Finance Act 2002

Part 1 — Excise duties

Tobacco products duty

Rates of tobacco products duty

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• (1) For the Table of rates of duty in Schedule 1 to the Tobacco Products Duty Act 1979 (c. 7) substitute—

1. Cigarettes	An amount equal to 22 per cent of the retail price plus £94.24 per thousand cigarettes.
2. Cigars	£137.26 per kilogram.
3. Hand-rolling tobacco	£98.66 per kilogram.
4. Other smoking tobacco and chewing tobacco	£60.34 per kilogram.

• (2) This section shall be deemed to have come into force at 6 o’clock in the evening of 17th April 2002.

Alcoholic liquor duties

Cars registered on or after 1st March 2001: rates of duty

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• (1) In section 62(1A) of the Alcoholic Liquor Duties Act 1979 (c. 4) (rates of duty on cider)—

• (a) in paragraph (b) (rate of duty per hectolitre in the case of cider of a strength exceeding 7.5 per cent that is not sparkling cider), for “£39.21” substitute “ £38.43 ”;

• (b) in paragraph (c) (rate of duty per hectolitre in any other case), for “£26.13” substitute “ £25.61 ”.

• (2) This section shall be deemed to have come into force on 28th April 2002.

Invoices

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• (1) Omit section 1(9) of the Alcoholic Liquor Duties Act 1979 (under which alcoholic beverages of a strength between 1.2 and 5.5 per cent made with spirits are treated as not being spirits, unless of a description specified by Treasury order).

• (2) This section shall be deemed to have come into force on 28th April 2002.

Shares acquired on same day: election for alternative treatment

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• (1) Schedule 1 to this Act (which makes provision for the excise duty on beer to be charged at reduced rates on beer produced in small breweries) has effect.

• (2) Subject to subsection (3), subsection (1) shall be deemed to have come into force on 1st June 2002.

• (3) So far as relating to—

• (a) the insertion by paragraph 2 of that Schedule of the new section 36H of the Alcoholic Liquor Duties Act 1979, and

• (b) paragraph 3 of that Schedule,

subsection (1) comes into force on the day on which this Act is passed.

Hydrocarbon oil duties

Gifts of real property to charity

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• (1) The Hydrocarbon Oil Duties Act 1979 (c. 5) is amended as follows.

• (2) After section 2 insert—

(2AA) (1) In this Act “biodiesel” means diesel quality liquid fuel— (a) that is produced from biomass or waste cooking oil, (b) the ester content of which is not less than 96.5% by weight, and (c) the sulphur content of which does not exceed 0.005% by weight or is nil. (2) In subsection (1)— (a) “diesel quality” means capable of being used for the same purposes as heavy oil; (b) “liquid” does not include any substance that is gaseous at a temperature of 15°C and under a pressure of 1013.25 millibars; (c) “biomass” means vegetable and animal substances constituting the biodegradable fraction of— (i) products, wastes and residues from agriculture, forestry and related activities, or (ii) industrial and municipal waste.

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

• (4) After section 6 (excise duty on hydrocarbon oil) insert—

(6AA) (1) A duty of excise shall be charged on the setting aside for a chargeable use by any person, or (where it has not already been charged under this section) on the chargeable use by any person, of biodiesel. (2) In subsection (1) “chargeable use” means use— (a) as fuel for any engine, motor or other machinery, or (b) as an additive or extender in any substance so used. (3) The rate of duty under this section shall be £0.2582 a litre. (6AB) (1) A duty of excise shall be charged on bioblend— (a) imported into the United Kingdom, or (b) produced in the United Kingdom and delivered for home use from a refinery or from other premises used for the production of hydrocarbon oil or from any bonded storage for hydrocarbon oil, not being bioblend chargeable with duty under paragraph (a) above. This is subject to subsection (6) below. (2) In this Act “bioblend” means any mixture that is produced by mixing— (a) biodiesel, and (b) heavy oil not charged with the excise duty on hydrocarbon oil. (3) The rate at which the duty shall be charged on any bioblend shall be a composite rate representing— (a) in respect of the proportion of the bioblend that is hydrocarbon oil, the rate that would be applicable to the bioblend if it consisted entirely of heavy oil of the description that went into producing the bioblend, and (b) in respect of the proportion of the bioblend that is biodiesel, the rate that would be applicable to the bioblend if it consisted entirely of biodiesel. (4) The references in subsection (3) above to the proportions of— (a) hydrocarbon oil, and (b) biodiesel, are to the proportions by volume to the nearest 0.001%. (5) If the Commissioners are not satisfied as to the proportion of biodiesel in any bioblend, the rate of duty chargeable shall be the rate that would be applicable to the bioblend if it consisted entirely of heavy oil of the description that went into producing the bioblend. (6) Where imported bioblend is removed to a refinery, the duty chargeable under subsection (1) above shall, instead of being charged at the time of the importation of the bioblend, be charged on the delivery of any goods from the refinery for home use and shall be the same as that which would be payable on the importation of like goods. (6AC) (1) The Commissioners may by regulations provide for— (a) references in this Act, or specified references in this Act, to hydrocarbon oil to be construed as including references to— (i) biodiesel; (ii) bioblend; (b) references in this Act, or specified references in this Act, to duty on hydrocarbon oil to be construed as including references to duty under— (i) section 6AA above; (ii) section 6AB above; (c) biodiesel, or bioblend, to be treated for the purposes of such of the following provisions of this Act as may be specified as if it fell within a specified description of hydrocarbon oil. (2) Where the effect of provision made under subsection (1) above is to extend any power to make regulations, provision made in exercise of the power as extended may be contained in the same statutory instrument as the provision extending the power. (3) In this section “specified” means specified by regulations under this section. (4) Regulations under this section may make different provision for different cases. (5) Paragraph (b) of subsection (1) above shall not be taken as prejudicing the generality of paragraph (a) of that subsection.

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• (5) Schedule 2 to this Act contains minor and consquential amendments of the Hydrocarbon Oil Duties Act 1979 (c. 5).

• (6) Subsection (4), and subsection (5) so far as relating to paragraphs 2 and 4(1) of that Schedule, have effect in relation to biodiesel that—

• (a) is set aside for chargeable use (as defined in the section 6AA inserted by subsection (4)) after such date as the Commissioners of Customs and Excise may by order made by statutory instrument appoint, or

• (b) not having been so set aside, is the subject of such chargeable use after that date,

and has not been set aside for chargeable use under section 6A of that Act (fuel substitutes) on or before that date.

• (7) Subsection (4), and subsection (5) so far as relating to paragraph 2 of that Schedule, have effect in relation to bioblend that—

• (a) is imported into the United Kingdom after the date appointed under subsection (6)(a), or

• (b) not having been so imported—

• (i) is produced in the United Kingdom and delivered for home use after that date, and

• (ii) has not been set aside for chargeable use under section 6A of that Act (fuel substitutes) on or before that date.

• (8) Subsection (5)—

• (a) so far as relating to paragraph 3 of that Schedule, comes into force on the day after the date appointed under subsection (6)(a),

• (b) so far as relating to paragraph 5 of that Schedule, applies to mixtures produced after the date appointed under subsection (6)(a), and

• (c) so far as relating to paragraph 7 of that Schedule, comes into force on such day as the Commissioners of Customs and Excise may by order made by statutory instrument appoint.

Regulating trade in rebated heavy oil etc

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• (1) Schedule 3 to this Act has effect.

• (2) In that Schedule—

• Part 1 makes provision for regulating trade in certain heavy oil on which rebate of excise duty has been allowed, and

• Part 2 amends provisions of the Hydrocarbon Oil Duties Act 1979 relating to rebates.

• (3) Subject to subsection (4), subsection (1) so far as relating to paragraph 1 of that Schedule shall not come into force until such day as the Commissioners of Customs and Excise may appoint by order made by statutory instrument.

• (4) For the purpose of the exercise of any power to make regulations, subsection (1) so far as relating to that paragraph comes into force on the day on which this Act is passed.

The Finance Act 1994

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• (1) In section 6A of the Hydrocarbon Oil Duties Act 1979 (c. 5) (fuel substitutes)—

• (a) in subsection (5) (power to provide that fuel substitute to be treated as if it were a description of hydrocarbon oil), for the words from “the description of such one or more of the following” to the end substitute “ such description of hydrocarbon oil as may be so specified ”;

• (b) in subsection (6)(a) (power to be exercised so that fuel substitute charged with duty and otherwise treated as if it were description of hydrocarbon oil to which it is most closely equivalent), for “the substance falling within the descriptions specified in subsection (5) above” substitute “ hydrocarbon oil of the description ”.

• (2) In section 10 of the Finance Act 1993 (c. 34) (mineral oil fuel substitutes)—

• (a) in subsection (2) (power to provide that mineral oil fuel substitute to be treated as if it were a particular description of hydrocarbon oil), for the words from “the description of such one or more of the following” to the end substitute “ such description of hydrocarbon oil as may be so specified ”;

• (b) in subsection (3) (power to be exercised so that mineral oil fuel substitute treated as if it were description of hydrocarbon oil to which it is most closely equivalent), for “the substance falling within the descriptions specified in subsection (2) above” substitute “ hydrocarbon oil of the description ”.

Betting and gaming duties

Commercial exploitation

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• (1) Section 21 of the Betting and Gaming Duties Act 1981 (c. 63) (amusement machine licences) is amended as follows.

• (2) In subsection (3A) (excepted machines), for paragraphs (c) and (d) (certain thirty-five penny machines and video machines) substitute—

(c) a fifty-penny machine that is not a gaming machine.

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• (3) For subsection (3B) substitute—

(3B) For the purposes of this section an amusement machine is a fifty-penny machine if, and only if— (a) where it is a machine on which a game can be played solo, the price for a solo game does not exceed 50p; and (b) where it is a machine on which a game can be played by more than one person at a time, the price to participate in such a game does not exceed 50p.

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• (4) In subsection (3C) (definition of the price for a solo game), for “35p”, in both places where it occurs, substitute “ 50p ”.

• (5) In section 25 of that Act (definition of different types of machine), in subsections (4) and (6) (treatment of machines capable of being played by more than one person at a time), for “an excepted video machine falling within section 21(3A)(d) above” substitute “ a fifty-penny machine within section 21(3B) above ”.

• (6) This section has effect in relation to the provision of an amusement machine at any time on or after 1st May 2002.

Partnerships involving companies

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• (1) In the Table in section 23(2) of the Betting and Gaming Duties Act 1981 (c. 63) (rates of amusement machine licence duty), for column (4) (medium-prize machines other than five-penny machines) and column 6 (machines not in any other category) substitute—

(4)	(6)
Category C	Category E
£	£
80	225
160	435
235	630
305	820
370	990
430	1155
485	1300
535	1440
585	1560
625	1675
665	1775
695	1860

• (2) This section applies in relation to any amusement machine licence for which an application is received by the Commissioners of Customs and Excise after 30th April 2002.

Limits on credit: corporation tax

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• (1) For the Table in section 11(2) of the Finance Act 1997 (c. 16) (rates of gaming duty) substitute—

Part of gross gaming yield	Rate
The first £488,000	2.5 per cent.
The next £1,083,500	12.5 per cent.
The next £1,083,500	20 per cent.
The next £1,897,000	30 per cent.
The remainder	40 per cent.

• (2) This section has effect in relation to accounting periods beginning on or after 1st April 2002.

Exchange gains and losses where derivative contracts not on arm’s length terms

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Profits arising from derivative contracts

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• (1) Schedule 4 to this Act has effect.

• (2) In that Schedule, Part 1—

• makes provision about pool betting duty, and

• provides for coupon betting to cease to be subject to pool betting duty but to be subject to general betting duty instead,

and Part 2 contains minor amendments and transitional provisions.

• (3) The amendments made by paragraph 2 of that Schedule have effect for the purposes of accounting periods beginning on or after 31st March 2002; but this does not apply to the substitution of the new regulation-making provisions.

• (4) The amendments made by paragraphs 3 and 4 of that Schedule apply to bets made on or after 31st March 2002.

• (5) Subsections (1) to (4) shall (subject to subsections (6) and (7)) be deemed to have come into force on 31st March 2002.

• (6) Subsection (1), so far as relating to paragraphs 5, 6(a) and (c), 7 to 9, 10(1), (2), (5) to (11), (13) and (14), 11, 12(1) and (3), 13 and 14 of Schedule 4 to this Act, shall be deemed to have come into force on 24th April 2002.

• (7) Subsection (1), so far as relating to—

• (a) the substitution of the new regulation-making provisions by paragraph 2 of that Schedule, and

• (b) paragraphs 10(3), (4) and (12) and 12(2) of that Schedule,

comes into force on the day on which this Act is passed; but the powers conferred by the new regulation-making provisions are exercisable only as respects accounting periods beginning after that day.

• (8) In this section “the new regulation-making provisions” means the following new provisions of the Betting and Gaming Duties Act 1981 (c. 63)—

• section 7D(6) to (8),

• section 7E(4) and (5),

• section 7F(6) and (7),

• section 8(3) and (4), and

• section 8B(1)(b) and (2).

Carry back of net losses on derivative contracts to which paragraph 45A applies

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Contracts becoming held for purposes of trade

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• (1) In Part 1 of the Betting and Gaming Duties Act 1981 (betting duties), after section 9 (prohibitions for protection of revenue) insert—

(9A) (1) A person shall be guilty of an offence if— (a) he knowingly issues, circulates or distributes in the United Kingdom, or has in his possession for that purpose, any advertisement or other document inviting the use of or otherwise relating to bet-broking services, and (b) any person providing any of the bet-broking services concerned— (i) is outside the United Kingdom, and (ii) provides them in the course of a business. (2) In this section “bet-broking services” means— (a) facilities provided by a person that may be used by other persons in making bets with third persons, or (b) a person’s services of acting as agent for other persons in making bets on their behalf with third parties (whether the persons on whose behalf the bets are made are disclosed principals or undisclosed principals). (3) In subsection (2) “bet” means a bet other than one made by way of pool betting. (4) A person who gets or tries to get any advertisement or other document given or sent to him shall not be guilty of an offence by reason of his thereby procuring or inciting some other person to commit, or aiding or abetting the commission of, an offence under this section.

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• (2) After section 9A of that Act (inserted by subsection (1) above) insert—

(9B) (1) This section applies where a person is guilty of an offence under section 9 or 9A (a “relevant offence”). (2) In the case of the person’s first conviction for a relevant offence, he is liable— (a) on summary conviction to a penalty of the prescribed sum, or (b) on conviction on indictment to a penalty of any amount. (3) In the case of a second or subsequent conviction of the person for a relevant offence, he is liable— (a) on summary conviction to a penalty of the prescribed sum or to imprisonment for a term not exceeding three months or to both, or (b) on conviction on indictment to a penalty of any amount or to imprisonment for a term not exceeding one year or to both.

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• (3) Omit section 9(4) of that Act (penalties for offences under section 9).