has effect in relation to corporation tax for accounting periods ending on or after the day appointed under section 199 of the Finance Act 1994, the following provisions shall cease to have effect—

• (a) subsections (4) and (4A) (claims by companies for payment of tax credits); and

• (b) in subsection (5), the words from “and the reference in subsection (4) above” onwards.

• (2) This paragraph has effect in relation to tax credits in respect of distributions made on or after 6th April 1999.

The Taxes Act 1988

Section 231

4

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Section 232

5

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Section 233

6

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Sections 235 to 237

7

• (1) Sections 235 to 237 of the Taxes Act 1988 (distributions of exempt funds and bonus issues) shall cease to have effect.

• (2) This paragraph has effect in relation to distributions made on or after 6th April 1999.

Section 238

8

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Section 241

9

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Section 249

10

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Section 421

11

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Section 469

12

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Section 549

13

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Section 660C

14

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Section 687

15

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Section 689B

16

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Section 699

17

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Section 703

18

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Section 709

19

• (1) In section 709 of the Taxes Act 1988 (meaning of tax advantage etc) in subsection (2A) (references to a relief and to repayment of tax to include references to a tax credit and payment of any amount in respect of a tax credit) the words “and to a repayment of tax”, “respectively” and “and to a payment of any amount in respect of a tax credit” shall be omitted.

• (2) This paragraph has effect for the year 1999-00 and subsequent years of assessment.

Section 743

20

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Section 819

21

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Section 832

22

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Schedule 13

23

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The Taxation of Chargeable Gains Act 1992

Section 4

24

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Section 6

25

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Part II — Insurance companies and Lloyd’s underwriters

The Taxes Act 1988

Section 231B

26

• (1) In section 231B of the Taxes Act 1988, in subsection (4)(b), the words “or 441A(7)” shall be omitted.

• (2) This paragraph has effect in relation to distributions made on or after 6th April 1999.

Section 434

27

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

Section 441A

28

• (1) In section 441A, subsections (2) to (8) (regulations about tax credits to which insurance companies are entitled) shall cease to have effect.

• (2) This paragraph has effect in relation to distributions made on or after 6th April 1999.

Schedule 19AC

29

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

The Finance Act 1993

Schedule 20

30

• (1) In Schedule 20 to the Finance Act 1993 (Lloyd’s underwriters: special reserve funds) the following provisions shall cease to have effect—

• (a) paragraph 9(3) (claims for payment of tax credits); and

• (b) in paragraph 11(3)(c) (value of fund as increased by tax repayment or tax credit received under paragraph 9(2) or (3)) the words “or tax credit received” and “or (3)”.

• (2) Sub-paragraph (1) above has effect in relation to distributions made on or after 6th April 1999.

SCHEDULE 5

Part I — Qualifying distributions other than bonus issues

1

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

2

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

3

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

4

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

5

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

Part II — Bonus issues

6

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

7

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

8

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

SCHEDULE 6

Section 13 of the Taxes Act 1988

1

• (1) Section 13 of the Taxes Act 1988 (small companies’ relief) shall be amended as follows.

• (2) In subsection (7) (profits of a company for an accounting period to include foreign income dividends) the words “and with the addition of foreign income dividends arising to the company” shall cease to have effect.

• (3) Subsection (8A) (definition of “foreign income dividends”) shall cease to have effect.

• (4) This paragraph has effect for accounting periods beginning on or after 6th April 1999.

Section 75 of the Taxes Act 1988

2

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

Chapter VA of Part VI of the Taxes Act 1988

3

• (1) Sections 246A to 246Y of the Taxes Act 1988 (foreign income dividends) shall cease to have effect.

• (2) The repeal of sections 246A to 246E and 246G of the Taxes Act 1988 has effect in relation to distributions made on or after 6th April 1999.

• (3) The repeal of sections 246F, 246H to 246J and 246N to 246Y of the Taxes Act 1988 has effect for accounting periods beginning on or after 6th April 1999.

• (4) The repeal of sections 246K to 246M of the Taxes Act 1988 has effect for accounting periods of the parent (within the meaning of those sections) beginning on or after 6th April 1999.

Section 247 of the Taxes Act 1988

4

• (1) In section 247 of the Taxes Act 1988 (dividends etc paid by one member of a group to another) subsections (5A) to (5D) (which relate to foreign income dividends) shall cease to have effect.

• (2) This paragraph has effect in relation to distributions made on or after 6th April 1999.

Section 431 of the Taxes Act 1988

5

• (1) In section 431(2) of the Taxes Act 1988 (interpretation of Chapter I of Part XII) the definition of “foreign income dividends” shall cease to have effect.

• (2) This paragraph has effect for accounting periods beginning on or after 6th April 1999.

Section 434 of the Taxes Act 1988

6

• (1) Section 434 of the Taxes Act 1988 (franked investment income etc) shall be amended as follows.

• (2) Subsections (3B) to (3D) (which relate to foreign income dividends) shall cease to have effect.

• (3) In subsection (6A), paragraphs (aa) to (ac) (which define expressions used in subsections (3B) to (3D)) shall cease to have effect.

• (4) This paragraph has effect for accounting periods beginning on or after 6th April 1999.

Section 458 of the Taxes Act 1988

7

• (1) In section 458 of the Taxes Act 1988 (capital redemption business) in subsection (2) (certain foreign income dividends treated as part of profits in ascertaining loss) the words “and foreign income dividends arising to” shall cease to have effect.

• (2) This paragraph has effect in relation to distributions made on or after 6th April 1999.

Chapter III of Part XII of the Taxes Act 1988

8

• (1) In section 468H of the Taxes Act 1988 (interpretation of sections 468I to 468R)—

• (a) subsection (5) (construction of references to foreign income dividends) shall cease to have effect; and

• (b) in subsection (6), for “to 468R” there shall be substituted “ to 468Q ”.

• (2) In section 468I of the Taxes Act 1988 (distribution accounts)—

• (a) in subsection (2), the words “which are not foreign income dividends” shall cease to have effect; and

• (b) subsections (3), (5), (5A) and (7) shall cease to have effect.

• (3) In section 468J of the Taxes Act 1988 (dividend distributions)—

• (a) in subsection (1), the words “or a part of the total amount” and “which are not foreign income dividends” shall cease to have effect;

• (b) in subsection (2), the words “or, as the case may be, the part” shall cease to have effect; and

• (c) subsection (3) shall cease to have effect.

• (4) Section 468K of the Taxes Act 1988 (foreign income distributions) shall cease to have effect.

• (5) In section 468M of the Taxes Act 1988 (deduction of tax: simple case) in subsection (5) (definition of “eligible income”) paragraph (c) shall cease to have effect.

• (6) In section 468Q of the Taxes Act 1988 (dividend distribution to corporate unit holder)—

• (a) in subsection (2)(a), the words “a foreign income distribution” shall cease to have effect;

• (b) in subsection (3)—

• (i) for the formula there shall be substituted the following formula—

$U=A×CD$

• (ii) the definition of “B” shall cease to have effect; and

• (c) subsection (4) shall cease to have effect.

• (7) Section 468R of the Taxes Act 1988 (foreign income distribution to corporate holder) shall cease to have effect.

• (8) Sub-paragraphs (1)(a), (5) and (6) above have effect for distribution periods beginning on or after 6th April 1999.

• (9) Sub-paragraphs (1)(b), (2) to (4) and (7) above have effect for distribution periods the distribution date for which falls on or after 6th April 1999.

Section 490 of the Taxes Act 1988

9

• (1) Section 490 of the Taxes Act 1988 (companies carrying on a mutual business or not carrying on a business) shall be amended as follows.

• (2) In subsection (1) (which contains a reference to foreign income dividends) the words “or out of foreign income dividends” shall cease to have effect.

• (3) In subsection (4) (which contains a reference to foreign income dividends) the words “or foreign income dividends” shall cease to have effect.

• (4) Subsection (5) (definition of “foreign income dividends”) shall cease to have effect.

• (5) This paragraph has effect in relation to distributions made on or after 6th April 1999.

Section 687 of the Taxes Act 1988

10

• (1) In section 687 of the Taxes Act 1988 (payments under discretionary trusts) in subsection (3), paragraph (aaa) (which concerns any sums treated under section 246D(4) as income of trustees) shall cease to have effect.

• (2) This paragraph has effect in relation to distributions made on or after 6th April 1999.

Section 689B of the Taxes Act 1988

11

• (1) In section 689B of the Taxes Act 1988 (order in which expenses to be set against income) in subsection (2)(b) the words “246D(4) or” shall cease to have effect.

• (2) This paragraph has effect in relation to distributions made on or after 6th April 1999.

Section 699A of the Taxes Act 1988

12

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

Section 701 of the Taxes Act 1988

13

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

Section 731 of the Taxes Act 1988

14

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

Section 802 of the Taxes Act 1988

15

• (1) Section 802 of the Taxes Act 1988 (UK insurance companies trading overseas) shall be amended as follows.

• (2) In subsection (2) (which contains a reference to foreign income dividends) the words “foreign income dividends” shall cease to have effect.

• (3) Subsection (4) (definition of “foreign income dividends”) shall cease to have effect.

• (4) This paragraph has effect in relation to distributions made on or after 6th April 1999.

Schedule 13 to the Taxes Act 1988

16

• (1) Schedule 13 to the Taxes Act 1988 shall be amended as follows.

• (2) In paragraph 1 (duty to make returns), in sub-paragraph (1)—

• (a) paragraph (b) (duty to make returns of foreign income dividends paid and received) shall cease to have effect;

• (b) in paragraph (c), the words “and foreign income dividends paid” shall cease to have effect; and

• (c) the words following paragraph (c) (construction of references to foreign income dividends) shall cease to have effect.

• (3) In sub-paragraph (4) of that paragraph—

• (a) the word “4A(2),”, and

• (b) paragraph (b) and the word “and” immediately preceding it,

shall cease to have effect.

• (4) In paragraph 2 (content of returns)—

• (a) in sub-paragraph (1)—

• (i) for “paragraphs 7(2), 3A(2) and 9A(2)” there shall be substituted “ paragraph 7(2) ”; and

• (ii) paragraphs (d) to (f) (which require the return to include information in relation to foreign income dividends) shall cease to have effect; and

• (b) sub-paragraphs (5) and (6) (which supplement paragraphs (e) and (f) of sub-paragraph (1)) shall cease to have effect.

• (5) In paragraph 3 (payment of tax)—

• (a) in sub-paragraph (1), the words “and foreign income dividends”, and

• (b) in sub-paragraph (3), the words “or foreign income dividend”,

shall cease to have effect.

• (6) Paragraphs 3A and 3B (which make provision in relation to international headquarters companies paying foreign income dividends) shall cease to have effect.

• (7) In paragraph 4 (receipt of franked investment income after payment of advance corporation tax) in sub-paragraph (2) the words “or paid any foreign income dividends” shall cease to have effect.

• (8) Paragraph 4A (receipt of foreign income dividends after payment of advance corporation tax) shall cease to have effect.

• (9) Paragraph 6A (claims for set-off in respect of foreign income dividends received by a company) shall cease to have effect.

• (10) In paragraph 7 (qualifying distributions which are not payments and payments of uncertain nature) in sub-paragraph (3) the words “and no foreign income dividend is paid” shall cease to have effect.

• (11) Paragraph 9A (manufactured foreign income dividends) shall cease to have effect.

• (12) Sub-paragraph (2) above has effect for accounting periods beginning on or after 6th April 1999.

• (13) Sub-paragraphs (3) to (10) above have effect for return periods beginning on or after 6th April 1999.

• (14) Sub-paragraph (11) above has effect in relation to manufactured dividends which are representative of dividends paid on or after 6th April 1999.

Schedule 23A to the Taxes Act 1988

17

• (1) Schedule 23A to the Taxes Act 1988 (manufactured dividends and interest) shall be amended as follows.

• (2) In paragraph 1(1) (interpretation) the definition of “foreign income dividend” shall cease to have effect.

• (3) In paragraph 2 (manufactured dividends on UK equities: general) in sub-paragraph (6) the words “Subject to paragraph 2B(2)(b) below” shall cease to have effect.

• (4) Paragraph 2B (manufactured dividends representative of foreign income dividends) shall cease to have effect.

• (5) This paragraph has effect in relation to manufactured dividends which are representative of dividends paid on or after 6th April 1999.

Section 88A of the Finance Act 1989

18

• (1) In section 88A of the Finance Act 1989 (lower corporation tax rate on certain insurance company profits) in subsection (3)—

• (a) paragraph (d)(ii) (which relates to foreign income distributions) shall cease to have effect; and

• (b) the words “(or by that subsection as applied by section 468R(2) of that Act)” shall cease to have effect.

• (2) This paragraph has effect in relation to distributions made on or after 6th April 1999.

Section 89 of the Finance Act 1989

19

• (1) Section 89 of the Finance Act 1989 (policy holders’ share of profits) shall be amended as follows.

• (2) In subsection (2), paragraph (c) (which provides for Case I profits to be reduced by the shareholders’ share of any foreign income dividends from investments held in connection with life assurance business) shall cease to have effect.

• (3) Subsection (2A) (which explains certain expressions used in subsection (2)(c)) shall cease to have effect.

• (4) This paragraph has effect in relation to distributions made on or after 6th April 1999.

Section 171 of the Finance Act 1993

20

• (1) Section 171 of the Finance Act 1993 (taxation of profits and allowance of losses of Lloyd’s underwriters) shall be amended as follows.

• (2) Subsection (2A) (which makes provision in relation to foreign income dividends) shall cease to have effect.

• (3) This paragraph has effect in relation to distributions made on or after 6th April 1999.

Schedule 7 to the Finance Act 1997

21

• (1) Schedule 7 to the Finance Act 1997 shall be amended as follows.

• (2) Paragraph 2 (distributions treated as FIDs) shall cease to have effect.

• (3) Paragraphs 4 to 6 (exceptions for stock options, dividends on fixed rate preference shares and pre-sale distributions) shall cease to have effect.

• (4) Sub-paragraphs (2) and (3) above have effect in relation to distributions made on or after 6th April 1999.

Transitional provisions

22

• (1) Where, in the case of an accounting period of a company beginning before 6th April 1999 and ending on or after 5th April 1999 (“a transitional period”), there would (apart from this sub-paragraph) be such an excess as is mentioned in section 246F(3) of the Taxes Act 1988, no such excess shall be deemed to have arisen.

• (2) In their application in relation to foreign income dividends paid in an accounting period of a company beginning before 6th April 1999, sections 246J(5) and 246K(10) of the Taxes Act 1988 shall have effect as if the reference to any subsequent accounting period—

• (a) included an accounting period which immediately follows a transitional period, but

• (b) did not include any later accounting period.

23

Where a foreign income dividend paid by a company before 6th April 1999—

• (a) is received by a person on or after that date, and

• (b) is not one in relation to which section 246D of the Taxes Act 1988 applies,

the recipient shall be treated, for all purposes of the Tax Acts, as receiving instead a ... distribution made by a company resident in the United Kingdom of an amount equal to ... the amount of the foreign income dividend.

SCHEDULE 7

Introductory

1

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

New limits

2

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

Consequential amendments

3

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

4

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

5

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

6

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

7

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

8

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

Commencement

9

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

SCHEDULE 8

Part I — Vehicle licensing: payments where information to be transmitted electronically

Part II — Income tax and corporation tax

Part III — Statutory effect of resolutions etc

The companies benefitting from windfalls.

Interpretation of Part I.

Rate of duty on spirits.

Rate of duty on beer.

Rates of duty on wine and made-wine.

Rates of hydrocarbon oil duties etc.

Rates of vehicle excise duty.

Payments where vehicle information transmitted electronically.

Mortgage interest payments.

Withdrawal of relief on medical insurance premiums.

Losses etc not to be set against surplus franked investment income.

Taxation of dealers in respect of distributions etc.

Trusts.

Repeal of s.95(5) of the Taxes Act 1988: consequential amendments.

Payments to companies under section 687 of the Taxes Act 1988.

Rates of tax applicable to Schedule F income etc.

Trusts.

Estates of deceased persons in administration.

Carry-back of trading losses.

Interest to be paid gross.

Paying and collecting agents.

Carry-back of trading losses.

Carry-back of loan relationship deficits.

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

Interpretation.

Interpretation.

The Taxes Management Act 1970

Section 7

Section 42 (pre-corporation tax self-assessment version)

Section 42 (corporation tax self-assessment version)

The Taxes Act 1988

Section 231

Section 232

Section 233

Sections 235 to 237

Section 238

Section 241

Section 249

Section 421

Section 469

Section 549

Section 660C

Section 687

Section 689B

Section 699

Section 703

Section 709

Section 743

Section 819

Section 832

Schedule 13

The Taxation of Chargeable Gains Act 1992

Section 4

Section 6

The Taxes Act 1988

Section 231B

Section 434

Section 441A

Schedule 19AC

The Finance Act 1993

Schedule 20

These repeals have effect in relation to distributions made on or after 2nd July 1997.

These repeals have effect for the year 1997-98 and subsequent years of assessment except in relation to the cases in which the relief that has been or may be given under section 54 of the Finance Act 1989 in respect of any payment is unaffected by the provisions of section 17(1) of this Act.

These repeals have effect in accordance with section 36 of, and Schedule 6 to, this Act.

These repeals have effect in accordance with section 36 of, and Schedule 6 to, this Act.

Editorial notes