Finance Act 2004

abatement	section 279(1)
accounting period	section 834(1) of ICTA
acquiring an interest in property (for the purposes of the taxable property provisions)	paragraphs 12 and 27 to 29 of Schedule 29A
active member (of a pension scheme)	section 151(2)
. . .	. . .
additional rate	section 6(2) of ITA 2007 (as applied by section 989 of that Act)
. . .	. . .
annual allowance	section 228
annual allowance charge	section 227(1)
annuity protection lump sum death benefit	paragraph 16 of Schedule 29
arrangement	section 152(1)
authorised surplus payment	section 177
. . .	. . .
basic rate	section 6(2) of ITA 2007 (as applied by section 989 of that Act)
basic rate limit	section 10 of ITA 2007 (as applied by section 989 of that Act)
benefits (provided by pension scheme)	section 279(2)
. . .	. . .
the Board of Inland Revenue	section 279(1)
borrowing (in Chapter 3)	section 163
building (for the purposes of the taxable property provisions)	paragraph 7(2) of Schedule 29A
cash balance arrangement	section 152(3)
cash balance benefits	section 152(5)
chargeable gain	section 989 of ITA 2007
charity	section 989 of ITA 2007
. . .	. . .
CMP periodic income	section 279(1G)
collective money purchase arrangement	section 152(3A)
collective money purchase benefits	section 152(5A)
company	section 992 of ITA 2007
compensation payment	section 178
consumer prices index	section 279(1)
contribution	sections188(4) to (6) and 195
defined benefits	section 152(7)
defined benefits arrangement	section 152(6)
defined benefits lump sum death benefit	paragraph 13 of Schedule 29
. . .	. . .
dependant (of a member of a registered pension scheme)	paragraph 15 of Schedule 28
dependants' annuity	paragraph 17 of Schedule 28
dependant's flexi-access drawdown fund	paragraph 22A of Schedule 28
dependants' scheme pension	paragraph 16 of Schedule 28
dependants' short-term annuity	paragraph 20 of Schedule 28
. . .	. . .
dependant's drawdown pension fund	paragraph 22 of Schedule 28
disqualifying pension credit	section 278A
dormant (in relation to a body corporate)	section 279(1E)
drawdown pension fund lump sum death benefit	paragraph 17 of Schedule 29
employee and employer (and employment)	section 279(1)
employment income	section 7(2) of ITEPA 2003
enhanced lifetime allowance regulations	section 256(2)
entitled (in relation to a lump sum)	section 166(2)
entitled (in relation to a pension)	section 165(3)
flexi-access drawdown fund lump sum death benefit	paragraph 17A of Schedule 29
higher rate	section 6(2) of ITA 2007 (as applied by section 989 of that Act)
higher rate limit	section 10 of ITA 2007
holding an interest in a person (for the purposes of the taxable property provisions)	paragraph 16(2) to (4) of Schedule 29A
holding an interest in property (for the purposes of the taxable property provisions)	paragraph 13 of Schedule 29A
holding directly an interest in a vehicle (for the purposes of the taxable property provisions)	paragraph 20(3) of Schedule 29A
holding directly an interest in property (for the purposes of the taxable property provisions)	paragraphs 14 and 15 of Schedule 29A
holding indirectly an interest in a vehicle (for the purposes of the taxable property provisions)	paragraph 20(4) of Schedule 29A
holding indirectly an interest in property (for the purposes of the taxable property provisions)	paragraph 16(1) of Schedule 29A
hybrid arrangement	section 152(8)
ill-health condition	paragraph 1 of Schedule 28
the individual (in sections 215 to 219)	section 214(5)
the Inland Revenue	section 279(1)
insurance company	section 275
investment-regulated pension scheme (for the purposes of the taxable property provisions)	paragraphs 1 to 3 of Schedule 29A
investments (in relation to a pension scheme)	section186(3) and (4)
liability (in Chapter 3)	section 163
. . .	. . .
. . .	. . .
. . .	. . .
. . .	. . .
lifetime annuity	paragraph 3 of Schedule 28
loan (in Chapter 3)	section 162
lump sum death benefit	section 168(2)
market value	section 278
Master Trust scheme	section 279(1B) and (1C)
member (of a pension scheme)	section 151(1)
. . .	. . .
member's drawdown pension fund	paragraph 8 of Schedule 28
member's flexi-access drawdown fund	paragraph 8A of Schedule 28
member’s unsecured pension fund	paragraph 8 of Schedule 28
money purchase arrangement	section 152(2)
money purchase benefits	section 152(4)
net income	section 23 of ITA 2007 (as applied by section 989 of that Act),
net pay pension scheme	section 191(9)
nominee (of a member of a registered pension scheme)	paragraph 27A of Schedule 28
nominees' annuity	paragraph 27AA of Schedule 28
nominees' drawdown pension	paragraph 27B of Schedule 28
nominee's flexi-access drawdown fund	paragraph 27E of Schedule 28
nominees' income withdrawal	paragraph 27D of Schedule 28
nominees' short-term annuity	paragraph 27C of Schedule 28
normal minimum pension age	section 279(1)
occupational pension scheme	section 150(5)
. . .	. . .
overseas pension scheme	section 150(7)
payment (in Chapter 3)	section 161
payments (made by pension scheme)	section 279(2)
pension	section 165(2)
pensionable age	section 279(1)
pension commencement excess lump sum	paragraph 3C of Schedule 29
pension commencement lump sum	paragraph 1of Schedule 29
pension credit and pension debit	section 279(1)
pension death benefit	section 167(2)
pension input amount	section 229
pension input period	sections 238 to 238ZB
pension protection lump sum death benefit	paragraph 14 of Schedule 29
pension scheme	section 150(1)
the pension scheme (in sections 215 to 219)	section 214(5)
pension sharing order or provision	section 279(1)
pensioner member (of a pension scheme)	section 151(3)
period of account	section 989 of ITA 2007
personal representatives	section 989 of ITA 2007
property investment LLP	section 1004 of ITA 2007
public service pension scheme	section 150(3)
qualifying recognised overseas pension scheme	section 169(2)
recognised overseas pension scheme	section 150(8)
. . .	. . .
registered pension scheme	section 150(2)
related dependants' annuity	section 278B(1)
related nominees' annuity	section 278B(2)
related dependants' scheme pension	“section 278B(3)
. . .	. . .
relevant UK earnings	section 189(2)
relevant UK individual	section 189
relevant valuation factor	section 276
relievable pension contributions	section 188(2) and (3)
residential property (for the purposes of the taxable property provisions)	paragraphs 7(1), 8 and 9 of Schedule 29A
retail prices index	section 989 of ITA 2007
scheme administrator	section 270 (but see also sections 271 to 274)
scheme chargeable payment	section 241
scheme-held taxable property	section 185B(3)
scheme manager	section 169(3)
scheme pension	paragraph 2 of Schedule 28
scheme sanction charge	section 239(1)
. . .	. . .
. . .	. . .
. . .	. . .
Scottish taxpayer	section 989 of ITA 2007
serious ill-health lump sum	paragraph 4 of Schedule 29
. . .	. . .
short service refund lump sum	paragraph 5 of Schedule 29
short service refund lump sum charge	section 205(1)
short-term annuity	paragraph 6 of Schedule 28
special lump sum death benefits charge	section 206
sponsoring employer	section 150(6)
. . .	. . .
successor (of a member of a registered pension scheme)	paragraph 27F of Schedule 28
successors' annuity	paragraph 27FA of Schedule 28
successors' drawdown pension	paragraph 27G of Schedule 28
successor's flexi-access drawdown fund	paragraph 27K of Schedule 28
successors' income withdrawal	paragraph 27J of Schedule 28
successors' short-term annuity	paragraph 27H of Schedule 28
sums and assets held for the purposes of an arrangement	section 279(3)
sums and assets held for the purposes of an arrangement (for the purposes of the taxable property provisions)	paragraph 5 of Schedule 29A
taxable property (for the purposes of the taxable property provisions)	paragraphs 6, 10 and 11 of Schedule 29A
the taxable property provisions	paragraph 1(3) of Schedule 29A
tax year	section 4(2) of ITA 2007 (as applied by section 989 of that Act)
the tax year 2006-07 etc.	section 4(4) of ITA 2007 (as applied by section 989 of that Act)
total income	section 23 of ITA 2007 (as applied by section 989 of that Act)
total pension input amount	section 229
. . .	. . .
. . .	. . .
trivial commutation lump sum	paragraph 7 of Schedule 29
unauthorised employer payment	section 160(4)
unauthorised (in relation to a Master Trust scheme)	section 279(1D)
unauthorised member payment	section 160(2)
unauthorised payment	section 160(5)
unauthorised payments charge	section 208(1)
unauthorised payments surcharge	section 209(1)
uncrystallised funds lump sum death benefit	paragraph 15 of Schedule 29
uncrystallised funds pension lump sum	paragraph 4A of Schedule 29
. . .	. . .
valuation assumptions (in relation to a person)	section 277
vehicle (in the taxable property provisions)	paragraph 20(2) of Schedule 29A
winding-up lump sum	paragraph 10 of Schedule 29
. . .	. . .

Other supplementary provisions

Minor and consequential amendments

281

• (1) Schedule 35 contains minor and consequential amendments of enactments in consequence of, or otherwise in connection with, this Part.

• (2) The Treasury may by order make such other amendments (including repeals and revocations) as may appear appropriate in consequence of, or otherwise in connection with, this Part—

• (a) in any enactment contained in an Act passed before 6th April 2006 or in the Session in which that date falls, and

• (b) in any instrument made before that date or in the Session in which that date falls.

• (2A) The Treasury may by order make in any relevant enactment such amendments (including repeals and revocations) as may appear appropriate in consequence of, or otherwise in connection with, any amendment (or repeal or revocation) made in this Part by any enactment contained in an Act passed after this Act (an “amending Act”).

• (2B) For this purpose a relevant enactment is—

• (a) an enactment contained in an Act passed, or

• (b) an instrument made,

before the passing of the amending Act or in the Session in which the amending Act is passed.

• (3) An order under subsection (2) or (2A) may include any transitional provisions or savings appearing to the Treasury to be appropriate.

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

Orders and regulations

282

• (A1) Any order or regulations made by the Treasury or the Commissioners for Her Majesty's Revenue and Customs under this Part may include provision having effect in relation to times before the order is, or regulations are, made if that provision does not increase any person's liability to tax.

• (A2) Subsection (A1) does not limit any specific power to make provision by an order or regulations in relation to times before the order is, or regulations are, made.

• (1) Any power of the Treasury or the Commissioners for Her Majesty's Revenue and Customs to make any order or regulations under this Part is exercisable by statutory instrument.

• (1A) No order may be made under section 208(6), 209(7), 215(2A), 237B(11), 240(3A) or 242(5), no order may be made under section 228(2) which specifies an amount for any tax year less than the annual allowance for the immediately preceding tax year and no order may be made under section 238A which increases any person's liability to tax unless a draft of the statutory instrument containing it has been laid before, and approved by a resolution of, the House of Commons.

• (2) Any statutory instrument containing any order or regulations made by the Treasury or the Commissioners for Her Majesty's Revenue and Customs under this Part , if made without a draft having been approved by a resolution of the House of Commons, is subject to annulment in pursuance of a resolution of the House of Commons.

• (3) Subsection (2) does not apply to an instrument containing only regulations under section 218(2D).

Transitionals and savings

283

• (1) Schedule 36 contains miscellaneous transitional provisions and savings.

• (2) The Treasury may by order make any other transitional provision which may appear appropriate in consequence of, or otherwise in connection with, this Part or the repeals made by this Act in consequence of this Part.

• (3) An order under subsection (2) may, in particular, include savings from the effect of any amendment made by this Part or any repeal made by this Act in consequence of this Part.

• (3A) The Treasury may by order make any transitional provision which may appear appropriate in consequence of, or otherwise in connection with, any amendment (or repeal or revocation) made in this Part by any enactment contained in an Act passed after this Act (an “amending Act”).

• (3B) An order under subsection (3A) may, in particular, include savings from the effect of any amendment (or repeal or revocation) made by the amending Act.

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

• (4) Nothing in Schedule 36 limits the power conferred by subsection (2) or (3A).

• (5) Nothing in that Schedule or in any provision made by virtue of subsection (2) or (3A) prejudices the operation of sections 16 and 17 of the Interpretation Act 1978 (c. 30) (effect of repeals).

Commencement

284

• (1) Chapters 3 to 7 and section 281 (with Schedule 35) do not come into force until 6th April 2006.

• (2) But any power to make an order or regulations under any of those provisions may be exercised at any time after this Act is passed.

Part 5 — Oil

Certain receipts not to be tariff receipts

285

• (1) The Oil Taxation Act 1983 (c. 56) is amended as follows.

• (2) In section 6(2) (meaning of tariff receipts) after “Subject to the provisions of this section” insert “ and section 6A below ”.

• (3) After section 6 insert—

(6A) (1) An amount which is a tax-exempt tariffing receipt (see subsection (2) below) does not constitute a tariff receipt for the purposes of the Oil Taxation Acts. (2) An amount is a “tax-exempt tariffing receipt” for the purposes of the Oil Taxation Acts if— (a) it would, apart from this section, be a tariff receipt of a participator in an oil field, (b) it is received or receivable by the participator in a chargeable period ending on or after 30th June 2004 under a contract entered into on or after 9th April 2003, and (c) it is in respect of tax-exempt business (see subsection (3) below). (3) For the purposes of this section an amount is in respect of tax-exempt business if it is an amount received or receivable by a participator in an oil field in respect of— (a) the use of a qualifying asset, or (b) the provision of services or other business facilities of whatever kind in connection with the use, otherwise than by the participator himself, of a qualifying asset, and that use of the qualifying asset falls within subsection (4) below. (4) Use of a qualifying asset falls within this subsection if it is— (a) use in relation to a new field (see subsection (5) below) or oil won from such a field, or (b) use in relation to a qualifying existing field (see subsection (5) below) or oil won from such a field. (5) In this section— - “existing field” means any oil field or foreign field which is not a new field; - “foreign field” means, subject to subsection (6) below (treatment of transmedian fields), any hydrocarbon accumulation which is not under the jurisdiction of the government of the United Kingdom; - “licensee”, in relation to a foreign field, means a person who has rights, interests or obligations in respect of the foreign field under a licence or other authority granted by the government of a country other than the United Kingdom; - “new field” means— 1. an oil field for no part of which had— 1. consent for development been granted to a licensee by the Secretary of State before 9th April 2003; or 2. a programme of development been served on a licensee or approved by the Secretary of State before that date; or 2. a foreign field for no part of which had— 1. any consent for development been granted to a licensee by the government of a country other than the United Kingdom before 9th April 2003; or 2. a programme of development been served on a licensee or approved by such a government before that date; - “the Oil Taxation Acts” means— 1. Parts 1 and 3 of the principal Act; 2. this Act; and 3. any other enactment relating to petroleum revenue tax; - “qualifying existing field” means an existing field as respects which the condition in section 6B(1) below is satisfied. (6) For the purposes of this section, in the case of an oil field which, by virtue of section 107 of the Finance Act 1980 (transmedian fields), is deemed to include the sector mentioned in subsection (1)(a)(ii) of that section— (a) that sector shall be treated as a foreign field, and (b) the remainder of that field shall be treated as a separate oil field. (7) In the application of provisions of the Oil Taxation Acts relating to tax-exempt tariffing receipts, references to oil, in relation to a foreign field, are references to any substance that would be oil within the meaning of the principal Act if the enactments mentioned in section 1(1) of that Act extended to the foreign field. (8) This section is subject to the transitional provisions in Part 2 of Schedule 37 to the Finance Act 2004 (expenditure incurred between 9th April and 31st December 2003: treatment of initial portion of tax-exempt tariffing receipts as tariff receipts). (6B) (1) The condition for an existing field to be a qualifying existing field for the purposes of section 6A above is that at no time in the period of 6 years ending with 8th April 2003 (“the 6 year period”) was there— (a) any use of a disqualifying asset (see subsection (2) below) in a UK area (see subsection (11) below) in relation to the field or oil won from it, or (b) any provision of any services or other business facilities of whatever kind in connection with the use of a disqualifying asset in a UK area in relation to the field or oil won from it. (2) For the purposes of subsection (1) above “disqualifying asset”, in relation to an existing field and any time in the 6 year period, means an asset which at that time— (a) was a qualifying asset in relation to a participator in an oil field; and (b) was not an excepted asset (see subsection (3) below). (3) For the purposes of subsection (2) above “excepted asset”, in relation to an existing field and any time in the 6 year period, means any of the following— (a) any asset (other than a tanker) which at that time was wholly situated in the existing field; (b) any tanker which at that time was a non-dedicated tanker (see subsection (10) below) being used for transporting from the existing field oil which had been won from that field; (c) any asset which at that time was being used in relation to oil which had been won from the existing field and transported from that field by a non-dedicated tanker; (d) if the existing field is an oil field and is expected not to be a tanker loading field (see subsection (7) below)— (i) any tanker which at that time was a dedicated tanker (see subsection (9) below) being used for transporting from the existing field oil which had been won from that field; (ii) any asset which at that time was being used in relation to oil which had been won from the existing field and transported from that field by a dedicated tanker; (iii) any asset which at that time was being used to transport from the existing field oil consisting of gas won from that field to another oil field for the purpose of enabling that oil to be used for assisting the extraction of oil from that other field; (e) if at that time the existing field was not a taxable field, any asset by reference to which an election under section 231 of the Finance Act 1994 (election by reference to asset with excess capacity) was at that time in operation with respect to an oil field. (4) Where any use of an asset is, by virtue of subsection (3) above, use of an excepted asset, the provision of any services or other business facilities of whatever kind in connection with that use of that asset accordingly falls to be disregarded for the purposes of subsection (1)(b) above. (5) Where an asset in a UK area— (a) is a qualifying asset in relation to a participator in such an oil field as is mentioned in section 107 of the Finance Act 1980 (a “participator in the UK sector”), and (b) is also, by virtue of paragraph 3 of Schedule 4 to this Act, a chargeable asset in relation to a participator in a foreign field (a “participator in the foreign sector”), subsection (6) below applies in relation to use of the asset in relation to the existing field or oil won from it. (6) Where this subsection applies, then, in determining for the purposes of subsection (1) above whether there has been any use of a disqualifying asset in relation to the existing field or oil won from it, any use of the asset in relation to that field or oil won from it shall be treated— (a) as use of a qualifying asset in relation to a participator in an oil field, if or to the extent that the use is attributable, on a just and reasonable basis, to a participator in the UK sector, or (b) as use of an asset which was not a qualifying asset in relation to a participator in an oil field, if or to the extent that the use is attributable, on a just and reasonable basis, to a participator in the foreign sector. (7) For the purposes of subsection (3) above, the existing field is expected not to be a tanker loading field if, at the time when the relevant contract is entered into, it is expected that all (or virtually all) of the oil (other than oil consisting of gas) to be won from that field and transported from it after the beginning of the operational period will be so transported otherwise than by tanker. (8) For the purposes of subsection (7) above— (a) “the relevant contract” means the contract mentioned in section 6A(2)(b) above; and (b) “the beginning of the operational period” means the time at which the qualifying asset to which that contract relates begins to be used under that contract in relation to the existing field or oil won from that field. (9) For the purposes of subsection (3) above a tanker is a dedicated tanker at any time if— (a) the existing field mentioned in that subsection is an oil field, and (b) at that time the tanker is a mobile asset dedicated to that oil field (see section 2 above). (10) For the purposes of subsection (3) above a tanker is a non-dedicated tanker— (a) at any time, if the existing field mentioned in that subsection is not an oil field, or (b) where that field is an oil field, at any time when the tanker is not a mobile asset dedicated to that oil field. (11) In this section “UK area” means each of the following— (a) the United Kingdom; (b) the territorial sea of the United Kingdom; (c) a designated area, to the extent that it does not fall to be treated by virtue of section 6A(6) above as a foreign field. (12) This section shall be construed as one with section 6A above.

.

• (4) In Schedule 2 (supplemental provisions in relation to receipts from qualifying assets) in paragraph 12 (purchase at place of extraction)—

• (a) in sub-paragraph (1), for “Subject to sub-paragraphs (4) and (5)” substitute “ Subject to sub-paragraphs (4) to (6) ”, and

• (b) at the end of the paragraph add—

(6) In any chargeable period ending on or after 30th June 2004, sub-paragraph (1) above does not apply to oil in a case where— (a) had the operation or operations to which the oil was subjected as mentioned in paragraph (b) of that sub-paragraph been carried out under a contract entered into on or after 9th April 2003, and (b) had an amount been received or receivable under the contract in that chargeable period by the participator, that amount would have been a tax-exempt tariffing receipt.

.

• (5) Schedule 37 to this Act has effect; and in that Schedule—

• Part 1 makes amendments to the Oil Taxation Act 1983 (c. 56) relating to allowable expenditure and disposal receipts;

• Part 2 makes transitional provision;

• Part 3 makes amendments to the Taxes Act 1988;

• Part 4 makes amendments to other enactments.

• (6) In Part 1 of Schedule 37 to this Act—

• (a) the amendments made by paragraph 5 (which relate to disposal receipts) have effect in relation to disposals in chargeable periods ending on or after 30th June 2004, and

• (b) the other amendments made by that Part have effect in relation to expenditure incurred on or after 1st January 2004.

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

• (8) The amendments made by Part 4 of that Schedule have effect in relation to chargeable periods (within the meaning of section 98 of the Finance Act 1999 (c. 16)) ending on or after 30th June 2004.

Petroleum extraction activities: exploration expenditure supplement

286

• (1) Chapter 5 of Part 12 of the Taxes Act 1988 (petroleum extraction activities) is amended as follows.

• (2) After section 496 (tariff receipts) insert—

(496A) Schedule 19B to this Act (exploration expenditure supplement) shall have effect.

.

• (3) Before Schedule 20 insert the Schedule 19B set out in Schedule 38 to this Act.

Restrictions on expenditure allowable

287

• (1) In Schedule 4 to the Oil Taxation Act 1975 (c. 22), paragraph 2 (restrictions on expenditure allowable where acquisition etc from connected person or otherwise not at arm’s length) is amended as follows.

• (2) In sub-paragraph (1), for the words following paragraph (b) (which limit the expenditure allowable to the cost in a transaction to which paragraph 2 does not apply) substitute— “ as having incurred that expenditure only to the extent that it does not exceed the lowest of the amounts described in sub-paragraph (1ZA) below which is applicable in the particular case. ”.

• (3) After sub-paragraph (1) insert—

(1ZA) Those amounts are— (a) the amount of expenditure (other than loan expenditure) incurred up to the time mentioned in sub-paragraph (1) above in a transaction to which this paragraph does not apply (or, if there has been more than one such transaction, the later or latest of them) in acquiring, bringing into existence, or enhancing the value of, the asset; (b) the amount of the open market consideration for the acquisition, bringing into existence, or enhancement of the value, of the asset; (c) in a case where the other party to the transaction is a participator in a taxable field and in the case of that participator either— (i) an amount is brought into account under section 2 of this Act in accordance with section 7(1) of the Oil Taxation Act 1983 as disposal receipts in respect of the transaction, or (ii) no amount is so brought into account by reason of reductions falling to be made in the amount that would have been so brought into account apart from those reductions, the amount so brought into account or, as the case may be, nil; (d) in a case where the other party to the transaction is not a participator in a taxable field but— (i) the transaction is the latest in a series of transactions in respect of the asset (or in respect of an asset or assets in which the asset was comprised), (ii) those transactions are transactions to which this paragraph applies, (iii) in the case of at least one of those transactions, there is a party who is a participator in an oil field, and (iv) in the case of any such party, an amount either is brought into account as mentioned in paragraph (c)(i) above in respect of the transaction or would have been so brought into account but for such reductions as are mentioned in paragraph (c)(ii) above, so much of the amount so brought into account in respect of that transaction (or, where there are two or more such transactions, the later or latest of them) as is justly and reasonably referable to the asset mentioned in sub-paragraph (1) above (taking that amount as being nil in the case of any transaction where no amount is so brought into account by reason of any such reductions).

.

• (4) In sub-paragraph (1B) (meaning of “loan expenditure” in sub-paragraph (1)) for “(1)” substitute “ (1ZA)(a) ”.

• (5) After sub-paragraph (1B) insert—

(1C) The reference in sub-paragraph (1ZA)(b) above to the open market consideration for the acquisition, bringing into existence, or enhancement of the value, of an asset is a reference to the consideration which might reasonably have been given for the acquisition, bringing into existence, or enhancement of the value, of the asset (whatever the nature of the acquisition, bringing into existence or enhancement of the value) had it been made in a transaction to which this paragraph does not apply.

.

• (6) The amendments made by this section have effect in relation to expenditure incurred on or after 17th March 2004.

Terminal losses

288

• (1) Schedule 17 to the Finance Act 1980 (c. 48) (transfers of interests in oil fields) is amended as follows.

• (2) For paragraph 15 (terminal losses) substitute—

(15) (1) This paragraph applies in any case where— (a) such an allowable loss as falls to be relieved under section 7(3) accrues to the new participator from the field in a chargeable period ending after 17th March 2004, but (b) some or all of the loss cannot be relieved under section 7(3) against assessable profits accruing to him from the field. (2) So much of the loss as cannot be so relieved (“the remaining loss”) shall be regarded as an allowable unrelievable field loss in relation to the new participator (“the loss-maker”) only to the extent that— (a) so much of it as cannot be relieved in accordance with sub-paragraphs (3) to (6) below, exceeds (b) the aggregate of any relevant previous participators' expenditure unrelated to the field (see sub-paragraphs (10) and (11) below). (3) The remaining loss shall be treated as an allowable loss which falls to be relieved under section 7(3) against so much of any assessable profits accruing to the old participator from the field as is attributable to his represented interest (see sub-paragraphs (9) and (12) below). (4) Where a person is the new participator in relation to two or more old participators— (a) the remaining loss shall be apportioned between those old participators in such manner as is just and reasonable having regard to the interests respectively transferred by them to the new participator, (b) sub-paragraph (3) above shall have effect separately in relation to each of them (and the part of the remaining loss apportioned to him). (5) Any relief by virtue of sub-paragraph (3) above shall be given against the assessable profits accruing to the old participator in an earlier chargeable period only to the extent to which it cannot be given against the assessable profits accruing to him in a later chargeable period. (6) If— (a) the old participator acquired some or all of his interest in the field by a previous transfer in relation to which he was the new participator, (b) Parts 2 and 3 of this Schedule applied in relation to that previous transfer, and (c) some or all of the part of the remaining loss treated as an allowable loss of his cannot be relieved in accordance with sub-paragraph (3) above, sub-paragraphs (3) to (5) above shall apply in relation to so much of that part of the remaining loss as cannot be so relieved as they apply in relation to the remaining loss, but construing the references in those sub-paragraphs to the new participator and the old participator by reference to that previous transfer and the parties to it, and then applying this sub-paragraph accordingly (and so on). (7) But where— (a) the person who is the old participator in relation to a transfer made before 17th March 2004 (“the later transfer”) is also the new participator in relation to a previous transfer, and (b) Parts 2 and 3 of this Schedule applied in relation to both of those transfers, sub-paragraph (3) above shall not apply by virtue of sub-paragraph (6) above in relation to so much of the assessable profits of the person who is the old participator in relation to that previous transfer as is attributable to so much of his interest as constitutes the whole or part of his represented interest by virtue of the later transfer. (8) Where losses accruing to each of two or more participators fall to be relieved by virtue of sub-paragraph (3) above against the same assessable profits, a loss accruing to the person who last had an interest representing the whole or part of the transferred interest at an earlier time shall be so relieved before one accruing to a person who last had such an interest at a later time. In this sub-paragraph “the transferred interest” means the interest transferred by the person against whose assessable profits the losses fall to be relieved. (9) In determining for the purposes of this paragraph the assessable profits of a participator that are attributable to his represented interest, the assessable profits shall be apportioned between— (a) the represented interest, and (b) the remainder of the participator’s interest, using such method as is just and reasonable, having regard to the respective sizes of those interests. (10) For the purposes of this paragraph “relevant previous participators' expenditure unrelated to the field” means so much of each relevant previous participator’s allowed expenditure unrelated to the field as is referable to his represented interest, other than excepted old expenditure. (11) For the purposes of sub-paragraph (10) above— - “allowed expenditure unrelated to the field”, in relation to a participator, is expenditure unrelated to the field which is allowed on a claim or election made by the participator; - “excepted old expenditure”is expenditure which has been allowed in pursuance of a claim or election for its allowance received by the Board before 17th March 2004; - “relevant previous participator” means a participator against any of whose assessable profits relief is given in accordance with sub-paragraphs (3) to (6) above; - and sub-paragraph (9) above shall apply in relation to allowed expenditure unrelated to the field as it applies in relation to assessable profits. (12) In this paragraph— - “expenditure unrelated to the field” has the meaning given by section 6(9); - “the loss-maker” shall be construed in accordance with sub-paragraph (2) above; - “previous owner” means a person from whom the loss-maker directly or indirectly derives his title to the whole or any part of his interest; - “represented interest”, in the case of a previous owner, means so much of the interest which that previous owner transferred, by a transfer to which Parts 2 and 3 of this Schedule apply, as is represented in the loss-maker’s interest by virtue only of— 1. that transfer, or 2. that transfer and one or more subsequent transfers to which those Parts apply,

.

• (3) The amendment made by this section has effect in relation to losses accruing in chargeable periods ending after 17th March 2004.

Part 6 — Other taxes

Climate change levy

Supplies to producers of commodities

289

• (1) Schedule 6 to the Finance Act 2000 (c. 17) (climate change levy) is amended as set out in subsections (2) to (5).

• (2) In paragraph 13 (exemption for supplies to producers of commodities), in paragraph (b), after sub-paragraph (ii) insert—

(iia) in producing biodiesel for chargeable use within the meaning of section 6AA of the Hydrocarbon Oil Duties Act 1979 (excise duty on biodiesel), (iib) in producing bioblend for delivery for home use from any place mentioned in section 6AB(1)(b) of that Act (excise duty on bioblend), (iic) in producing bioethanol for chargeable use within the meaning of section 6AD of that Act (excise duty on bioethanol), (iid) in producing bioethanol blend for delivery for home use from any place mentioned in section 6AE(1)(b) of that Act (excise duty on bioethanol blend),

.

• (3) In paragraph 13(b)(iii), for “liquids that are not hydrocarbon oil” substitute “ liquids (within the meaning of that section) in respect of which a charge is capable of arising under that section ”.

• (4) In paragraph 13, for the words from “For this purpose” to the end substitute— “ Expressions which are used in this paragraph and the Hydrocarbon Oil Duties Act 1979 have the same meaning in this paragraph as they have in that Act. ”

• (5) After paragraph 13 insert—

(13A) (1) The Commissioners may by regulations make provision amending paragraph 13 for the purpose of— (a) extending the circumstances in which a supply of a taxable commodity is exempt from the levy, or (b) restricting the circumstances in which a supply of a taxable commodity is exempt from the levy. (2) Regulations under this paragraph that include provision made for the purpose mentioned in sub-paragraph (1)(a) may provide for the provision to have retrospective effect. (3) A statutory instrument that contains (whether alone or with other provisions) regulations under this paragraph made for the purpose mentioned in sub-paragraph (1)(b) shall not be made unless a draft of the instrument has been laid before Parliament and approved by a resolution of the House of Commons.

• (6) The amendments made by subsections (2) to (4) have effect—

• (a) as regards biodiesel and bioblend, in relation to supplies made on or after the day on which this Act is passed;

• (b) as regards bioethanol and bioethanol blend, in relation to supplies made on or after 1st January 2005.

Aggregates levy

Transitional tax credit in Northern Ireland: changes to existing scheme

290

• (1) In section 30A of the Finance Act 2001 (c. 9) (aggregates levy: transitional tax credit in Northern Ireland) after subsection (3) insert—

(4) The Treasury may by order made by statutory instrument amend subsection (2) above so as to— (a) change the period in relation to which the amount of a tax credit is to be reduced; (b) change the amount by which a tax credit is to be reduced. (5) An order under subsection (4) above shall not be made unless a draft of the order has been laid before Parliament and approved by a resolution of the House of Commons.

• (2) This section shall be deemed to have come into force on 1st April 2004.

Transitional tax credit in Northern Ireland: new scheme

291

• (1) Part 2 of the Finance Act 2001 (aggregates levy) is amended as set out in subsections (2) and (3).

• (2) For section 30A substitute—

(30A) (1) The Commissioners may by regulations make provision of the kind described in section 30(2) above (entitlement to tax credit) in relation to cases within subsection (2) below. (2) The cases are those where a charge to aggregates levy has arisen on a quantity of aggregate which has been subjected to commercial exploitation in Northern Ireland during a period— (a) starting on the prescribed date, and (b) ending on 31st March 2011. (3) The date prescribed for the purposes of subsection (2)(a) above may be earlier than the date on which this section comes into force. (4) The amount of a tax credit to which a person is entitled under the regulations must not be more than 80% of any aggregates levy charged on the aggregate in question. (5) Regulations under this section may in particular make provision— (a) for a person operating a site to be entitled to a tax credit under the regulations in respect of a period for which he holds an aggregates levy credit certificate which has been issued in respect of the site and which has not been withdrawn; (b) for an aggregates levy credit certificate to be issued to a person in respect of a site only if an aggregates levy credit agreement is in force in respect of the site; (c) for the withdrawal of an aggregates levy credit certificate where the aggregates levy credit agreement in respect of which it was issued is no longer in force; (d) for the form and content of aggregates levy credit certificates and aggregates levy credit agreements. (6) Regulations under this section which make provision such as is mentioned in subsection (5)(d) above may be framed by reference to any provisions of a notice published by the Commissioners in pursuance of the regulations and not withdrawn by a further notice. (7) If regulations under this section make provision such as is mentioned in subsection (5) above, the Commissioners or the Northern Ireland Department may— (a) enter into aggregates levy credit agreements; (b) issue and withdraw aggregates levy credit certificates; (c) take such other steps as the Commissioners or the Northern Ireland Department consider appropriate in relation to aggregates levy credit agreements and aggregates levy credit certificates. (8) Regulations under this section which make provision such as is mentioned in subsection (5) above must include provision requiring the Northern Ireland Department to inform the Commissioners if the Northern Ireland Department issues or withdraws an aggregates levy credit certificate. (9) Subsections (3) to (5) of section 30 above apply to regulations under this section as they apply to regulations under that section. (10) The Treasury may by order made by statutory instrument amend subsection (4) above by substituting for the percentage for the time being specified in that subsection a percentage lower than 80%. (11) An order under subsection (10) above shall not be made unless a draft of the order has been laid before Parliament and approved by a resolution of the House of Commons. (12) Any expenses of the Northern Ireland Department under this section shall be charged on the Consolidated Fund of Northern Ireland. (13) In this section— - “aggregates levy credit agreement” means an agreement entered into in respect of a site by the person operating the site and the Commissioners or the Northern Ireland Department; - “aggregates levy credit certificate” means a certificate issued to the person operating a site by the Commissioners or the Northern Ireland Department as evidence of the fact that an aggregates levy credit agreement has been entered into in respect of the site; - “the Northern Ireland Department” means the Department of the Environment in Northern Ireland.

• (3) In section 48(1) (interpretation), in the definition of “tax credit regulations” after “section 30” insert “ or 30A ”.

• (4) The preceding provisions of this section come into force on such day as the Treasury may by order made by statutory instrument appoint.

• (5) An order under subsection (4) may—

• (a) make different provision for different purposes;

• (b) make incidental, consequential, supplemental or transitional provision and savings.

Lorry road-user charge

Lorry road-user charge

292

• (1) Section 137 of the Finance Act 2002 (c. 23) (lorry road-user charge) is amended as follows.

• (2) For subsection (4) substitute—

(4) Lorry road-user charge— (a) shall be under the care and management of the Commissioners of Customs and Excise, and (b) shall be administered and enforced in accordance with such provisions as Parliament may determine.

.

• (3) For subsections (5) and (6) substitute—

(5) All money and securities for money collected or received for or on account of lorry road-user charge shall— (a) if collected or received in Great Britain, be placed to the general account of the Commissioners of Customs and Excise kept at the Bank of England under section 17 of the Customs and Excise Management Act 1979; (b) if collected or received in Northern Ireland, be paid into the Consolidated Fund of the United Kingdom in such manner as the Treasury may direct.

.

Inheritance tax

Delivery of accounts etc

293

• (1) Section 256 of the Inheritance Tax Act 1984 (c. 51) (regulations about information to be furnished to the Board) is amended as follows.

• (2) In subsection (1)—

• (a) in paragraph (a), after “specified in” insert “ or determined under ”;

• (b) after paragraph (a) insert—

(aa) requiring persons who by virtue of regulations under paragraph (a) above are not required to deliver accounts under section 216 above to produce to the Board, in such manner as may be specified in or determined under the regulations, such information or documents as may be so specified or determined

;

• (c) in paragraph (b), after “so specified” insert “ or determined ”;

• (d) paragraph (c) shall cease to have effect.

• (3) After subsection (1) insert—

(1A) Regulations under subsection (1)(aa) may in particular— (a) provide that information or documents must be produced to the Board by producing it or them to— (i) a probate registry in England and Wales; (ii) the sheriff in Scotland; (iii) the Probate and Matrimonial Office in Northern Ireland; (b) provide that information or documents produced as specified in paragraph (a) is or are to be treated for any or all purposes of this Act as produced to the Board; (c) provide for the further transmission to the Board of information or documents produced as specified in paragraph (a).

• (4) Subsection (2) shall cease to have effect.

• (5) In subsection (3), at the end insert “ and may make different provision for different cases ”.

• (6) After subsection (3) insert—

(3A) Regulations under this section may only be made— (a) in relation to England and Wales or Northern Ireland, after consulting the Lord Chancellor; (b) in relation to Scotland, after consulting the Scottish Ministers.

Grant of probate

294

• (1) In section 109 of the Senior Courts Act 1981 (c. 54) (refusal of grant of probate where inheritance tax unpaid)—

• (a) for subsection (1) substitute—

(1) No grant shall be made, and no grant made outside the United Kingdom shall be resealed, except— (a) on the production of information or documents under regulations under section 256(1)(aa) of the Inheritance Tax Act 1984 (excepted estates); or (b) on the production of an account prepared in pursuance of that Act showing by means of such receipt or certification as may be prescribed by the Commissioners either— (i) that the inheritance tax payable on the delivery of the account has been paid; or (ii) that no such tax is so payable.

;

• (b) in subsection (2), for “this section” substitute “ subsection (1)(b) ”;

• (c) after subsection (2) insert—

(2A) In this section and the following section, “the Commissioners” means the Commissioners of Inland Revenue

;

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

• (2) In section 42 of the Probate and Legacy Duties Act 1808 (c. 149) (grant of confirmation)—

• (a) the existing text shall become subsection (1) of that section;

• (b) at the beginning of that subsection, for “And” substitute “ Subject to subsection (2) below, ”; and

• (c) after that subsection insert—

(2) In a case to which regulations under section 256(1)(aa) of the Inheritance Tax Act 1984 (c. 51) apply (excepted estates), it shall not be lawful to grant confirmation such as is mentioned in subsection (1) above except on the production of information or documents in accordance with those regulations.

• (3) In Article 20 of the Administration of Estates (Northern Ireland) Order 1979 (S.I.1979/1575 (N.I.14)) (inheritance tax accounts)—

• (a) for paragraph (1) substitute—

(1) The High Court shall not make any grant, or reseal any grant made outside the United Kingdom, except— (a) on the production of information or documents under regulations under section 256(1)(aa) of the Inheritance Tax Act 1984 (excepted estates); or (b) on the production of an account prepared in pursuance of that Act showing by means of such receipt or certification as may be prescribed by the Commissioners of Inland Revenue either— (i) that the inheritance tax payable on the delivery of the account has been paid; or (ii) that no such tax is so payable.

;

• (b) in paragraph (2) of that Article, for “this Article” substitute “ paragraph (1)(b) ”.

• (4) Subsection (1) shall come into force on such day as the Treasury may after consulting the Lord Chancellor by order made by statutory instrument appoint.

• (5) Subsection (2) shall come into force on such day as the Treasury may after consulting the Scottish Ministers by order made by statutory instrument appoint.

• (6) Subsection (3) shall come into force on such day as the Treasury may after consulting the Lord Chancellor by order made by statutory instrument appoint.

Amendments to penalty regime

295

• (1) The Inheritance Tax Act 1984 (c. 51) is amended as specified in subsections (2) to (4).

In section 245 (failure to deliver accounts)—

• (2)

• (a) in subsections (2)(a) and (3), for “not exceeding” substitute “ of ”;

• (b) after subsection (4) insert—

(4A) Without prejudice to any penalties under subsections (2) and (3) above, if— (a) the failure by the taxpayer to deliver the account continues after the anniversary of the end of the period given by section 216(6) or (7) (whichever is applicable), and (b) there would have been a liability to tax shown in the account, the taxpayer shall be liable to a penalty of an amount not exceeding £3,000.

• (3) In section 245A (failure to provide information etc)—

• (a) after subsection (1A) insert—

(1B) Without prejudice to any penalties under subsection (1A) above, if a person continues to fail to comply with the requirements of section 218A after the anniversary of the end of the period of six months referred to in section 218A(1), he shall be liable to a penalty of an amount not exceeding £3,000.

;

• (b) in subsection (5)—

• (i) after “failing to make a return” insert “ , to comply with the requirements of section 218A ”;

• (ii) after “fails to make the return” insert “ , to comply with the requirements of section 218A ”.

• (4) In section 247 (provision of incorrect information)—

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

• (b) in subsection (3), for the words from “, in the case of fraud” to the end substitute “ to a penalty not exceeding £3,000 ”.

• (5) Subsection (2)(a) above has effect in relation to a failure by any person to deliver an account under section 216 or 217 of the Inheritance Tax Act 1984 (c. 51) where the period under section 216(6) or (7) or 217 of that Act (whichever is applicable) within which the person is required to deliver the account expires after six months from the day on which this Act is passed.

• (6) Subsection (2)(b) above has effect—

• (a) in relation to a failure by any person to deliver an account under section 216 of the Inheritance Tax Act 1984 where the period under section 216(6) or (7) of that Act (whichever is applicable) within which the person is required to deliver the account expires after the day on which this Act is passed; and

• (b) in relation to such a failure to deliver such an account where that period expires on or before the day on which this Act is passed, as if, in the subsection (4A) inserted in section 245 of that Act by subsection (2)(b) above, for the words “anniversary of the end of the period given by section 216(6) or (7) (whichever is applicable)” there were substituted “ end of the period of twelve months beginning with the day on which the Finance Act 2004 is passed ”.

• (7) Subsection (3)(a) above has effect—

• (a) in relation to a failure to comply with the requirements of section 218A of the Inheritance Tax Act 1984 where the period of six months referred to in subsection (1) of that section expires after the day on which this Act is passed; and

• (b) in relation to such a failure to comply with those requirements where that period expires on or before the day on which this Act is passed, as if, in the subsection (1B) inserted in section 245A of that Act by subsection (3)(a) above, for the words “anniversary of the end of the period of six months referred to in section 218A(1)” there were substituted “ end of the period of twelve months beginning with the day on which the Finance Act 2004 is passed ”.

• (8) Subsection (3)(b) above has effect in relation to a failure to comply with the requirements of section 218A of the Inheritance Tax Act 1984 where the period of six months referred to in subsection (1) of that section expires after the day on which this Act is passed.

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

Stamp duty land tax and stamp duty

Miscellaneous amendments

296

Schedule 39 to this Act, which makes amendments to Part 4 (stamp duty land tax) and Part 5 (stamp duty) of the Finance Act 2003 (c. 14), has effect.

Stamp duty land tax

Leases

297

• (1) Part 4 of the Finance Act 2003 (c. 14) (stamp duty land tax) is amended as follows.

• (2) In subsection (3) of section 43 (land transactions), in paragraph (d) (inserted by paragraph 2(b) of Schedule 39 to this Act), after “where” insert “ (i) ” and at the end insert

, or (ii) paragraph 15A of Schedule 17A (reduction of rent or term) applies.

.

• (3) In section 48 (chargeable interests), at the end of subsection (7) (inserted by paragraph 4(2) of that Schedule) insert “ and to paragraph 15A of Schedule 17A (reduction of rent or term of lease) ”.

• (4) In section 53 (deemed market value where transaction involves connected company), for subsection (1) substitute—

(1) This section applies where the purchaser is a company and— (a) the vendor is connected with the purchaser, or (b) some or all of the consideration for the transaction consists of the issue or transfer of shares in a company with which the vendor is connected. (1A) The chargeable consideration for the transaction shall be taken to be not less than— (a) the market value of the subject-matter of the transaction as at the effective date of the transaction, and (b) if the acquisition is the grant of a lease at a rent, that rent.

.

• (5) In section 79 (registration of land transactions etc), in subsection (2) (transactions to which section does not apply) (as amended by paragraph 7 of Schedule 39 to this Act)—

• (a) in paragraph (a) for the words from “by virtue of” to the end substitute

by virtue of— (i) section 45 (contract and conveyance: effect of transfer of rights), or (ii) paragraph 12B of Schedule 17A (assignment of agreement for lease),

;

• (b) at the end insert—

(c) under paragraph 12A(2) or 19(3) of Schedule 17A (agreement for lease), or (d) under paragraph 13 (increase of rent) or 15A (reduction of rent or term) of that Schedule.

.

• (6) After that subsection insert—

(2A) Subsection (1), so far as relating to the entry of a notice under section 34 of the Land Registration Act 2002 or section 38 of the Land Registration Act (Northern Ireland) 1970 (notice in respect of interest affecting registered land), does not apply where the land transaction in question is the variation of a lease.

.

• (7) In subsection (3) of that section, after “The certificate” insert “ referred to in subsection (1) ”.

• (8) In Schedule 4 (chargeable consideration), in paragraph 10 (carrying out of works), in sub-paragraph (2A) (inserted by paragraph 9(2) of Schedule 39 to this Act), for the words from the beginning to “completion),” substitute—

Where by virtue of— (a) subsection (8) of section 44 (contract and conveyance), (b) paragraph 12A of Schedule 17A (agreement for lease), or (c) paragraph 19(3) to (6) of Schedule 17A (missives of let etc in Scotland), there are two notifiable transactions (the first being the contract or agreement and the second being the transaction effected on completion or, as the case may be, the grant or execution of the lease),

.

• (9) Subsections (2) to (4) and (8) apply in relation to any transaction of which the effective date is on or after the day on which this Act is passed.

• (10) Subsections (5) to (7) apply in relation to any transaction or deemed transaction of which the effective date is on or after 17th March 2004.

• (11) In this section “effective date” has the same meaning as in Part 4 of the Finance Act 2003 (c. 14).

Notification, registration and penalties

298

• (1) Part 4 of the Finance Act 2003 (stamp duty land tax) is amended as follows.

• (2) In section 77 (notifiable transactions)—

• (a) after subsection (2) insert—

(2A) The assignment of a lease is notifiable if— (a) the grant of the lease, if occurring at the time of the assignment, would be notifiable, or (b) there is consideration for the assignment that is chargeable at a rate of 1% or higher, or would be so chargeable but for a relief.

;

• (b) in subsection (3), for “unless it is exempt from charge under Schedule 3” substitute

unless— (a) the acquisition is exempt from charge under Schedule 3, or (b) the land consists entirely of residential property and the chargeable consideration for the acquisition, together with that of any linked transactions, is less than £1,000

;

• (c) after subsection (5) (inserted by paragraph 4(3) of Schedule 39 to this Act) insert—

(6) In this section “relief” does not include any exemption from charge under Schedule 3.

.

• (3) In section 79 (registration of land transactions etc), in subsection (1)(b), after “any register maintained by the Keeper of the Registers of Scotland” insert “ (other than the Register of Community Interests in Land) ”.

• (4) In section 99 (general provisions about penalties), after subsection (2) insert—

(2A) Where a person is liable to more than one tax-related penalty in respect of the same land transaction, each penalty after the first shall be reduced so that his liability to such penalties, in total, does not exceed the amount of whichever is (or, but for this subsection, would be) the greatest one.

.

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

Claims not included in returns

299

• (1) Part 4 of the Finance Act 2003 (c. 14) (stamp duty land tax) is amended as follows.

• (2) After section 82 insert—

(82A) Schedule 11A has effect with respect to claims not included in returns.

.

• (3) After Schedule 11 insert the Schedule set out in Schedule 40 to this Act.

• (4) In section 80 (adjustment where contingency ceases or consideration is ascertained), in subsection (4) (claim for repayment), for the words from “the amount” to the end substitute—

(a) the purchaser may, within the period allowed for amendment of the land transaction return, amend the return accordingly; (b) after the end of that period he may (if the land transaction return is not so amended) make a claim to the Inland Revenue for repayment of the amount overpaid

.

• (5) In section 111 (claim for repayment if regulations under general power not approved) in subsection (1), for the words from “any amount” to the end substitute “ a claim may be made to the Inland Revenue for repayment of any tax, interest or penalty that would not have been payable but for the regulations ”.

• (6) In section 113 (functions conferred on “the Inland Revenue”), after subsection (3) insert—

(3A) The following functions of the Inland Revenue under Schedule 11A (claims not included in returns) are functions of the Board— (a) functions under paragraph 2(1) (form of claims), (b) functions relating to a claim made to the Board.

.

• (7) In Schedule 10 (returns, enquiries, assessments and appeals), in paragraph 33 (relief in case of double assessment)—

• (a) in sub-paragraph (1), for “for relief under this paragraph” substitute “ to the Inland Revenue for relief against any double charge ”;

• (b) omit sub-paragraphs (2) and (3).

• (8) In paragraph 34 of that Schedule (relief in case of mistake in return)—

• (a) in sub-paragraph (1), for “for relief under this paragraph” substitute “ to the Inland Revenue for relief against any excessive charge ”;

• (b) in sub-paragraph (2), omit “by notice in writing given to the Inland Revenue”;

• (c) omit sub-paragraph (3).

Assents and appropriations by personal representatives

300

• (1) In Schedule 3 to the Finance Act 2003 (c. 14) (stamp duty land tax: transactions exempt from charge), after paragraph 3 insert—

(3A) (1) The acquisition of property by a person in or towards satisfaction of his entitlement under or in relation to the will of a deceased person, or on the intestacy of a deceased person, is exempt from charge. (2) Sub-paragraph (1) does not apply if the person acquiring the property gives any consideration for it, other than the assumption of secured debt. (3) Where sub-paragraph (1) does not apply because of sub-paragraph (2), the chargeable consideration for the transaction is determined in accordance with paragraph 8A(1) of Schedule 4. (4) In this paragraph— - “debt” means an obligation, whether certain or contingent, to pay a sum of money either immediately or at a future date, and - “secured debt” means debt that, immediately after the death of the deceased person, is secured on the property.

.

• (2) The amendment made by this section is deemed always to have had effect.

Chargeable consideration

301

• (1) In Schedule 3 to the Finance Act 2003 (transactions exempt from charge), in paragraph 4 (variation of testamentary dispositions etc) after sub-paragraph (2) insert—

(2A) Where the condition in sub-paragraph (2)(b) is not met, the chargeable consideration for the transaction is determined in accordance with paragraph 8A(2) of Schedule 4.

.

• (2) Schedule 4 to that Act (stamp duty land tax: chargeable consideration) is amended as follows.

• (3) In paragraph 8 (debt as consideration), after sub-paragraph (1) insert—

(1A) Where— (a) debt is secured on the subject-matter of a land transaction immediately before and immediately after the transaction, and (b) the rights or liabilities in relation to that debt of any party to the transaction are changed as a result of or in connection with the transaction, then for the purposes of this paragraph there is an assumption of that debt by the purchaser, and that assumption of debt constitutes chargeable consideration for the transaction. (1B) Where in a case in which sub-paragraph (1)(b) applies— (a) the debt assumed is or includes debt secured on the property forming the subject-matter of the transaction, and (b) immediately before the transaction there were two or more persons each holding an undivided share of that property, or there are two or more such persons immediately afterwards, the amount of secured debt assumed shall be determined as if the amount of that debt owed by each of those persons at a given time were the proportion of it corresponding to his undivided share of the property at that time. (1C) For the purposes of sub-paragraph (1B), in England and Wales and Northern Ireland each joint tenant of property is treated as holding an equal undivided share of it.

.

• (4) In sub-paragraph (2) of that paragraph, for “sub-paragraph (1)” substitute “ this paragraph ”.

• (5) After paragraph 8 insert—

(8A) (1) Where a land transaction would be exempt from charge under paragraph 3A of Schedule 3 (assents and appropriations by personal representatives) but for sub-paragraph (2) of that paragraph (cases where person acquiring property gives consideration for it), the chargeable consideration for the transaction does not include the amount of any secured debt assumed. - “Secured debt” has the same meaning as in that paragraph. (2) Where a land transaction would be exempt from charge under paragraph 4 of Schedule 3 (variation of testamentary dispositions etc) but for a failure to meet the condition in sub-paragraph (2)(b) of that paragraph (no consideration other than variation of another disposition), the chargeable consideration for the transaction does not include the making of any such variation as is mentioned in that sub-paragraph.

.

• (6) The amendments made by subsections (3) and (4) apply in relation to any transaction of which the effective date (within the meaning of Part 4 of the Finance Act 2003 (c. 14)) is on or after the day on which this act is passed.

• (7) The other amendments made by this section are deemed always to have had effect.

Charities relief

302

• (1) In Schedule 8 to the Finance Act 2003 (stamp duty land tax: charities relief), after paragraph 2 insert—

(3) (1) This paragraph applies where— (a) a land transaction is not exempt from charge under paragraph 1 because the first condition in that paragraph is not met, but (b) the purchaser (“C”) intends to hold the greater part of the subject-matter of the transaction for qualifying charitable purposes. (2) In such a case— (a) the transaction is exempt from charge, but (b) for the purposes of paragraph 2 (withdrawal of charities relief) “disqualifying event” includes— (i) any transfer by C of a major interest in the whole or any part of the subject-matter of the transaction, or (ii) any grant by C at a premium of a low-rental lease of the whole or any part of that subject-matter, that is not made in furtherance of the charitable purposes of C. (3) For the purposes of sub-paragraph (2)(b)(ii)— (a) a lease is granted “at a premium” if there is consideration other than rent, and (b) a lease is a “low-rental”lease if the annual rent (if any) does not exceed £600 a year. (4) In relation to a transaction that, by virtue of this paragraph, is a disqualifying event for the purposes of paragraph 2— (a) the date of the event for those purposes is the effective date of the transaction; (b) paragraph 2 has effect as if— (i) in sub-paragraph (1)(b), for “at the time of” there were substituted “ immediately before ”, (ii) in sub-paragraph (4)(a), for “at the time of” there were substituted “ immediately before and immediately after ”, and (iii) sub-paragraph (4)(b) were omitted. (5) In this paragraph— - “qualifying charitable purposes” has the same meaning as in paragraph 1; - “rent” has the same meaning as in Schedule 5 (amount of tax chargeable: rent) and “annual rent” has the same meaning as in paragraph 9(2) of that Schedule.

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• (2) After paragraph 3 of that Schedule (inserted by subsection (1) above) insert—

(4) (1) This Schedule applies in relation to a charitable trust as it applies in relation to a charity. (2) In this paragraph “charitable trust” means— (a) a trust of which all the beneficiaries are charities, or (b) a unit trust scheme in which all the unit holders are charities, and “charity” has the same meaning as in paragraph 1. (3) In this Schedule as it applies by virtue of this paragraph— (a) references to the purchaser in paragraphs (a) and (b) of paragraph 1(2) are to the beneficiaries or unit holders, or any of them; (b) the reference to the purchaser in paragraph 2(3)(a) is to any of the beneficiaries or unit holders; (c) the reference in paragraph 3(2)(b) to the charitable purposes of C is to those of the beneficiaries or unit holders, or any of them.

• (3) In paragraph 1(1) of that Schedule, for “this paragraph” substitute “ this Schedule ”.

• (4) In paragraph 2(1) of that Schedule, for “paragraph 1 (charities relief)” substitute “ this Schedule ”.

• (5) In section 81 (further return where relief withdrawn), in paragraph (c) of subsection (4) (meaning of “the disqualifying event”), after “paragraph 2(3)” insert “ or 3(2) ”.

• (6) In section 87 (interest on unpaid tax), in paragraph (c) of subsection (4) (meaning of “the disqualifying event”), after “paragraph 2(3)” insert “ or 3(2) ”.

• (7) This section applies in relation to any transaction of which the effective date (within the meaning of Part 4 of the Finance Act 2003 (c. 14)) is on or after the day on which this Act is passed.

Shared ownership leases

303

• (1) In Schedule 9 to the Finance Act 2003 (stamp duty land tax: right to buy, shared ownership leases etc), after paragraph 4 insert—