Finance Act 2009

For section 9 substitute—

(9) (1) This section has effect for determining for the purposes of section 7A (or Schedule 4A) or section 8, in relation to any supply of services, whether a person who is the supplier or recipient belongs in one country or another. (2) A person who is a relevant business person is to be treated as belonging in the relevant country. (3) In subsection (2) “the relevant country” means— (a) if the person has a business establishment, or some other fixed establishment, in a country (and none in any other country), that country, (b) if the person has a business establishment, or some other fixed establishment or establishments, in more than one country, the country in which the relevant establishment is, and (c) otherwise, the country in which the person's usual place of residence is. (4) In subsection (3)(b) “relevant establishment” means whichever of the person's business establishment, or other fixed establishments, is most directly concerned with the supply. (5) A person who is not a relevant business person is to be treated as belonging in the country in which the person's usual place of residence is. (6) In this section “usual place of residence”, in relation to a body corporate, means the place where it is legally constituted.

7

• (1) Section 43 (groups of companies) is amended as follows.

• (2) In subsection (2A)—

• (a) in paragraph (a), for “falling within Schedule 5” substitute “ to which section 7A(2)(a) applies made ”, and

• (b) in paragraph (c)—

• (i) omit “falling within paragraphs 1 to 8 of Schedule 5”, and

• (ii) insert at the end “and section 7A(2)(a) applied to the supply”.

• (3) In subsection (2D)—

• (a) in paragraph (c)—

• (i) omit “falling within paragraphs 1 to 8 of Schedule 5”, and

• (ii) insert at the end “ and section 7A(2)(a) applied to the supply ”, and

• (b) in the words after the paragraphs, for “falling within that Schedule,” substitute “ to which section 7A(2)(a) applies, ”.

• (4) In subsection (2E)(b), for “there are services falling within paragraphs 1 to 8 of Schedule 5 which, if used by the transferor for making supplies falling within that Schedule,” substitute “ there is a supply to which section 7A(2)(a) applies of services which, if used by the transferor for making such a supply, ”.

8

• (1) Section 96 (interpretation) is amended as follows.

• (2) In subsection (1), after the definition of “regulations” insert—

“relevant business person” has the meaning given by section 7A(4);

.

• (3) In subsection (8), omit “(subject to any provision made under section 8(6))”.

9

Section 97(4)(a) (orders subject to requirement of Parliamentary approval after making), after “5(4)” insert “ , 7A(6) ”.

10

Section 97A(1) (place of supply orders: transitional provision), for “on or after 17th March 1998 under section 7(11)” substitute “ under section 7A(6) ”.

11

After Schedule 4 insert—

SCHEDULE 4A (1) (1) A supply of services to which this paragraph applies is to be treated as made in the country in which the land in connection with which the supply is made is situated. (2) This paragraph applies to— (a) the grant, assignment or surrender of any interest in or right over land, (b) the grant, assignment or surrender of a personal right to call for or be granted any interest in or right over land, (c) the grant, assignment or surrender of a licence to occupy land or any other contractual right exercisable over or in relation to land (including the provision of holiday accommodation, seasonal pitches for caravans and facilities at caravan parks for persons for whom such pitches are provided and pitches for tents and camping facilities), (d) the provision in an hotel, inn, boarding house or similar establishment of sleeping accommodation or of accommodation in rooms which are provided in conjunction with sleeping accommodation or for the purpose of a supply of catering, (e) any works of construction, demolition, conversion, reconstruction, alteration, enlargement, repair or maintenance of a building or civil engineering work, and (f) services such as are supplied by estate agents, auctioneers, architects, surveyors, engineers and others involved in matters relating to land. (3) In sub-paragraph (2)(c) “holiday accommodation” includes any accommodation in a building, hut (including a beach hut or chalet), caravan, houseboat or tent which is advertised or held out as holiday accommodation or as suitable for holiday or leisure use. (4) In sub-paragraph (2)(d) “similar establishment” includes premises in which there is provided furnished sleeping accommodation, whether with or without the provision of board or facilities for the preparation of food, which are used by, or held out as being suitable for use by, visitors or travellers. (2) (1) A supply of services consisting of the transportation of passengers (or of any luggage or motor vehicles accompanying passengers) is to be treated as made in the country in which the transportation takes place, and (in a case where it takes place in more than one country) in proportion to the distances covered in each. (2) For the purposes of sub-paragraph (1) transportation which takes place partly outside the territorial jurisdiction of a country is to be treated as taking place wholly in the country if— (a) it takes place in the course of a journey between two points in the country (whether or not as part of a longer journey involving travel to or from another country), and (b) the means of transport used does not (except in an emergency or involuntarily) stop, put in or land in another country in the course of the journey between those two points. (3) For the purposes of sub-paragraph (1) a pleasure cruise is to be regarded as the transportation of passengers (so that services provided as part of a pleasure cruise are to be treated as supplied in the same place as the transportation of the passengers). (4) In sub-paragraph (3) “pleasure cruise” includes a cruise wholly or partly for education or training. (3) (1) A supply of services consisting of the short-term hiring of a means of transport is to be treated as made in the country in which the means of transport is actually put at the disposal of the person by whom it is hired. But this is subject to sub-paragraphs (3) and (4). (2) For the purposes of this Schedule the hiring of a means of transport is “short-term” if it is hired for a continuous period not exceeding— (a) if the means of transport is a vessel, 90 days, and (b) otherwise, 30 days. (3) Where— (a) a supply of services consisting of the hiring of a means of transport would otherwise be treated as made in the United Kingdom, and (b) the services are to any extent effectively used and enjoyed in a country which is not a member State, the supply is to be treated to that extent as made in that country. (4) Where— (a) a supply of services consisting of the hiring of a means of transport would otherwise be treated as made in a country which is not a member State, and (b) the services are to any extent effectively used and enjoyed in the United Kingdom, the supply is to be treated to that extent as made in the United Kingdom. (4) (1) A supply of services to which this paragraph applies is to be treated as made in the country in which the services are physically carried out. (2) This paragraph applies to the provision of— (a) services relating to cultural, artistic, sporting, scientific, educational, entertainment or similar activities (including fairs and exhibitions), and (b) ancillary services relating to such activities, including services of organisers of such activities. (5) (1) A supply of services to which this paragraph applies is to be treated as made in the country in which the services are physically carried out. (2) This paragraph applies to the provision of restaurant services and the provision of catering services, other than the provision of services to which paragraph 6 applies. (6) (1) A supply of services consisting of (a) the provision of restaurant services, or (b) the provision of catering services, on board a ship, aircraft or train in connection with the transportation of passengers during an intra-EC passenger transport operation is to be treated as made in the country in which the relevant point of departure is located. (2) An intra-EC passenger transport operation is a passenger transport operation which, or so much of a passenger transport operation as,— (a) has as the first place at which passengers can embark a place which is within the European Union , (b) has as the last place at which passengers who embarked in a member State can disembark a place which is within the the European Union , and (c) does not include a stop at a place which is not within the European Union and at which passengers can embark or passengers who embarked in a member State can disembark. (3) “Relevant point of departure”, in relation to an intra-EC passenger transport operation, is the first place in the intra-EC passenger transport operation at which passengers can embark. (4) A place is within the the European Union if it is within any member State. (5) For the purposes of this paragraph the return stage of a return passenger transport operation is to be regarded as a separate passenger transport operation; and for this purpose— (a) a return passenger transport operation is one which takes place in more than one country but is expected to end in the country in which it begins, and (b) the return stage of a return passenger transport operation is the part of it which ends in the country in which it began and begins with the last stop at a place at which there has not been a previous stop during it. (7) (1) Where— (a) a supply of services consisting of the hiring of any goods other than a means of transport would otherwise be treated as made in the United Kingdom, and (b) the services are to any extent effectively used and enjoyed in a country which is not a member State, the supply is to be treated to that extent as made in that country. (2) Where— (a) a supply of services consisting of the hiring of any goods other than a means of transport would otherwise be treated as made in a country which is not a member State, and (b) the services are to any extent effectively used and enjoyed in the United Kingdom, the supply is to be treated to that extent as made in the United Kingdom. (8) (1) This paragraph applies to a supply of services consisting of the provision of— (a) telecommunication services, or (b) radio or television broadcasting services. (2) In this Schedule “telecommunication services” means services relating to the transmission, emission or reception of signals, writing, images and sounds or information of any nature by wire, radio, optical or other electromagnetic systems, including— (a) the related transfer or assignment of the right to use capacity for such transmission, emission or reception, and (b) the provision of access to global information networks. (3) Where— (a) a supply of services to which this paragraph applies would otherwise be treated as made in the United Kingdom, and (b) the services are to any extent effectively used and enjoyed in a country which is not a member State, the supply is to be treated to that extent as made in that country. (4) Where— (a) a supply of services to which this paragraph applies would otherwise be treated as made in a country which is not a member State, and (b) the services are to any extent effectively used and enjoyed in the United Kingdom, the supply is to be treated to that extent as made in the United Kingdom. (9) (1) Where— (a) a supply of services consisting of the provision of electronically supplied services to a relevant business person would otherwise be treated as made in the United Kingdom, and (b) the services are to any extent effectively used and enjoyed in a country which is not a member State, the supply is to be treated to that extent as made in that country. (2) Where— (a) a supply of services consisting of the provision of electronically supplied services to a relevant business person would otherwise be treated as made in a country which is not a member State, and (b) the services are to any extent effectively used and enjoyed in the United Kingdom, the supply is to be treated to that extent as made in the United Kingdom. (3) Examples of what are electronically supplied services for the purposes of this Schedule include— (a) website supply, web-hosting and distance maintenance of programmes and equipment, (b) the supply of software and the updating of software, (c) the supply of images, text and information, and the making available of databases, (d) the supply of music, films and games (including games of chance and gambling games), (e) the supply of political, cultural, artistic, sporting, scientific, educational or entertainment broadcasts (including broadcasts of events), and (f) the supply of distance teaching. (4) But where the supplier of a service and the supplier's customer communicate via electronic mail, this does not of itself mean that the service provided is an electronically supplied service for the purposes of this Schedule. (10) (1) A supply of services to which this paragraph applies is to be treated as made in the same country as the supply to which it relates. (2) This paragraph applies to a supply to a person who is not a relevant business person consisting of the making of arrangements for a supply by or to another person or of any other activity intended to facilitate the making of such a supply. (11) (1) A supply of services to a person who is not a relevant business person consisting of the transportation of goods is to be treated as made in the country in which the transportation takes place, and (in a case where it takes place in more than one country) in proportion to the distances covered in each. (2) For the purposes of sub-paragraph (1) transportation which takes place partly outside the territorial jurisdiction of a country is to be treated as taking place wholly in the country if— (a) it takes place in the course of a journey between two points in the country (whether or not as part of a longer journey involving travel to or from another country), and (b) the means of transport used does not (except in an emergency or involuntarily) stop, put in or land in another country in the course of the journey between those two points. (3) This paragraph does not apply to a transportation of goods beginning in one member State and ending in another (see paragraph 12). (12) A supply of services to a person who is not a relevant business person consisting of the transportation of goods which begins in one member State and ends in another is to be treated as made in the member State in which the transportation begins. (13) (1) A supply to a person who is not a relevant business person of ancillary transport services is to be treated as made where the services are physically performed. (2) “Ancillary transport services” means loading, unloading handling and similar activities. (14) A supply to a person who is not a relevant business person of services consisting of the valuation of, or carrying out of work on, goods is to be treated as made where the services are physically performed. (15) A supply consisting of the provision by a person who belongs in a country which is not a member State (other than the Isle of Man) of electronically supplied services (as to the meaning of which see paragraph 9(3) and (4)) to a person (“the recipient”) who— (a) is not a relevant business person, and (b) belongs in a member State, is to be treated as made in the country in which the recipient belongs. (16) (1) A supply consisting of the provision to a person (“the recipient”) who— (a) is not a relevant business person, and (b) belongs in a country which is not a member State (other than the Isle of Man), of services to which this paragraph applies is to be treated as made in the country in which the recipient belongs. (2) This paragraph applies to— (a) transfers and assignments of copyright, patents, licences, trademarks and similar rights, (b) the acceptance of any obligation to refrain from pursuing or exercising (in whole or in part) any business activity or any rights within paragraph (a), (c) advertising services, (d) services of consultants, engineers, consultancy bureaux, lawyers, accountants, and similar services, data processing and provision of information, other than any services relating to land, (e) banking, financial and insurance services (including reinsurance), other than the provision of safe deposit facilities, (f) the provision of access to, and of transport or transmission through, natural gas and electricity distribution systems and the provision of other directly linked services, (g) the supply of staff, (h) the letting on hire of goods other than means of transport, (i) telecommunication services (as to the meaning of which see paragraph 8(2)), (j) radio and television broadcasting services, and (k) electronically supplied services (as to the meaning of which see paragraph 9(3) and (4)).

12

Omit Schedule 5 (services supplied where received).

13

In Article 5 of the Value Added Tax (Tour Operators) Order 1987 (S.I. 1987/1806)—

• (a) omit paragraph (1), and

• (b) in paragraph (2) after “treated” insert “ for the purposes of this Act ”,

and treat that article as made under section 7A(6)(c) of VATA 1994 (inserted by paragraph 4).

14

• (1) The powers contained in section 7A(6) of VATA 1994 (inserted by paragraph 4) may be exercised at any time on or after the day on which this Act is passed.

• (2) The amendments made by paragraph 7 come into force on 1 January 2010; but the references in section 43 of VATA 1994 (as amended by that paragraph) to a supply to which section 7A(2) of that Act applies includes a supply of services falling within paragraphs 1 to 8 of Schedule 5 made before that date.

• (3) Subject to that, the amendments made by this Part have effect in relation to supplies made on or after 1 January 2010.

Part 2 — Amendments coming into force in 2011

Admission to cultural, educational and entertainment activities etc

15

• (1) Schedule 4A to VATA 1994 (inserted by paragraph 11) is amended as follows.

• (2) Omit paragraph 4.

• (3) After paragraph 9 insert—

(9A) (1) A supply to a relevant business person of services to which this paragraph applies is to be treated as made in the country in which the events in question actually take place. (2) This paragraph applies to the provision of— (a) services in respect of admission to cultural, artistic, sporting, scientific, educational, entertainment or similar events (including fairs and exhibitions), and (b) ancillary services relating to admission to such events.

• (4) After paragraph 14 insert—

(14A) (1) A supply to a person who is not a relevant business person of services to which this paragraph applies is to be treated as made in the country in which the activities concerned actually take place. (2) This paragraph applies to the provision of— (a) services relating to cultural, artistic, sporting, scientific, educational, entertainment or similar activities (including fairs and exhibitions), and (b) ancillary services relating to such activities, including services of organisers of such activities.

16

The amendments made by this Part have effect in relation to supplies made on or after 1 January 2011.

Part 3 — Amendments coming into force in 2013

17

In Schedule 4A to VATA 1994 (inserted by paragraph 11), after paragraph 13 insert—

(13A) (1) A supply to a person who is not a relevant business person (“the recipient”) of services consisting of the long-term hiring of a means of transport is to be treated as made in the country in which the recipient belongs. But this is subject to sub-paragraph (2) and paragraph 3(3) and (4). (2) A supply to a person who is not a relevant business person (“the recipient”) of services consisting of the long-term hiring of a pleasure boat which is actually put at the disposal of the recipient at the supplier's business establishment, or some other fixed establishment of the supplier, is to be treated as made in the country where the pleasure boat is actually put at the disposal of the recipient. (3) For the purposes of this Schedule, the hiring of a means of transport is “long-term” if it is not short-term (as to the meaning of which see paragraph 3(2)).

18

The amendment made by this Part has effect in relation to supplies made on or after 1 January 2013.

Part 4 — Transitional provisions

19

• (1) This paragraph applies where—

• (a) amendments made by this Schedule provide for a supply of services to be treated as made in the United Kingdom,

• (b) the supply would not have fallen to be so treated apart from the amendments, and

• (c) the services are treated under the law of a member State other than the United Kingdom as supplied in that member State before the commencement date.

• (2) The supply is not to be treated as made in the United Kingdom.

• (3) “The commencement date” means the date specified by this Schedule as that on or after which a supply must be made if it is to be treated as made in the United Kingdom by virtue of the amendments.

SCHEDULE 37

Part 1 — Stamp duty

1

FA 1986 is amended as follows.

2

In Part 3 (stamp duty), after section 80C insert—

(80D) (1) This section applies where— (a) A and B have entered into an arrangement falling within section 80C(1), (b) the conditions in subsection (2A) or (3) of that section are met, (c) stock is transferred to A or A's nominee, and (d) the conditions in subsection (2) below are met. (2) The conditions in this subsection are that— (a) A and B are not connected persons within the meaning of section 839 of the Taxes Act 1988, (b) after B has transferred stock under the arrangement, A or B becomes insolvent, (c) it becomes apparent (whether before or after the insolvency occurs) that, as a result of the insolvency, stock will not be transferred to B or B's nominee in accordance with the arrangement, (d) the party who does not become insolvent (“the solvent party”) or the solvent party's nominee acquires replacement stock, and (e) the replacement stock is acquired before the end of the period of 30 days beginning with the day on which the insolvency occurs (“the insolvency date”). (3) Where collateral is provided under the arrangement (or under arrangements of which that arrangement forms part), stamp duty is not chargeable on any instrument transferring to the solvent party or the solvent party's nominee— (a) replacement stock acquired using the collateral (whether directly or indirectly), or (b) where the solvent party uses the whole of the value of the collateral to acquire replacement stock, any further replacement stock. (4) Where no collateral is provided as mentioned in subsection (3), stamp duty is not chargeable on any instrument transferring replacement stock to the solvent party or the solvent party's nominee. (5) Subsections (3) and (4) may apply as regards more than one instrument (and where those subsections apply as regards more than one instrument, the instruments may be executed by different persons). (6) But those subsections apply only as regards replacement stock up to the amount of stock which will not be transferred as a result of the insolvency. (7) An instrument on which stamp duty is not chargeable by virtue only of subsection (3) or (4) is not to be deemed to be duly stamped unless it has been stamped with a stamp denoting that it is not chargeable with any duty. (8) Despite section 122(1) of the Stamp Act 1891, the stamp mentioned in subsection (7) may be a stamp of such kind as the Commissioners for Her Majesty's Revenue and Customs may prescribe. (9) For the purposes of this section a person becomes insolvent— (a) if a company voluntary arrangement takes effect under Part 1 of the Insolvency Act 1986, (b) if an administration application (within the meaning of Schedule B1 to that Act) is made or a receiver or manager, or an administrative receiver, is appointed, (c) on the commencement of a creditor's voluntary winding up (within the meaning of Part 4 of that Act) or a winding up by the court under Chapter 6 of that Part, (d) if an individual voluntary arrangement takes effect under Part 8 of that Act, (e) on the presentation of a bankruptcy petition (within the meaning of Part 9 of that Act), (f) if a compromise or arrangement takes effect under Part 26 of the Companies Act 2006, (g) if a bank insolvency order takes effect under Part 2 of the Banking Act 2009, (h) if a bank administration order takes effect under Part 3 of that Act, or (i) on the occurrence of any corresponding event which has effect under or as a result of the law of Scotland or Northern Ireland or a country or territory outside the United Kingdom. (10) In this section— - “collateral” means an amount of money or other property which is payable to, or made available for the benefit of, a party to an arrangement or that party's nominee for the purpose of securing the discharge of the requirement to transfer stock to that party or the nominee; - “replacement stock”, in the event of a party to an arrangement becoming insolvent, is stock of the same kind as the stock which will not be transferred to the other party or that party's nominee as a result of the insolvency.

3

• (1) In consequence of the amendment made by paragraph 2, section 88(1C) (disregard of certain instruments falling within section 80C(1)) is amended as follows.

• (2) At the beginning of the words after paragraph (c) insert “ then, if section 80D does not apply, ”.

Part 2 — Stamp duty reserve tax

4

Part 4 of FA 1986 (stamp duty reserve tax) is amended as follows.

5

After section 89AA insert—

(89AB) (1) This section applies where— (a) P and Q have entered into an arrangement falling within section 89AA(1), (b) the only reason that the conditions in subsection (2A) or (3) of that section are not met is that chargeable securities of the same kind and amount as those transferred to P or P's nominee are not transferred to Q or Q's nominee, and (c) the conditions in subsection (2) below are met. (2) The conditions in this subsection are that— (a) P and Q are not connected persons within the meaning of section 839 of the Taxes Act 1988, (b) after Q has transferred securities under the arrangement, either P or Q becomes insolvent, (c) it becomes apparent (whether before or after the insolvency occurs) that, as a result of the insolvency, securities will not be transferred to Q or Q's nominee in accordance with the arrangement. (3) Section 87 does not apply as regards an agreement to transfer chargeable securities to P or P's nominee, or Q or Q's nominee, in accordance with the arrangement. (4) Subsections (5) and (6) apply if— (a) the party who does not become insolvent (“the solvent party”) or the solvent party's nominee acquires replacement securities, and (b) the replacement securities are acquired before the end of the period of 30 days beginning with the day on which the insolvency occurs (“the insolvency date”). (5) Where collateral is provided under the arrangement (or under arrangements of which that arrangement forms part), section 87 does not apply as regards any agreement to transfer to the solvent party or the solvent party's nominee— (a) replacement securities acquired using the collateral (whether directly or indirectly), or (b) where the solvent party uses the whole of the value of the collateral to acquire replacement securities, any further replacement securities. (6) Where no collateral is provided as mentioned in subsection (5), section 87 does not apply as regards any agreement to transfer replacement securities to the solvent party or the solvent party's nominee. (7) Subsections (5) and (6) may apply as regards more than one agreement (and where those subsections apply as regards more than one agreement, the agreements may be with different persons). (8) But those subsections apply only as regards replacement securities up to the amount of securities which will not be transferred as a result of the insolvency. (9) For the purposes of this section a person becomes insolvent— (a) if a company voluntary arrangement takes effect under Part 1 of the Insolvency Act 1986, (b) if an administration application (within the meaning of Schedule B1 to that Act) is made or a receiver or manager, or an administrative receiver, is appointed, (c) on the commencement of a creditor's voluntary winding up (within the meaning of Part 4 of that Act) or a winding up by the court under Chapter 6 of that Part, (d) if an individual voluntary arrangement takes effect under Part 8 of that Act, (e) on the presentation of a bankruptcy petition (within the meaning of Part 9 of that Act), (f) if a compromise or arrangement takes effect under Part 26 of the Companies Act 2006, (g) if a bank insolvency order takes effect under Part 2 of the Banking Act 2009, (h) if a bank administration order takes effect under Part 3 of that Act, or (i) on the occurrence of any corresponding event which has effect under or as a result of the law of Scotland or Northern Ireland or a country or territory outside the United Kingdom. (10) In this section— - “collateral” means an amount of money or other property which is payable to, or made available for the benefit of, a party to an arrangement or that party's nominee for the purpose of securing the discharge of the requirement to transfer securities to that party or the nominee; - “replacement securities”, in the event of a party to an arrangement becoming insolvent, are chargeable securities of the same kind as the securities which will not be transferred to the other party or that party's nominee as a result of the insolvency.

SCHEDULE 38

1

CAA 2001 is amended as follows.

2

• (1) Section 163 (meaning of “general decommissioning expenditure”) is amended as follows.

• (2) In subsection (1), for “(3) and (4)” substitute “ (3) to (4) ”.

• (3) After subsection (3) insert—

(3A) The expenditure must have been incurred wholly or substantially in complying with— (a) an approved abandonment programme, (b) a condition to which the approval of an abandonment programme is subject, or (c) a condition imposed by the Secretary of State, or an agreement made with the Secretary of State— (i) before the approval of an abandonment programme, and (ii) in relation to the decommissioning of the plant or machinery.

• (4) In subsection (5)(b), insert at the beginning “ “abandonment programme”, “approval” and “approved” (in relation to an abandonment programme),”.

3

• (1) Section 164 (general decommissioning expenditure incurred before cessation of ring fence trade) is amended as follows.

• (2) For subsection (1) substitute—

(1) A person (“R”) carrying on a ring fence trade may elect to have a special allowance made to R for a chargeable period (the “relevant chargeable period”) if conditions A and B are met. (1A) Condition A is that one or more of these paragraphs applies— (a) R incurs general decommissioning expenditure in the relevant chargeable period in respect of decommissioning carried out in that period; (b) R incurs general decommissioning expenditure in the relevant chargeable period in respect of decommissioning carried out in a previous chargeable period; (c) R incurred general decommissioning expenditure in a previous chargeable period in respect of decommissioning that has not been carried out until the relevant chargeable period. (1B) Condition B is that the plant or machinery concerned has been brought into use for the purposes of the ring fence trade.

• (3) In subsection (2)(a), for the words from “the chargeable period” to the end substitute “ the relevant chargeable period, and ”.

• (4) In subsection (3)—

• (a) in paragraph (a), omit the “and” at the end, and

• (b) after that paragraph insert—

(aa) the chargeable period in which the expenditure was incurred, (ab) the decommissioning to which the expenditure relates, (ac) the chargeable period in which the decommissioning was carried out, and

.

• (5) In subsection (4)(a), for the words from “the chargeable period” to the end substitute “ the relevant chargeable period, and ”.

• (6) In subsection (5), for the words from “a chargeable period” to the end substitute “ the relevant chargeable period is equal to the amount of the general decommissioning expenditure to which the election relates. ”

• (7) After that subsection insert—

(5A) But subsection (5) is subject to subsections (5B) and (6). (5B) If an amount of general decommissioning expenditure to which the election relates is disproportionate to the relevant decommissioning carried out in the specified decommissioning period then, for the purposes of this section, the election is to be taken to specify only the allowable expenditure. (5C) The application of subsection (5B) to an amount of general decommissioning expenditure does not prevent a person from making an election under this section for a subsequent chargeable period specifying the non-allowable expenditure. (5D) In subsections (5B) and (5C)— - “allowable expenditure”, in relation to general decommissioning expenditure, means the amount of the expenditure that is proportionate to the relevant decommissioning carried out in the specified decommissioning period; - “non-allowable expenditure”, in relation to general decommissioning expenditure, means so much of that expenditure as is not allowable expenditure; - “relevant decommissioning”, in relation to general decommissioning expenditure, means the decommissioning to which the expenditure relates; - “specified decommissioning period”, in relation to relevant decommissioning, means the chargeable period specified in the election as the period in which the decommissioning was carried out; - “specified expenditure period”, in relation to general decommissioning expenditure, means the chargeable period specified in the election as the period in which the expenditure was incurred.

4

• (1) Section 165 (general decommissioning expenditure after ceasing ring fence trade) is amended as follows.

• (2) In subsection (1), for paragraph (b) substitute—

(b) the decommissioning condition is met in relation to a notional accounting period, and

.

• (3) After that subsection insert—

(1A) The decommissioning condition is met in relation to a notional accounting period (the “relevant period”) if one or more of these paragraphs applies— (a) the former trader incurs general decommissioning expenditure in the relevant period in respect of decommissioning carried out in that period, (b) the former trader incurs general decommissioning expenditure in the relevant period in respect of decommissioning carried out in— (i) a previous notional accounting period, or (ii) a chargeable period falling before the first notional accounting period, and (c) the former trader incurred general decommissioning expenditure in— (i) a previous notional accounting period, or (ii) a chargeable period falling before the first notional accounting period, in respect of decommissioning that has not been carried out until the relevant period. (1B) “Notional accounting period” means each of the following periods— (a) the period that— (i) begins with the day following the last day on which the former trader carried on the ring fence trade, and (ii) ends with the day on which the first termination event subsequently occurs, and (b) each period that— (i) begins with the day following the last day of a period determined under paragraph (a) or this paragraph, and (ii) ends with the day on which the first termination event subsequently occurs; but there are to be no notional accounting periods after the end of the post-cessation period. (1C) “Termination event”, in relation to a notional accounting period, means each of the following— (a) the end of the period of 12 months beginning with the first day of the notional accounting period, (b) the occurrence of an accounting date of the former trader or, if there is a period for which the former trader does not make up accounts, the end of that period (but see subsections (6A) and (6B)), and (c) the end of the post-cessation period.

• (4) In subsection (3)—

• (a) after “applies” insert “ in relation to a notional accounting period ”, and

• (b) in paragraph (a), after “relevant decommissioning cost” insert “ for that period, or the aggregate of all the relevant decommissioning costs for that period, ”.

• (5) In subsection (4), for the definition of “the relevant decommissioning cost” substitute—

“relevant decommissioning cost”, for a notional accounting period, means the amount by which general decommissioning expenditure falling within paragraph (a), (b) or (c) of subsection (1A) in relation to that period exceeds any amounts received before or during that period for the remains of any plant or machinery on whose demolition any of the general decommissioning expenditure was incurred.

• (6) After subsection (4A) insert—

(4B) If an amount of general decommissioning expenditure is disproportionate to the relevant decommissioning carried out in the decommissioning period then, for the purposes of this section, only the allowable expenditure is to be taken to have been incurred in the expenditure period. (4C) The application of subsection (4B) to an amount of general decommissioning expenditure does not prevent the non-allowable expenditure from being taken into account under this section in relation to a subsequent notional accounting period. (4D) In subsections (4B) and (4C)— - “allowable expenditure”, in relation to general decommissioning expenditure, means the amount of the expenditure that is proportionate to the relevant decommissioning carried out in the decommissioning period; - “decommissioning period”, in relation to relevant decommissioning, means the notional accounting period or chargeable period in which the decommissioning was carried out; - “expenditure period”, in relation to general decommissioning expenditure, means the notional accounting period or chargeable period in which the expenditure was incurred; - “non-allowable expenditure”, in relation to general decommissioning expenditure, means so much of that expenditure as is not allowable expenditure; - “relevant decommissioning”, in relation to general decommissioning expenditure, means the decommissioning to which the expenditure relates.

• (7) After subsection (6) insert—

(6A) If the former trader— (a) carries on more than one trade, (b) makes up accounts of any of them to different dates, and (c) does not make up general accounts for the whole of the company's activities, subsection (1C)(b) applies with reference to the accounting date of such one of the trades as the former trader may determine. (6B) If the Commissioners for Her Majesty's Revenue and Customs are of the opinion, on reasonable grounds, that a date determined by the former trader for the purposes of subsection (6A) is inappropriate, the Commissioners may by notice direct that the accounting date of such other of the trades referred to in that subsection as appears to the Commissioners to be appropriate is to be used instead.

5

The amendments made by this Schedule have effect in relation to expenditure incurred on or after 22 April 2009.

SCHEDULE 39

1

Part 5 of FA 1987 (oil taxation) is amended as follows.

2

For section 63 substitute—

(63) (1) This section applies if, at any time before its disposal or relevant appropriation, oil won from an oil field (“the relevant field”) in a chargeable period (“the relevant period”) is mixed with oil won from one or more other oil fields. (2) A relevant participator's share of oil won from the relevant field in the relevant period is to be taken to be the amount of the blended oil that it is just and reasonable (for the purposes of the oil taxation legislation) to allocate to the participator in respect of the relevant period. (3) In making the allocation regard must be had (in particular) to the quantity and quality of the oil derived from each of the originating fields. (4) If the participators in the originating fields select a method for making the allocation, that method is to be used to determine that allocation. (5) But that is subject to Schedule 12. (6) If the participators in the originating fields fail to select a method for making the allocation, HMRC may select a method. (7) In a case where only some oil won from the relevant field in the relevant period is, before its disposal or relevant appropriation, mixed with oil won from one or more other fields, subsection (2) has effect for the purpose of determining the amount of the blended oil that is to be taken to be included in a relevant participator's share of oil won from the relevant field. (8) Schedule 12 contains provision supplementing this section. (9) In this section and Schedule 12— - “blended oil” means oil that consists of oil from two or more oil fields that has been mixed; - “foreign field” means an area which is a foreign field for the purposes of section 12 of the Oil Taxation Act 1983; - “oil” includes any substance which would be oil if the enactments mentioned in section 1(1) of the principal Act extended to a foreign field; - “oil field” includes a foreign field; - “oil taxation legislation” means Part 1 of the principal Act and any enactment construed as one with that Part; - “originating fields”, in relation to any blended oil, means the oil fields from which oil which has been mixed as mentioned in subsection (1); - “relevant participator” means a person who is a participator in the relevant field at any time in the relevant period.

3

• (1) Schedule 12 (supplementary provisions as to blended oil) is amended as follows.

• (2) For paragraphs 1 and 2 (and the headings before them) substitute—

(1) (1) In this Schedule— - “HMRC” means Her Majesty's Revenue and Customs; - “method of allocation” means a method for making an allocation of blended oil for the purposes of section 63 that has been selected by the participators in the originating fields (including such a method that has been amended in accordance with this Schedule). (2) In this Schedule a reference to a suitable method of allocation is a reference to a method which secures that allocation of blended oil is just and reasonable (for the purposes of the oil taxation legislation). (2) (1) This paragraph applies if it appears to HMRC that— (a) a method of allocation that has been used in respect of a chargeable period was not suitable, or (b) a method of allocation that is proposed to be used in respect of a chargeable period would not be suitable. (2) HMRC may give notice to each of the participators in the originating fields— (a) informing the participators of what appears to HMRC to be the case, and (b) proposing amendments to the method of allocation. (3) If HMRC give notice, the allocation of the blended oil for the purposes of section 63 in respect of the chargeable period is to be redetermined, or determined, using the method of allocation as amended in accordance with the notice. (4) Sub-paragraph (3) is subject to— (a) the following provisions of this Schedule, (b) any subsequent notice given under this paragraph, and (c) any amendment to the method of allocation made by the participators in the originating fields.

• (3) In paragraph 3(1)—

• (a) for “the Board” (in each place) substitute “ HMRC ”, and

• (b) for “paragraph 2(a)” substitute “ paragraph 2(2) ”.

• (4) In paragraph 3(2), for “the Board” (in each place) substitute “ HMRC ”.

• (5) After paragraph 3(2) insert—

(3) If the method of allocation is amended in accordance with this paragraph, the allocation of the blended oil for the purposes of section 63 in respect of the chargeable period is to be redetermined, or determined, using the method of allocation as so amended. (4) Sub-paragraph (3) is subject to— (a) any subsequent notice given under this paragraph, and (b) any amendment to the method of allocation made by the participators in the originating fields.

• (6) Omit paragraph 4.

4

The amendments made by this Schedule have effect in relation to chargeable periods beginning after 30 June 2009.

SCHEDULE 40

Part 1 — Licence swaps

1

TCGA 1992 is amended as follows.

2

In section 35(3) (assets held on 31 March 1982, including assets held on 6 April 1965)—

• (a) in paragraph (c), omit the “or” at the end, and

• (b) after that paragraph insert—

(ca) where, by virtue of section 195B, 195C or 195E, neither a gain nor a loss accrues to the person making the disposal, or

.

3

In section 55 (assets owned on 31 March 1982 or acquired on a no gain/no loss disposal), after subsection (5) insert—

(5A) For the purposes of subsection (5), a disposal is also a no gain/no loss disposal if it is one on which, by virtue of section 195B, 195C or 195E, neither a gain nor a loss accrues to the person making the disposal; but, in such a case, subsection (6)(b) below does not apply.

4

In section 175(2C)(b) (replacement of business assets by members of a group), after “applies” insert “ or is one where, by virtue of section 195B, 195C or 195E, neither a gain nor a loss accrues to the person making the disposal ”.

5

After section 195 insert—

(195A) (1) Sections 195B to 195E apply for the purposes of corporation tax on chargeable gains. (2) In those sections— - “licence-consideration swap” means a case where conditions A, B, C and D are met; - “mixed-consideration swap” means a case where conditions A, B, C and E are met. (3) Condition A is that a company (“company A”) disposes of one or more UK licences to another company (“company B”), by way of a bargain at arm's length (“disposal A”). (4) Condition B is that company B disposes of one or more UK licences to company A, by way of a bargain at arm's length (“disposal B”). (5) Condition C is that either or both of the following paragraphs applies— (a) the licence, or at least one of the licences, comprised in disposal A relates to a developed area; (b) the licence, or at least one of the licences, comprised in disposal B relates to a developed area. (6) Condition D is that both— (a) disposal A is the only consideration given for disposal B, and (b) disposal B is the only consideration given for disposal A. (7) Condition E is that either— (a) disposal A is the only consideration given for disposal B, or (b) disposal B is the only consideration given for disposal A, (and accordingly one of the disposals is part of the consideration given for the other disposal). (8) In this section and sections 195B to 196 a reference to disposal of a UK licence includes— (a) a disposal of an interest in a UK licence, and (b) a disposal of a UK licence, or an interest in a UK licence, only so far as the licence relates to part of the licensed area. (195B) (1) This section applies to a licence-consideration swap. (2) Each company participating in the swap is to be treated as follows. (3) As regards the licence, or each licence, which the company disposes of, the company is to be treated as if it had disposed of that licence for a consideration of such amount as to secure that on the disposal neither a gain nor a loss accrues to the company. (4) In a case where the company acquires only one licence, the company is to be treated as if it had acquired the licence for a consideration of the same amount as the deemed disposal consideration. (5) In a case where the company acquires two or more licences, as regards each licence acquired, the company is to be treated as if it had acquired that licence for a consideration of— $$DDC×ATA$where—DDC is the deemed disposal consideration,A is the value of the licence acquired, andTA is total value of all the licences acquired.$ (6) In this section “deemed disposal consideration”, in relation to a company participating in the swap, means— (a) the amount of the consideration for which the company is, under subsection (3), treated as having disposed of its licence (if the company disposes of only one licence), or (b) the aggregate of all such amounts (if the company disposes of two or more licences). (195C) (1) This section applies to a mixed-consideration swap if— (a) the no gain/no loss loss amount (“N”) of the company that receives the mixed consideration (“company R”), exceeds (b) the amount of non-licence consideration (“C”) which company R receives. (2) In a case where company R acquires only one licence, company R is to be treated as if it had acquired the licence for a consideration of— $N-C$ (3) In a case where company R acquires two or more licences, as regards each licence acquired, company R is to be treated as if it had acquired the licence for a consideration of— $$(N-C)×ATA$where—A is the value of the licence acquired, andTA is total value of all the licences acquired.$ (4) The disposal by company R of a licence under the swap is to be taken to be one on which neither a gain nor a loss accrues. (5) But (despite subsection (4)), the disposal by company R is not a no gain/no loss disposal for the purposes of section 56. (6) For the purposes of the application of sections 53 and 54, any enactment is to be disregarded insofar as it provides that, if the other company which acquires a licence under the swap (“company G”) subsequently disposes of the licence, company R's acquisition of the licence is to be treated as company G's acquisition of it. (7) In this section the reference to the no gain/no loss amount of company R is a reference to— (a) in a case where company R disposes of only one licence, company R's no gain/no loss amount in relation to that disposal, or (b) in a case where company R disposes of two or more licences, the aggregate of company R's no gain/no loss amounts in relation to all of those disposals. (195D) (1) This section applies to a mixed-consideration swap if— (a) the no gain/no loss amount (“N”) of the company that receives the mixed consideration (“company R”) does not exceed (b) the amount of non-licence consideration (“C”) which company R receives. (2) As regards the licence, or each licence, which company R acquires, company R is to be treated as if it had acquired the licence for nil consideration. (3) In a case where company R disposes of only one licence, company R is to be treated as if, on the disposal of the licence, there had arisen a gain of— $C-N$ (4) In a case where company R disposes of two or more licences, as regards each licence disposed of, company R is to be treated as if, on the disposal of the licence, there had arisen a gain of— $$(C-N)×DTD$where—D is the value of the licence disposed of, andTD is total value of all the licences disposed of.$ (195E) (1) This section applies to a mixed-consideration swap— (a) whatever the no gain/no loss amount (“N”) of the company that gives the mixed consideration (“company G”), and (b) whatever the amount of the non-licence consideration (“C”) which company G gives. (2) In a case where company G acquires only one licence, company G is to be treated as if it had acquired the licence for a consideration of— $N+C$ (3) In a case where company G acquires two or more licences, as regards each licence acquired, company G is to be treated as if it had acquired the licence for a consideration of— $$(N+C)×ATA$where—A is the value of the licence acquired, andTA is total value of all the licences acquired.$ (4) The disposal by company G of a licence under the swap is to be taken to be one on which neither a gain nor a loss accrues. (5) But (despite subsection (4)), the disposal by company G is not a no gain/no loss disposal for the purposes of section 56. (6) For the purposes of the application of sections 53 and 54, any enactment is to be disregarded insofar as it provides that, if the other company which acquires a licence under the swap (“company R”) subsequently disposes of the licence, company G's acquisition of the licence is to be treated as company R's acquisition of it. (7) In this section the reference to the no gain/no loss amount of company G is a reference to— (a) in a case where company G disposes of only one licence, company G's no gain/no loss amount in relation to that disposal, or (b) in a case where company G disposes of two or more licences, the aggregate of company G's no gain/no loss amounts in relation to all of those disposals.

6

• (1) Section 196 (interpretation of sections 194 and 195) is amended as follows.

• (2) In the heading, for “and 195” substitute “ to 195E ”.

• (3) In subsection (1), after “section 194” insert “ and this section ”.

• (4) After subsection (1A) insert—

(1B) In sections 195A to 195E, a reference to a UK licence that relates to a developed area is a reference to any UK licence apart from one that relates to an undeveloped area.

• (5) In subsection (2), for “and (1A)” substitute “ to (1B) ”.

• (6) In subsection (3), after “(1)” insert “ or (1B) ”.

• (7) In subsection (5)—

• (a) for “and 195” substitute “ to 195E ”,

• (b) after the definition of “licence” insert—

“licence-consideration swap” has the meaning given in section 195A(2);

, and

• (c) after the definition of “licensee” insert—

“mixed consideration” means consideration that consists partly of disposal of a UK licence; “mixed-consideration swap” has the meaning given in section 195A(2); “no gain/no loss amount”, in relation to a company that disposes of a UK licence, means the amount that would be taken to be the consideration for the disposal if section 56(2) applied to the disposal; “non-licence consideration” means consideration that does not consist of disposal of a UK licence, as determined at the time the swap arrangements are entered into; “swap arrangements”, in relation to a licence-consideration swap or a mixed-consideration swap, means the arrangements under which the swap takes place;

.

• (8) After subsection (5A) insert—

(5B) In any of sections 195B to 195E, a reference to the value of a licence comprised in disposal A or disposal B (see section 195A) is a reference to the value of the licence as determined under the swap arrangements at the time the swap arrangements are entered into.

7

In Schedule 3 (assets held on 31 March 1982), in paragraph 1(2) (meaning of no gain/no loss disposal), after “provisions” insert “ or any of sections 195B, 195C or 195E ”.

8

The amendments made by this Part have effect in relation to disposals made on or after 22 April 2009.

Part 2 — Reinvestment of ring fence assets

Amendment of TCGA 1992

9

TCGA 1992 is amended as follows.

Roll-over relief

10

In section 198 (replacement of business assets used in connection with oil fields), for subsection (3) substitute—

(3) Where— (a) section 152 or 153 applies in relation to any of the consideration on a material disposal, and (b) the asset which constitutes the new assets for the purposes of that section is a depreciating asset, section 154(2)(b) is to have effect as if the reference to a trade carried on by the claimant were a reference solely to the claimant's ring fence trade.

Alternative to roll-over relief

11

In section 198 (replacement of business assets used in connection with oil fields), after subsection (2) insert—

(2A) But subsection (1) is subject to section 198A(3)(a).

12

After that section insert—

(198A) (1) This section applies if a person (“P”) makes a disposal and acquisition which— (a) is a ring fence reinvestment, and (b) qualifies for roll-over relief. (2) P may make a claim under this section in relation to the disposal and acquisition. (3) If P makes a claim under this section— (a) section 152 does not apply to any of the disposal consideration, and (b) any gain accruing to P on the disposal is not a chargeable gain. (4) In this section “disposal consideration” means the whole of the consideration obtained on the disposal made by P. (198B) (1) This section applies if a person (“P”) makes a disposal and acquisition which— (a) is a ring fence reinvestment, and (b) qualifies for section 153 relief. (2) P may make a claim under this section in relation to the disposal and acquisition. (3) If P makes a claim under this section— (a) section 153(1)(a) applies in relation to P and the disposal, but (b) section 153(1)(b) does not apply to P and the acquisition. (198C) (1) This section applies where a person (“P”) carrying on a ring fence trade who for a consideration disposes of, or of an interest in, any assets (“the old assets”) declares, in P's return for the chargeable period in which the disposal takes place— (a) that the whole or any specified part of the consideration will be applied in the acquisition of, or of an interest in, other assets (“the new assets”), (b) that the acquisition will take place as mentioned in section 152(3), (c) that the disposal and acquisition will be a ring fence reinvestment, (d) that P intends to make a claim under section 198A or 198B in relation to the disposal and acquisition, and (e) that P has not made, and will not make, a declaration under section 153A in relation to the disposal and acquisition. (2) Until the declaration ceases to have effect, section 198A or 198B applies as if the acquisition had taken place and the person had made a claim under that section. (3) The declaration ceases to have effect as follows— (a) if and to the extent that it is withdrawn before the relevant day, or is superseded before that day by a valid claim made under section 198A or 198B, on the day on which it is so withdrawn or superseded, and (b) if and to the extent that it is not so withdrawn or superseded, on the relevant day. (4) On the declaration ceasing to have effect in whole or in part, all necessary adjustments— (a) are to be made by making or amending assessments or by repayment or discharge of tax, and (b) are to be so made despite any limitation on the time within which assessments or amendments may be made. (5) If— (a) P makes a declaration under this section, and (b) the disposal and acquisition is not a ring fence reinvestment, but qualifies for roll-over relief or section 153 relief, on P making a claim, the declaration is to have effect as also a declaration under section 153A. (6) In this section “the relevant day” means— (a) in relation to capital gains tax, the third anniversary of the 31st January next following the year of assessment in which the disposal of, or of the interest in, the old assets took place, and (b) in relation to corporation tax, the fourth anniversary of the last day of the accounting period in which that disposal took place. (7) Section 152(6), (10) and (11) apply for the purposes of this section as they apply for the purposes of section 152. (198D) (1) If P makes a claim under section 198A or 198B, no other relevant claim may be made in respect of the relevant acquisition. (2) P may make a claim under section 198A or 198B (“the new claim”), if P has previously made a claim under section 152 or 153 (“the previous claim”) in respect of the relevant acquisition. (3) But P may make the new claim only if the previous claim is withdrawn at or before the time the new claim is made. (4) If the new claim is made in accordance with subsections (2) and (3), all necessary adjustments— (a) are to be made by making or amending assessments or by repayment or discharge of tax, and (b) are to be so made despite any limitation on the time within which assessments or amendments may be made. (5) In this section— - “relevant acquisition” means the acquisition of the new assets that is comprised in the disposal and acquisition to which a claim under section 198A or 198B or declaration under section 198C relates; - “relevant claim” means a claim under section 152, 153, 198A or 198B. (198E) (1) This section applies for the purposes of sections 198A to 198G. (2) A disposal and acquisition is a ring fence reinvestment if— (a) the disposal was— (i) a material disposal, or (ii) a disposal of a UK licence which relates to an undeveloped area, (b) the old assets were used only for the purposes of P's ring fence trade, (c) the new assets are taken into use, and used only, for the purposes of one or more of the following trades— (i) P's ring fence trade; (ii) if P is a member of a group of companies (within the meaning given in section 170), a ring fence trade of another member of that group, and (d) the new assets are oil assets. (3) If the disposal consists of— (a) disposal of a licence to which section 195D(3) applies, or (b) disposal of two or more licences to which section 195D(4) applies, the consideration for the disposal is to be taken to be the whole of the non-licence consideration obtained on the disposal (which is referred to as “C” in section 195D). (4) Accordingly, in sections 198A to 198G (including section 198A(4)), any reference to the consideration obtained on the disposal has effect subject to subsection (3). (5) Each of the following is an “oil asset” for the purposes of this section— (a) an interest in oil to be won from an oil field, (b) an asset used in connection with an oil field, (c) a structure which is to be placed on the seabed of the United Kingdom continental shelf, (d) an asset used wholly in the winning of oil, or in the measuring of oil won, in the United Kingdom otherwise than from an oil field, (e) an asset used for the initial treatment or storage of oil in the United Kingdom, (f) an asset used for the transportation of oil from an oil field to the United Kingdom, and (g) a UK licence which relates to an undeveloped area. (6) Section 12 of the Oil Taxation Act 1975 (interpretation of Part 1 of that Act) applies for the interpretation of subsection (5)(a) to (f). (7) Expressions used in this section and in section 152 have the same meanings in this section as in section 152. (8) In this section a reference to a UK licence which relates to an undeveloped area has the same meaning as in section 194 (see section 196). (9) In this section— - “material disposal” has the meaning given in section 197; - “ring fence trade” has the meaning given in section 198. (198F) (1) This section applies for the purposes of sections 198A and 198B and section 198G. (2) A disposal and acquisition qualifies for roll-over relief if— (a) the consideration for the disposal is applied in an acquisition as mentioned in section 152(1), and (b) section 152(1)(a) and (b) would apply to the disposal and acquisition if the appropriate claim were made. (3) Subsections (4) to (6) apply in deciding whether a disposal and acquisition is one that qualifies for roll-over relief. (4) Section 152(8) is to be disregarded. (5) Section 198A is to be disregarded. (6) Subject to subsections (4) to (5), all the circumstances are to be taken into account, including section 153(1) and section 198(1) and (2). (198G) (1) This section applies for the purposes of sections 198B and 198C. (2) A disposal and acquisition qualifies for section 153 relief if— (a) section 153(1) applies to part of the amount or value of the consideration for the disposal, (b) section 153(1)(a) and (b) would apply to the disposal and acquisition if the appropriate claim were made, and (c) the disposal and acquisition would qualify for roll-over relief but for the disapplication of section 152(1) by section 153(1). (3) Subsections (4) to (6) apply in deciding whether a disposal and acquisition is one that qualifies for section 153 relief. (4) Section 153(2) has effect subject to section 198F(4) and (5). (5) Section 198B is to be disregarded. (6) Subject to subsections (4) and (5), all the circumstances are to be taken into account, including section 198(1).

13

The amendments made by this Part have effect in relation to disposals made on or after 22 April 2009 (whether the acquisition in which the consideration is reinvested takes place before, on or after that date).

SCHEDULE 41

Part 1 — Petroleum revenue tax

Allowance of decommissioning and restoration expenditure

1

• (1) Section 3 of OTA 1975 (allowance of expenditure) is amended as follows.

• (2) In subsection (1C)(b), for “in connection with the field” substitute “ for a qualifying purpose ”.

• (3) In subsection (1D), for “in connection with the field” substitute “ for a qualifying purpose ”.

• (4) After that subsection insert—

(1DA) In subsections (1C) and (1D) a reference to use for a qualifying purpose is a reference to— (a) use in connection with the taxable field mentioned in subsection (1C), and (b) other use in— (i) the United Kingdom, (ii) the territorial sea of the United Kingdom, or (iii) a designated area, except use wholly or partly for an ineligible oil purpose. (1DB) In subsection (1DA)(b) the reference to use for an ineligible oil purpose is a reference to— (a) use in connection with an oil field other than the taxable field mentioned in subsection (1C), and (b) use for any other purpose (apart from a purpose falling within section 3(1)(b)) of a separate trade consisting of activities falling within section 492(1) of the Income and Corporation Taxes Act 1988. (1DC) In subsections (1DA) and (1DB) a reference to use in connection with a taxable field or other oil field includes use giving rise to receipts which, for the purposes of the Oil Taxation Act 1983, are tariff receipts.

Amounts which are not chargeable tariff receipts

2

• (1) Section 6 of OTA 1983 (amounts which are not chargeable tariff receipts) is amended as follows.

• (2) In subsection (4)—

• (a) in paragraph (b), insert at the end “or”, and

• (b) after that paragraph insert—

(c) is referable to other use of an asset, except use wholly or partly for an oil purpose,

.

• (3) After that subsection insert—

(4A) In this section the reference to use of an asset for an oil purpose is a reference to— (a) use in connection with an oil field, and (b) use for any other purpose (apart from a purpose falling within section 3(1)(b) of the principal Act) of a separate trade consisting of activities falling within section 492(1) of the Income and Corporation Taxes Act 1988. (4B) In subsection (4A) the reference to use in connection with an oil field includes use giving rise to receipts which, for the purposes of this Act, are tariff receipts.

No reduction of allowable expenditure

3

• (1) Paragraph 8 of Schedule 1 to OTA 1983 (allowable expenditure: use of new asset otherwise than in connection with taxable field) is amended as follows.

• (2) In sub-paragraph (1)(a) and (b), for “in connection with a taxable field” substitute “ for a qualifying purpose ”.

• (3) After sub-paragraph (2) insert—

(2A) In sub-paragraph (1) a reference to use for a qualifying purpose is a reference to— (a) use in connection with a taxable field, and (b) other use in— (i) the United Kingdom, (ii) the territorial sea of the United Kingdom, or (iii) a designated area, except use wholly or partly for an ineligible oil purpose. (2B) In this Act a reference to use of an asset for an ineligible oil purpose is a reference to— (a) use in connection with an oil field that is not a taxable field, and (b) use for any other purpose (apart from a purpose falling within section 3(1)(b) of the principal Act) of a separate trade consisting of activities falling within section 492(1) of the Income and Corporation Taxes Act 1988. (2C) In sub-paragraphs (2A) and (2B) a reference to use in connection with a taxable field or other oil field includes use giving rise to receipts which, for the purposes of this Act, are tariff receipts.

Commencement

4

The amendments made by this Part have effect in relation to chargeable periods beginning after 30 June 2009.

Part 2 — Capital allowances

General decommissioning expenditure

5

• (1) Section 163 of CAA 2001 (meaning of “general decommissioning expenditure”) is amended as follows.

• (2) In subsection (3)(a), after “use” insert “ wholly or partly ”.

• (3) In subsection (4ZA), for paragraphs (a) and (b) substitute—

(a) was not brought into use wholly for qualifying purposes, or (b) has, at any time since it was brought into use, not been used wholly for qualifying purposes.

• (4) In subsection (4ZC), for “the purposes of the ring fence trade” substitute “ qualifying purposes ”.

• (5) After subsection (4C) insert—

(4D) In this section a reference to use for qualifying purposes is a reference to— (a) use for the purposes of any ring fence trade of any person, or (b) other use in— (i) the United Kingdom, (ii) the territorial sea of the United Kingdom, or (iii) an area designated under section 1(7) of the Continental Shelf Act 1964, except use wholly or partly in connection with an oil field (within the meaning given by section 12(2) of the Oil Taxation Act 1975).

6

In section 165(4A) of CAA 2001 (general decommissioning expenditure after ceasing ring fence trade), for “abandonment expenditure” substitute “ general decommissioning expenditure ”.

Commencement

7

• (1) The amendments made by paragraph 5 have effect in relation to expenditure incurred on or after 22 April 2009.

• (2) The amendment made by paragraph 6 has effect in relation to ring fence trades that cease to be carried on or after 12 March 2008.

SCHEDULE 42

Part 1 — Persons who cease to be licensees because of cessation events

1

OTA 1975 is amended as follows.

2

• (1) Section 12 (interpretation of Part 1) is amended as follows.

• (2) In subsection (1), in the definition of “participator”—

• (a) for “any”, in the first place, substitute “ a ”,

• (b) after paragraph (a) insert—

(aa) a person who is no longer a licensee in respect of any licensed area wholly or partly included in the field, but who— (i) was such a licensee at any time in any chargeable period preceding the relevant chargeable period, and (ii) ceased to be such a licensee because of a cessation event; and

,

• (c) in paragraph (b), after “field” insert “ (and who does not fall within paragraph (aa) of this definition) ”,

• (d) in paragraph (c), after “paragraph” insert “ (aa) or ”, and

• (e) omit the words after paragraph (g).

• (3) After that subsection insert—

(1A) In the definition of “participator” in subsection (1)— (a) “cessation event”, in relation to an oil field to which a licence relates, means any of the following— (i) determination of the licence by the licensee, (ii) revocation of the licence by the Secretary of State or a Northern Ireland Department, (iii) expiry of the licence at the end of its term, (iv) the licensed area ceasing to include any relevant area whatsoever, by reason of the licensee surrendering the licence so far as it relates to the whole of the relevant area, and (v) the licence ceasing to apply to the oil field by reason of the operation of the licence; and for the purposes of sub-paragraph (iv) “relevant area” means an area which is, or combination of areas each of which is, included in the oil field (whether or not such an area falls partly outside the oil field); (b) “current participator”, “former participator” and “default payment” have the same meanings as in paragraph 2A of Schedule 5.

3

In Schedule 5 (allowance of expenditure other than abortive exploration expenditure), in paragraph 2C(2)—

• (a) in the definition of “current participator”, after “paragraph (a),” insert “ (aa), ”, and

• (b) in paragraph (b) of the definition of “former participator”, after “paragraph (a),” insert “ (aa), ”.

4

The amendments made by this Part have effect in relation to persons who cease to be licensees because of cessation events occurring in chargeable periods that begin after 30 June 2009.

Part 2 — Areas treated as continuing to be oil fields

5

OTA 1975 is amended as follows.

6

In section 12(1) (interpretation of Part 1), in the definition of “oil field”, after “this Act” insert “ (which also includes provision about areas that are to be treated as continuing to be oil fields) ”.

7

• (1) Schedule 1 (determination of oil fields) is amended as follows.

• (2) Before paragraph 1 insert— “ Areas that are oil fields ”

• (3) After paragraph 5 insert—

(6) (1) This paragraph applies if an area has ceased to be— (a) an oil field within the meaning of paragraph 1(1), or (b) part of such an oil field. (2) The area is to be treated as continuing to be— (a) the oil field, or (b) the part of the oil field, that it actually was. (3) Accordingly, whilst the area is treated in accordance with sub-paragraph (2), any reference to an oil field is to include a reference to the area. (4) Sub-paragraph (2) ceases to apply to the area— (a) in accordance with sub-paragraph (5), and (b) if or to the extent that it has not ceased to apply in accordance with sub-paragraph (5), in accordance with sub-paragraph (6). (5) Sub-paragraph (2) ceases to apply to the area if, or to the extent that, it again becomes— (a) an oil field within the meaning of paragraph 1(1), or (b) part of such an oil field. (6) Sub-paragraph (2) ceases to apply to the area at the end of the second chargeable period that falls after the chargeable period in which the area is decommissioned. (7) (1) A relevant area is decommissioned for the purposes of paragraph 6 if all qualifying assets of the relevant area are decommissioned. (2) If, and to the extent that, a UK offshore decommissioning regime applies to qualifying assets of the relevant area, those assets are decommissioned if— (a) the Secretary of State has approved one or more abandonment programmes under the regime in relation to those assets, and (b) those programmes have been carried out to the satisfaction of the Secretary of State. (3) If, and to the extent that, a UK offshore decommissioning regime does not apply to qualifying assets of the relevant area, those assets are decommissioned if the Board are satisfied that they have been decommissioned. (4) For the purposes of sub-paragraph (3) the Board must have regard to any obligations to decommission the qualifying assets which arise under the law applicable to the relevant area (whether the law of any part of the United Kingdom or of any other state or territory), including any obligations imposed by an authority having functions under that law in respect of such decommissioning. (5) If sub-paragraph (3) applies (to any extent) to any qualifying assets, the Board must give the responsible person notice of any decision the Board make under that sub-paragraph. (6) The responsible person may appeal against such a decision by notice in writing given to the Board within three months of the responsible person receiving the notice under sub-paragraph (5). (7) An appeal under sub-paragraph (6) may, before it is notified to the tribunal, be abandoned by notice in writing given to the Board by the responsible person. (8) The provisions of paragraphs 14A to 14I of Schedule 2 apply to appeals under sub-paragraph (6) subject to any necessary modifications. (9) In this paragraph— - “qualifying assets” means assets that are qualifying assets within the meaning of OTA 1983; - “relevant area” means an area that is treated as being an oil field, or part of an oil field, under paragraph 6; - “UK offshore decommissioning regime” means— 1. Part 4 of the Petroleum Act 1998, and 2. Part 1 of the Petroleum Act 1987.

8

The amendments made by this Part have effect in relation to areas that cease to be oil fields, or parts of oil fields, in chargeable periods that begin after 30 June 2009.

SCHEDULE 43

Interpretation

1

In this Schedule—

• “future chargeable period” means a chargeable period beginning after 30 June 2009;

• “provisional expenditure allowance” means an amount calculated under section 2(9)(a) of OTA 1975.

Abolition of allowance

2

No provisional expenditure allowance is to be calculated in respect of a future chargeable period.

Amendments consequential on abolition

3

• (1) Section 2 of OTA 1975 (assessable profits and allowable losses) is amended as follows.

• (2) For subsection (8) substitute—

(8) The amount (if any) to be debited or credited to the participator for the period in respect of expenditure is the sum of the amounts mentioned in subsection (9) below.

• (3) Omit subsections (9)(a), (10) and (11).

• (4) In Schedule 17 to FA 1980 (transfers of interests in oil fields), omit paragraph 11 (and the heading before it).

• (5) This paragraph has effect in relation to future chargeable periods.

• (6) But this paragraph is subject to paragraph 4.

Savings

4

• (1) This paragraph applies if provisional expenditure allowance has been calculated in respect of a pre-abolition chargeable period (“the relevant allowance”).

• (2) The saved provisions continue to have effect in future chargeable periods in relation to the relevant allowance and the relevant participator as if those provisions had not been amended by paragraph 3.

• (3) In this paragraph—

• “pre-abolition chargeable period” means a chargeable period that begins before 30 June 2009;

• “relevant participator” means the participator in respect of which the relevant allowance has been calculated;

• “the saved provisions” means—section 2(8) and (10) of OTA 1975, andparagraph 11 of Schedule 17 to FA 1980.

SCHEDULE 44

Part 1 — Reduction of adjusted ring fence profits

1

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

Part 2 — Pool of field allowances

Company’s pool of field allowances

2

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

Carrying part of pool of field allowances into following period

3

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

Carrying whole of pool of field allowances into following period

4

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

Part 3 — Field allowance: when held and unactivated amount

Initial licensee to hold a field allowance

5

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

Holding a field allowance on acquisition of equity share

6

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

Unactivated amount of a field allowance

7

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

Part 4 — No change in equity share: activation of allowance

Introduction

8

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

Activation of field allowance

9

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

Part 5 — Change in equity share: activation of allowance

Introduction

10

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

Reference periods

11

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

Activation of field allowance

12

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

Part 6 — Change in equity share: transfer of field allowance

Introduction

13

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

Reduction of field allowance if equity disposed of

14

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

Acquisition of field allowance if equity acquired

15

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

Part 7 — Miscellaneous

Adjustments

16

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

Orders

17

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

Part 8 — Interpretation

New oil fields

18

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

Authorising development

19

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

Qualifying oil fields

20

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

Small oil field

21

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

Ultra heavy oil field

22

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

Ultra high pressure/high temperature oil field

23

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

Total field allowance for new oil field

24

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

Other interpretation

25

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

SCHEDULE 45

OTA 1975

1

• (1) OTA 1975 is amended as follows.

• (2) Omit paragraphs 9 and 10 of Schedule 3 (election to have amounts mentioned in section 2(9)(b) and (c) spread).

• (3) In consequence of the omission of paragraph 9 of Schedule 3, omit section 9(4).

• (4) Omit paragraph 3 of Schedule 4 (allowable expenditure incurred before 13 November 1974).

• (5) The repeals made by this paragraph have effect in relation to chargeable periods beginning after 30 June 2009.

OTA 1983

2

• (1) OTA 1983 is amended as follows.

• (2) Omit section 9(3) and paragraph 3 of Schedule 3 (receipts from contracts made before 8 May 1982).

• (3) In consequence of the omission of subsection (3) of section 9—

• (a) in subsection (2) of that section, for “subsections (3) and (4)” substitute “ subsection (4) ”, and

• (b) in subsection (4)(b) of that section, for “subsections (1) to (3)” substitute “ subsections (1) and (2) ”.

• (4) Omit sections 13 and 14 and Schedule 5 (transitional provision for expenditure incurred on or before 31 December 1983).

FA 1993

3

• (1) Schedule 20A to FA 1993 (as inserted by Part 1 of Schedule 33 to FA 2008) is renumbered as Schedule 20B to that Act.

• (2) In the following provisions, for “Schedule 20A” substitute “ Schedule 20B ”

• (a) section 6(1A) of OTA 1975,

• (b) paragraph 15(9A) of Schedule 17 to FA 1980, and

• (c) section 185(1ZA)(b) of FA 1993.

ICTA

4

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

SCHEDULE 46

Main duty of senior accounting officer

1

• (1) The senior accounting officer of a qualifying company must take reasonable steps to ensure that the company establishes and maintains appropriate tax accounting arrangements.

• (2) The senior accounting officer of a qualifying company must, in particular, take reasonable steps—

• (a) to monitor the accounting arrangements of the company, and

• (b) to identify any respects in which those arrangements are not appropriate tax accounting arrangements.

Certificate for Commissioners

2

• (1) The senior accounting officer of a qualifying company must provide the Commissioners with a certificate for each financial year of the company.

• (2) The certificate must—

• (a) state whether the company had appropriate tax accounting arrangements throughout the financial year, and

• (b) if it did not, give an explanation of the respects in which the accounting arrangements of the company were not appropriate tax accounting arrangements.

• (3) The certificate must be provided—

• (a) by such means and in such form as is reasonably specified by an officer of Revenue and Customs, and

• (b) not later than the end of the period for filing the company's accounts for the financial year (or such later time as an officer of Revenue and Customs may have allowed).

• (4) A certificate may relate to more than one qualifying company.

Notifying Commissioners of name of senior accounting officer

3

• (1) For each financial year a qualifying company must ensure that the Commissioners are notified of the name of each person who was its senior accounting officer at any time during the year.

• (2) The notification must be given—

• (a) by such means and in such form as is reasonably specified by an officer of Revenue and Customs, and

• (b) not later than the end of the period for filing the company's accounts for the financial year (or such later time as an officer of Revenue and Customs may have allowed for providing the certificate for the financial year under paragraph 2).

• (3) A notification may relate to more than one qualifying company.

Penalty for failure to comply with main duty

4

• (1) This paragraph applies if a senior accounting officer fails to comply with paragraph 1 at any time in a financial year.

• (2) The senior accounting officer is liable to a penalty of £5,000.

• (3) A person is not liable to more than one penalty under this paragraph in respect of the same company and the same financial year.

Penalties for failure to provide certificate etc

5

• (1) This paragraph applies if a senior accounting officer—

• (a) fails to provide a certificate in accordance with paragraph 2, or

• (b) provides a certificate in accordance with that paragraph that contains a careless or deliberate inaccuracy.

• (2) The senior accounting officer is liable to a penalty of £5,000.

• (3) For the purposes of this Schedule, an inaccuracy is careless if the inaccuracy is due to a failure by the senior accounting officer to take reasonable care.

• (4) An inaccuracy in a certificate that was neither careless nor deliberate when the certificate was given is to be treated as careless if the senior accounting officer—

• (a) discovered the inaccuracy some time later, and

• (b) did not take reasonable steps to inform HMRC.

More than one senior accounting officer

6

• (1) This paragraph applies if the identity of the senior accounting officer of a company changes.

• (2) If (but for this sub-paragraph) more than one person would be liable to a penalty under paragraph 4 in respect of a financial year of the company, only the one who became the senior accounting officer latest in the year is liable to such a penalty.

• (3) If a person who is or has been the senior accounting officer of the company complies, or purports to comply, with paragraph 2 in respect of a financial year, no other person is liable to a penalty under paragraph 5 in respect of that company and that financial year.

• (4) A person who is replaced as the senior accounting officer of the company before the last day for compliance with paragraph 2 in respect of a financial year is not liable to a penalty under paragraph 5(1)(a) for failing to comply with that paragraph in respect of that company and that financial year.

Penalty for failure to notify Commissioners of name of senior accounting officer

7

A qualifying company is liable to a penalty of £5,000 if, for a financial year, the Commissioners are not notified of the name or names of its senior accounting officer or officers in accordance with paragraph 3.

Reasonable excuse

8

• (1) Liability to a penalty for a failure to comply with this Schedule does not arise if the senior accounting officer or qualifying company satisfies HMRC or (on an appeal notified to the tribunal) the tribunal that there is a reasonable excuse for the failure.