Law

Finance Act 1996

United Kingdom · statute

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In force since 2026-03-18, as the publisher states.

Copy read on 2026-11-08. The page it was read from

Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.

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Contents: 258 provisions
  1. Title and introductory text
  2. 1 Spirits: rate of duty.
  3. 2 Wine and made-wine: rates.
  4. 3 Cider: rate of duty.
  5. 4 Rates of duty and rebate.
  6. 5 Misuse of rebated kerosene.
  7. 6 Mixing of rebated oil.
  8. 7 Marked oil used as fuel for road vehicles.
  9. 8 Relief for marine voyages.
  10. 9 Rates of duty.
  11. 10 General betting duty.
  12. 11 Pool betting duty.
  13. 12 Licences for machines as well as premises.
  14. 13 Pleasure flights.
  15. 14 Increase in general rate.
  16. 15 Electrically propelled vehicles.
  17. 16 Steam powered vehicles etc.
  18. 17 Vehicles capable of conveying loads.
  19. 18 Old vehicles.
  20. 19 Old vehicles: further provisions.
  21. 20 Exemptions for vehicle testing: general.
  22. 22 Other provisions relating to Northern Ireland.
  23. 23 Licensing and registration.
  24. 24 Repeal of certain drawbacks and allowances.
  25. 25 EC Second VAT Simplification Directive.
  26. 26 Fiscal and other warehousing.
  27. 27 Value of imported goods.
  28. 28 Adaptation of aircraft and hovercraft.
  29. 29 Work on materials.
  30. 30 Refunds in connection with construction and conversion.
  31. 31 Groups: anti-avoidance.
  32. 32 Supplies of gold etc.
  33. 33 Small gifts.
  34. 34 Method of making payments on account.
  35. 35 Default surcharges.
  36. 36 Repeated misdeclaration penalty.
  37. 37 Penalties for failure to notify.
  38. 38 VAT invoices and accounting.
  39. 39 Landfill tax.
  40. 40 Charge to tax.
  41. 40A Disposals of material
  42. 41 Liability to pay tax.
  43. 42 Amount of tax.
  44. 43 Material removed from water.
  45. 43A Contaminated land.
  46. 43B Contaminated land: certificates.
  47. 43C Site restoration.
  48. 44 Mining and quarrying.
  49. 44A Quarries.
  50. 45 Pet cemeteries.
  51. 46 Power to vary.
  52. 47 Registration.
  53. 48 Information required to keep register up to date.
  54. 49 Accounting for tax and time for payment.
  55. 50 Power to assess: registered persons.
  56. 50A Power to assess: unregistered persons
  57. 51 Credit: general.
  58. 52 Bad debts.
  59. 53 Bodies concerned with the environment.
  60. 54 Appeals
  61. 54A Offer of review
  62. 54B Right to require review
  63. 54C Review by HMRC
  64. 54D Extensions of time
  65. 54E Review out of time
  66. 54F Nature of review etc
  67. 54G Bringing of appeals
  68. 55 Appeals: further provisions
  69. 56 Appeals: other provisions.
  70. 57 Review and appeal: commencement.
  71. 58 Partnership, bankruptcy, transfer of business, etc.
  72. 59 Groups of companies.
  73. 60 Information, powers, penalties, secondary liability, etc.
  74. 61 Taxable disposals: special provisions.
  75. 62 Taxable disposals: regulations.
  76. 63 Qualifying material: special provisions.
  77. 63A Qualifying fines: special provisions
  78. 65 Disposal by way of landfill.
  79. 65A Prescribed landfill site activities to be treated as disposals
  80. 66 Landfill sites.
  81. 68 Weight of material disposed of.
  82. 69 Taxable activities.
  83. 70 Interpretation: other provisions.
  84. 71 Orders and regulations.
  85. 72 Charge and rates of income tax for 1996-97.
  86. 73 Application of lower rate to income from savings.
  87. 77 Charge and rate of corporation tax for 1996.
  88. 78 Small companies.
  89. 79 Abolition of Schedule C charge etc.
  90. 80 Taxation of loan relationships.
  91. 81 Meaning of “loan relationship” etc.
  92. 82 Method of bringing amounts into account.
  93. 83 Non-trading deficit on loan relationships.
  94. 84 Debits and credits brought into account.
  95. 84A Exchange gains and losses from loan relationships
  96. 85A Computation in accordance with generally accepted accounting practice
  97. 85B Amounts recognised in determining company’s profit or loss
  98. 85C Amounts not fully recognised for accounting purposes
  99. 87 Accounting method where parties have a connection.
  100. 87A Meaning of “control” in section 87
  101. 88 Exemption from section 87 in certain cases.
  102. 88A Accounting method where rate of interest is reset
  103. 89 Inconsistent application of accounting methods.
  104. 90 Changes of accounting method.
  105. 90A Change of accounting basis applicable to assets or liabilities
  106. 91 Payments subject to deduction of tax.
  107. 91A Shares subject to outstanding third party obligations
  108. 91B Non-qualifying shares
  109. 91C Condition 1 for section 91B(6)(b)
  110. 91D Condition 2 for section 91B(6)(b)
  111. 91E Condition 3 for section 91B(6)(b)
  112. 91F Power to add, vary or remove Conditions for section 91B(6)(b)
  113. 91G Shares beginning or ceasing to be subject to section 91A or 91B
  114. 91H Payments in return for capital contribution
  115. 91I Change of partnership shares
  116. 92 Convertible securities etc: creditor relationships
  117. 92A Convertible securities etc: debtor relationships
  118. 93 Relationships linked to the value of chargeable assets.
  119. 93A Relationships linked to the value of chargeable assets: guaranteed returns
  120. 93B Loan relationships ceasing to be within section 93
  121. 93C Creditor relationships and benefit derived by connected persons
  122. 94 Indexed gilt-edged securities.
  123. 94A Loan relationships with embedded derivatives
  124. 94B Loan relationships treated differently by connected debtor and creditor
  125. 95 Gilt strips.
  126. 96 Special rules for certain other gilts.
  127. 97 Manufactured interest.
  128. 98 Collective investment schemes.
  129. 99 Insurance companies.
  130. 100 Money debts etc not arising from the lending of money
  131. 101 Financial instruments.
  132. 102 Discounted securities: income tax provisions.
  133. 103 Interpretation of Chapter.
  134. 104 Minor and consequential amendments.
  135. 105 Commencement and transitional provisions.
  136. 111 Amount or value of consideration for option.
  137. 112 Release and replacement.
  138. 116 The release date.
  139. 117 The appropriate percentage.
  140. 118 The appropriate allowance.
  141. 119 Removal of requirement for at least one year’s service.
  142. 120 Grant and exercise of share options.
  143. 121 Returns and self assessment.
  144. 122 Notional tax deductions and payments.
  145. 123 Liability of partners.
  146. 124 Retention of original records.
  147. 125 Determination of tax where no return delivered.
  148. 126 PAYE regulations.
  149. 127 Repayment postponed pending completion of enquiries.
  150. 128 Claims for reliefs involving two or more years.
  151. 129 Claims for medical insurance and vocational training relief.
  152. 130 Procedure for giving notices.
  153. 131 Interest on overdue tax.
  154. 132 Overdue tax and excessive payments by the Board.
  155. 133 Claims and enquiries.
  156. 134 Discretions exercisable by the Board etc.
  157. 135 Time limits for claims etc.
  158. 136 Appeals.
  159. 137 Schedules 13 and 16 to the Taxes Act 1988.
  160. 138 Accounting periods.
  161. 139 Surrenders of advance corporation tax.
  162. 140 Transfer of company’s assets to investment trust.
  163. 141 Roll-over relief.
  164. 142 Premiums for leases.
  165. 143 Annual payments under certain insurance policies.
  166. 144 Vocational training.
  167. 145 Personal reliefs for non-resident EEA nationals.
  168. 146 Exemptions for charities.
  169. 147 Withdrawal of relief for Class 4 contributions.
  170. 148 Mis-sold personal pensions etc.
  171. 149 Annual payments in residuary cases.
  172. 150 Income tax exemption for periodical payments of damages and compensation for personal injury.
  173. 151 Benefits under pilot schemes.
  174. 152 Jobfinder’s grant.
  175. 153 Foreign income dividends.
  176. 154 FOTRA securities.
  177. 155 Directions for payment without deduction of tax.
  178. 156 Paying and collecting agents etc.
  179. 157 Stock lending fees.
  180. 158 Transfers on death under the accrued income scheme.
  181. 159 Manufactured payments, repos, etc.
  182. 160 Investments in housing.
  183. 161 Venture capital trusts: control of companies etc.
  184. 162 Qualifying life insurance policies: certification.
  185. 163 Life assurance business losses.
  186. 164 Limits on relief for expenses.
  187. 165 Annual payments under insurance policies: deductions.
  188. 166 Equalisation reserves.
  189. 167 Industrial assurance business.
  190. 168 Capital redemption business.
  191. 169 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  192. 170 Time for amending and enquiring into returns.
  193. 171 Life or endowment business.
  194. 172 Return of contributions on or after death of member.
  195. 173 Loans to participators etc.
  196. 174 Attribution of gains to participators in non-resident companies.
  197. 175 Transactions in certain securities.
  198. 176 Retirement relief: age limits.
  199. 177 Reinvestment relief on disposal of qualifying corporate bond.
  200. 178 Sub-contractors in the construction industry.
  201. 179 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  202. 180 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  203. 181 Overseas petroleum.
  204. 182 Controlled foreign companies.
  205. 183 Rate bands.
  206. 184 Business property relief.
  207. 185 Agricultural property relief.
  208. 186 Transfers of securities to members of electronic transfer systems etc.
  209. 187 Territorial scope of the tax.
  210. 188 Removal of the two month period.
  211. 189 Transfers to members of electronic transfer systems etc.
  212. 190 Transfers between associated bodies.
  213. 191 Stock lending and collateral security arrangements.
  214. 192 Repayment or cancellation of tax.
  215. 193 Depositary receipts.
  216. 194 Rates of charge expressed as percentages.
  217. 195 Regulations concerning administration: sub-delegation to the Board.
  218. 196 Election by operator for alternative system of charge.
  219. 197 Setting of rates of interest.
  220. 198 Banks.
  221. 199 Quotation or listing of securities.
  222. 200 Domicile for tax purposes of overseas electors.
  223. 201 Enactment of Inland Revenue concessions.
  224. 202 Gilt stripping.
  225. 203 Modification of the Agriculture Act 1993.
  226. 204 Interpretation.
  227. 205 Repeals.
  228. 206 Short title.
  229. SCHEDULE 1 Mixing of rebated oil
  230. SCHEDULE 2 Vehicle licensing and registration
  231. SCHEDULE 3 Value added tax: Fiscal and other warehousing
  232. SCHEDULE 4 Value added tax: anti-avoidance provisions
  233. SCHEDULE 5 Landfill Tax
  234. SCHEDULE 6 Taxation of savings at the lower rate
  235. SCHEDULE 7 Transfer of charge under Schedule C to Schedule D
  236. SCHEDULE 12
  237. SCHEDULE 14 Loan relationships: minor and consequential amendments
  238. SCHEDULE 15 Loan relationships: savings and transitional provisions
  239. SCHEDULE 17 Claims for relief involving two or more years
  240. SCHEDULE 18 Overdue tax and excessive payments by the Board
  241. SCHEDULE 19 Self-assessment: claims and enquiries
  242. SCHEDULE 20 Self-assessment: discretions exercisable by the Board etc.
  243. SCHEDULE 21 Self-assessment: time limits
  244. SCHEDULE 22 Self-assessment: appeals
  245. SCHEDULE 24 Self-assessment: accounting periods etc.
  246. SCHEDULE 25 Self-assessment: surrenders of advance corporation tax
  247. SCHEDULE 27 Foreign income dividends
  248. SCHEDULE 28 FOTRA securities: consequential amendments
  249. SCHEDULE 29 Paying and Collecting Agents etc.
  250. SCHEDULE 32 Equalisation reserves
  251. SCHEDULE 34 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  252. SCHEDULE 35 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  253. SCHEDULE 36 Controlled foreign companies
  254. SCHEDULE 37 Banks
  255. SCHEDULE 38 Quotation or listing of securities
  256. SCHEDULE 39 Enactment of Certain Inland Revenue Extra-Statutory Concessions
  257. SCHEDULE 40 Gilt stripping: taxation provisions
  258. SCHEDULE 41 Repeals

Proposed changes to this act

No one has proposed a change to this act yet.

258 provisions

93C Creditor relationships and benefit derived by connected persons

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Propose a change

94 Indexed gilt-edged securities.

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Propose a change

94A Loan relationships with embedded derivatives

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94B Loan relationships treated differently by connected debtor and creditor

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95 Gilt strips.

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96 Special rules for certain other gilts.

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97 Manufactured interest.

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98 Collective investment schemes.

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Propose a change

99 Insurance companies.

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100 Money debts etc not arising from the lending of money

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Propose a change

101 Financial instruments.

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Propose a change

102 Discounted securities: income tax provisions.

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Propose a change

103 Interpretation of Chapter.

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Propose a change

104 Minor and consequential amendments.

Schedule 14 to this Act (which, for the purposes of both corporation tax and income tax, makes certain minor and consequential amendments in connection with the provisions of this Chapter) shall have effect.

Propose a change

105 Commencement and transitional provisions.

(1) Subject to Schedule 15 to this Act, this Chapter has effect— (a) for the purposes of corporation tax, in relation to accounting periods ending after 31st March 1996; and (b) so far as it makes provision for the purposes of income tax, in relation to the year 1996-97 and subsequent years of assessment. (2) Schedule 15 to this Act (which contains transitional provisions and savings in connection with the coming into force of this Chapter) shall have effect.

Propose a change

111 Amount or value of consideration for option.

(1) Section 149A of the Taxation of Chargeable Gains Act 1992 (consideration for grant of option under approved share option schemes not to be deemed to be equal to market value of option) shall be amended as follows. (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) In subsection (2) (grantor to be treated as if the amount or value of the consideration was its actual amount or value) for “The grantor of the option” there shall be substituted “ Both the grantor of the option and the person to whom the option is granted ”. (4) Subsection (4) (section not to affect treatment under that Act of person to whom option granted) shall cease to have effect. (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6) This section has effect in relation to any right to acquire shares in a body corporate obtained on or after 28th November 1995 by an individual by reason of his office or employment as a director or employee of a body corporate.

Propose a change

112 Release and replacement.

(1) After section 237 of the Taxation of Chargeable Gains Act 1992 there shall be inserted— Share option schemes: release and replacement of options. 237A (1) This section applies in any case where a right to acquire shares in a body corporate (“the old right”) which was obtained by an individual by reason of his office or employment as a director or employee of that or any other body corporate is released in whole or in part for a consideration which consists of or includes the grant to that individual of another right (“the new right”) to acquire shares in that or any other body corporate. (2) As respects the person to whom the new right is granted— (a) without prejudice to subsection (1) above, the new right shall not be regarded for the purposes of capital gains tax as consideration for the release of the old right; (b) the amount or value of the consideration given by him or on his behalf for the acquisition of the new right shall be taken for the purposes of section 38(1) to be the amount or value of the consideration given by him or on his behalf for the old right; and (c) any consideration paid for the acquisition of the new right shall be taken to be expenditure falling within section 38(1)(b). (3) As respects the grantor of the new right, in determining for the purposes of this Act the amount or value of the consideration received for the new right, the release of the old right shall be disregarded. (2) Section 238(4) of that Act (which provides that the release of an option under an approved share option scheme in exchange for another option, in connection with a company take-over, is not to involve a disposal, and which is superseded by subsection (1) above) shall cease to have effect. (3) This section has effect in relation to transactions effected on or after 28th November 1995.

Propose a change

116 The release date.

(1) In section 187(2) of the Taxes Act 1988 (interpretation of sections 185 and 186 of, and Schedules 9 and 10 to, that Act) in the definition of “release date” (the fifth anniversary of the date on which shares were appropriated to a participant in a profit sharing scheme) for “fifth” there shall be substituted “ third ”. (2) The amendment made by subsection (1) above shall have effect in relation to shares of a participant in a profit sharing scheme if the third anniversary of the appropriation of the shares to the participant occurs on or after the day on which this Act is passed. (3) If the third anniversary of the appropriation of any shares to a participant in a profit sharing scheme has occurred, but the fifth anniversary of their appropriation to him has not occurred, before the passing of this Act, then, in the application of sections 186 and 187 of, and Schedules 9 and 10 to, the Taxes Act 1988 in relation to those shares, the release date shall be the day on which this Act is passed.

Propose a change

117 The appropriate percentage.

(1) In Schedule 10 to the Taxes Act 1988 (further provisions relating to profit sharing schemes) for paragraph 3 (the appropriate percentage) there shall be substituted— 3 (1) For the purposes of any of the relevant provisions charging an individual to income tax under Schedule E by reason of the occurrence of an event relating to any of his shares, the “appropriate percentage” in relation to those shares is 100 per cent., unless sub-paragraph (2) below applies. (2) Where the individual— (a) ceases to be a director or employee of the grantor or, in the case of a group scheme, a participating company as mentioned in paragraph 2(a) above, or (b) reaches the relevant age, before the event occurs, the “appropriate percentage” is 50 per cent., unless paragraph 6(4) below applies. (2) In section 187(8) of that Act (determination of certain values and percentages where shares are appropriated to a participant at different times) paragraph (b) (which relates to the appropriate percentage), and the word “and” immediately preceding it, shall cease to have effect. (3) Subsections (1) and (2) above have effect in relation to the occurrence, on or after the day on which this Act is passed, of events by reason of whose occurrence any provision of section 186 or 187 of, or Schedule 9 or 10 to, the Taxes Act 1988 charges an individual to income tax under Schedule E.

Propose a change

118 The appropriate allowance.

(1) In section 186(12) of the Taxes Act 1988 (determination of the appropriate allowance for the purposes of the charge to tax on capital receipts by a participant in an approved profit sharing scheme)— (a) for “£100” there shall be substituted “ £60 ”; and (b) for “five years” there shall be substituted “ three years ”. (2) Subsection (1) above has effect for the year 1997-98 and subsequent years of assessment.

Propose a change

119 Removal of requirement for at least one year’s service.

(1) In Schedule 5 to the Finance Act 1989 (employee share ownership trusts) in paragraph 4(5)(a) (for a trust to be a qualifying ESOT, its beneficiaries must have been employees or directors of the company for at least one year) the words “not less than one year and” shall cease to have effect. (2) This section applies to trusts established on or after the day on which this Act is passed.

Propose a change

120 Grant and exercise of share options.

(1) In Schedule 5 to the Finance Act 1989 (employee share ownership trusts), in paragraph 4 (the trust deed must contain provision as to the beneficiaries) after sub-paragraph (2) there shall be inserted— (2A) The trust deed may provide that a person is a beneficiary at a given time if at that time he is eligible to participate in a savings-related share option scheme within the meaning of Schedule 9 to the Taxes Act 1988— (a) which was established by a company within the founding company’s group, and (b) which is approved under that Schedule. (2B) Where a trust deed contains a rule conforming with sub-paragraph (2A) above it must provide that the only powers and duties which the trustees may exercise in relation to persons who are beneficiaries by virtue only of that rule are those which may be exercised in accordance with the provisions of a scheme such as is mentioned in that sub-paragraph. (2) In consequence of the amendment made by subsection (1) above, section 69 of, and Schedule 5 to, the Finance Act 1989 (which respectively make provision about chargeable events in relation to the trustees of qualifying employee share ownership trusts and the requirements to be satisfied by such trusts) shall be amended in accordance with the following provisions of this section. (3) In subsection (4) of that section (meaning of “qualifying terms” for the purposes of the provision that the transfer of securities to beneficiaries is a chargeable event if it is not on qualifying terms)— (a) in paragraph (a) (securities which are transferred at the same time must be transferred on similar terms) after “time” there shall be inserted “ other than those transferred on a transfer such as is mentioned in subsection (4ZA) below ”; (b) in paragraph (b) (securities must have been offered to all the persons who are beneficiaries), after “trust deed” there shall be inserted “ by virtue of a rule which conforms with paragraph 4(2), (3) or (4) of Schedule 5 to this Act ”; and (c) in paragraph (c) (securities must be transferred to all such beneficiaries who have accepted the offer) for “beneficiaries” there shall be substituted “ persons ”. (4) After subsection (4) of that section there shall be inserted— (4ZA) For the purposes of subsection (1)(b) above a transfer of securities is also made on qualifying terms if— (a) it is made to a person exercising a right to acquire shares, and (b) that right was obtained in accordance with the provisions of a savings-related share option scheme within the meaning of Schedule 9 to the Taxes Act 1988— (i) which was established by, or by a company controlled by, the company which established the trust, and (ii) which is approved under that Schedule, and (c) that right is being exercised in accordance with the provisions of that scheme, and (d) the consideration for the transfer is payable to the trustees. (5) In sub-paragraph (4) of paragraph 4 of that Schedule (trust deed may provide for charity to be beneficiary if there are no beneficiaries falling within a rule conforming with sub-paragraph (2) or (3)) after “sub-paragraph (2)” there shall be inserted “ , (2A) ”. (6) In sub-paragraph (7) of that paragraph (trust deed must not provide for a person to be a beneficiary unless he falls within a rule conforming with sub-paragraph (2), (3) or (4)) after “sub-paragraph (2)” there shall be inserted “ , (2A) ”. (7) In sub-paragraph (8) of that paragraph (trust deed must provide that person with material interest in founding company cannot be a beneficiary) after “at a particular time (the relevant time)” there shall be inserted “ by virtue of a rule which conforms with sub-paragraph (2), (3) or (4) above ”. (8) In paragraph 5(2) of that Schedule (trust deed must be so expressed that it is apparent that the general functions of the trustees are as mentioned in paragraphs (a) to (e)) after paragraph (c) there shall be inserted— (cc) to grant rights to acquire shares to persons who are beneficiaries under the terms of the trust deed; . (9) In paragraph 9 of that Schedule (trust deed must provide that transfers of securities to beneficiaries must be on qualifying terms and within the qualifying period) in sub-paragraph (2) (meaning of qualifying terms)— (a) in paragraph (a) (securities which are transferred at the same time must be transferred on similar terms) after “time” there shall be inserted “ other than those transferred on a transfer such as is mentioned in sub-paragraph (2ZA) below ”; (b) in paragraph (b) (securities must have been offered to all the persons who are beneficiaries) after “trust deed” there shall be inserted “ by virtue of a rule which conforms with paragraph 4(2), (3) or (4) above ”; and (c) in paragraph (c) (securities must be transferred to all such beneficiaries who have accepted the offer) for “beneficiaries” there shall be substituted “ persons ”. (10) After sub-paragraph (2) of that paragraph there shall be inserted— (2ZA) For the purposes of sub-paragraph (1) above a transfer of securities is also made on qualifying terms if— (a) it is made to a person exercising a right to acquire shares, and (b) that right was obtained in accordance with the provisions of a savings-related share option scheme within the meaning of Schedule 9 to the Taxes Act 1988— (i) which was established by, or by a company controlled by, the founding company, and (ii) which is approved under that Schedule, and (c) that right is being exercised in accordance with the provisions of that scheme, and (d) the consideration for the transfer is payable to the trustees. (11) In paragraph 10 of that Schedule (trust deed must not contain features not essential or reasonably incidental to purposes mentioned in that paragraph)— (a) after “acquiring sums and securities,” there shall be inserted “ granting rights to acquire shares to persons who are eligible to participate in savings-related share option schemes approved under Schedule 9 to the Taxes Act 1988, transferring shares to such persons, ”; and (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12) This section has effect in relation to trusts established on or after the day on which this Act is passed.

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121 Returns and self assessment.

(1) In subsection (1) of section 8 of the Taxes Management Act 1970 (personal return), and in subsection (1) of section 8A of that Act (trustee’s return), after the words “year of assessment,” there shall be inserted the words “ and the amount payable by him by way of income tax for that year, ”. (2) In subsection (1A) of each of those sections, the words from “and the amounts referred to” to the end shall cease to have effect. (3) After that subsection of each of those sections there shall be inserted the following subsection— (1AA) For the purposes of subsection (1) above— (a) the amounts in which a person is chargeable to income tax and capital gains tax are net amounts, that is to say, amounts which take into account any relief or allowance a claim for which is included in the return; and (b) the amount payable by a person by way of income tax is the difference between the amount in which he is chargeable to income tax and the aggregate amount of any income tax deducted at source and any tax credits to which section 231 of the principal Act applies. (4) For subsection (1) of section 9 of that Act (returns to include self-assessment) there shall be substituted the following subsection— (1) Subject to subsection (2) below, every return under section 8 or 8A of this Act shall include a self-assessment, that is to say— (a) an assessment of the amounts in which, on the basis of the information contained in the return and taking into account any relief or allowance a claim for which is included in the return, the person making the return is chargeable to income tax and capital gains tax for the year of assessment; and (b) an assessment of the amount payable by him by way of income tax, that is to say, the difference between the amount in which he is assessed to income tax under paragraph (a) above and the aggregate amount of any income tax deducted at source and any tax credits to which section 231 of the principal Act applies. (5) In subsection (1)(b) of section 11AA of that Act (return of profits to include self-assessment), for the words “, allowance or repayment of tax” there shall be substituted the words “ or allowance ”. (6) In subsection (1)(a) of section 12AA of that Act (partnership return), after the words “so chargeable” there shall be inserted the words “ and the amount payable by way of income tax by each such partner ”. (7) For subsection (1A) of that section there shall be substituted the following subsection— (1A) For the purposes of subsection (1) above— (a) the amount in which a partner is chargeable to income tax or corporation tax is a net amount, that is to say, an amount which takes into account any relief or allowance for which a claim is made; and (b) the amount payable by a partner by way of income tax is the difference between the amount in which he is chargeable to income tax and the aggregate amount of any income tax deducted at source and any tax credits to which section 231 of the principal Act applies. (8) This section and sections 122, 123, 125 to 127 and 141 below— (a) so far as they relate to income tax and capital gains tax, have effect as respects the year 1996-97 and subsequent years of assessment, and (b) so far as they relate to corporation tax, have effect as respects accounting periods ending on or after the appointed day for the purposes of Chapter III of Part IV of the Finance Act 1994.

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122 Notional tax deductions and payments.

(1) At the end of subsection (1) of section 9 of the Taxes Management Act 1970 (as substituted by section 121(4) above) there shall be inserted the words “ but nothing in this subsection shall enable a self-assessment to show as repayable any income tax treated as deducted or paid by virtue of section 233(1), 246D(1), 249(4), 421(1), 547(5) or 599A(5) of the principal Act. ” (2) At the end of subsection (1) of section 59B of that Act (payment of income tax and capital gains tax) there shall be inserted the words “ but nothing in this subsection shall require the repayment of any income tax treated as deducted or paid by virtue of section 233(1), 246D(1), 249(4), 421(1), 547(5) or 599A(5) of the principal Act. ” (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6) In subsection (1)(b) of section 421 of that Act (taxation of borrower when loan released), for the words “no assessment shall be made on him in respect of” there shall be substituted the words “ he shall not be liable to pay ”. (7) The following shall cease to have effect, namely— (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) in subsection (6) of section 599A of that Act (charge to tax: payments out of surplus funds), the words from “subject” to “and”; and (c) subsection (7) of that section.

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123 Liability of partners.

(1) In subsection (2) of section 12AA of the Taxes Management Act 1970 (partnership return) after the words “with the notice” there shall be inserted the words “ or a successor of his ”. (2) In subsection (3) of that section after the words “the partner” there shall be inserted the words “ or a successor of his ”. (3) In subsection (7)(a) of that section, the words “any part of” shall cease to have effect. (4) At the end of that section there shall be inserted the following subsections— (11) In this Act “successor”, in relation to a person who is required to make and deliver, or has made and delivered, a return in pursuance of a notice under subsection (2) or (3) above, but is no longer available, means— (a) where a partner is for the time being nominated for the purposes of this subsection by a majority of the relevant partners, that partner; and (b) where no partner is for the time being so nominated, such partner as— (i) in the case of a notice under subsection (2) above, is identified in accordance with rules given with that notice; or (ii) in the case of a notice under subsection (3) above, is nominated for the purposes of this subsection by an officer of the Board; and “predecessor” and “successor”, in relation to a person so nominated or identified, shall be construed accordingly. (12) For the purposes of subsection (11) above a nomination under paragraph (a) of that subsection, and a revocation of such a nomination, shall not have effect in relation to any time before notice of the nomination or revocation is given to an officer of the Board. (13) In this section “relevant partner” means a person who was a partner at any time during the period for which the return was made or is required, or the personal representatives of such a person. (5) In subsection (1) of section 12AB of that Act (partnership return to include partnership statement)— (a) in paragraph (a), for the words “each period of account ending within the period in respect of which the return is made” there shall be substituted the words “ the period in respect of which the return is made and each period of account ending within that period ”; (b) in sub-paragraph (i) of that paragraph, for the words “that period” there shall be substituted the words “ the period in question ”; (c) after that sub-paragraph there shall be inserted the following sub-paragraph— (ia) the amount of the consideration which, on that basis, has accrued to the partnership in respect of each disposal of partnership property during that period, ; and (d) in paragraph (b), after the words “such period” there shall be inserted the words “ as is mentioned in paragraph (a) above ” and after the word “loss,” there shall be inserted the word “ consideration, ”. (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8) In subsection (1)(b) of section 93A of that Act (failure to make partnership return), after the word “he” there shall be inserted the words “ or a successor of his ”. (9) In subsections (3) and (4) of that section, after the words “the representative partner” there shall be inserted the words “ or a successor of his ”. (10) In subsection (6) of that section— (a) after the words “the representative partner” there shall be inserted the words “ or a successor of his ”; and (b) after the words “that partner”, in both places where they occur, there shall be inserted the words “ or successor ”. (11) In subsection (7) of that section, for the words “the representative partner had a reasonable excuse for not delivering the return” there shall be substituted the words “ the person for the time being required to deliver the return (whether the representative partner or a successor of his) had a reasonable excuse for not delivering it ”. (12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14) In subsection (1) of section 118 of that Act (interpretation), for the definition of “successor” there shall be substituted the following definition— “successor”, in relation to a person who is required to make and deliver, or has made and delivered, a return under section 12AA of this Act, and “predecessor” and “successor”, in relation to the successor of such a person, shall be construed in accordance with section 12AA(11) of this Act; .

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124 Retention of original records.

(1) The Taxes Management Act 1970, as it has effect— (a) for the purposes of income tax and capital gains tax, as respects the year 1996-97 and subsequent years of assessment, and (b) for the purposes of corporation tax, as respects accounting periods ending on or after the day appointed under section 199 of the Finance Act 1994 for the purposes of Chapter III of Part IV of that Act (self-assessment management provisions), shall be amended in accordance with the following provisions of this section. (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) After that subsection there shall be inserted— (4A) The records which fall within this subsection are— (a) any statement in writing such as is mentioned in— (i) subsection (1) of section 234 of the principal Act (amount of qualifying distribution and tax credit), or (ii) subsection (1) of section 352 of that Act (gross amount, tax deducted, and actual amount paid, in certain cases where payments are made under deduction of tax), which is furnished by the company or person there mentioned, whether after the making of a request or otherwise; (b) any certificate or other record (however described) which is required by regulations under section 566(1) of the principal Act to be given to a sub-contractor (within the meaning of Chapter IV of Part XIII of that Act) on the making of a payment to which section 559 of that Act (deductions on account of tax) applies; (c) any such record as may be requisite for making a correct and complete claim in respect of, or otherwise requisite for making a correct and complete return so far as relating to, an amount of tax— (i) which has been paid under the laws of a territory outside the United Kingdom, or (ii) which would have been payable under the law of such a territory but for a relief to which section 788(5) of the principal Act (relief for promoting development and relief contemplated by double taxation arrangements) applies. (4) In subsection (5) of that section (penalty for failure to comply with section 12B(1) or (2A)) for “Subject to subsection (5A)” there shall be substituted “ Subject to subsections (5A) and (5B) ”. (5) After subsection (5A) of that section there shall be inserted— (5B) Subsection (5) above also does not apply where— (a) the records which the person fails to keep or preserve are records falling within paragraph (a) of subsection (4A) above; and (b) an officer of the Board is satisfied that any facts which he reasonably requires to be proved, and which would have been proved by the records, are proved by other documentary evidence furnished to him. (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7) In sub-paragraph (4) of that paragraph (penalty for failure to comply with paragraph 2A(1)) at the beginning there shall be inserted “ Subject to sub-paragraph (5) below, ”. (8) After that sub-paragraph there shall be inserted— (5) Sub-paragraph (4) above does not apply where— (a) the records which the person fails to keep or preserve are records falling within paragraph (a) of section 12B(4A) of this Act; and (b) an officer of the Board is satisfied that any facts which he reasonably requires to be proved, and which would have been proved by the records, are proved by other documentary evidence furnished to him. (9) The amendments made by this section shall not have effect in relation to— (a) any time before this Act is passed, or (b) any records which a person fails to preserve before this Act is passed.

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125 Determination of tax where no return delivered.

(1) For subsection (1) of section 28C of the Taxes Management Act 1970 (determination of tax where no return delivered) there shall be substituted the following subsections— (1) This section applies where— (a) a notice has been given to any person under section 8 or 8A of this Act (the relevant section), and (b) the required return is not delivered on or before the filing date. (1A) An officer of the Board may make a determination of the following amounts, to the best of his information and belief, namely— (a) the amounts in which the person who should have made the return is chargeable to income tax and capital gains tax for the year of assessment; and (b) the amount which is payable by him by way of income tax for that year; and subsection (1AA) of section 8 or, as the case may be, section 8A of this Act applies for the purposes of this subsection as it applies for the purposes of subsection (1) of that section. (2) In subsection (3) of that section the words “or 11AA” shall cease to have effect. (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) After subsection (5) of section 59B of that Act (payment of income tax and capital gains tax) there shall be inserted the following subsection— (5A) Where a determination under section 28C of this Act which has effect as a person’s self-assessment is superseded by his self-assessment under section 9 of this Act, any amount of tax which is payable or repayable by virtue of the supersession shall be payable or (as the case may be) repayable on or before the day given by subsection (3) or (4) above.

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126 PAYE regulations.

(1) After subsection (9) of section 59A of the Taxes Management Act 1970 (payments on account of income tax) there shall be inserted the following subsection— (10) Regulations under section 203 of the principal Act (PAYE) may provide that, for the purpose of determining the amount of any such excess as is mentioned in subsection (1) above, any necessary adjustments in respect of matters prescribed by the regulations shall be made to the amount of tax deducted at source under that section. (2) After subsection (7) of section 59B of that Act (payment of income tax and capital gains tax) there shall be inserted the following subsection— (8) Regulations under section 203 of the principal Act (PAYE) may provide that, for the purpose of determining the amount of the difference mentioned in subsection (1) above, any necessary adjustments in respect of matters prescribed by the regulations shall be made to the amount of tax deducted at source under that section.

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127 Repayment postponed pending completion of enquiries.

After subsection (4) of section 59B of the Taxes Management Act 1970 (payment of income tax and capital gains tax) there shall be inserted the following subsection— (4A) Where in the case of a repayment the return on the basis of which the person’s self-assessment was made under section 9 of this Act is enquired into by an officer of the Board— (a) nothing in subsection (3) or (4) above shall require the repayment to be made before the day on which, by virtue of section 28A(5) of this Act, the officer’s enquiries are treated as completed; but (b) the officer may at any time before that day make the repayment, on a provisional basis, to such extent as he thinks fit.

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128 Claims for reliefs involving two or more years.

(1) In section 42 of the Taxes Management Act 1970 (procedure for making claims etc.)— (a) subsections (3A) and (3B) (which are superseded by subsection (2) below) shall cease to have effect; (b) in subsection (7)(a), the words “534, 535, 537A, 538” shall cease to have effect; and (c) after subsection (11) there shall be inserted the following subsection— (11A) Schedule 1B to this Act shall have effect as respects certain claims for relief involving two or more years of assessment. (2) After Schedule 1A to that Act there shall be inserted, as Schedule 1B, the provisions set out in Schedule 17 to this Act (claims for reliefs involving two or more years). (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11) This section (except subsections (1)(b) and (6) above) and Schedule 17 to this Act have effect as respects claims made (or deemed to be made) in relation to the year 1996-97 or later years of assessment. (12) Subsection (1)(b) above has effect as respects claims made in relation to the year 1997-98 or later years of assessment.

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129 Claims for medical insurance and vocational training relief.

(1) Nothing in section 42 of the Taxes Management Act 1970 (procedure for making claims etc.), or Schedule 1A to that Act (claims etc. not included in returns), shall apply in relation to— (a) any claim under subsection (6)(b) of section 54 (medical insurance relief) of the Finance Act 1989 (“the 1989 Act”); or (b) any claim under subsection (5)(b) of section 32 (vocational training relief) of the Finance Act 1991 (“the 1991 Act”). (2) In section 54(6)(b) of the 1989 Act andsection 32(5)(b) of the 1991 Act, after the words “on making a claim” there shall be inserted the words “ in accordance with regulations ”. (3) In section 57(1) of the 1989 Act (medical insurance relief: supplementary), after paragraph (a) there shall be inserted the following paragraph— (aa) make provision for and with respect to appeals against a decision of an officer of the Board or the Board with respect to a claim under section 54(6)(b) above; . (4) In section 33(1) of the 1991 Act (vocational training relief: supplementary), after paragraph (a) there shall be inserted the following paragraph— (aa) make provision for and with respect to appeals against a decision of an officer of the Board or the Board with respect to a claim under section 32(5)(b) above; . (5) Subsection (1)(a) above shall not apply in relation to claims made before the coming into force of regulations made by virtue of section 57(1)(aa) of the 1989 Act. (6) Subsection (1)(b) above shall not apply in relation to claims made before the coming into force of regulations made by virtue of section 33(1)(aa) of the 1991 Act.

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130 Procedure for giving notices.

(1) Section 42 of, and Schedule 1A to, the Taxes Management Act 1970, as they have effect— (a) for the purposes of income tax and capital gains tax, as respects the year 1996-97 and subsequent years of assessment, and (b) for the purposes of corporation tax, as respects accounting periods ending on or after the day appointed under section 199 of the Finance Act 1994 for the purposes of Chapter III of Part IV of that Act (self-assessment management provisions), shall be amended in accordance with the following provisions of this section. (2) In subsection (7) of section 42 (which contains a list of provisions, claims under which must be made in accordance with subsection (6)) the following words shall cease to have effect, that is to say— (a) in paragraph (a), “62A,” and “401,”; and (b) in paragraph (c), “30,”, “33,”, “48, 49,” and “124A,”. (3) In subsection (10) of that section (section 42 to apply in relation to elections and notices as it applies in relation to claims) the words “and notices” shall cease to have effect. (4) In subsection (11) of that section (Schedule 1A to apply as respects any claim, election or notice made otherwise than in a return under section 8 etc) for the words “, election or notice” there shall be substituted “ or election ”. (5) In paragraph 1 of Schedule 1A (claims etc. not included in returns), in the definition of “claim”, for the words “means a claim, election or notice” there shall be substituted “ means a claim or election ”.

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131 Interest on overdue tax.

(1) Section 110 of the Finance Act 1995 (interest on overdue tax) shall be deemed to have been enacted with the insertion after subsection (3) of the following subsection— (4) So far as it relates to partnerships whose trades, professions or businesses were set up and commenced before 6th April 1994, subsection (1) above has effect as respects the year 1997-98 and subsequent years of assessment. (2) In subsection (3) of section 86 of the Taxes Management Act 1970 (which was substituted by the said section 110), for the words “section 93” there shall be substituted the words “ section 92 ”. (3) In Schedule 19 to the Finance Act 1994, paragraph 23 (which is superseded by the said section 110) shall cease to have effect.

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132 Overdue tax and excessive payments by the Board.

Schedule 18 to this Act (which amends enactments relating to overdue tax or excessive payments by the Board) shall have effect.

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133 Claims and enquiries.

Schedule 19 to this Act (which, for purposes connected with self-assessment, further amends provisions relating to claims and enquiries) shall have effect.

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134 Discretions exercisable by the Board etc.

(1) Schedule 20 to this Act (which in connection with self-assessment modifies enactments by virtue of which a decision or other action affecting an assessment may be or is required to be taken by the Board, or one of their officers, before the making of the assessment) shall have effect. (2) Subject to subsection (3) below, the amendments made by that Schedule shall have effect— (a) for the purposes of income tax and capital gains tax, as respects the year 1996-97 and subsequent years of assessment; and (b) for the purposes of corporation tax, as respects accounting periods ending on or after the day appointed under section 199 of the Finance Act 1994 for the purposes of Chapter III of Part IV of that Act (self-assessment management provisions). (3) Paragraphs 22 and 23 of that Schedule shall have effect in relation to shares issued on or after 6th April 1996.

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135 Time limits for claims etc.

(1) Schedule 21 to this Act (which in connection with self-assessment modifies enactments which impose time limits on the making of claims, elections, adjustments and assessments and the giving of notices, and enactments which provide for the giving of notice to the inspector) shall have effect. (2) Subject to subsections (3) to (5) below, the amendments made by that Schedule shall have effect— (a) for the purposes of income tax and capital gains tax, as respects the year 1996-97 and subsequent years of assessment; and (b) for the purposes of corporation tax, as respects accounting periods ending on or after the day appointed under section 199 of the Finance Act 1994 for the purposes of Chapter III of Part IV of that Act (self-assessment management provisions). (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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136 Appeals.

Schedule 22 to this Act (which makes provision, in connection with self-assessment, about appeals) shall have effect.

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137 Schedules 13 and 16 to the Taxes Act 1988.

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138 Accounting periods.

Schedule 24 to this Act (which makes provision, in connection with self-assessment, in relation to accounting periods) shall have effect.

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