Finance Act 1999

• (9) Nothing in subsection (3) above shall affect the operation of section 24(1) of the Taxation of Chargeable Gains Act 1992 (disposals where assets extinguished etc.) in relation to the asset.

• (10) Subject to subsection (11) below this section applies to arrangements entered into on or after 6th April 1999 or subsisting on that date.

• (11) In the case of arrangements subsisting on 6th April 1999, this section has effect—

• (a) as if the time mentioned in subsection (3) above were the earliest time (“the notional time of acquisition”) at which the member acquired any of the syndicate rights held by him under the arrangement immediately before 6th April 1999;

• (b) as if the consideration referred to in subsection (4) above were the consideration, in money or money’s worth, given by him wholly and exclusively for the acquisition of such of those rights as he acquired at the notional time of acquisition; and

• (c) in relation to times before 6th April 1999, as if the amount mentioned in subsection (5) above were the amount of any consideration, in money or money’s worth, given by him wholly and exclusively for the acquisition, after the notional time of acquisition, of rights such as are mentioned in paragraph (a) above;

and the incidental costs of any acquisition falling within paragraph (b) or (c) above shall be taken to be incidental costs of the acquisition of the asset.

Provisions supplementary to s. 82

83

• (1) In section 82 above and this section, except where the context otherwise requires—

• “member” means an individual who is an underwriting member of Lloyd’s;

• “members’ agent”, in relation to a member, means a person registered as a members’ agent at Lloyd’s who is acting as such an agent for the member;

• “members’ agent pooling arrangement”, in relation to a member, means an arrangement—under which a members’ agent arranges for the member’s participation in syndicates; andwhich satisfies the conditions set out in subsection (2) below;

• “syndicate” has the same meaning as in Chapter III of Part II of the Finance Act 1993; and

• “syndicate rights”, in relation to a member, means rights under a syndicate in which the member participates.

• (2) The conditions mentioned in paragraph (ii) of the above definition of “members’ agent pooling arrangement” are that under the arrangement—

• (a) the member must participate in each of the syndicates to which the arrangement relates; and

• (b) the extent to which the member participates in each such syndicate is determined—

• (i) by the members’ agent; or

• (ii) according to a formula provided for in the arrangement.

• (3) References in section 82 above to the payment of an amount are references to the payment of an amount in money or money’s worth; and to the extent that an amount mentioned in subsection (4), (5) or (6) of that section is paid in money’s worth, the amount of the consideration or expenditure there referred to shall be calculated by reference to the market value of the money’s worth at the time of the payment mentioned in that subsection.

• (4) Section 82 above and this section have effect in relation to a Scottish partnership which is an underwriting member of Lloyd’s as they have effect in relation to a member, but as if the reference in section 82(2) to any liability of the member’s to capital gains tax that may arise from transactions effected in pursuance of the arrangement were a reference to any such liability of members of the partnership that may so arise.

Lloyd's: roll-over relief

84

• (1) In section 155 of the Taxation of Chargeable Gains Act 1992 (classes of assets for the purposes of roll-over relief), after Class 7 there shall be inserted—

• (2) This section applies to—

• (a) assets (or interests in them) disposed of on or after 6th April 1999;

• (b) assets (or interests in them) acquired on or after that date.

Advance pricing agreements and CFCs

Advance pricing agreements etc

85

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

Provisions supplementary to s. 85

86

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

Effect of section 85 agreements on non-parties

87

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

Controlled foreign companies

88

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

Management and enforcement

Corporation tax: due and payable date

89

• (1) In the Table in section 98 of the Taxes Management Act 1970 (penalties for failure to provide information, produce documents etc.), in the first column, after the entry for Part III of the Taxes Management Act 1970 insert “ regulations under section 59E of this Act; ”.

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

• (3) This section has effect in relation to accounting periods ending on or after 1st July 1999.

Release or writing off of debt: interest on tax overpaid

90

• (1) In section 826(4) of the Taxes Act 1988 (interest on tax overpaid)—

• (a) for “the repayment of, or of the part in question of, the loan or advance mentioned in section 419(4) was made” substitute “ the event giving rise to entitlement to relief under section 419(4) occurred ”; and

• (b) in paragraph (a)(i) of that subsection, after “repayment” insert “ , or the release or writing off, ”.

• (2) This section has effect in relation to the release or writing off of the whole or part of a debt on or after 6th April 1999.

Advance corporation tax: consequences of abolition

91

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

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

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

• (4) In section 32(6) of the Finance Act 1998 (meaning of “unrelieved surplus advance corporation tax”), for “paragraph 11” substitute “ paragraph 12 ”.

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

• (6) The amendment made by subsection (4) above shall be deemed always to have had effect.

Group relief: consequences of reduction in surrenderable amount

92

• (1) Part VIII of Schedule 18 to the Finance Act 1998 (claims for group relief) is amended as follows.

• (2) In paragraph 75 (reduction in amount available for surrender by way of group relief)—

• (a) in sub-paragraph (1), for “amount available for relief” substitute “ total amount available for surrender ”; and

• (b) in sub-paragraphs (2) and (4), before “amount available for surrender” insert “ total ”.

• (3) After that paragraph insert—

(75A) (1) This paragraph applies where, after the surrendering company has given notice of consent to surrender, a claimant company (“the chargeable company”) has become liable to tax in consequence of receiving— (a) notice of the withdrawal of consent, or a copy of a new notice of consent, under paragraph 75(3), or (b) a copy of a notice containing directions by the Inland Revenue under paragraph 75(4). (2) If any of the tax is unpaid six months after the chargeable company’s time limit for claims, the Inland Revenue may make an assessment to tax in the name of the chargeable company on any other company that has obtained group relief as a result of the surrender. (3) The assessment may not be made more than two years after that time limit. (4) The amount of the assessment must not exceed— (a) the amount of the unpaid tax, or (b) if less, the amount of tax which the other company saves by virtue of the surrender. (5) A company assessed to an amount of tax under sub-paragraph (2) is entitled to recover from the chargeable company— (a) a sum equal to that amount, and (b) any interest on that amount which it has paid under section 87A of the Taxes Management Act 1970 (interest on unpaid corporation tax). (6) For the purposes of this paragraph the chargeable company’s time limit for claims is the last of the dates mentioned in paragraph 74(1) on which the chargeable company could make or withdraw a claim for group relief for the accounting period for which the claim in question is made.

• (4) In paragraph 76 (assessments to recover excessive group relief), after sub-paragraph (2) add—

(3) If an assessment under this paragraph is made because a claimant company fails, or is unable, to amend its company tax return under paragraph 75(6), the assessment is not out of time if it is made within one year from— (a) the date on which the surrendering company gives notice of the withdrawal of consent, or (if later) sends a copy of a new notice of consent, to the claimant company under paragraph 75(3), or (b) the date on which the Inland Revenue send the claimant company a copy of a notice containing their directions under paragraph 75(4).

• (5) In section 87A(3) of the Taxes Management Act 1970 (interest on unpaid corporation tax assessed on other persons), for “section 96(8) of the Finance Act 1990” substitute “ paragraph 75A(2) of Schedule 18 to the Finance Act 1998 ”.

• (6) Section 96 of the Finance Act 1990 shall cease to have effect.

• (7) This section has effect in relation to accounting periods ending on or after 1st July 1999.

Company tax returns, etc

93

• (1) The enactments mentioned in Schedule 11 to this Act have effect with the amendments specified there, which are minor amendments and amendments consequential on Schedule 18 to the Finance Act 1998 (company tax returns, assessments and claims, etc.).

• (2) The amendments made by Schedule 11 to this Act have effect in relation to accounting periods ending on or after 1st July 1999.

Part IV — Oil Taxation

Excluded oil

94

• (1) This section applies where—

• (a) a contract (“the old contract”) provides for the sale by a person (“A”) of oil consisting of gas to the British Gas Corporation or one of its successors (“the purchaser”);

• (b) the old contract is a contract made, or treated (by virtue of this section) as made, before the end of June 1975;

• (c) the old contract is replaced by a contract (“the new contract”) for the sale of oil consisting of gas to the purchaser made after the end of June 1975; and

• (d) any of the rights and liabilities which, under the old contract, were rights and liabilities of A are, under the new contract, rights and liabilities of another person (“B”).

• (2) The new contract shall be treated for the purposes of section 10(1)(a) of the Oil Taxation Act 1975 as the same contract as the old contract unless the rights and liabilities of B under the new contract are so different from those of A under the old contract that a contract conferring those rights and imposing those liabilities on A could not have been regarded as the same contract as the old contract.

• (3) For the purposes of subsection (1) above the successors of the British Gas Corporation are—

• (a) British Gas plc; and

• (b) British Gas Trading Limited.

• (4) This section shall be deemed always to have had effect.

Sale and lease-back

95

• (1) This section applies to a lease (“the lease in question”) of an asset (“the relevant asset”) where—

• (a) a person (“the seller”) who is a participator in an oil field (“the seller’s oil field”) has made a disposal in a chargeable period of the relevant asset or an interest in it;

• (b) the relevant asset was a qualifying asset in relation to the seller and the seller’s oil field is the chargeable field in relation to it;

• (c) the relevant asset is used in connection with an oil field (“the lessee’s oil field”) by a participator in that field (“the lessee”) under the lease in question;

• (d) the seller, or a person connected with him at any time in the relevant period, is the lessee; and

• (e) the lessee uses the relevant asset before the end of the period of two years beginning with the disposal.

• (2) Subject to subsection (8) below, to the extent that the expenditure falling within subsection (3) below exceeds the amount of the cap, that expenditure shall not be allowable under section 3 or 4 of the principal Act or section 3 of the Oil Taxation Act 1983 for the lessee’s oil field.

• (3) That expenditure is the aggregate of the following—

• (a) the total expenditure, excluding operating expenditure, incurred by the lessee under the lease in question; and

• (b) if at any time after the disposal he acquires the relevant asset or an interest in it, the total expenditure (not falling within paragraph (a) above) incurred by him in acquiring the asset or interest.

• (4) Subject to subsections (5) to (7) below—

• (a) if the period in which the disposal was made is one in which the seller has benefitted from safeguard relief, the amount of the cap is the smaller of—

• (i) the amount given by dividing the marginal tax on the disposal receipts by the applicable rate of tax; and

• (ii) the amount of the disposal receipts; and

• (b) in any other case the amount of the cap is the amount of the disposal receipts.

• (5) Subject to subsection (7) below, where at the relevant time there are, in relation to the relevant asset, two or more leases to which this section applies, the amount of the cap for the lease in question shall be the appropriate proportion of the cap found by applying subsection (4) above.

• (6) For the purposes of subsection (5) above the appropriate proportion is the proportion given by the formula—

$AB$

where—

• A is the proportion of the total use of the relevant asset during the term of the lease in question that is expected to be use under the lease; and

• B is—in a case where the seller disposed of the whole of the relevant asset, one; andin any other case, the proportion that the value of the interest disposed of by him bore to the total value of the relevant asset.

• (7) Where at the relevant time the relevant asset is used, or is expected to be used, by the lessee under the lease in question in connection with two or more oil fields, the amount of the cap for each of the fields shall be so much of the cap found by applying subsections (4) to (6) above as accords with the proportion of the use of the asset under the lease that is expected, at that time, to be—

• (a) use in connection with that field; or

• (b) use giving rise to tariff receipts of the lessee attributable to that field.

• (8) Where—

• (a) expenditure falling within subsection (3) above has been allowed for the lessee’s oil field, on a claim under Schedule 5 or 6 to the principal Act, on the basis that the cap was of a particular amount;

• (b) information later becomes available to the Board which establishes that the cap is not of that amount; and

• (c) the amount that was allowed exceeds the amount (if any) of the expenditure falling within that subsection that would have been allowed on the claim if the information had been available when the expenditure was allowed,

the excess shall continue to be allowable.

• (9) Subject to subsection (10) below, this section and sections 96 and 97 below apply to assets, or interests in assets, disposed of on or after 9th March 1999.

• (10) This section and those sections do not apply to assets, or interests in assets, disposed of pursuant to an agreement made before that date if—

• (a) the agreement is not conditional; or

• (b) the agreement is conditional and the condition is satisfied before that date.

Transfer of field interest

96

• (1) This section applies where—

• (a) section 95 above has applied to a lease;

• (b) the lessee has transferred the whole or part of his interest in the lessee’s oil field; and

• (c) pursuant to the transfer, the relevant asset is used in connection with that oil field under a lease (“the new participator’s lease”) by the person who is the new participator in relation to the transfer.

• (2) Subject to subsection (4) below, section 95 above shall have effect as if the new participator were the lessee and the new participator’s lease were the lease in question.

• (3) The reference in subsection (1)(b) above to the lessee includes a reference to a successor of his; and subject to subsection (4) below, the expenditure that the new participator is treated by virtue of subsection (2) above as having incurred includes—

• (a) any expenditure, excluding operating expenditure, incurred by the lessee or a successor of his under the lease in question or a lease of the relevant asset; and

• (b) any expenditure (not falling within paragraph (a) above) incurred by the lessee or a successor of his after the disposal mentioned in section 95(1)(a) above in acquiring the relevant asset or an interest in it.

• (4) Where the transfer mentioned in subsection (1)(b) above, or any antecedent transfer, was a transfer of part of the transferor’s interest in the lessee’s oil field—

• (a) the amount of the cap which is applicable by virtue of subsection (2) above shall be so much of the cap that would be applicable apart from this subsection as accords with the proportion of the lessee’s interest in the field that is represented by the new participator’s interest in the field; and

• (b) the expenditure incurred (as mentioned in subsection (3) above) by the lessee or any successor of his that is treated, by virtue of subsection (2) above, as expenditure incurred by the new participator shall be so much of the expenditure incurred (as so mentioned) by the person concerned as accords with the proportion of that person’s interest in the field that is represented by the new participator’s interest in the field.

• (5) A person is a successor of the lessee for the purposes of this section if and only if—

• (a) this section has applied to an earlier transfer by the lessee or a successor of his of the whole or part of his interest in the lessee’s oil field; and

• (b) that person was the new participator in relation to the earlier transfer and used the relevant asset under the lease in connection with that oil field.

• (6) In this section “antecedent transfer” means a transfer (other than the transfer mentioned in subsection (1)(b) above) by the lessee or a successor of his of the whole or part of his interest in the lessee’s oil field, pursuant to which the relevant asset was used as mentioned in subsection (1)(c) above.

Provisions supplementary to ss. 95 and 96

97

• (1) For the purposes of section 95 above the marginal tax on the disposal receipts is the difference between—

• (a) the amount of tax to which the seller is chargeable on the assessable profit accruing to him from the seller’s oil field in the period in which the asset or interest was disposed of; and

• (b) the amount of tax to which the seller would have been so chargeable if the amount or value of the consideration received or receivable by him in respect of the disposal in that period of the asset or interest had been nil.

• (2) For the purposes of that section—

• (a) any question whether a person is connected with the seller shall be determined in accordance with the provisions of section 1122 of the Corporation Tax Act 2010;

• (b) the relevant period is the period beginning with the time of the disposal of the asset or interest and ending with the time when the first claim is made for the allowance, for the lessee’s oil field, of expenditure incurred by the lessee or a successor of his under the lease in question or a lease of the relevant asset (and in this paragraph the reference to the lessee includes a reference to a person who is treated as the lessee by virtue of section 96 above);

• (c) the applicable rate of tax is the rate at which tax is charged under section 1(2) of the principal Act at the time of the disposal of the asset or interest;

• (d) the amount of the disposal receipts is the aggregate of the amount or value of any consideration received or receivable by the seller in respect of the disposal of the asset or interest;

• (e) a chargeable period is a period in which the seller benefits from safeguard relief if and only if the tax payable by the seller for that period is less than it would have been if section 9 of the principal Act (safeguard relief) had not been enacted;

• (f) the relevant time is the end of the earliest claim period for which a claim such as is mentioned in paragraph (b) above is made; and

• (g) tariff receipts of the lessee shall be taken to be attributable to an oil field if and only if they are attributable to the field for any chargeable period for the purposes of the Oil Taxation Act 1983.

• (3) In section 96 above references—

• (a) to the transfer by a person of the whole or part of his interest in the lessee’s oil field; or

• (b) in relation to a transfer, to the new participator,

shall be construed in accordance with Schedule 17 to the Finance Act 1980.

• (4) The expenditure which for the purposes of sections 95 and 96 above shall be taken to be operating expenditure shall be so much of the expenditure incurred by the lessee or, as the case may be, a successor of his under the lease concerned as appears, on a just and reasonable estimate, to be operating expenditure.

• (5) References in this section to a successor of the lessee shall be construed in accordance with section 96(5) above.

• (6) In this section and sections 95 and 96 above—

• “the chargeable field” has the same meaning as in the Oil Taxation Act 1983;

• “lease”, in relation to an asset, has the same meaning as in Chapter 3 of Part 19 of CTA 2010 (see section 868);

• “the lease in question”, “the lessee”, “the lessee’s oil field”, “the relevant asset”, “the seller” and “the seller’s oil field” shall be construed in accordance with section 95(1) above;

• “operating expenditure” means expenditure (for example, in respect of the provision of staff or crew or the maintenance or operation of the relevant asset) of such a nature that the lessee or, as the case may be, his successor would or might have incurred it, otherwise than under any arrangements to finance his ownership, if he had been the owner of the asset;

• “the new participator’s lease” shall be construed in accordance with section 96(1) above;

• “the principal Act” means the Oil Taxation Act 1975;

• “qualifying asset” has the same meaning as in the Oil Taxation Act 1983; and

• “tariff receipts” has the same meaning as in that Act.

• (7) This section and sections 95 and 96 above shall be construed as one with Part I of the principal Act.

Qualifying assets

98

• (1) Subsection (2) below applies where—

• (a) an asset which is not a mobile asset is a qualifying asset for the purposes of the Oil Taxation Act 1983 in relation to a person (“the taxpayer”) who is a participator in an oil field (“the field”);

• (ba) Chapter 16A of Part 2 of the Income Tax (Trading and Other Income) Act 2005 (oil activities).

• (d) not more than two chargeable periods intervene between the earlier period and the later period.

• (2) The Oil Taxation Acts shall have effect, in relation to the later period and any subsequent chargeable period, as if—

• (a) receipts of the taxpayer which are referable to the asset for the period concerned were tariff receipts , tax-exempt tariffing receipts or disposal receipts attributable to the field for that period; and

• (b) in a case falling within subsection (1)(c)(i) above, the taxpayer continued to be a participator in the field.

• (3) Subsection (4) below applies where—

• (a) an asset which is not a mobile asset is a qualifying asset for the purposes of the Oil Taxation Act 1983 in relation to a person (“the taxpayer”) who is a participator in an oil field (“the field”);

• (b) tariff receipts , tax-exempt tariffing receipts or disposal receipts of the taxpayer which are referable to the asset are attributable to the field for a chargeable period (“the earlier period”);

• (c) in a subsequent chargeable period (“the later period”) the taxpayer disposes of—

• (i) the asset; or

• (ii) an interest in the asset,

to another person (“the transferee”) in circumstances such that section 7 of the Oil Taxation Act 1983 does not apply to the disposal; and

• (d) not more than two chargeable periods intervene between the earlier period and the later period.

• (4) The Oil Taxation Acts shall have effect, in relation to the later period and any subsequent chargeable period, as if—

• (a) receipts of the transferee which are referable to the asset for the period concerned were tariff receipts , tax-exempt tariffing receipts or disposal receipts attributable to the field for that period; and

• (b) the transferee were a participator in the field.

• (5) Subject to subsection (6) below, any reference in this section to receipts of any person which are referable to the asset for a period is a reference to any sums which—

• (a) are received or receivable by that person in that period in respect of the use of the asset, or the provision of services or other business facilities of whatever kind in connection with its use; or

• (b) are received or receivable by that person in respect of the disposal in that period of the asset, or an interest in the asset.

• (6) In a case falling within subsection (3)(c)(ii) above—

• (a) any sums which are received or receivable by the transferee otherwise than by virtue of his acquisition of the interest shall not be regarded for the purposes of subsection (4) above as receipts of his which are referable to the asset for any period; and

• (b) for the purposes of paragraph (a) above, such apportionments shall be made as may be just and reasonable.

• (6A) In relation to tax-exempt tariffing receipts, any reference in this section—

• (a) to being attributable to a field for a period, or

• (b) to being referable to an asset,

shall be construed as if tax-exempt tariffing receipts were tariff receipts (and expenditure were or had been allowable accordingly).

• (7) This section shall be construed as one with Part I of the Oil Taxation Act 1975; and in this section “the Oil Taxation Acts” means—

• (a) the enactments relating to petroleum revenue tax (including this section);

• (aa) Part 8 of the Corporation Tax Act 2010 (oil activities); and

• (ba) Chapter 16A of Part 2 of the Income Tax (Trading and Other Income) Act 2005 (oil activities).

• (8) Nothing in this section shall be taken to affect the meaning of “participator” in paragraph 4 of Schedule 2 to the principal Act.

• (9) Subject to subsection (11) below, subsection (1) above applies where—

• (a) the disposal by virtue of which the taxpayer ceased to be a participator in the field; or

• (b) the acquisition by virtue of which he became a participator in the other oil field,

was made on or after 1st July 1999.

• (10) Subject to subsection (11) below, subsection (3) above applies where the asset, or the interest in the asset, was disposed of on or after that date.

• (11) Neither subsection (1) nor subsection (3) above applies where the disposal or acquisition concerned was made pursuant to an agreement which was made before 1st July 1999 and either—

• (a) the agreement was not conditional; or

• (b) the agreement was conditional and the condition was satisfied before that date.

PRT instalments

99

• (1) In paragraph 3 of Schedule 19 to the Finance Act 1982 (months in which instalments may be withheld)—

• (a) in sub-paragraph (1), at the beginning there shall be inserted “Subject to sub-paragraph (1A) below,” and after “month” there shall be inserted “ (the relevant month) ”; and

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

(1A) Sub-paragraph (1) above does not apply if the relevant month is a month in which any consideration (whether in the nature of income or capital) is received or receivable by the participator in respect of any such matter as is mentioned in paragraph (a) or (b) of section 6(2) of the Oil Taxation Act 1983 (chargeable tariff receipts).

• (2) Subsection (1) above applies for the purpose of determining whether instalments are payable in respect of chargeable periods ending on or after 31st December 1999.

Sale and lease-back: ring fence profits

100

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

Pipe-line elections

101

• (1) In subsection (1)(b) of section 233 of the Finance Act 1994 (relief for tariff receipts from participator in non-taxable field)—

• (a) for “a participator in a non-taxable field” there shall be substituted “ any person ”, and

• (b) for “in connection with that non-taxable field” there shall be substituted “ otherwise than in connection with a taxable field ”.

• (2) Subsection (1) above applies to sums received or receivable in any chargeable period ending on or after 31st December 1999.

PRT returns

102

• (1) In paragraph 2 of Schedule 2 to the Oil Taxation Act 1975 (returns by participators)—

• (a) in sub-paragraph (1) (returns must be delivered within two months of the end of a chargeable period), after “the period” there shall be inserted “ or within such longer period as the Board may allow ”; and

• (b) after sub-paragraph (4) there shall be inserted the following sub-paragraph—

(5) The power of the Board to allow an extension of time under sub-paragraph (1) above shall include power— (a) to allow an extension for an indefinite period; and (b) to provide for the period of any extension to end at such time as may be stipulated in a notice given by the Board.

• (2) In paragraph 5 of that Schedule (returns by the responsible person)—

• (a) in sub-paragraph (1) (returns must be delivered within one month of the end of a chargeable period), after “the period” there shall be inserted “ or within such longer period as the Board may allow ”; and

• (b) after sub-paragraph (3) there shall be inserted the following sub-paragraph—

(4) The power of the Board to allow an extension of time under sub-paragraph (1) above shall include power— (a) to allow an extension for an indefinite period; and (b) to provide for the period of any extension to end at such time as may be stipulated in a notice given by the Board.

• (3) After paragraph 12 of that Schedule there shall be inserted the following paragraph—

(12A) (1) Where— (a) the Board has extended the period for the delivery of any return that is required under paragraph 2 of this Schedule to be delivered for any chargeable period, and (b) the relevant time falls more than one year after the end of the chargeable period, the period within which the Board may make an assessment under this Schedule for that chargeable period shall not expire before the end of the period of five years beginning with the relevant time. (2) In this paragraph “the relevant time” means the earlier of— (a) the time which, as a result of the extension, is the latest time for the delivery of the return; and (b) the time when the return is delivered.

• (4) In paragraph 2 of Schedule 5 to that Act, after sub-paragraph (6) there shall be inserted the following sub-paragraphs—

(7) Where— (a) the claim period in which any expenditure allowable under section 3 or 4 of this Act for an oil field is incurred coincides with or includes a chargeable period, and (b) the Board has extended the period for the delivery of the return that is required under paragraph 5 of Schedule 2 to this Act to be delivered for that chargeable period by the responsible person, and (c) the relevant time falls more than four years after the end of the claim period, sub-paragraph (1) above shall have effect as if the reference to six years after the end of the claim period in which the expenditure is incurred were a reference to two years after the relevant time. (8) In sub-paragraph (7) above “the relevant time” means the earlier of— (a) the time which, as a result of the extension mentioned in that sub-paragraph, is the latest time for the delivery of the return there mentioned; and (b) the time when that return is delivered.

• (5) In the Table in paragraph 2 of Schedule 6 to that Act (application of provisions of Schedule 5 to claims under Schedule 6), after the entry relating to paragraph 2(6) of Schedule 5 there shall be inserted the following entries—

2(7)	For the reference to paragraph 5 of Schedule 2 to this Act substitute a reference to paragraph 2 of that Schedule;for the reference to paragraph 2(1) of Schedule 5 to this Act substitute a reference to paragraph 1(2) of this Schedule.
2(8)

• (6) In subsection (4) of section 62 of the Finance Act 1987 (returns relating to sales of oil), for the words from the beginning to “additional return” there shall be substituted—

(4) In any case where paragraph 2 of Schedule 2 to the principal Act requires a participator in any oil field to make a return for any chargeable period (including cases where the latest time for the delivery of that return is deferred), that participator shall also be required, not later than the end of the second month after the end of that chargeable period, to deliver to the Board a return

.

• (7) In subsection (6) of that section, for paragraph (b) (return under subsection (4) not to include details included in return under paragraph 2 of Schedule 2 to the principal Act) there shall be substituted the following paragraph—

(b) details of which are not included in a return for the period under paragraph 2 of Schedule 2 to the principal Act which is delivered to the Board at the same time as the return required by subsection (4) above or which was delivered to them previously; and

.

• (8) The preceding provisions of this section apply in relation to chargeable periods ending on or after 30th June 1999.

Business assets: roll-over relief

103

• (1) Section 193 of the Taxation of Chargeable Gains Act 1992 (roll-over relief not available for gains on oil licences) shall cease to have effect.

• (2) This section has effect in relation to—

• (a) a disposal of a licence or an interest in a licence which occurs on or after 1st July 1999;

• (b) an acquisition of a licence or an interest in a licence which occurs on or after 1st July 1999.

Part V — Inheritance tax

Gifts

104

The following shall be inserted after section 102 of the Finance Act 1986 (inheritance tax: gifts with reservation)—

(102A) (1) This section applies where an individual disposes of an interest in land by way of gift on or after 9th March 1999. (2) At any time in the relevant period when the donor or his spouse enjoys a significant right or interest, or is party to a significant arrangement, in relation to the land— (a) the interest disposed of is referred to (in relation to the gift and the donor) as property subject to a reservation; and (b) section 102(3) and (4) above shall apply. (3) Subject to subsections (4) and (5) below, a right, interest or arrangement in relation to land is significant for the purposes of subsection (2) above if (and only if) it entitles or enables the donor to occupy all or part of the land, or to enjoy some right in relation to all or part of the land, otherwise than for full consideration in money or money’s worth. (4) A right, interest or arrangement is not significant for the purposes of subsection (2) above if— (a) it does not and cannot prevent the enjoyment of the land to the entire exclusion, or virtually to the entire exclusion, of the donor; or (b) it does not entitle or enable the donor to occupy all or part of the land immediately after the disposal, but would do so were it not for the interest disposed of. (5) A right or interest is not significant for the purposes of subsection (2) above if it was granted or acquired before the period of seven years ending with the date of the gift. (6) Where an individual disposes of more than one interest in land by way of gift, whether or not at the same time or to the same donee, this section shall apply separately in relation to each interest. (102B) (1) This section applies where an individual disposes, by way of gift on or after 9th March 1999, of an undivided share of an interest in land. (2) At any time in the relevant period, except when subsection (3) or (4) below applies— (a) the share disposed of is referred to (in relation to the gift and the donor) as property subject to a reservation; and (b) section 102(3) and (4) above shall apply. (3) This subsection applies when the donor— (a) does not occupy the land; or (b) occupies the land to the exclusion of the donee for full consideration in money or money’s worth. (4) This subsection applies when— (a) the donor and the donee occupy the land; and (b) the donor does not receive any benefit, other than a negligible one, which is provided by or at the expense of the donee for some reason connected with the gift. (102C) (1) In sections 102A and 102B above “the relevant period” has the same meaning as in section 102 above. (2) An interest or share disposed of is not property subject to a reservation under section 102A(2) or 102B(2) above if or, as the case may be, to the extent that the disposal is an exempt transfer by virtue of any of the provisions listed in section 102(5) above. (3) In applying sections 102A and 102B above no account shall be taken of— (a) occupation of land by a donor, or (b) an arrangement which enables land to be occupied by a donor, in circumstances where the occupation, or occupation pursuant to the arrangement, would be disregarded in accordance with paragraph 6(1)(b) of Schedule 20 to this Act. (4) The provisions of Schedule 20 to this Act, apart from paragraph 6, shall have effect for the purposes of sections 102A and 102B above as they have effect for the purposes of section 102 above; and any question which falls to be answered under section 102A or 102B above in relation to an interest in land shall be determined by reference to the interest which is at that time treated as property comprised in the gift. (5) Where property other than an interest in land is treated by virtue of paragraph 2 of that Schedule as property comprised in a gift, the provisions of section 102 above shall apply to determine whether or not that property is property subject to a reservation. (6) Sections 102 and 102A above shall not apply to a case to which section 102B above applies. (7) Section 102A above shall not apply to a case to which section 102 above applies.

Delivery of accounts

105

• (1) For subsection (3) of section 216 of the Inheritance Tax Act 1984 (delivery of accounts) there shall be substituted the following subsections—

(3) Subject to subsections (3A) and (3B) below, where an account is to be delivered by personal representatives (but not where it is to be delivered by a person who is an executor of the deceased only in respect of settled land in England and Wales), the appropriate property is— (a) all property which formed part of the deceased’s estate immediately before his death, other than property which would not, apart from section 102(3) of the Finance Act 1986, form part of his estate; and (b) all property to which was attributable the value transferred by any chargeable transfers made by the deceased within seven years of his death. (3A) If the personal representatives, after making the fullest enquiries that are reasonably practicable in the circumstances, are unable to ascertain the exact value of any particular property, their account shall in the first instance be sufficient as regards that property if it contains— (a) a statement to that effect; (b) a provisional estimate of the value of the property; and (c) an undertaking to deliver a further account of it as soon as its value is ascertained. (3B) The Board may from time to time give such general or special directions as they think fit for restricting the property to be specified in pursuance of subsection (3) above by any class of personal representatives.

• (2) This section has effect in relation to deaths occurring on or after 9th March 1999.

Power to call for documents etc

106

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

Inland revenue charge

107

• (1) In subsection (3) of section 237 of the Inheritance Tax Act 1984 (imposition of Inland Revenue charge), for “ “personal property” includes leaseholds” there shall be substituted “personal property” does not include leaseholds ”.

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

(3B) Subsection (3C) below applies to any tax charged— (a) under section 32, 32A or 79(3) above in respect of any property, (b) under paragraph 8 of Schedule 4 to this Act in respect of any property, or (c) under paragraph 1 or 3 of Schedule 5 to this Act with respect to any object or property. (3C) Where any tax to which this subsection applies, or any interest on it, is for the time being unpaid, a charge for the amount unpaid is also by virtue of this section imposed in favour of the Board— (a) except where the event giving rise to the charge was a disposal to a purchaser of the property or object in question, on that property or object; and (b) in the excepted case, on any property for the time being representing that property or object.

• (3) Subsection (1) above has effect in relation to deaths occurring on or after 9th March 1999; and subsection (2) above has effect in relation to tax charged on or after that day.

Penalties

108

• (1) For section 245 of the Inheritance Tax Act 1984 (failure to provide information) there shall be substituted the following sections—

(245) (1) This section applies where a person (“the taxpayer”) fails to deliver an account under section 216 or 217 above. (2) The taxpayer shall be liable— (a) to a penalty not exceeding £100; and (b) to a further penalty not exceeding £60 for every day after the day on which the failure has been declared by a court or the Special Commissioners and before the day on which the account is delivered. (3) If— (a) proceedings in which the failure could be declared are not commenced before the end of the relevant period, and (b) the taxpayer has not delivered the account by the end of that period, he shall be liable to a further penalty not exceeding £100. (4) In subsection (3) above “the relevant period” means the period of six months beginning immediately after the end of the period given by section 216(6) or (7) or section 217 above (whichever is applicable). (5) If the taxpayer proves that his liability to tax does not exceed a particular amount, the penalty under subsection (2)(a) above, together with any penalty under subsection (3) above, shall not exceed that amount. (6) A person shall not be liable to a penalty under subsection (2)(b) above if he delivers the account required by section 216 or 217 before proceedings in which the failure could be declared are commenced. (7) A person who has a reasonable excuse for failing to deliver an account shall not be liable by reason of that failure to a penalty under this section, unless he fails to deliver the account without unreasonable delay after the excuse has ceased. (245A) (1) A person who fails to make a return under section 218 above shall be liable— (a) to a penalty not exceeding £300; and (b) to a further penalty not exceeding £60 for every day after the day on which the failure has been declared by a court or the Special Commissioners and before the day on which the return is made. (2) A person who fails to comply with a notice under section 219 above shall be liable— (a) to a penalty not exceeding £300; and (b) to a further penalty not exceeding £60 for every day after the day on which the failure has been declared by a court or the Special Commissioners and before the day on which the notice is complied with. (3) A person who fails to comply with a notice under section 219A(1) or (4) above shall be liable— (a) to a penalty not exceeding £50; and (b) to a further penalty not exceeding £30 for every day after the day on which the failure has been declared by a court or the Special Commissioners and before the day on which the notice is complied with. (4) A person shall not be liable to a penalty under subsection (1)(b), (2)(b) or (3)(b) above if— (a) he makes the return required by section 218 above, (b) he complies with the notice under section 219 above, or (c) he complies with the notice under section 219A(1) or (4) above, before proceedings in which the failure could be declared are commenced. (5) A person who has a reasonable excuse for failing to make a return or to comply with a notice shall not be liable by reason of that failure to a penalty under this section, unless he fails to make the return or to comply with the notice without unreasonable delay after the excuse has ceased.

• (2) In section 247 of that Act (provision of incorrect information)—

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

• (b) in subsection (3), for “£500” and “£250” there shall be substituted “ £3,000 ” and “ £1,500 ” respectively; and

• (c) in subsection (4), for “£500” there shall be substituted “ £3,000 ”.

• (3) Subsection (1) above does not have effect in relation to a failure by any person—

• (a) to deliver an account under section 216 or 217 of the Inheritance Tax Act 1984,

• (b) to make a return under section 218 of that Act, or

• (c) to comply with a notice under section 219 of that Act,

where the period within which the person is required to perform the obligation in question expires before the day on which this Act is passed.

• (4) Subsection (2) above has effect in relation to incorrect accounts, information or documents delivered, furnished or produced on or after the day on which this Act is passed.

Part VI — Stamp duty and stamp duty reserve tax

Stamp duty

Interest and penalties on late stamping

109

• (1) For section 15 of the Stamp Act 1891 (penalty upon stamping instruments after execution) substitute—

(15) (1) An unstamped or insufficiently stamped instrument may be stamped after being executed on payment of the unpaid duty and any interest or penalty payable. (2) Any interest or penalty payable on stamping shall be denoted on the instrument by a particular stamp. (15A) (1) Interest is payable on the stamping of an instrument which— (a) is chargeable withad valorem duty, and (b) is not duly stamped within 30 days after the day on which the instrument was executed (whether in the United Kingdom or elsewhere). (2) Interest is payable on the amount of the unpaid duty from the end of the period of 30 days mentioned in subsection (1)(b) until the duty is paid. If an amount is lodged with the Commissioners in respect of the duty, the amount on which interest is payable is reduced by that amount. (3) Interest shall be calculated at the rate applicable under section 178 of the Finance Act 1989 (power of Treasury to prescribe rates of interest). (4) The amount of interest shall be rounded down (if necessary) to the nearest multiple of £5. No interest is payable if that amount is less than £25. (5) Interest under this section shall be paid without any deduction of income tax and shall not be taken into account in computing income or profits for any tax purposes. (15B) (1) A penalty is payable on the stamping of an instrument which is not presented for stamping within 30 days after— (a) if the instrument is executed in the United Kingdom, the day on which it is so executed; (b) if the instrument is executed outside the United Kingdom, the day on which it is first received in the United Kingdom. (2) If the instrument is presented for stamping within one year after the end of the 30-day period mentioned in subsection (1), the maximum penalty is £300 or the amount of the unpaid duty, whichever is less. (3) If the instrument is not presented for stamping until after the end of the one-year period mentioned in subsection (2), the maximum penalty is £300 or the amount of the unpaid duty, whichever is greater. (4) The Commissioners may, if they think fit, mitigate or remit any penalty payable on stamping. (5) No penalty is payable if there is a reasonable excuse for the delay in presenting the instrument for stamping.

.

• (2) In section 178(2) of the Finance Act 1989 (enactments for purposes of which Treasury may prescribe rates of interest), before paragraph (a) insert—

(aa) section 15A of the Stamp Act 1891;

.

• (3) The consequential amendments in Schedule 12 to this Act have effect.

• (4) This section applies to instruments executed on or after 1st October 1999.

Interest on repayment of duty overpaid etc

110

• (1) A payment by the Commissioners to which this section applies shall be paid with interest at the rate applicable under section 178 of the Finance Act 1989 for the period between the relevant time (as defined below) and the date on which the order for the payment is issued.

• (2) This section applies to any repayment by the Commissioners of duty, or any penalty on late stamping, under the enactments relating to stamp duty.

In that case the relevant time is 30 days after the day on which the instrument in question was executed or, if later, the date on which the payment of duty or penalty was made.

• (3) This section applies to a repayment by the Commissioners of an amount lodged with them in respect of the duty payable on stamping an instrument if—

• (a) the instrument is presented for stamping,

• (b) the instrument is duly stamped, and

• (c) the repayment is of an amount then repayable.

In that case the relevant time is 30 days after the day on which the instrument was executed or, if later, the date on which the amount was lodged with the Commissioners.

• (4) This section also applies to a money payment made by the Commissioners under section 11 of the Stamp Duties Management Act 1891 (allowances for spoiled or misused stamps).

In that case the relevant time is the date on which the duty was paid for the stamp in respect of which the allowance is made.

• (5) A payment by the Commissioners under section 12A(2)(b) of that Act (allowances for lost or spoiled instruments) is treated for the purposes of this section as a repayment of the duty or penalty by reference to which it is made.

In that case the relevant time is the date on which the payment of duty or penalty was made.

• (6) No interest is payable under this section if the amount of the payment to which this section applies is less than £25.

• (7) No interest is payable under this section in respect of a payment made in consequence of an order or judgment of a court having power to allow interest on the payment.

• (8) Interest paid to any person under this section is not income of that person for any tax purposes.

• (9) In section 178(2) of the Finance Act 1989 (enactments for purposes of which Treasury may prescribe rates of interest), after paragraph (o) add—

, and (p) section 110 of the Finance Act 1999.

.

• (10) This section applies in relation to instruments executed on or after 1st October 1999.

Stamp duty on conveyance or transfer on sale

111

• (1) Section 55 of the Finance Act 1963 and section 4 of the Finance Act (Northern Ireland) 1963 (rates of stamp duty on conveyance or transfer on sale) are each amended as follows.

• (2) In subsection (1)(d) (rate of £2 for every £100 etc. where consideration does not exceed £500,000 and the instrument is certified at that amount) for “£2” substitute “ £2.50p ”.

• (3) In subsection (1)(e) (rate of £3 for every £100 etc. in cases not otherwise provided for) for “£3” substitute “ £3.50p ”.

• (4) This section applies to instruments executed on or after 16th March 1999, except where the instrument in question is executed in pursuance of a contract made on or before 9th March 1999.

• (5) This section shall be deemed to have come into force on 16th March 1999.

General amendment of charging provisions

112

• (1) The amount of any stamp duty chargeable ad valorem—

• (a) shall be a percentage of the amount specified in the relevant charging provision, and

• (b) shall be rounded up (if necessary) to the nearest multiple of £5.

• (2) The amount of every fixed stamp duty shall be £5.

• (3) The provisions of Schedule 13 to this Act have effect in place of Schedule 1 to the Stamp Act 1891, and certain related enactments, so far as they relate to the instruments (other than bearer instruments) chargeable to duty and the method of calculation and rates of duty.

• (4) The consequential amendments in Schedule 14 to this Act have effect.

• (5) The percentage rates specified in Schedule 13 and the enactments amended by Schedule 14 correspond to the rates of duty generally in force at the passing of this Act.

In the case of an instrument in relation to which there was then in force transitional provision in connection with an earlier change in the rate of duty having the effect that a different rate applied, the new or amended provisions have effect as if a reference to a percentage corresponding to that different rate were substituted.

• (6) This section has effect in relation to instruments executed on or after 1st October 1999.

Bearer instruments

113

• (1) The provisions of Schedule 15 to this Act have effect in place of the heading “Bearer Instruments” in Schedule 1 to the Stamp Act 1891, and certain related enactments, and incorporate amendments in relation to bearer instruments corresponding to those made by—

• section 109 (interest and penalties on late stamping),

• section 112 (general amendment of charging provisions), and

• Part I of Schedule 17 to this Act (amendments of penalties other than on late stamping).

• (2) The percentage rates specified in Schedule 15 correspond to the rates of duty generally in force at the passing of this Act.

In the case of an instrument in relation to which there was then in force transitional provision in connection with an earlier change in the rate of duty having the effect that a different rate applied, the new provisions have effect as if a reference to a percentage corresponding to that different rate were substituted.

• (3) The consequential amendments specified in Schedule 16 to this Act have effect.

• (4) This section applies in relation to bearer instruments issued on or after 1st October 1999.

Penalties other than on late stamping

114

• (1) The provisions of Schedule 17 to this Act (stamp duty: penalties other than on late stamping) have effect.

• (2) The provisions of that Schedule have effect in relation to penalties in respect of things done or omitted on or after 1st October 1999.

Minor amendments and repeal of obsolete provisions

115

Schedule 18 to this Act (stamp duty: minor amendments and repeal of obsolete provisions) has effect.

Stamp duty reserve tax

Non-sterling bearer instruments issued in connection with merger or takeover

116

• (1) In section 95 of the Finance Act 1986 (exceptions from charge on entry into depositary receipt system), for subsection (2) (bearer instruments) substitute—

(2) There shall be no charge to tax under section 93 above in respect of a transfer, issue or appropriation of an inland bearer instrument, within the meaning of the heading “Bearer Instrument” in Schedule 1 to the Stamp Act 1891, except in the case of— (a) an instrument within exemption 3 in that heading (renounceable letters of allotment etc. where rights are renounceable not later than six months after issue); or (b) an instrument within the stamp duty exemption for non-sterling instruments which is issued in connection with a company merger or takeover (whether or not involving the company issuing the instrument). In paragraph (b) “the stamp duty exemption for non-sterling instruments” means the exemption from stamp duty provided for by section 30 of the Finance Act 1967 or section 7 of the Finance Act (Northern Ireland) 1967.

.

• (2) In section 97 of the Finance Act 1986 (exceptions from charge on entry into clearance system), for subsection (3) (bearer instruments) substitute—

(3) There shall be no charge to tax under section 96 above in respect of a transfer or issue of an inland bearer instrument, within the meaning of the heading “Bearer Instrument” in Schedule 1 to the Stamp Act 1891, except in the case of— (a) an instrument within exemption 3 in that heading (renounceable letters of allotment etc. where rights are renounceable not later than six months after issue); or (b) an instrument within the stamp duty exemption for non-sterling instruments which is issued in connection with a company merger or takeover (whether or not involving the company issuing the instrument). In paragraph (b) “the stamp duty exemption for non-sterling instruments” means the exemption from stamp duty provided for by section 30 of the Finance Act 1967 or section 7 of the Finance Act (Northern Ireland) 1967.

.

• (3) This section applies to any instrument issued on or after 30th January 1999, except one giving effect to an agreement for a company merger or takeover entered into in writing by the companies involved before that date.

Scope of exceptions for certain bearer instruments

117

• (1) In section 95(2) of the Finance Act 1986 (bearer instruments excepted from charge on entry into depositary receipt system), for paragraph (b) (one of the categories of instrument to which the exception does not apply) substitute—

(b) an instrument within the stamp duty exemption for non-sterling instruments which— (i) does not raise new capital, and (ii) is not issued in exchange for an instrument raising new capital.

.

• (2) After that subsection insert—

(2A) For the purpose of subsection (2)(b)— (a) an instrument is regarded as raising new capital only if the condition in subsection (2B) is met, and (b) an instrument is regarded as issued in exchange for an instrument raising new capital only if the conditions in subsection (2C) are met. (2B) The condition mentioned in subsection (2A)(a) is that the instrument— (a) is issued in conjunction with— (i) the issue of relevant securities for which only cash is subscribed, or (ii) the granting of rights to subscribe for relevant securities which are granted for a cash consideration only and exercisable only by means of a cash subscription; or (b) is issued to give effect to the exercise of such rights as are mentioned in paragraph (a)(ii). (2C) The conditions mentioned in subsection (2A)(b) are that— (a) the instrument is issued in conjunction with the issue of relevant securities by a company in exchange for relevant securities issued by another company, and (b) immediately before the exchange an instrument relating to those other securities— (i) was regarded for the purposes of subsection (2)(b) as raising new capital or as issued in exchange for an instrument raising new capital, or (ii) would have been so regarded if the amendments made to this section by section 117 of the Finance Act 1999 had been in force at the time of its issue, and accordingly was or would have been within the exception conferred by subsection (2). (2D) For the purposes of subsections (2B) and (2C) “relevant securities” means chargeable securities which are either— (a) shares the holders of which have a right to a dividend at a fixed rate but have no other right to share in the profits of the company, or (b) loan capital within the meaning of section 78 above, and which, in either case, do not carry any rights (of conversion or otherwise) by the exercise of which chargeable securities other than relevant securities may be obtained.

.

• (3) For subsection (6) of that section substitute—

(6) Where an arrangement is entered into under which— (a) a company issues securities to persons in respect of their holdings of securities issued by another company, and (b) the securities issued by the other company are cancelled, the issue shall be treated for the purposes of this section as an issue of securities in exchange for securities issued by the other company.

.

• (4) In section 97(3) of that Act (bearer instruments excepted from charge on entry into clearance system), for paragraph (b) (one of the categories of instrument to which the exception does not apply) substitute—

(b) an instrument within the stamp duty exemption for non-sterling instruments which— (i) does not raise new capital, and (ii) is not issued in exchange for an instrument raising new capital.

.

• (5) After that subsection insert—

(3A) For the purpose of subsection (3)(b)— (a) an instrument is regarded as raising new capital only if the condition in subsection (3B) is met, and (b) an instrument is regarded as issued in exchange for an instrument raising new capital only if the conditions in subsection (3C) are met. (3B) The condition mentioned in subsection (3A)(a) is that the instrument— (a) is issued in conjunction with— (i) the issue of relevant securities for which only cash is subscribed, or (ii) the granting of rights to subscribe for relevant securities which are granted for a cash consideration only and exercisable only by means of a cash subscription; or (b) is issued to give effect to the exercise of such rights as are mentioned in paragraph (a)(ii). (3C) The conditions mentioned in subsection (3A)(b) are that— (a) the instrument is issued in conjunction with the issue of relevant securities by a company in exchange for relevant securities issued by another company, and (b) immediately before the exchange an instrument relating to those other securities— (i) was regarded for the purposes of subsection (3)(b) as raising new capital or as issued in exchange for an instrument raising new capital, or (ii) would have been so regarded if the amendments made to this section by section 117 of the Finance Act 1999 had been in force at the time of its issue, and accordingly was or would have been within the exception conferred by subsection (3). (3D) For the purposes of subsections (3B) and (3C) “relevant securities” means chargeable securities which are either— (a) shares the holders of which have a right to a dividend at a fixed rate but have no other right to share in the profits of the company, or (b) loan capital within the meaning of section 78 above, and which, in either case, do not carry any rights (of conversion or otherwise) by the exercise of which chargeable securities other than relevant securities may be obtained.

.

• (6) For subsection (7) of that section substitute—

(7) Where an arrangement is entered into under which— (a) a company issues securities to persons in respect of their holdings of securities issued by another company, and (b) the securities issued by the other company are cancelled, the issue shall be treated for the purposes of this section as an issue of securities in exchange for securities issued by the other company.

.

• (7) Subsections (1) to (6) above apply in relation to any instrument issued on or after 9th March 1999, except one giving effect to an agreement for a company merger or takeover entered into in writing by the companies involved before 30th January 1999.

Relief in case of certain replacement securities

118

• (1) After section 95 of the Finance Act 1986 (depositary receipts: exceptions) insert—

(95A) (1) There shall be no charge to tax under section 93 above in respect of the transfer, issue or appropriation of chargeable securities (“the new securities”) issued by a company in place of existing securities of the same company (“the old securities”) if the following conditions are met. (2) The first condition is that the old securities are held under a depositary receipt scheme. (3) The second condition is that— (a) there was a charge to tax under section 93 above in respect of the transfer, issue or appropriation— (i) of the old securities, or (ii) of earlier securities in relation to which on a previous application of this section those securities were the new securities, or there would have been such a charge if that section had been in force; or (b) there would have been such a charge but for section 95(2) or (3) above. (4) The third condition is that there is an arrangement under which— (a) the new securities are transferred, issued or appropriated as mentioned in section 93(1)(b), and (b) the old securities are cancelled. (5) For the purposes of subsection (2) above the cases in which securities are held under a depositary receipt scheme are those specified (in relation to shares) in section 95(5) above. (6) The exception provided by this section applies only to the extent that the value of the new securities immediately after their issue does not exceed the value of the old securities immediately before the issue of the new securities.

.

• (2) In section 99(10) of that Act (meaning of “chargeable securities”), after “95,” insert “ 95A, ”.

• (3) After section 97 of that Act (clearance services: exceptions) insert—

(97AA) (1) There shall be no charge to tax under section 96 above in respect of the transfer or issue of chargeable securities (“the new securities”) issued by a company in place of existing securities of the same company (“the old securities”) if the following conditions are met. (2) The first condition is that the old securities are held under a clearance services scheme. (3) The second condition is that— (a) there was a charge to tax under section 96 above in respect of the transfer or issue— (i) of the old securities, or (ii) of earlier securities in relation to which on a previous application of this section those securities were the new securities, or there would have been such a charge if that section had been in force; or (b) there would have been such a charge but for section 97(3) or (4) above. (4) The third condition is that there is an arrangement under which— (a) the new securities are transferred or issued as mentioned in section 96(1)(b), and (b) the old securities are cancelled. (5) For the purposes of subsection (2) above the cases in which securities are held under a clearance services scheme are those specified (in relation to shares) in section 97(6) above. (6) The exception provided by this section applies only to the extent that the value of the new securities immediately after their issue does not exceed the value of the old securities immediately before the issue of the new securities.

.

• (4) In section 99(10) of that Act (meaning of “chargeable securities”), after “97” insert “ , 97AA ”.

• (5) This section applies in relation to securities issued on or after 1st May 1998.

Power to exempt UK depositary interests in foreign securities

119

• (1) The Treasury may by regulations make provision excluding from the definition of “chargeable securities” in Part IV of the Finance Act 1986 such rights in or in relation to securities as, in accordance with the regulations, are to be treated as exempt UK depositary interests in foreign securities.

• (2) Subject to subsection (3), the regulations may—

• (a) define “depositary interest”, “UK depositary interest” and “foreign securities” for this purpose; and

• (b) exempt such descriptions of UK depositary interests in foreign securities (as so defined) as may from time to time be specified in the regulations.

• (3) The regulations shall not make provision for the exemption of a depositary interest unless the terms of issue of the interest are such that it can only be transferred in accordance with regulations under section 785 of the Companies Act 2006 (transfer of securities without written instrument) or by means of a transfer within section 186(1) of the Finance Act 1996 (transfer of securities to member of electronic transfer system).

• (4) The regulations may contain such incidental, supplementary, consequential and transitional provision as appears to the Treasury to be appropriate.

This may include provision modifying the enactments relating to stamp duty reserve tax for the purpose of giving effect to the exemption conferred by regulations under this section (or, where earlier regulations are varied or revoked, withdrawing an exemption formerly conferred).

• (5) Regulations under this section may make different provision for different cases.

• (6) Regulations under this section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of the House of Commons.

Minor amendments of exceptions to general charge

120

• (1) Section 90 of the Finance Act 1986 (exceptions from the general charge to stamp duty reserve tax) is amended as follows.

• (2) In subsection (3F)(c) (conditions of exception under subsection (3E)) for “securities which are not listed” substitute “ chargeable securities which are not listed ”.

• (3) In subsection (5) for “by a person” substitute “ for the purposes of a business ”; and in subsection (6) for “A person is within this subsection if his business is exclusively” substitute “ A business is within this subsection if, or so far as, it consists of ”.

• (4) Subsection (2) above applies to instruments issued on or after 9th March 1999.

• (5) Subsection (3) above applies to agreements to transfer securities made on or after 9th March 1999.

Power to make regulations with respect to administration, etc

121

• (1) The following provisions have effect with respect to the power conferred on the Treasury by section 98(1) of the Finance Act 1986 (stamp duty reserve tax: regulations with respect to administration, etc.).

• (2) That power includes power to make provision—