Finance Act 1996

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180 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

181 Overseas petroleum.

(1) In subsection (1) of section 196 of the Taxation of Chargeable Gains Act 1992 (interpretation of sections 194 and 195), for “licence” there shall be substituted “ UK licence ”. (2) After subsection (1) of section 196 of that Act there shall be inserted the following subsection— (1A) For the purposes of section 194 a licence other than a UK licence relates to an undeveloped area at any time if, at that time— (a) no development has actually taken place in any part of the licensed area; and (b) no condition for the carrying out of development anywhere in that area has been satisfied— (i) by the grant of any consent by the authorities of a country or territory exercising jurisdiction in relation to the area; or (ii) by the approval or service on the licensee, by any such authorities, of any programme of development. ; and in subsection (2) of that section for “subsection (1) above” there shall be substituted “ subsections (1) and (1A) above ”. (3) For subsection (5) of section 196 of that Act there shall be substituted the following subsections— (5) In sections 194 and 195 and this section— “foreign oil concession” means any right to search for or win overseas petroleum, being a right conferred or exercisable (whether or not by virtue of a licence) in relation to a particular area; “interest” in relation to a licence, includes, where there is an agreement which— relates to oil from the whole or any part of the licensed area, and was made before the extraction of the oil to which it relates, any entitlement under that agreement to, or to a share of, either that oil or the proceeds of its sale; “licence” means any UK licence or foreign oil concession; “licensed area” (subject to subsection (4) above)— in relation to a UK licence, has the same meaning as in Part I of the Oil Taxation Act 1975; and in relation to a foreign oil concession, means the area to which the concession applies; “licensee”— in relation to a UK licence, has the same meaning as in Part I of the Oil Taxation Act 1975; and in relation to a foreign oil concession, means the person with the concession or any person having an interest in it; “oil”— except in relation to a UK licence, means any petroleum (within the meaning of the Petroleum (Production) Act 1934); and in relation to such a licence, has the same meaning as in Part I of the Oil Taxation Act 1975; “overseas petroleum” means any oil that exists in its natural condition at a place to which neither the Petroleum (Production) Act 1934 nor the Petroleum (Production) Act (Northern Ireland) 1964 applies; and “UK licence” means a licence within the meaning of Part I of the Oil Taxation Act 1975. (5A) References in sections 194 and 195 to a part disposal of a licence shall include references to the disposal of any interest in a licence. (4) Subsections (1) to (3) above shall have effect in relation to any disposal on or after 13th September 1995 and subsection (3) shall also have effect, and be deemed always to have had effect, for the construction of section 195 of the Taxation of Chargeable Gains Act 1992 in its application to disposals before that date. (5) Where enactments re-enacted in the Taxation of Chargeable Gains Act 1992 apply, instead of that Act, in the case of any disposal before 13th September 1995, this section shall have effect as if it required amendments equivalent to those made by subsection (3) above to have effect, and be deemed always to have had effect, for the construction of any enactment corresponding to section 195 of that Act.

182 Controlled foreign companies.

Schedule 36 to this Act (which contains amendments of Chapter IV of Part XVII of the Taxes Act 1988) shall have effect in relation to accounting periods of a controlled foreign company, within the meaning of that Chapter, beginning on or after 28th November 1995.

183 Rate bands.

(1) For the Table in Schedule 1 to the Inheritance Tax Act 1984 there shall be substituted— Table of Rates of Tax Portion of value | Rate of tax Lower limit | Upper limit | Per cent. £ | £ 0 | 200,000 | Nil 200,000 | 40 (2) Subsection (1) above shall apply to any chargeable transfer made on or after 6th April 1996; and section 8 of that Act (indexation of rate bands) shall not have effect as respects any difference between the retail prices index for the month of September 1994 and that for the month of September 1995.

184 Business property relief.

(1) The Inheritance Tax Act 1984 shall be amended as follows. (2) In section 105(1) (relevant business property for the purposes of business property relief)— (a) in paragraph (b) (unquoted shares and securities attracting 100 per cent. relief where they gave the transferor control of a company)— (i) the words “ shares in or ” shall be omitted; and (ii) for the words “shares or securities owned by the transferor” there shall be substituted “ securities owned by the transferor and any unquoted shares so owned ”; (b) for paragraph (bb) (unquoted shares attracting 100 per cent. relief in other cases) there shall be substituted the following paragraph— (bb) any unquoted shares in a company; and (c) paragraph (c) (unquoted shares attracting 50 per cent. relief) shall be omitted. (3) In section 107(4) (replacement of property with unquoted shares), for the words from the beginning to “such shares” there shall be substituted— (4) Without prejudice to subsection (1) above, where any shares falling within section 105(1)(bb) above which are . (4) In section 113A(3A)(b) (which contains a reference to shares and securities falling within paragraph (b) of section 105(1)), after “(b)” there shall be inserted “ or (bb) ”. (5) For the removal of any doubt, the following subsection shall be inserted in section 113A (provisions applying to business property relief where there is a transfer within seven years of death) after subsection (7)— (7A) The provisions of this Chapter for the reduction of value transferred shall be disregarded in any determination for the purposes of this section of whether there is a potentially exempt or chargeable transfer in any case. (6) This section— (a) so far as it inserts a new subsection (7A) in section 113A, has effect in relation to any transfer of value on or after 28th November 1995; and (b) so far as it makes any other provision, has effect— (i) in relation to any transfer of value on or after 6th April 1996, and (ii) for the purposes of any charge to tax by reason of an event occurring on or after 6th April 1996, in relation to transfers of value before that date.

185 Agricultural property relief.

(1) Chapter II of Part V of the Inheritance Tax Act 1984 (agricultural property) shall be amended as follows. (2) In section 116 (relief for transfers of agricultural property) after subsection (5) there shall be inserted— (5A) Where, in consequence of the death on or after 1st September 1995 of the tenant or, as the case may be, the last surviving tenant of any property, the tenancy— (a) becomes vested in a person, as a result of his being a person beneficially entitled under the deceased tenant’s will or other testamentary writing or on his intestacy, and (b) is or becomes binding on the landlord and that person as landlord and tenant respectively, subsection (2)(c) above shall have effect as if the tenancy so vested had been a tenancy beginning on the date of the death. (5B) Where in consequence of the death on or after 1st September 1995 of the tenant or, as the case may be, the last surviving tenant of any property, a tenancy of the property or of any property comprising the whole or part of it— (a) is obtained by a person under or by virtue of an enactment, or (b) is granted to a person in circumstances such that he is already entitled under or by virtue of an enactment to obtain such a tenancy, but one which takes effect on a later date, or (c) is granted to a person who is or has become the only or only remaining applicant, or the only or only remaining person eligible to apply, under a particular enactment for such a tenancy in the particular case, subsection (2)(c) above shall have effect as if the tenancy so obtained or granted had been a tenancy beginning on the date of the death. (5C) Subsection (5B) above does not apply in relation to property situate in Scotland. (5D) If, in a case where the transferor dies on or after 1st September 1995,— (a) the tenant of any property has, before the death, given notice of intention to retire in favour of a new tenant, and (b) the tenant’s retirement in favour of the new tenant takes place after the death but not more than thirty months after the giving of the notice, subsection (2)(c) above shall have effect as if the tenancy granted or assigned to the new tenant had been a tenancy beginning immediately before the transfer of value which the transferor is treated by section 4(1) above as making immediately before his death. (5E) In subsection (5D) above and this subsection— “the new tenant” means— the person or persons identified in a notice of intention to retire in favour of a new tenant as the person or persons who it is desired should become the tenant of the property to which that notice relates; or the survivor or survivors of the persons so identified, whether alone or with any other person or persons; “notice of intention to retire in favour of a new tenant” means, in the case of any property, a notice or other written intimation given to the landlord by the tenant, or (in the case of a joint tenancy or tenancy in common) all of the tenants, of the property indicating, in whatever terms, his or their wish that one or more persons identified in the notice or intimation should become the tenant of the property; “the retiring tenant’s tenancy” means the tenancy of the person or persons giving the notice of intention to retire in favour of a new tenant; “the tenant’s retirement in favour of the new tenant” means— the assignment, or (in Scotland) assignation, of the retiring tenant’s tenancy to the new tenant in circumstances such that the tenancy is or becomes binding on the landlord and the new tenant as landlord and tenant respectively; or the grant of a tenancy of the property which is the subject of the retiring tenant’s tenancy, or of any property comprising the whole or part of that property, to the new tenant and the acceptance of that tenancy by him; and, except in Scotland, “grant” and “acceptance” in paragraph (b) above respectively include the deemed grant, and the deemed acceptance, of a tenancy under or by virtue of any enactment. (3) In consequence of subsection (2) above, subsection (2A) of that section (which made, in relation to Scotland, provision which is superseded by the subsection (5A) inserted by subsection (2) above) shall cease to have effect. (4) For the removal of any doubt, the following subsection shall be inserted in section 124A (provisions applying to agricultural property relief where there is a transfer within seven years of death) after subsection (7)— (7A) The provisions of this Chapter for the reduction of value transferred shall be disregarded in any determination for the purposes of this section of whether there is a potentially exempt or chargeable transfer in any case. (5) Subsection (2) above— (a) so far as relating to subsections (5A) to (5C) of section 116 of the Inheritance Tax Act 1984, has effect in any case where the death of the tenant or, as the case may be, the sole surviving tenant, occurs on or after 1st September 1995; and (b) so far as relating to subsections (5D) and (5E) of that section, has effect in any case where the death of the transferor occurs on or after 1st September 1995. (6) Subsection (3) above has effect in any case where the death of the tenant or, as the case may be, the sole surviving tenant, occurs on or after 1st September 1995. (7) Subsection (4) above has effect in relation to any transfer of value on or after 28th November 1995.

186 Transfers of securities to members of electronic transfer systems etc.

(1) Stamp duty shall not be chargeable on an instrument effecting a transfer of securities if the transferee is a member of an electronic transfer system and the instrument is in a form which will, in accordance with the rules of the system, ensure that the securities are changed from being held in certificated form to being held in uncertificated form so that title to them may become transferable by means of the system. (2) In this section— “certificated form” has the same meaning as in the relevant regulations; “electronic transfer system” means a system and procedures which, in accordance with the relevant regulations, enable title to securities to be evidenced and transferred without a written instrument; “member”, in relation to an electronic transfer system, means a person who is permitted by the operator of the system to transfer by means of the system title to securities held by him in uncertificated form; “operator” means a person approved by the Treasury under the relevant regulations as operator of an electronic transfer system; “the relevant regulations” means regulations under section 785 of the Companies Act 2006 (transfer without written instrument); “securities” means stock or marketable securities; “uncertificated form” has the same meaning as it has in the relevant regulations. (3) This section applies in relation to instruments executed on or after 1st July 1996. (4) This section shall be construed as one with the Stamp Act 1891.

187 Territorial scope of the tax.

(1) In section 86 of the Finance Act 1986 (introduction) after subsection (3) there shall be added— (4) Stamp duty reserve tax shall be chargeable in accordance with the provisions of this Part of this Act— (a) whether the agreement, transfer, issue or appropriation in question is made or effected in the United Kingdom or elsewhere, and (b) whether or not any party is resident or situate in any part of the United Kingdom. (2) The amendment made by subsection (1) above shall have effect— (a) in relation to an agreement, if— (i) the agreement is conditional and the condition is satisfied on or after 1st July 1996; or (ii) the agreement is not conditional and is made on or after that date; and (b) in relation to a transfer, issue or appropriation made or effected on or after that date.

188 Removal of the two month period.

(1) In section 87 of the Finance Act 1986 (the principal charge) in subsection (2) (tax charged on the expiry of the period of two months beginning with the relevant day unless the first and second conditions are fulfilled before that period expires) the following shall be omitted— (a) the words “ the expiry of the period of two months beginning with ”, and (b) the words from “ unless ” to the end. (2) In section 88 of that Act (special cases) in subsection (1) (which provides for instruments on which stamp duty is not chargeable by virtue of certain enactments to be disregarded for the purposes of section 87(4) and (5)) before paragraph (a) there shall be inserted— (aa) section 65(1) of the Finance Act 1963 (renounceable letters of allotment etc), (ab) section 14(1) of the Finance Act (Northern Ireland) 1963 (renounceable letters of allotment etc.), . (3) Subsections (2) and (3) of that section (which are superseded by subsection (2) above) shall cease to have effect. (4) In section 92(1) of that Act (repayment or cancellation of tax where the conditions in section 87(4) and (5) are shown to have been fulfilled after the expiry of the period of two months beginning with the relevant day but before the expiry of six years so beginning)— (a) for “after the expiry of the period of two months (beginning with the relevant day, as defined in section 87(3))” there shall be substituted “ on or after the relevant day (as defined in section 87(3)) ”; and (b) for “(so beginning)” there shall be substituted “ (beginning with that day) ”. (5) The amendments made by this section shall have effect in relation to an agreement to transfer securities if— (a) the agreement is conditional and the condition is satisfied on or after 1st July 1996; or (b) the agreement is not conditional and is made on or after that date.

189 Transfers to members of electronic transfer systems etc.

(1) In section 88 of the Finance Act 1986 (special cases) after subsection (1) there shall be inserted— (1A) An instrument on which stamp duty is not chargeable by virtue of section 186 of the Finance Act 1996 (transfers of securities to members of electronic transfer systems etc) shall be disregarded in construing section 87(4) and (5) above unless— (a) the transfer is made by a stock exchange nominee; and (b) the maximum stamp duty chargeable on the instrument, apart from section 186 of the Finance Act 1996, would be 50p; and in this subsection “stock exchange nominee” means a person designated for the purposes of section 127 of the Finance Act 1976 as a nominee of The Stock Exchange by an order made by the Secretary of State under subsection (5) of that section. (2) This section has effect in relation to an agreement to transfer securities if an instrument is executed on or after 1st July 1996 in pursuance of the agreement.

190 Transfers between associated bodies.

(1) In section 88 of the Finance Act 1986 (special cases) after subsection (1A) there shall be inserted— (1B) An instrument on which stamp duty is not chargeable by virtue of section 42 of the Finance Act 1930 or section 11 of the Finance Act (Northern Ireland) 1954 (transfer between associated bodies corporate) shall be disregarded in construing section 87(4) and (5) above in any case where— (a) the property mentioned in section 42(2)(a) of the Finance Act 1930 or, as the case may be, section 11(2)(a) of the Finance Act (Northern Ireland) 1954 consists of chargeable securities of any particular kind acquired in the period of two years ending with the day on which the instrument was executed; and (b) the body corporate from which the conveyance or transfer there mentioned is effected acquired the chargeable securities— (i) in a transaction which was given effect by an instrument of transfer on which stamp duty was not chargeable by virtue of section 81 above; (ii) in pursuance of an agreement to transfer securities as regards which section 87 above did not apply by virtue of section 89 below; or (iii) in circumstances with regard to which the charge to stamp duty or stamp duty reserve tax was treated as not arising by virtue of regulations under section 116 or 117 of the Finance Act 1991. (2) At the end of that section there shall be added— (4) For the purposes of subsection (1B) above, if the securities mentioned in paragraph (a) of that subsection cannot (apart from this subsection) be identified, securities shall be taken as follows, that is to say, securities of the same kind acquired later in the period of two years there mentioned (and not taken under this subsection for the purposes of any earlier instrument) shall be taken before securities acquired earlier in that period. (5) If, in a case where subsection (4) above applies, some, but not all, of the securities taken in accordance with that subsection were acquired as mentioned in paragraph (b) of subsection (1B) above by the body corporate mentioned in that paragraph, the stamp duty reserve tax chargeable under section 87 above by virtue of subsection (1B) above shall not exceed the tax that would have been so chargeable had the agreement to transfer the securities related only to such of the securities so taken as were so acquired. (6) Where a person enters into an agreement for securities to be transferred to him or his nominee, the securities shall be treated for the purposes of subsections (1B)(a) and (4) above as acquired by that person at the time when he enters into the agreement, unless the agreement is conditional, in which case they shall be taken to be acquired by him when the condition is satisfied. (3) This section has effect where the instrument on which stamp duty is not chargeable by virtue of section 42 of the Finance Act 1930 or section 11 of the Finance Act (Northern Ireland) 1954 is executed on or after 4th January 1996 in pursuance of an agreement to transfer securities made on or after that date.

191 Stock lending and collateral security arrangements.

(1) After section 89A of the Finance Act 1986 (exceptions from section 87 for public issues) there shall be inserted— Section 87: exceptions for stock lending and collateral security arrangements. 89B (1) Where a person (P) has contracted to sell chargeable securities of a particular kind in the ordinary course of his business as a market maker in chargeable securities of that kind and, to enable him to fulfil the contract, he enters into an arrangement under which— (a) another person (Q) is to transfer chargeable securities to P or his nominee, and (b) in return, chargeable securities of the same kind and amount are to be transferred (whether or not by P or his nominee) to Q or his nominee, section 87 above shall not apply as regards an agreement to transfer chargeable securities which is made for the purpose of performing the obligation to transfer chargeable securities described in paragraph (a) or (b) above. (2) Where the arrangement mentioned in subsection (1) above is also one under which— (a) an amount of chargeable securities of some other kind is to be transferred by P or his nominee to Q or his nominee by way of security for the performance of the obligation described in paragraph (b) of that subsection, and (b) on performance of that obligation, the securities mentioned in paragraph (a) above, or chargeable securities of the same kind and amount as those securities, are to be transferred to P or his nominee, section 87 above shall also not apply as regards an agreement to transfer chargeable securities which is made for the purpose of performing the obligation to transfer chargeable securities described in paragraph (a) or (b) above. (3) Where, to enable Q to make the transfer to P or his nominee which is mentioned in paragraph (a) of subsection (1) above, Q enters into an arrangement under which— (a) another person (R) is to transfer chargeable securities to Q or his nominee, and (b) in return, chargeable securities of the same kind and amount are to be transferred (whether or not by Q or his nominee) to R or his nominee, section 87 above shall not apply as regards an agreement to transfer chargeable securities which is made for the purpose of performing the obligation to transfer chargeable securities described in paragraph (a) or (b) above. (4) Where the arrangement mentioned in subsection (3) above is also one under which— (a) an amount of chargeable securities of some other kind is to be transferred by Q or his nominee to R or his nominee by way of security for the performance of the obligation described in paragraph (b) of that subsection, and (b) on performance of that obligation, the securities mentioned in paragraph (a) above, or chargeable securities of the same kind and amount as those securities, are to be transferred to Q or his nominee, section 87 above shall also not apply as regards an agreement to transfer chargeable securities which is made for the purpose of performing the obligation to transfer chargeable securities described in paragraph (a) or (b) above. (5) For the purposes of this section a person is a market maker in chargeable securities of a particular kind if he— (a) holds himself out at all normal times in compliance with the rules of The Stock Exchange as willing to buy and sell chargeable securities of that kind at a price specified by him, and (b) is recognised as doing so by The Stock Exchange. (6) The Treasury may by regulations provide that for subsection (5) above (as it has effect for the time being) there shall be substituted a subsection containing a different definition of a market maker for the purposes of this section. (7) Regulations under subsection (6) above shall apply in relation to any agreement to transfer chargeable securities in pursuance of an arrangement entered into on or after such day after 1st July 1996 as is specified in the regulations. (8) The power to make regulations under subsection (6) above shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons. (2) This section applies in relation to agreements to transfer chargeable securities in pursuance of an arrangement entered into on or after 1st July 1996.

192 Repayment or cancellation of tax.

(1) In consequence of section 188(1) above, subsections (4), (5) and (8) of section 87 of the Finance Act 1986 (exemption from stamp duty reserve tax where an instrument is executed etc) shall cease to have effect. (2) In section 88 of that Act (which provides for instruments on which stamp duty is not chargeable by virtue of certain enactments to be disregarded for the purposes of section 87(4) and (5)) in subsections (1), (1A) and (1B) for “section 87(4) and (5) above” there shall be substituted “ section 92(1A) and (1B) below ”. (3) In section 92 of that Act (repayment or cancellation of tax) in subsection (1) (which refers to the conditions in section 87(4) and (5))— (a) for “section 87(4) and (5)” there shall be substituted “ subsections (1A) and (1B) below ”; and (b) for “the following provisions of this section shall apply” there shall be substituted “ subsections (2) to (4A) of this section shall apply ”. (4) After that subsection, there shall be inserted— (1A) The first condition is that an instrument is (or instruments are) executed in pursuance of the agreement and the instrument transfers (or the instruments between them transfer) to B or, as the case may be, to his nominee all the chargeable securities to which the agreement relates. (1B) The second condition is that the instrument (or each instrument) transferring the chargeable securities to which the agreement relates is duly stamped in accordance with the enactments relating to stamp duty if it is an instrument which, under those enactments, is chargeable with stamp duty or otherwise required to be stamped. (5) At the end of that section there shall be added— (6) In this section “the enactments relating to stamp duty” means the Stamp Act 1891 and any enactment which amends or is required to be construed together with that Act. (6) The amendments made by this section shall have effect in relation to an agreement to transfer securities if— (a) the agreement is conditional and the condition is satisfied on or after 1st July 1996; or (b) the agreement is not conditional and is made on or after that date.

193 Depositary receipts.

(1) Section 93 of the Finance Act 1986 (depositary receipts) shall be amended in accordance with the following provisions of this section. (2) In subsection (1) (charge to stamp duty reserve tax where certain things are done in pursuance of an arrangement) in paragraph (b) (transfer or issue to, or appropriation by, a person falling within subsection (3))— (a) after “transferred or issued to” there shall be inserted “ the person mentioned in paragraph (a) above or ”; and (b) for “such a person” there shall be substituted “ the person mentioned in paragraph (a) above or a person falling within subsection (3) below ”. (3) In subsection (6) (payment by instalments) in paragraph (d) (instrument received by person falling within subsection (3)) for “subsection (3)” there shall be substituted “ subsection (2) or (3) ”. (4) This section has effect— (a) so far as relating to the charge to tax under section 93(1) of the Finance Act 1986, where securities are transferred, issued or appropriated on or after 1st July 1996 (whenever the arrangement was made); (b) so far as relating to the charge to tax under section 93(10) of that Act, in relation to instalments payable on or after 1st July 1996.

194 Rates of charge expressed as percentages.

(1) In section 87 of the Finance Act 1986, in subsection (6) (which specifies the rate at which stamp duty reserve tax under that section is charged) for “50p for every £100 or part of £100” there shall be substituted “ 0.5 per cent. ” (2) In section 93 of that Act (depositary receipts)— (a) in subsection (4) (rate of charge) for “£1.50 for every £100 or part of £100” there shall be substituted “ 1.5 per cent. ”; (b) in subsection (5) (which applies subsection (4) with modifications in certain cases where the securities are transferred by a chargeable instrument) for the words from “as if “£1.50” read” onwards there shall be substituted “ as if “1.5 per cent.” read “1 per cent.” ”; and (c) in subsection (10) (payment in instalments etc) in paragraph (b), for “£1.50 for every £100 or part of £100” there shall be substituted “ 1.5 per cent. of the amount ”. (3) Section 94(8) of that Act (which defines “the day of The Stock Exchange reforms” for the purposes of section 93(5) and which becomes unnecessary in consequence of the amendment made by subsection (2)(b) above) shall be omitted. (4) In section 96 of that Act (clearance services)— (a) in subsection (2) (rate of charge) for “£1.50 for every £100 or part of £100” there shall be substituted “ 1.5 per cent. ”; (b) in subsection (3) (which applies subsection (2) with modifications in certain cases where the securities are transferred by a chargeable instrument) for the words from “as if “£1.50” read” onwards there shall be substituted “ as if “1.5 per cent.” read “1 per cent.” ”; and (c) in subsection (8) (payment in instalments etc) in paragraph (b), for “£1.50 for every £100 or part of £100” there shall be substituted “ 1.5 per cent. of the amount ”. (5) Section 96(12) of that Act (which defines “the day of The Stock Exchange reforms” for the purposes of subsection (3) and which becomes unnecessary in consequence of the amendment made by subsection (4)(b) above) shall be omitted. (6) In section 99 of that Act (interpretation) after subsection (12) there shall be added— (13) Where the calculation of any tax in accordance with the provisions of this Part results in an amount which is not a multiple of one penny, the amount so calculated shall be rounded to the nearest penny, taking any½p as nearest to the next whole penny above. (7) Subsections (1) to (5) above have effect in accordance with the following provisions of this subsection, that is to say— (a) in relation to the charge to tax under section 87 of the Finance Act 1986, subsection (1) above applies where— (i) the agreement to transfer is conditional and the condition is satisfied on or after 1st July 1996; or (ii) the agreement is not conditional and is made on or after 1st July 1996; (b) in relation to the charge to tax under section 93(1) of that Act, paragraphs (a) and (b) of subsection (2) above apply where securities are transferred, issued or appropriated on or after 1st July 1996 (whenever the arrangement was made) and subsection (3) above has effect accordingly; (c) in relation to the charge to tax under section 93(10) of that Act, paragraph (c) of subsection (2) above applies in relation to instalments payable on or after 1st July 1996; (d) in relation to the charge to tax under section 96(1) of that Act, paragraphs (a) and (b) of subsection (4) above apply where securities are transferred or issued on or after 1st July 1996 (whenever the arrangement was made) and subsection (5) above has effect accordingly; (e) in relation to the charge to tax under section 96(8) of that Act, paragraph (c) of subsection (4) above applies in relation to instalments payable on or after 1st July 1996.

195 Regulations concerning administration: sub-delegation to the Board.

In section 98 of the Finance Act 1986 (Treasury regulations with respect to administration etc) after subsection (1) there shall be inserted— (1A) The power conferred on the Treasury by subsection (1) above includes power to make provision conferring or imposing on the Board functions which involve the exercise of a discretion.

196 Election by operator for alternative system of charge.

(1) In section 70 of the Finance Act 1986 (clearance services) in subsection (1) (which, subject to subsection (9), makes provision with respect to stamp duty on transfers into clearance services) after “Subject to subsection (9)” there shall be inserted “ and section 97A ”. (2) In section 96 of that Act (clearance services) in subsection (1) (which, subject to subsection (5) and section 97, provides for stamp duty reserve tax to be chargeable on transfers into clearance services) for “section 97” there shall be substituted “ sections 97 and 97A ”. (3) After section 97 of that Act (exceptions) there shall be inserted— Clearance services: election for alternative system of charge. 97A (1) A person whose business is or includes the provision of clearance services for the purchase and sale of chargeable securities or relevant securities (an “operator”) may, with the approval of the Board, elect that stamp duty and stamp duty reserve tax shall be chargeable in accordance with this section in connection with those clearance services. (2) An election under subsection (1) above— (a) shall come into force on such date as may be notified to the operator by the Board in giving their approval; and (b) shall continue in force unless and until it is terminated in accordance with the following provisions of this section. (3) If and so long as an election under subsection (1) above is in force, stamp duty or stamp duty reserve tax (as the case may require) shall, in connection with the clearance services to which the election relates, be chargeable in relation to— (a) a transfer or issue falling within section 70(1) or 96(1) above, (b) an agreement falling within section 90(4) above by virtue of section 96(1) above, or (c) an agreement falling within section 90(5) above, as it would be chargeable apart from sections 70, 90(4) and (5) and 96 above. (4) Where stamp duty or stamp duty reserve tax is chargeable by virtue of subsection (3) above in relation to a transfer, issue or agreement, sections 70, 90(4) and (5) and 96 above shall not have effect in relation to that transfer, issue or agreement. (5) Nothing in subsection (3) or (4) above affects the application of section 70 or 96 above in relation to a transfer falling within section 70(1) or 96(1) above by the operator or his nominee to, or to a nominee of, another operator in relation to whom no election under subsection (1) above is for the time being in force. (6) The Board may require the operator, as a condition of the approval of his election under subsection (1) above, to make and maintain such arrangements as they may consider satisfactory— (a) for the collection of stamp duty reserve tax chargeable in accordance with this section, and (b) for complying, or securing compliance, with the provisions of this Part and of regulations under section 98 below, so far as relating to such tax. (7) Where the operator is not resident in the United Kingdom and has no branch or agency in the United Kingdom, the Board may require him, as a condition of the approval of his election under subsection (1) above, to appoint and, so long as the election remains in force, maintain a tax representative. (8) A person shall not be an operator’s tax representative under this section unless that person— (a) has a business establishment in the United Kingdom, and (b) is approved by the Board. (9) A person who is at any time an operator’s tax representative under this section— (a) shall be entitled to act on the operator’s behalf for the purposes of stamp duty and stamp duty reserve tax in connection with the clearance services to which the operator’s election under subsection (1) above relates, (b) shall secure (where appropriate by acting on the operator’s behalf) the operator’s compliance with and discharge of the obligations and liabilities to which the operator is subject, in connection with the clearance services to which the operator’s election under subsection (1) above relates, by virtue of legislation relating to stamp duty or stamp duty reserve tax (including obligations and liabilities arising before he became the operator’s tax representative), and (c) shall be personally liable in respect of any failure to secure the operator’s compliance with or discharge of any such obligation or liability, and in respect of anything done for purposes connected with acting on the operator’s behalf, as if the obligations and liabilities imposed on the operator were imposed jointly and severally on the tax representative and the operator. (10) An election under subsection (1) above may be terminated— (a) by not less than thirty days’ notice given by the operator to the Board or by the Board to the operator; or (b) if there is or has been a breach of a condition of the approval of the election imposed by virtue of subsection (6) or (7) above, by a notice— (i) given by the Board to the operator, (ii) taking effect on the giving of the notice or at such later time as may be specified in the notice, and (iii) stating that it is given by reason of the breach of condition. (11) Where an election under subsection (1) above is terminated, section 96 above shall have effect as if chargeable securities of the same amounts and kinds as are, immediately before the termination, held by the operator or his nominee in connection with the provision of the clearance services, had, immediately after the termination, been transferred to the operator or, as the case may be, to the nominee by a transfer falling within subsection (1) of that section. (12) In this section “relevant securities” has the same meaning as in section 70 above. (4) Section 97(2) of that Act (no charge to tax under section 96 on transfers to a stock exchange nominee or to, or to a nominee of, a recognised investment exchange or recognised clearing house) shall not have effect in relation to any transfer effected on or after 1st July 1996. (5) In section 99(10) of that Act (interpretation of “chargeable securities” in sections 93, 94 and 96) for “and 96” there shall be substituted “ , 96 and 97A ”. (6) Subsections (1), (2), (3) and (5) above shall come into force on 1st July 1996.

197 Setting of rates of interest.

(1) The rate of interest applicable for the purposes of an enactment to which this section applies shall be the rate which for the purposes of that enactment is provided for by regulations made by the Treasury under this section. (2) This section applies to— (a) paragraphs 7 and 8(1) of Schedule 6 to the Finance Act 1994 (interest payable to the Commissioners of Customs and Excise in connection with air passenger duty); (b) sections 60(6), (7) and (8) of and paragraphs 21 and 22 of Schedule 7 to that Act (interest on amounts of insurance premium tax and on amounts payable by the Commissioners in respect of that tax); (c) sections 74, 78 and 85A(2) and (3) of the Value Added Tax Act 1994 (interest on VAT recovered or recoverable by assessment and interest payable in cases of official error); . . . (d) sections 56(3) to (5) of and paragraphs 26 and 29 of Schedule 5 to this Act (interest payable to or by the Commissioners in connection with landfill tax)and (e) paragraph 17 of Schedule 5 to the Finance Act 1997 (interest on amounts repayable in respect of overpayments by the Commissioners in connection with excise duties, insurance premium tax and landfill tax). (f) sections 126 and 127 of the Finance Act 1999 (interest on overdue customs duty and on repayments of amounts paid by way of customs duty). (g) the following provisions of Schedule 6 to the Finance Act 2000 (interest payable to or by the Commissioners in connection with climate change levy), that is to say, paragraphs 41(2)(f), 62(3)(f), 66, 70(1)(b) , 81(3) and 123(4) to (6) . (h) the following provisions of the Finance Act 2001 (interest payable to or by the Commissioners in connection with aggregates levy), that is to say— (i) sections 25(2)(f) , 30(3)(f) and 42(4) to (6) ; (ii) paragraphs 6 and 8(3)(a) of Schedule 5; and (iii) paragraphs 2 and 6(1)(b) of Schedule 8. (i) Parts 2 and 3 of Schedule 3 to the Finance Act 2001 (interest payable on repayments etc.). (3) Regulations under this section may— (a) make different provision for different enactments or for different purposes of the same enactment, (b) either themselves specify a rate of interest for the purposes of an enactment or make provision for any such rate to be determined, and to change from time to time, by reference to such rate or the average of such rates as may be referred to in the regulations, (c) provide for rates to be reduced below, or increased above, what they otherwise would be by specified amounts or by reference to specified formulae, (d) provide for rates arrived at by reference to averages or formulae to be rounded up or down, (e) provide for circumstances in which changes of rates of interest are or are not to take place, and (f) provide that changes of rates are to have effect for periods beginning on or after a day determined in accordance with the regulations in relation to interest running from before that day, as well as in relation to interest running from, or from after, that day. (4) The power to make regulations under this section shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons. (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6) The words “ the rate applicable under section 197 of the Finance Act 1996 ” shall be substituted— (a) for the words “the specified rate” in each of paragraphs 7(1) and (3) and 9(1) of Schedule 6 to the Finance Act 1994 (air passenger duty); (b) for the words “the prescribed rate” in each of sub-paragraphs (1) and (3) of paragraph 21 of Schedule 7 to that Act (insurance premium tax); (c) for the words from “such rate” onwards in sub-paragraph (2) of paragraph 22 of that Schedule; and (d) in the Value Added Tax Act 1994— (i) for the words “the prescribed rate” in each of subsections (1), (2) and (4) of section 74, and (ii) for the words from “such rates” onwards in subsection (3) of section 78. (7) Subsections (1) and (6) above shall have effect for periods beginning on or after such day as the Treasury may by order made by statutory instrument appoint and shall have effect in relation to interest running from before that day, as well as in relation to interest running from, or from after, that day; and different days may be appointed under this subsection for different purposes.

198 Banks.

Schedule 37 to this Act (which re-defines “bank” for certain purposes, and makes related amendments) shall have effect.

199 Quotation or listing of securities.

Schedule 38 to this Act (which contains amendments of enactments referring to the quotation or listing of securities) shall have effect.

200 Domicile for tax purposes of overseas electors.

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

201 Enactment of Inland Revenue concessions.

Schedule 39 to this Act has effect for the purpose of enacting certain extra-statutory concessions relating to income tax, corporation tax, capital gains tax, and stamp duty.

202 Gilt stripping.

(1) In section 47 of the Finance Act 1942 (Treasury regulations with respect to the transfer and registration of Government stock), after paragraph (bb) of subsection (1) there shall be inserted the following paragraphs— (bc) for the exchange of any such stock and bonds (whenever issued) for strips thereof; (bd) for exchanges by which such strips (whether deriving from the same security or from different securities) are consolidated into a single security of a description so specified; . (2) After subsection (1A) of that section (transfer of deceased persons’ stocks and bonds) there shall be inserted the following subsections— (1B) In this section “strip”, in relation to any stock or bond, means a security issued under the National Loans Act 1968 which— (a) is issued for the purpose of representing the right to, or of securing— (i) a payment corresponding to a payment of interest or principal remaining to be made under the stock or bond, or (ii) two or more payments each corresponding to a different payment remaining to be so made; (b) is issued in conjunction with the issue of one or more other securities which, together with that security, represent the right to, or secure, payments corresponding to every payment remaining to be made under the stock or bond; and (c) is not itself a security that represents the right to, or secures, payments corresponding to a part of every payment so remaining. (1C) For the purposes of subsection (1B) of this section, where the balance has been struck for a dividend on any stock or bond, any payment to be made in respect of that dividend shall, at times falling after that balance has been struck, be treated as not being a payment remaining to be made under the stock or bond. (1D) Without prejudice to the generality of the powers conferred by the preceding provisions of this section (but subject to subsection (1E) of this section), regulations made by virtue of paragraph (bc) or (bd) of subsection (1) of this section may— (a) provide, for the purpose of authorising the making of exchanges, for any stock or bonds to be treated as issued on such terms as may be specified in the regulations; (b) contain such provision as the Treasury think fit about the circumstances in which and the conditions subject to which exchanges may be effected; and (c) contain any such provision as could be contained in rules made under section 14(3) of the National Loans Act 1968 (Treasury rules as to exchange of securities). (1E) Regulations made by virtue of subsection (1)(bc) or (bd) of this section shall not make provision for the exchange of any stock or bonds, or of any strips, in any cases other than those where the exchange is at the request of the holder or in accordance with an order made by a court. (1F) Regulations under this section may make different provision for different cases and contain such exceptions and exclusions as the Treasury think fit; and the powers of the Treasury to make regulations under this section are without prejudice to any of their powers under the National Loans Act 1968. (3) After section 2 of the National Debt (Stockholders Relief) Act 1892 (date for striking balance for a dividend on stock) there shall be inserted the following section— Payment of dividend on stock stripped after balance struck. 2A (1) Where— (a) any stock is exchanged for strips of that stock, and (b) that exchange takes place after the balance has been struck for a dividend on that stock but before the day on which that dividend is payable, any person who would have been entitled to that dividend but for the exchange shall remain entitled to that dividend notwithstanding the exchange. (2) The Treasury may by order made by statutory instrument provide that for the purposes of this section and section 47(1C) of the Finance Act 1942, the balance for any dividend on any stock is to be deemed to be struck at a time which, by such a period as is specified in the order, precedes the time when the balance is actually struck. (3) A period specified in an order under subsection (2) above shall not exceed 7 days; and an order made under that subsection may make different provision for different cases. (4) In this section “strip”, in relation to any stock, has the meaning given by section 47 of the Finance Act 1942. (4) In section 16 of the National Loans Act 1968 (supplemental provisions as to national debt), after subsection (4) there shall be inserted the following subsection— (4A) In subsections (3) and (4) above the references to stock or registered bonds issued under this Act include references to a strip (within the meaning of section 47 of the Finance Act 1942) of any stock or bond (whether the stock or bond is issued under this Act or otherwise). (5) The Treasury may by regulations make provision for securing that enactments and subordinate legislation which— (a) apply in relation to government securities or to any description of such securities, or (b) for any other purpose refer (in whatever terms) to such securities or to any description of them, have effect with such modifications as the Treasury may think appropriate in consequence of the making of any provision or arrangements for, or in connection with, the issue or transfer of strips of government securities or the consolidation of such strips into other securities. (6) Regulations under subsection (5) above may— (a) impose a charge to income tax, corporation tax, capital gains tax, inheritance tax, stamp duty or stamp duty reserve tax; (b) include provision applying generally to, or to any description of, enactments or subordinate legislation; (c) make different provision for different cases; and (d) contain such incidental, supplemental, consequential and transitional provision as the Treasury think appropriate. (7) The power to make regulations under subsection (5) above shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons. (8) Schedule 40 to this Act (which makes provision in relation to strips for taxation purposes) shall have effect. (9) The enactments that may be modified by regulations under this section shall include section 95 above and the enactments contained in Schedule 40 to this Act. (10) In this section— “government securities” means any securities included in Part I of Schedule 11 to the Finance Act 1942; “modifications” includes amendments, additions and omissions; and “subordinate legislation” has the same meaning as in the Interpretation Act 1978; and expressions used in this section and in section 47 of the Finance Act 1942 have the same meanings in this section as in that section.

203 Modification of the Agriculture Act 1993.

(1) Part I of Schedule 2 to the Agriculture Act 1993 (taxation provisions applying to the reorganisation of the milk marketing boards) shall have effect, and be deemed always to have had effect, in accordance with subsections (2) to (4) below where— (a) any approved scheme has made provision as to the functions of a milk marketing board in the period after the transfers taking effect on the vesting day under section 11 of that Act; (b) regulations have been made by virtue of section 14(2) of that Act (provision following re-organisation) for giving effect to that provision; and (c) a transaction is or has been entered into by that board in pursuance of any obligation under those regulations to carry out those functions so far as they relate to a subsidiary of the board. (2) For the purposes of that Part of that Schedule— (a) anything done by way of entering into the transaction, or for the purpose of carrying it out, shall be deemed to have been done under and in accordance with the scheme; and (b) the terms and other provisions having effect in relation to that transaction by virtue of anything contained in, or anything done in exercise of powers conferred by, any regulations under section 14(2) of the Agriculture Act 1993 shall be deemed to be terms for which the scheme provided or, as the case may be, to be provisions of the scheme. (3) Sub-paragraph (1) of paragraph 16 of Schedule 2 to the Agriculture Act 1993 (distributions) shall have effect, and be deemed always to have had effect, in a case where the terms and provisions mentioned in subsection (2)(b) above involved or involve— (a) the issue or transfer of any shares in, or securities of, any body, (b) the conferring of any right to a distribution out of the assets of any body, (c) the conferring of any right to, or to acquire, shares in any body, or (d) the transfer to any person of any property or rights of a milk marketing board, or of the subsidiary of such a board, as if the references to the vesting day in paragraphs (a), (c), (d) and (e) of that sub-paragraph were references to the day on which the winding up of the board is completed. (4) Sub-paragraph (4) of paragraph 31 of Schedule 2 to the Agriculture Act 1993 (condition to be satisfied if body to be qualifying body by virtue of sub-paragraph (1)(c)) shall have effect, and be deemed always to have had effect, as if— (a) the reference, in relation to a company, to 90 per cent. of its ordinary share capital were a reference to 70 per cent. of its ordinary share capital; and (b) the references to shares having been issued to any person included references to their having been allotted to that person. (5) Paragraph 1 of Schedule 2 to the Agriculture Act 1993 (tax continuity with successor bodies) shall have effect, and be deemed to have had effect, in relation to any relevant transfer after 31st December 1995 to a society registered under the Industrial and Provident Societies Act 1965 of— (a) a trade, or part of a trade, of a milk marketing board, or (b) any property, rights or liabilities of such a board, as it has effect in relation to any transfer under section 11 of that Act to a qualifying body. (6) Paragraphs 16, 20, 25, 26, 28 and 29 of Schedule 2 to the Agriculture Act 1993 shall have effect, and be deemed to have had effect, in relation to any relevant transfer after 31st December 1995 of assets of a milk marketing board to a society registered under the Industrial and Provident Societies Act 1965 as if— (a) the terms and other provisions of the transaction for effecting the transfer were contained in an approved scheme; (b) the society were a relevant successor of that board; and (c) references in those paragraphs to the vesting day were references to the day on which the winding up of the board is completed. (7) For the purposes of subsections (5) and (6) above, a transfer of anything to a society registered under the Industrial and Provident Societies Act 1965 is a relevant transfer if— (a) it is a transfer in pursuance of regulations made by virtue of section 14(2) of the Agriculture Act 1993; (b) it is not a transfer of shares in a subsidiary of a milk marketing board; and (c) the condition mentioned in sub-paragraph (5) of paragraph 31 of Schedule 2 to that Act would have been met in relation to that society if the provision made as to the persons to whom the membership of the society is open were contained in an approved scheme providing for the transfer. (8) Paragraph 20 of Schedule 2 to the Agriculture Act 1993 (treatment of acquisition of certain shares and securities) shall not apply, and shall be deemed never to have applied, in relation to the acquisition of any security after 31st December 1995 if the indebtedness acknowledged by that security does not fall, for the purposes of the Taxation of Chargeable Gains Act 1992, to be treated as a debt on a security (as defined in section 132 of that Act of 1992). (9) For the purposes of Part 5 of the Corporation Tax Act 2009 (loan relationships), so far as it has effect for any accounting period ending after 31st March 1996 in relation to any creditor relationship represented by a debenture issued on or after 31st December 1995, paragraph 25 of Schedule 2 to the Agriculture Act 1993 shall have effect as if sub-paragraph (2)(a) of that paragraph (deemed consideration for issue of debenture issued under approved scheme) were omitted. (10) For the purposes of the Taxation of Chargeable Gains Act 1992, where any debenture to which paragraph 25 of Schedule 2 to the Agriculture Act 1993 applies has been or is issued at any time after 31st December 1995, the indebtedness acknowledged by that debenture shall be deemed (where that would not otherwise be the case) to be, and always to have been, a debt on a security (as defined in section 132 of that Act of 1992). (11) Expressions used in this section and in Part I of the Agriculture Act 1993 have the same meanings in this section as in that Part.

204 Interpretation.

In this Act “the Taxes Act 1988” means the Income and Corporation Taxes Act 1988.

205 Repeals.

(1) The enactments mentioned in Schedule 41 to this Act (which include spent provisions) are hereby repealed to the extent specified in the third column of that Schedule. (2) The repeals specified in that Schedule have effect subject to the commencement provisions and savings contained in, or referred to, in the notes set out in that Schedule.

206 Short title.

This Act may be cited as the Finance Act 1996.

SCHEDULE 1 Mixing of rebated oil

Section 6. The following is the Schedule which shall be inserted after Schedule 2 to the Misuse of rebated kerosene Hydrocarbon Oil Duties Act 1979— SCHEDULE 2A Mixing of rebated oil Part I Light oil Converting unleaded petrol into leaded petrol 1 (1) A mixture which is leaded petrol is produced in contravention of this paragraph if such a mixture is produced by— (a) adding lead to unleaded petrol in respect of which a rebate has been allowed under subsection (1) of section 13A of this Act at the rate given by subsection (1A)(a) of that section; (b) adding lead to unleaded petrol in respect of which a rebate has been allowed under subsection (1) of that section at the rate given by subsection (1A)(b) of that section; or (c) adding lead to a mixture of unleaded petrol of a description mentioned in paragraph (a) above and unleaded petrol of a description mentioned in paragraph (b) above. (2) In sub-paragraph (1) above the reference to adding lead to unleaded petrol includes a reference to adding leaded petrol to unleaded petrol. (3) This paragraph is subject to any direction given under paragraph 3 below. Adding octane enhancers to low octane unleaded petrol 2 (1) A mixture which is super-unleaded petrol is produced in contravention of this paragraph if such a mixture is produced by adding an octane enhancer to unleaded petrol in respect of which a rebate has been allowed under subsection (1) of section 13A of this Act at the rate given by subsection (1A)(b) of that section. (2) For the purposes of sub-paragraph (1) above “super-unleaded petrol” means unleaded petrol— (a) whose research octane number is not less than 96; and (b) whose motor octane number is not less than 86. (3) Subsection (1C) of section 13A applies for the purposes of this paragraph as it applies for the purposes of that section. (4) This paragraph is subject to any direction given under paragraph 3 below. Power to create exceptions 3 The Commissioners may give a direction that, in such description of circumstances as may be specified in the direction, a mixture is not produced in contravention of paragraph 1 above or (as the case may be) paragraph 2 above. Part II Heavy oil Mixing partially rebated heavy oil with unrebated heavy oil 4 A mixture of heavy oils is produced in contravention of this paragraph if such a mixture is produced by mixing— (a) gas oil in respect of which a rebate has been allowed under section 11(1)(b) of this Act; and (b) heavy oil in respect of which, on its delivery for home use, a declaration was made that it was intended for use as fuel for a road vehicle. Mixing fully rebated heavy oil with unrebated heavy oil 5 A mixture of heavy oils is produced in contravention of this paragraph if such a mixture is produced by mixing— (a) heavy oil which is neither fuel oil nor gas oil and in respect of which a rebate has been allowed under section 11(1)(c) of this Act; and (b) heavy oil in respect of which, on its delivery for home use, a declaration was made that it was intended for use as fuel for a road vehicle. Mixing fully rebated heavy oil with partially rebated heavy oil 6 A mixture of heavy oils is produced in contravention of this paragraph if such a mixture is produced by mixing— (a) heavy oil which is neither fuel oil nor gas oil and in respect of which a rebate has been allowed under section 11(1)(c) of this Act; and (b) gas oil in respect of which a rebate has been allowed under section 11(1)(b) of this Act. Complex mixtures of heavy oils 7 A mixture of heavy oils is produced in contravention of this paragraph if such a mixture is produced in contravention of more than one paragraph of paragraphs 4 to 6 above. Part III Rates of duty, etc. Rate for mixtures of light oil 8 (1) Subject to paragraph 10 below, duty under section 20AAA(1) of this Act shall be charged at the following rates. (2) In the case of a mixture produced in contravention of paragraph 1 above, the rate is the rate for light oil in force at the time that the mixture is produced. (3) In the case of a mixture produced in contravention of paragraph 2 above, the rate is the rate produced by deducting from the rate for light oil in force at the time the mixture is produced the rate of rebate which at that time is in force under section 13A(1A)(a) of this Act. (4) In this paragraph “the rate for light oil” means the rate given in the case of light oil by section 6(1) of this Act. Rate for mixtures of heavy oil 9 (1) Subject to paragraph 10 below, duty charged under subsection (2) of section 20AAA of this Act shall be charged at the rate for heavy oil in force at the time when the mixture is supplied as mentioned in that subsection. (2) In this paragraph “the rate for heavy oil” means the rate given in the case of heavy oil by section 6(1) of this Act. Credit for duty paid on ingredients of mixture 10 Where duty is charged under section 20AAA of this Act in respect of any mixture, the amount of duty produced by applying paragraph 8 or 9 above shall be reduced by the amount of any duty under section 6 of this Act which the Commissioners are satisfied has been paid in respect of any ingredient of the mixture. Interpretation 11 In this Schedule— “fuel oil” and “gas oil” have the same meanings as in section 11 of this Act; “leaded petrol” and “unleaded petrol” shall be construed in accordance with section 13A of this Act.

SCHEDULE 2 Vehicle licensing and registration

Section 23. 1 In this Schedule “the 1994 Act” means the Vehicle Excise and Registration Act 1994. Vehicle licences 2 (1) Section 7 of the 1994 Act (issue of vehicle licences) shall be amended in accordance with this paragraph. (2) After subsection (3) there shall be inserted the following subsections— (3A) A person applying for a licence shall not be required to make a declaration specified for the purposes of subsection (1)(a) if he agrees to comply with such conditions as may be specified in relation to him by the Secretary of State. (3B) The conditions which may be specified under subsection (3A) include a condition that particulars for the time being specified for the purposes of subsection (1)(b) are furnished by being transmitted to the Secretary of State by such electronic means as he may specify. (3) Sub-paragraph (2) above applies to applications made on or after the day on which this Act is passed. (4) In subsection (6)— (a) after “may provide for—” there shall be inserted the following paragraph— (aa) the return of any vehicle licence which is damaged or contains any particulars which have become illegible or inaccurate, ; (b) in paragraph (a), after “or damaged”, there shall be inserted “ or which contains any particulars which have become illegible or inaccurate ”; and (c) at the end of paragraph (b) there shall be inserted “ in any of those circumstances ”. Trade licences 3 In section 11 of the 1994 Act (trade licences), after subsection (1) there shall be inserted the following subsection— (1A) The power to prescribe conditions under subsection (1) includes, in particular, the power to prescribe conditions which are to be complied with after the licence is issued. Registration regulations 4 (1) Subsection (1) of section 22 of the 1994 Act (registration regulations) shall be amended in accordance with this paragraph. (2) In paragraph (d), after “a person by”, there shall be inserted “ , through ”. (3) In paragraph (dd), after “a person by”, there shall be inserted “ or through ”. (4) At the end of paragraph (h) there shall be inserted “ or which contain any particulars which have become illegible or inaccurate ”. (5) After paragraph (h) there shall be inserted the following paragraph— (i) provide for a fee of such amount as appears to the Secretary of State to be reasonable to be paid on the issue of new registration documents in any of the circumstances mentioned in paragraph (h). 5 In subsection (1B)(a) of section 22 of the 1994 Act, for “the other person there mentioned or to the Secretary of State or to both;” there shall be substituted “ another person there mentioned or to the Secretary of State or to another such person and to the Secretary of State; ”. 6 After subsection (1B) of section 22 of the 1994 Act there shall be inserted the following subsection— (1C) Regulations under subsection (1)(e) may, in particular, provide that registration documents need not be issued in respect of the registration of a vehicle until the vehicle has been inspected by a person specified by the Secretary of State. 7 After subsection (1C) of section 22 of the 1994 Act there shall be inserted the following subsections— (1D) The Secretary of State may by regulations require a person— (a) who surrenders a vehicle licence under section 10(2), (b) who does not renew a vehicle licence for a vehicle kept by him, or (c) who keeps an unlicensed vehicle at any place in the United Kingdom, to furnish such particulars and make such declarations as may be prescribed by the regulations, and to do so at such times and in such manner as may be so prescribed. (1E) For the purposes of subsection (1D)(b) a person shall be regarded as not renewing a vehicle licence for a vehicle kept by him if— (a) he keeps a vehicle for which a vehicle licence is in force, and (b) he does not, at such time as may be prescribed by the regulations or within such period as may be so prescribed, take out a vehicle licence to have effect from the expiry of the vehicle licence mentioned in paragraph (a). (1F) For the purposes of subsection (1D)(c) a vehicle is unlicensed if no vehicle licence is in force for the vehicle. (1G) Regulations under subsection (1D) may make such transitional provision as appears to the Secretary of State to be appropriate. Surrender of licences: repayments 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Offences 9 (1) In section 29 of the 1994 Act (penalty for using or keeping unlicensed vehicle), at the beginning of subsection (3) there shall be inserted “ Subject to subsection (3A) ”, and after subsection (3) there shall be inserted the following subsection— (3A) In the case of a person who— (a) has provided the Secretary of State with a declaration or statement (in pursuance of regulations under section 22) that the vehicle will not during a period specified in the declaration or statement be used or kept on a public road, and (b) commits an offence under subsection (1) within a period prescribed by regulations, subsection (3) applies as if the reference in paragraph (a) to level 3 were a reference to level 4. (2) This paragraph applies in relation to offences committed on or after the day on which this Act is passed. 10 In section 33 of the 1994 Act (not exhibiting licence), after subsection (3) there shall be inserted the following subsection— (4) The Secretary of State may make regulations prohibiting a person from exhibiting on a vehicle in respect of which excise duty is chargeable anything— (a) which is intended to be, or (b) which could reasonably be, mistaken for a licence which is for, or in respect of, the vehicle and which is for the time being in force. 11 (1) Section 45 of the 1994 Act (false or misleading declarations and information) shall be amended in accordance with this paragraph. (2) After subsection (2) there shall be inserted the following subsection— (2A) A person who makes a declaration or statement which— (a) is required to be made in respect of a vehicle by regulations under section 22, and (b) to his knowledge is either false or in any material respect misleading, is guilty of an offence. (3) In subsection (3) (offence of furnishing false or misleading particulars), in paragraph (a), after “required by” there shall be inserted “ virtue of ”. Offences: information and admissions 12 After section 46 of the 1994 Act there shall be inserted the following section— Duty to give information: offences under regulations. 46A (1) Subsection (2) applies where it appears to the Secretary of State— (a) that a person is a person by, through or to whom a vehicle has been sold or disposed of and that he has failed to comply with regulations made by virtue of section 22(1)(d) requiring him to furnish particulars prescribed by the regulations; (b) that a person is a person by or through whom a vehicle has been sold or disposed of and that he has failed to comply with regulations made by virtue of section 22(1)(dd) requiring him to furnish a document prescribed by the regulations; or (c) that a person is a person who is surrendering a vehicle licence, or who is not renewing a vehicle licence for a vehicle kept by him or who is keeping an unlicensed vehicle and that he has failed to comply with regulations made by virtue of section 22(1D) requiring him to furnish particulars or make a declaration prescribed by the regulations. (2) The Secretary of State may serve a notice on the person in question requiring him to give the Secretary of State such information as it in his power to give— (a) as to the identity of any person who is keeping a specified vehicle or who has kept it at a specified time or during a specified period; (b) as to the identity of any person by, through or to whom a specified vehicle has been sold or disposed of at a specified time or during a specified period; or (c) which may lead to the identification of a person falling within paragraph (a) or (b). (3) A person who fails to comply with a notice under subsection (2) is guilty of an offence. (4) A person guilty of an offence under subsection (3) is liable on summary conviction to a fine not exceeding level 3 on the standard scale. (5) In this section “specified” means specified in a notice under subsection (2). 13 After section 51 of the 1994 Act there shall be inserted the following section— Admissions: offences under regulations. 51A (1) Subsection (2) applies in relation to any proceedings in England, Wales or Northern Ireland against a person for an offence on the grounds that— (a) a vehicle has been sold or disposed of by, through or to him and he has failed to furnish particulars prescribed by regulations made by virtue of section 22(1)(d); (b) a vehicle has been sold or disposed of by or through him and he has failed to furnish a document prescribed by regulations made by virtue of section 22(1)(dd); or (c) he has surrendered, or not renewed, a vehicle licence, or is keeping an unlicensed vehicle, and has failed to furnish any particulars or make a declaration prescribed by regulations made by virtue of section 22(1D). (2) If— (a) it is appropriately proved that there has been served on the accused by post a requirement under section 46A to give information as to the identity of the person keeping the vehicle at a particular time, and (b) a statement in writing is produced to the court purporting to be signed by the accused that he was keeping the vehicle at that time, the court may accept the statement as evidence that the accused was keeping the vehicle at that time. (3) In subsection (2) “appropriately proved” has the same meaning as in section 51. Proceedings in respect of offences 14 (1) In— (a) section 47(1) and (2) of the 1994 Act (institution and conduct of proceedings in England and Wales or Northern Ireland), and (b) section 48(3) of the 1994 Act (proceedings in Scotland), after “section 29, 34” there shall in each case be inserted “ , 35A ”. (2) In section 55(1) of the 1994 Act (guilty plea by absent accused), for paragraphs (a) and (b) there shall be substituted “ an offence under section 29 or 35A ”. (3) This paragraph applies in relation to proceedings commenced on or after the day on which this Act is passed. Compounding of offences 15 In section 59 of the 1994 Act (regulations: offences), after subsection (5), there shall be inserted the following subsection— (6) The Secretary of State may, if he sees fit, compound any proceedings for an offence— (a) under subsection (1), or (b) under regulations under section 24 or 28. Regulations 16 In section 57(1) of the 1994 Act (regulations generally), the words “ (other than sections 7(2) and (3), 8, 26, 27, 52 and 54) ” shall be omitted.

SCHEDULE 3 Value added tax: Fiscal and other warehousing

Section 26. 1 In subsection (1) of section 6 of the Value Added Tax Act 1994, for the words “section 18” there shall be substituted the words “ sections 18, 18B and 18C ”. 2 In subsection (1) of section 7 of the Value Added Tax Act 1994, for the words “sections 14 and 18” there shall be substituted the words “ sections 14, 18 and 18B ”. 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 The following sections shall be inserted in the Value Added Tax Act 1994 after section 18. Fiscal warehousing. 18A (1) The Commissioners may, if it appears to them proper, upon application approve any registered person as a fiscal warehousekeeper; and such approval shall be subject to such conditions as they shall impose. (2) Subject to those conditions and to regulations made under section 18F such a person shall be entitled to keep a fiscal warehouse. (3) “Fiscal warehouse” means such place in the United Kingdom in the occupation or under the control of the fiscal warehousekeeper, not being retail premises, as he shall notify to the Commissioners in writing; and such a place shall become a fiscal warehouse on receipt by the Commissioners of that notification or on the date stated in it as the date from which it is to have effect, whichever is the later, and, subject to subsection (6) below, shall remain a fiscal warehouse so long as it is in the occupation or under the control of the fiscal warehousekeeper or until he shall notify the Commissioners in writing that it is to cease to be a fiscal warehouse. (4) The Commissioners may in considering an application by a person to be a fiscal warehousekeeper take into account any matter which they consider relevant, and may without prejudice to the generality of that provision take into account all or any one or more of the following— (a) his record of compliance and ability to comply with the requirements of this Act and regulations made hereunder; (b) his record of compliance and ability to comply with the requirements of the customs and excise Acts (as defined in the Management Act) and regulations made thereunder; (c) his record of compliance and ability to comply with Community customs provisions; (d) his record of compliance and ability to comply with the requirements of other member States relating to VAT and duties equivalent to duties of excise; (e) if the applicant is a company the records of compliance and ability to comply with the matters set out at (a) to (d) above of its directors, persons connected with its directors, its managing officers, any shadow directors or any of those persons, and, if it is a close company, the records of compliance and ability to comply with the matters set out at (a) to (d) above of the beneficial owners of the shares of the company or any of them; and (f) if the applicant is an individual the records of compliance and ability to comply with the matters set out at (a) to (d) above of any company of which he is or has been a director, managing officer or shadow director or, in the case of a close company, a shareholder or the beneficial owner of shares, and for the purposes of paragraphs (e) and (f) “connected” shall have the meaning given by section 24(7), “managing officer” the meaning given by section 61(6), “shadow director” the meaning given by section 741(2) of the Companies Act 1985 and “close company” the meaning given by the Taxes Act. (5) Subject to subsection (6) below, a person approved under subsection (1) shall remain a fiscal warehousekeeper until he ceases to be a registered person or until he shall notify the Commissioners in writing that he is to cease to be a fiscal warehousekeeper. (6) The Commissioners may if they consider it appropriate from time to time— (a) impose conditions on a fiscal warehousekeeper in addition to those conditions, if any, which they imposed under subsection (1), and vary or revoke any conditions previously imposed; (b) withdraw approval of any person as a fiscal warehousekeeper, and (c) withdraw fiscal warehouse status from any premises. (7) Any application by or on behalf of a person to be a fiscal warehousekeeper shall be in writing in such form as the Commissioners may direct and shall be accompanied by such information as they shall require. (8) Any approval by the Commissioners under subsection (1) above, and any withdrawal of approval or other act by them under subsection (6) above, shall be notified by them to the fiscal warehousekeeper in writing and shall take effect on such notification being made or on any later date specified for the purpose in the notification. (9) Without prejudice to the provisions of section 43 concerning liability for VAT, in subsections (1) and (2) above “registered person” includes any body corporate which under that section is for the time being treated as a member of a group. Fiscally warehoused goods: relief. 18B (1) Subsections (3) and (4) below apply where— (a) there is an acquisition of goods from another member State; (b) those goods are eligible goods; (c) either— (i) the acquisition takes place while the goods are subject to a fiscal warehousing regime; or (ii) after the acquisition but before the supply, if any, of those goods which next occurs, the acquirer causes the goods to be placed in a fiscal warehousing regime; and (d) the acquirer, not later than the time of the acquisition, prepares and keeps a certificate that the goods are subject to a fiscal warehousing regime, or (as the case may be) that he will cause paragraph (c)(ii) above to be satisfied; and the certificate shall be in such form and be kept for such period as the Commissioners may by regulations specify. (2) Subsections (3) and (4) below also apply where— (a) there is a supply of goods; (b) those goods are eligible goods; (c) either— (i) that supply takes place while the goods are subject to a fiscal warehousing regime; or (ii) after that supply but before the supply, if any, of those goods which next occurs, the person to whom the former supply is made causes the goods to be placed in a fiscal warehousing regime; (d) in a case falling within paragraph (c)(ii) above, the person to whom the supply is made gives the supplier, not later than the time of the supply, a certificate in such form as the Commissioners may by regulations specify that he will cause paragraph (c)(ii) to be satisfied; and (e) the supply is not a retail transaction. (3) The acquisition or supply in question shall be treated for the purposes of this Act as taking place outside the United Kingdom if any subsequent supply of those goods is while they are subject to the fiscal warehousing regime. (4) Where subsection (3) does not apply and the acquisition or supply in question falls, for the purposes of this Act, to be treated as taking place in the United Kingdom, that acquisition or supply shall be treated for the purposes of this Act as taking place when the goods are removed from the fiscal warehousing regime. (5) Where— (a) subsection (4) above applies to an acquisition or a supply, (b) the acquisition or supply is taxable and not zero-rated, and (c) the acquirer or supplier is not a taxable person but would be were it not for paragraph 1(9) of Schedule 1, paragraph 1(7) of Schedule 2 and paragraph 1(6) of Schedule 3, or any of those provisions, VAT shall be chargeable on that acquisition or supply notwithstanding that the acquirer or the supplier is not a taxable person. (6) In this section “eligible goods” means goods— (a) of a description falling within Schedule 5A; (b) upon which any import duties, as defined in article 4(10) of the Community Customs Code of 12th October 1992 (Council Regulation (EEC) No.2913/92), either have been paid or have been deferred under article 224 of that Code or regulations made under section 45 of the Management Act; (c) (in the case of goods imported from a place outside the member States) upon which any VAT chargeable under section 1(1)(c) has been either paid or deferred in accordance with Community customs provisions, and (d) (in the case of goods subject to a duty of excise) upon which that duty has been either paid or deferred under section 127A of the Management Act. (7) For the purposes of this section, apart from subsection (4), an acquisition or supply shall be treated as taking place at the material time for the acquisition or supply. (8) The Treasury may by order vary Schedule 5A by adding to or deleting from it any goods or varying any description of any goods. Warehouses and fiscal warehouses: services. 18C (1) Where— (a) a taxable person makes a supply of specified services; (b) those services are wholly performed on or in relation to goods while those goods are subject to a warehousing or fiscal warehousing regime; (c) (except where the services are the supply by an occupier of a warehouse or a fiscal warehousekeeper of warehousing or fiscally warehousing the goods) the person to whom the supply is made gives the supplier a certificate, in such a form as the Commissioners may by regulations specify, that the services are so performed; (d) the supply of services would (apart from this section) be taxable and not zero-rated; and (e) the supplier issues to the person to whom the supply is made an invoice of such a description as the Commissioners may by regulations prescribe, his supply shall be zero-rated. (2) If a supply of services is zero-rated under subsection (1) above (“the zero-rated supply of services”) then, unless there is a supply of the goods in question the material time for which is— (a) while the goods are subject to a warehousing or fiscal warehousing regime, and (b) after the material time for the zero-rated supply of services, subsection (3) below shall apply. (3) Where this subsection applies— (a) a supply of services identical to the zero-rated supply of services shall be treated for the purposes of this Act as being, at the time the goods are removed from the warehousing or fiscal warehousing regime or (if earlier) at the duty point, both made (for the purposes of his business) to the person to whom the zero-rated supply of services was actually made and made by him in the course or furtherance of his business, (b) that supply shall have the same value as the zero-rated supply of services, (c) that supply shall be a taxable (and not a zero-rated) supply, and (d) VAT shall be charged on that supply even if the person treated as making it is not a taxable person. (4) In this section “specified services” means— (a) services of an occupier of a warehouse or a fiscal warehousekeeper of keeping the goods in question in a warehousing or fiscal warehousing regime; (b) in relation to goods subject to a warehousing regime, services of carrying out on the goods operations which are permitted to be carried out under Community customs provisions or warehousing regulations as the case may be; and (c) in relation to goods subject to a fiscal warehousing regime, services of carrying out on the goods any physical operations (other than any prohibited by regulations made under section 18F), for example, and without prejudice to the generality of the foregoing words, preservation and repacking operations. Removal from warehousing: accountability. 18D (1) This section applies to any supply to which section 18B(4) or section 18C(3) applies (supply treated as taking place on removal or duty point) and any acquisition to which section 18B(5) applies (acquisition treated as taking place on removal where acquirer not a taxable person). (2) Any VAT payable on the supply or acquisition shall (subject to any regulations under subsection (3) below) be paid— (a) at the time when the supply or acquisition is treated as taking place under the section in question; and (b) by the person by whom the goods are removed or, as the case may be, together with the excise duty, by the person who is required to pay that duty. (3) The Commissioners may by regulations make provision for enabling a taxable person to pay the VAT he is required to pay by virtue of subsection (2) above at a time later than that provided by that subsection; and they may make different provisions for different descriptions of taxable persons and for different descriptions of goods and services. Deficiency in fiscally warehoused goods. 18E (1) This section applies where goods have been subject to a fiscal warehousing regime and, before being lawfully removed from the fiscal warehouse, they are found to be missing or deficient. (2) In any case where this section applies, unless it is shown to the satisfaction of the Commissioners that the absence of or deficiency in the goods can be accounted for by natural waste or other legitimate cause, the Commissioners may require the fiscal warehousekeeper to pay immediately in respect of the missing goods or of the whole or any part of the deficiency, as they see fit, the VAT that would have been chargeable. (3) In subsection (2) “VAT that would have been chargeable” means VAT that would have been chargeable on a supply of the missing goods, or the amount of goods by which the goods are deficient, taking place at the time immediately before the absence arose or the deficiency occurred, if the value of that supply were the open market value; but where that time cannot be ascertained to the Commissioners’ satisfaction, that VAT shall be the greater of the amounts of VAT which would have been chargeable on a supply of those goods— (a) if the value of that supply were the highest open market value during the period (the relevant period) commencing when the goods were placed in the fiscal warehousing regime and ending when the absence or deficiency came to the notice of the Commissioners, or (b) if the rate of VAT chargeable on that supply were the highest rate chargeable on a supply of such goods during the relevant period and the value of that supply were the highest open market value while that rate prevailed. (4) This section has effect without prejudice to any penalty incurred under any other provision of this Act or regulations made under it. Sections 18A to 18E: supplementary. 18F (1) In sections 18A to 18E and this section— “duty point” has the meaning given by section 18(6); “eligible goods” has the meaning given by section 18B(6); “fiscal warehouse” means a place notified to the Commissioners under section 18A(3) and from which such status has not been withdrawn; “fiscal warehousekeeper” means a person approved under section 18A(1); “material time”— in relation to any acquisition or supply the time of which is determined in accordance with regulations under section 6(14) or 12(3), means such time as may be prescribed for the purpose of this section by those regulations; in relation to any other acquisition, means the time when the goods reach the destination to which they are despatched from the member State in question; in relation to any other supply of goods, means the time when the supply would be treated as taking place in accordance with subsection (2) of section 6 if paragraph (c) of that subsection were omitted; and in relation to any other supply of services, means the time when the services are performed; “warehouse”, except in the expression “fiscal warehouse”, has the meaning given by section 18(6); “warehousing regulations” has the same meaning as in the Management Act. (2) Any reference in sections 18A to 18E or this section to goods being subject to a fiscal warehousing regime is, subject to any regulations made under subsection (8)(e) below, a reference to eligible goods being kept in a fiscal warehouse or being transferred between fiscal warehouses in accordance with such regulations; and any reference to the removal of goods from a fiscal warehousing regime shall be construed accordingly. (3) Subject to subsection (2) above, any reference in sections 18C and 18D to goods being subject to a warehousing regime or to the removal of goods from a warehousing regime shall have the same meaning as in section 18(7). (4) Where as a result of an operation on eligible goods subject to a fiscal warehousing regime they change their nature but the resulting goods are also eligible goods, the provisions of sections 18B to 18E and this section shall apply as if the resulting goods were the original goods. (5) Where as a result of an operation on eligible goods subject to a fiscal warehousing regime they cease to be eligible goods, on their ceasing to be so sections 18B to 18E shall apply as if they had at that time been removed from the fiscal warehousing regime; and for that purpose the proprietor of the goods shall be treated as if he were the person removing them. (6) Where— (a) any person ceases to be a fiscal warehousekeeper; or (b) any premises cease to have fiscal warehouse status, sections 18B to 18E and this section shall apply as if the goods of which he is the fiscal warehousekeeper, or the goods in the fiscal warehouse, as the case may be, had at that time been removed from the fiscal warehousing regime; and for that purpose the proprietor of the goods shall be treated as if he were the person removing them. (7) The Commissioners may make regulations governing the deposit, keeping, securing and treatment of goods in a fiscal warehouse, and the removal of goods from a fiscal warehouse. (8) Regulations may, without prejudice to the generality of subsection (7) above, include provisions— (a) in relation to— (i) goods which are, have been or are to be subject to a fiscal warehousing regime, (ii) other goods which are, have been or are to be kept in fiscal warehouses, (iii) fiscal warehouse premises, and (iv) fiscal warehousekeepers and their businesses, as to the keeping, preservation and production of records and the furnishing of returns and information by fiscal warehousekeepers and any other persons; (b) requiring goods deposited in a fiscal warehouse to be produced to or made available for inspection by an authorised person on request by him; (c) prohibiting the carrying out on fiscally warehoused goods of such operations as they may prescribe; (d) regulating the transfer of goods from one fiscal warehouse to another; (e) concerning goods which, though kept in a fiscal warehouse, are not eligible goods or are not intended by a relevant person to be goods in respect of which reliefs are to be enjoyed under sections 18A to 18E and this section; (f) prohibiting the fiscal warehousekeeper from allowing goods to be removed from the fiscal warehousing regime without payment of any VAT payable under section 18D on or by reference to that removal and, if in breach of that prohibition he allows goods to be so removed, making him liable for the VAT jointly and severally with the remover, and may contain such incidental or supplementary provisions as the Commissioners think necessary or expedient. (9) Regulations may make different provision for different cases, including different provision for different fiscal warehousekeepers or descriptions of fiscal warehousekeeper, for fiscal warehouses of different descriptions or for goods of different classes or descriptions or of the same class or description in different circumstances. 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 (1) Section 62 of the Value Added Tax Act 1994 shall be amended as follows. (2) In paragraph (a) of subsection (1), after the words “a person” there shall be inserted the words “ by whom one or more acquisitions or ”, the words “or” at the end of sub-paragraph (i) and “and” at the end of sub-paragraph (ii) shall be omitted and the following additional sub-paragraphs shall be inserted— (iii) prepares a certificate in accordance with section 18B(1)(d) or gives a supplier a certificate in accordance with section 18B(2)(d); or (iv) gives the supplier a certificate in accordance with section 18C(1)(c); and . (3) In the passage following paragraph (b) of subsection (1) and in subsections (3) and (4), after the word “giving” wherever it appears there shall be inserted the words “ or preparing ”. (4) In subsection (3) after the words “gave” and “given” there shall be inserted in each case the words “ or prepared ”. 9 In subsection (1) of section 69 of the Value Added Tax Act 1994 after paragraph (f) the following shall be added— ; or (g) section 18A in the form of a condition imposed by the Commissioners under subsection (1) or (6) of that section, . 10 In section 73 of the Value Added Tax Act 1994 the following subsections shall be added after subsection (7)— (7A) Where a fiscal warehousekeeper has failed to pay VAT required by the Commissioners under section 18E(2), the Commissioners may assess to the best of their judgment the amount of that VAT due from him and notify it to him. (7B) Where it appears to the Commissioners that goods have been removed from a warehouse or fiscal warehouse without payment of the VAT payable under section 18(4) or section 18D on that removal, they may assess to the best of their judgment the amount of VAT due from the person removing the goods or other person liable and notify it to him. 11 In sections 73(9) and 76(5) of the Value Added Tax Act 1994 for the words “or (7)” there shall be substituted “ , (7), (7A) or (7B) ”. 12 In section 83 of the Value Added Tax Act 1994 the following paragraph shall be added after paragraph (d)— (da) a decision of the Commissioners under section 18A— (i) as to whether or not a person is to be approved as a fiscal warehousekeeper or the conditions from time to time subject to which he is so approved; (ii) for the withdrawal of any such approval; or (iii) for the withdrawal of fiscal warehouse status from any premises; , and in paragraph (p)(ii) for “subsection (7)” there shall be substituted “ subsections (7), (7A) or (7B) ”. 13 In paragraph 1 of Schedule 1 to the Value Added Tax Act 1994, the following sub-paragraph shall be added after sub-paragraph (8)— (9) In determining the value of a person’s supplies for the purposes of sub-paragraph (1) or (2) above, supplies to which section 18B(4) (last acquisition or supply of goods before removal from fiscal warehousing) applies and supplies treated as made by him under section 18C(3) (self-supply of services on removal of goods from warehousing) shall be disregarded. . 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 In paragraph 8(1) of Schedule 11 to the Value Added Tax Act 1994 after the words “another member State” there shall be inserted the words “ , or in the possession of a fiscal warehousekeeper, ”. 17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 The following Schedule shall be added to the Value Added Tax Act 1994. SCHEDULE 5A Goods Eligible to be Fiscally Warehoused Section 18B. Description of goods | Combined nomenclature code of the European Union Tin | 8001 Copper | 7402 7403 7405 7408 Zinc | 7901 Nickel | 7502 Aluminium | 7601 Lead | 7801 Indium | ex 811291 ex 811299 Cereals | 1001 to 1005 1006: unprocessed rice only 1007 to 1008 Oil seeds and oleaginous fruit | 1201 to 1207 Coconuts, Brazil nuts and cashew nuts | 0801 Other nuts | 0502 Olives | 071120 Grains and seeds (including soya beans) | 1201 to 1207 Coffee, not roasted | 0901 11 00 0901 12 00 Tea | 0902 Cocoa beans, whole or broken, raw or roasted | 1801 Raw sugar | 1701 11 1701 12 Rubber, in primary forms or in plates, sheets or strip | 4001 4002 Wool | 5101 Chemicals in bulk | Chapters 28 and 29 Mineral oils (including propane and butane; also including crude petroleum oils) | 2709 2710 2711 12 2711 13 Silver | 7106 Platinum (palladium, rhodium) | 7110 11 00 7110 21 00 7110 31 00 Potatoes | 0701 Vegetable oils and fats and their fractions, whether or not refined, but not chemically modified | 1507 to 1515

SCHEDULE 4 Value added tax: anti-avoidance provisions

Section 31. The following is the Schedule which shall be inserted after Schedule 9 to the Value Added Tax Act 1994— SCHEDULE 9A Anti-avoidance provisions: groups Power to give directions 1 (1) Subject to paragraph 2 below, the Commissioners may give a direction under this Schedule if, in any case— (a) a relevant event has occurred; (b) the condition specified in sub-paragraph (3) below is fulfilled; (c) that condition would not be fulfilled apart from the occurrence of that event; and (d) in the case of an event falling within sub-paragraph (2)(b) below, the transaction in question is not a supply which is the only supply by reference to which the case falls within paragraphs (a) to (c) above. (2) For the purposes of this Schedule, a relevant event occurs when a body corporate— (a) begins to be, or ceases to be, treated as a member of a group; or (b) enters into any transaction. (3) The condition mentioned in sub-paragraph (1) above is that— (a) there has been, or will or may be, a taxable supply on which VAT has been, or will or may be, charged otherwise than by reference to the supply’s full value; (b) there is at least a part of the supply which is not or, as the case may be, would not be zero-rated; and (c) the charging of VAT on the supply otherwise than by reference to its full value gives rise or, as the case may be, would give rise to a tax advantage. (4) For the purposes of this paragraph the charging of VAT on a supply (“the undercharged supply”) otherwise than by reference to its full value shall be taken to give rise to a tax advantage if, and only if, a person has become entitled— (a) to credit for input tax allowable as attributable to that supply or any part of it, or (b) in accordance with regulations under section 39, to any repayment in respect of that supply or any part of it. (5) The cases where a person shall be taken for the purposes of sub-paragraph (4) above to have become entitled to a credit for input tax allowable as attributable to the undercharged supply, or to a part of it, shall include any case where— (a) a person has become entitled to a credit for any input tax on the supply to him, or the acquisition or importation by him, of any goods or services; and (b) whatever the supplies to which the credit was treated as attributable when the entitlement to it arose, those goods or services are used by him in making the undercharged supply, or a part of it. (6) For the purposes of sub-paragraphs (4) and (5) above where— (a) there is a supply of any of the assets of a business of a person (“the transferor”) to a person to whom the whole or any part of that business is transferred as a going concern (“the transferee”), and (b) that supply is treated, in accordance with an order under section 5(3), as being neither a supply of goods nor a supply of services, the question, so far as it falls to be determined by reference to those assets, whether a credit for input tax to which any person has become entitled is one allowable as attributable to the whole or any part of a supply shall be determined as if the transferor and the transferee were the same person. (7) Where, in a case to which sub-paragraph (6) above applies, the transferor himself acquired any of the assets in question by way of a supply falling within paragraphs (a) and (b) of that sub-paragraph, that sub-paragraph shall have the effect, as respects the assets so acquired, of requiring the person from whom those assets were acquired to be treated for the purposes of sub-paragraphs (4) and (5) above as the same person as the transferor and the transferee, and so on in the case of any number of successive supplies falling within those paragraphs. (8) For the purposes of this paragraph any question— (a) whether any credit for input tax to which a person has become entitled was, or is to be taken to have been, a credit allowable as attributable to the whole or any part of a supply, or (b) whether any repayment is a repayment in respect of the whole or any part of a supply, shall be determined, in relation to a supply of a right to goods or services or to a supply of goods or services by virtue of such a right, as if the supply of the right and supplies made by virtue of the right were a single supply of which the supply of the right and each of those supplies constituted different parts. (9) References in this paragraph to the full value of a supply are references to the amount which (having regard to any direction under paragraph 1 of Schedule 6) would be the full value of that supply for the purposes of the charge to VAT if that supply were not a supply falling to be disregarded, to any extent, in pursuance of section 43(1)(a). (10) References in this paragraph to the supply of a right to goods or services include references to the supply of any right, option or priority with respect to the supply of goods or services, and to the supply of an interest deriving from any right to goods or services. Restrictions on giving directions 2 The Commissioners shall not give a direction under this Schedule by reference to a relevant event if they are satisfied that— (a) the change in the treatment of the body corporate, or (b) the transaction in question, had as its main purpose or, as the case may be, as each of its main purposes a genuine commercial purpose unconnected with the fulfilment of the condition specified in paragraph 1(3) above. Form of directions under Schedule 3 (1) The directions that may be given by the Commissioners under this Schedule are either— (a) a direction relating to any supply of goods or services that has been made, in whole or in part, by one body corporate to another; or (b) a direction relating to a particular body corporate. (2) A direction under this Schedule relating to a supply shall require it to be assumed (where it would not otherwise be the case) that, to the extent described in the direction, the supply was not a supply falling to be disregarded in pursuance of section 43(1)(a). (3) A direction under this Schedule relating to a body corporate shall require it to be assumed (where it would not otherwise be the case) that, for such period (comprising times before the giving of the direction or times afterwards or both) as may be described in the direction, the body corporate— (a) did not fall to be treated, or is not to be treated, as a member of a group, or of a particular group so described; or (b) fell to be treated, or is to be treated, as a member of any group so described of which, for that period, it was or is eligible to be a member. (4) Where a direction under this Schedule requires any assumptions to be made, then— (a) so far as the assumptions relate to times on or after the day on which the direction is given, this Act shall have effect in relation to such times in accordance with those assumptions; and (b) paragraph 6 below shall apply for giving effect to those assumptions in so far as they relate to earlier times. (5) A direction falling within sub-paragraph (3)(b) above may identify in relation to any times or period the body corporate which is to be assumed to have been, or to be, the representative member of the group at those times or for that period. (6) A direction under this Schedule may vary the effect of a previous direction under this Schedule. (7) The Commissioners may at any time, by notice in writing to the person to whom it was given, withdraw a direction under this Schedule. (8) The refusal or non-refusal by the Commissioners of an application under section 43 shall not prejudice the power of the Commissioners to give a direction under this Schedule requiring any case to be assumed to be what it would have been had the application not been refused or, as the case may be, had it been refused. Time limit on directions 4 (1) A direction under this Schedule shall not be given more than six years after whichever is the later of— (a) the occurrence of the relevant event by reference to which it is given; and (b) the time when the relevant entitlement arose. (2) A direction under this Schedule shall not be given by reference to a relevant event occurring on or before 28th November 1995. (3) Subject to sub-paragraphs (1) and (2) above, a direction under this Schedule— (a) may be given by reference to a relevant event occurring before the coming into force of this Schedule; and (b) may require assumptions to be made in relation to times (including times before 29th November 1995) falling before the occurrence of the relevant event by reference to which the direction is given, or before the relevant entitlement arose. (4) For the purposes of this paragraph the reference, in relation to the giving of a direction, to the relevant entitlement is a reference to the entitlement by reference to which the requirements of paragraph 1(4) above are taken to be satisfied for the purposes of that direction. Manner of giving directions 5 (1) A direction under this Schedule relating to a supply may be given to— (a) the person who made the supply to which the direction relates; or (b) any body corporate which, at the time when the direction is given, is the representative member of a group of which that person was treated as being a member at the time of the supply. (2) A direction under this Schedule relating to a body corporate (“the relevant body”) may be given to that body or to any body corporate which at the time when the direction is given is, or in pursuance of the direction is to be treated as, the representative member of a group of which the relevant body— (a) is treated as being a member; (b) was treated as being a member at a time to which the direction relates; or (c) is to be treated as being, or having been, a member at any such time. (3) A direction given to any person under this Schedule shall be given to him by notice in writing. (4) A direction under this Schedule must specify the relevant event by reference to which it is given. Assessment in consequence of a direction 6 (1) Subject to sub-paragraph (3) below, where— (a) a direction is given under this Schedule, and (b) there is an amount of VAT (“the unpaid tax”) for which a relevant person would have been liable before the giving of the direction if the facts had accorded with the assumptions specified in the direction, the Commissioners may, to the best of their judgement, assess the amount of unpaid tax as tax due from the person to whom the direction was given or another relevant person and notify their assessment to that person. (2) In sub-paragraph (1) above the reference to an amount of VAT for which a person would, on particular assumptions, have been liable before the giving of a direction under this Schedule is a reference to the aggregate of the following— (a) any amount of output tax which, on those assumptions but not otherwise, would have been due from a relevant person at the end of a prescribed accounting period ending before the giving of the direction; (b) the amount of any credit for input tax to which a relevant person is treated as having been entitled at the end of such an accounting period but to which he would not have been entitled on those assumptions; and (c) the amount of any repayment of tax made to a relevant person in accordance with regulations under section 39 but to which he would not have been entitled on those assumptions. (3) Where any assessment falls to be made under this paragraph in a case in which the Commissioners are satisfied that the actual revenue loss is less than the unpaid tax, the total amount to be assessed under this paragraph shall not exceed what appears to them, to the best of their judgement, to be the amount of that loss. (4) For the purposes of the making of an assessment under this paragraph in relation to any direction, the actual revenue loss shall be taken to be equal to the amount of the unpaid tax less the amount given by aggregating the amounts of every entitlement— (a) to credit for input tax, or (b) to a repayment in accordance with regulations under section 39, which (whether as an entitlement of the person in relation to whom the assessment is made or as an entitlement of any other person) would have arisen on the assumptions contained in the direction, but not otherwise. (5) An assessment under this paragraph relating to a direction may be notified to the person to whom that direction is given by being incorporated in the same notice as that direction. (6) An assessment under this paragraph shall not be made— (a) more than one year after the day on which the direction to which it relates was given, or (b) in the case of any direction that has been withdrawn. (7) Where an amount has been assessed on any person under this paragraph and notified to him— (a) that amount shall be deemed (subject to the provisions of this Act as to appeals) to be an amount of VAT due from him; (b) that amount may be recovered accordingly, either from that person or, in the case of a body corporate that is for the time being treated as a member of a group, from the representative member of that group; and (c) to the extent that more than one person is liable by virtue of any assessment under this paragraph in respect of the same amount of unpaid tax, those persons shall be treated as jointly and severally liable for that amount. (8) Sub-paragraph (7) above does not have effect if or to the extent that the assessment in question has been withdrawn or reduced. (9) Sections 74 and 77(6) apply in relation to assessments under this paragraph as they apply in relation to assessments under section 73 but as if the reference in subsection (1) of section 74 to the reckonable date were a reference to the date on which the assessment is notified. (10) Where by virtue of sub-paragraph (9) above any person is liable to interest under section 74— (a) section 76 shall have effect in relation to that liability with the omission of subsections (2) to (6); and (b) section 77, except subsection (6), shall not apply to an assessment of the amount due by way of interest; and (without prejudice to the power to make assessments for interest for later periods) the interest to which any assessment made under section 76 by virtue of paragraph (a) above may relate shall be confined to interest for a period of no more than two years ending with the time when the assessment to interest is made. (11) In this paragraph “a relevant person”, in relation to a direction, means— (a) the person to whom the direction is given; (b) the body corporate which was the representative member of any group of which that person was treated as being, or in pursuance of the direction is to be treated as having been, a member at a time to which the assumption specified in the direction relates; or (c) any body corporate which, in pursuance of the direction, is to be treated as having been the representative member of such a group. Interpretation of Schedule etc. 7 (1) References in this Schedule to being treated as a member of a group and to being eligible to be treated as a member of a group shall be construed in accordance with section 43. (2) For the purposes of this Schedule the giving of any notice or notification to any receiver, liquidator or person otherwise acting in a representative capacity in relation to another shall be treated as the giving of a notice or, as the case may be, notification to the person in relation to whom he so acts.

SCHEDULE 5 Landfill Tax

Part I Information and samples Information: general 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Information: material at landfill sites 1A (1) Regulations may make provision about giving the Commissioners information relating to material at a landfill site or a part of a landfill site. (2) Regulations under this paragraph may require a person to give information. (3) Regulations under this paragraph may— (a) require a person, or authorise an officer of Revenue and Customs to require a person, to designate a part of a landfill site (an “information area”), and (b) require material, or prescribed descriptions of material, to be deposited in an information area. (4) Regulations under this paragraph may make provision about information relating to what is done with material. (5) Sub-paragraphs (2) to (4) do not prejudice the generality of sub-paragraph (1). Information: site restoration 1B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Site information 1C (1) Regulations may require the operator of a landfill site— (a) to retain plans, permits and licences relating to the site; (b) to provide the Commissioners with copies of, or information relating to, plans, permits and licences retained under paragraph (a). (2) Regulations under sub-paragraph (1)(b) may be framed by reference to such copies or information as may be stipulated in any notice published by the Commissioners in pursuance of the regulations and not withdrawn by a further notice. Records: taxable persons 2 (1) Regulations may require taxable persons to make records. (2) Regulations under sub-paragraph (1) above may be framed by reference to such records as may be stipulated in any notice published by the Commissioners in pursuance of the regulations and not withdrawn by a further notice. (3) Regulations may— (a) require taxable persons to preserve records of a prescribed description (whether or not the records are required to be made in pursuance of regulations) for such period not exceeding six years as may be specified in the regulations; (b) authorise the Commissioners to direct that any such records need only be preserved for a shorter period than that specified in the regulations; (c) authorise a direction to be made so as to apply generally or in such cases as the Commissioners may stipulate. (4) A duty under regulations under this paragraph to preserve records may be discharged— (a) by preserving them in any form and by any means, or (b) by preserving the information contained in them in any form and by any means, subject to any conditions or exceptions specified in writing by the Commissioners. Records: material at landfill sites and other 2A (1) Regulations may require a person to make records relating to— (a) material at a landfill site or a part of a landfill site, and (b) material disposed of elsewhere than at a landfill site. (2) Regulations under this paragraph may make provision about records relating to what is done with material. (3) Sub-paragraphs (2) to (7) of paragraph 2 apply in relation to regulations under this paragraph as they apply in relation to regulations under paragraph 2. (4) But, in the application of paragraph 2(3)(a) in relation to regulations under this paragraph, the reference to registrable persons has effect as a reference to persons. Information: qualifying fines 2B (1) Regulations may make provision about giving the Commissioners information about fines proposed to be disposed of, or disposed of, as qualifying fines. (2) Regulations under this paragraph may require a person to notify the Commissioners if the result of a test carried out on fines indicates that the fines are not qualifying fines. Samples: qualifying fines 2C (1) Regulations may require persons— (a) where a sample is taken from a quantity of fines in order to carry out a test on the fines, to retain a prescribed amount of that sample; (b) to preserve fines retained under paragraph (a) for such period not exceeding three months as may be specified in the regulations. (2) A duty under regulations under this paragraph to preserve fines may be discharged by taking such steps to preserve them as the Commissioners may specify in writing. Documents 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Part II Powers Entry and inspection 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Entry and search 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Arrest 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Order for access to recorded information etc. 7 (1) Where, on an application by an authorised person, a justice of the peace or, in Scotland, a justice (within the meaning of section 307 of the Criminal Procedure (Scotland) Act 1995) is satisfied that there are reasonable grounds for believing— (a) that an offence in connection with tax is being, has been or is about to be committed, and (b) that any recorded information (including any document of any nature whatsoever) which may be required as evidence for the purpose of any proceedings in respect of such an offence is in the possession of any person, he may make an order under this paragraph. (2) An order under this paragraph is an order that the person who appears to the justice to be in possession of the recorded information to which the application relates shall— (a) give an authorised person access to it, and (b) permit an authorised person to remove and take away any of it which he reasonably considers necessary, not later than the end of the period of 7 days beginning with the date of the order or the end of such longer period as the order may specify. (3) The reference in sub-paragraph (2)(a) above to giving an authorised person access to the recorded information to which the application relates includes a reference to permitting the authorised person to take copies of it or to make extracts from it. (4) Where the recorded information consists of information stored in any electronic form , an order under this paragraph shall have effect as an order to produce the information in a form in which it is visible and legible or from which it can readily be produced in a visible and legible form and, if the authorised person wishes to remove it, in a form in which it can be removed. (5) This paragraph is without prejudice to paragraphs 3 to 5 above. Removal of documents etc. 8 (1) An authorised person who removes anything in the exercise of a power conferred by or under paragraph 5 or 7 above shall, if so requested by a person showing himself— (a) to be the occupier of premises from which it was removed, or (b) to have had custody or control of it immediately before the removal, provide that person with a record of what he removed. (2) The authorised person shall provide the record within a reasonable time from the making of the request for it. (3) Subject to sub-paragraph (7) below, if a request for permission to be allowed access to anything which— (a) has been removed by an authorised person, and (b) is retained by the Commissioners for the purposes of investigating an offence, is made to the officer in overall charge of the investigation by a person who had custody or control of the thing immediately before it was so removed or by someone acting on behalf of such a person, the officer shall allow the person who made the request access to it under the supervision of an authorised person. (4) Subject to sub-paragraph (7) below, if a request for a photograph or copy of any such thing is made to the officer in overall charge of the investigation by a person who had custody or control of the thing immediately before it was so removed, or by someone acting on behalf of such a person, the officer shall— (a) allow the person who made the request access to it under the supervision of an authorised person for the purpose of photographing it or copying it, or (b) photograph or copy it, or cause it to be photographed or copied. (5) Subject to sub-paragraph (7) below, where anything is photographed or copied under sub-paragraph (4)(b) above the officer shall supply the photograph or copy, or cause it to be supplied, to the person who made the request. (6) The photograph or copy shall be supplied within a reasonable time from the making of the request. (7) There is no duty under this paragraph to allow access to, or to supply a photograph or copy of, anything if the officer in overall charge of the investigation for the purposes of which it was removed has reasonable grounds for believing that to do so would prejudice— (a) that investigation, (b) the investigation of an offence other than the offence for the purposes of the investigation of which the thing was removed, or (c) any criminal proceedings which may be brought as a result of the investigation of which he is in charge or any such investigation as is mentioned in paragraph (b) above. (8) Any reference in this paragraph to the officer in overall charge of the investigation is a reference to the person whose name and address are endorsed on the warrant concerned as being the officer so in charge. 9 (1) Where, on an application made as mentioned in sub-paragraph (2) below, the appropriate judicial authority is satisfied that a person has failed to comply with a requirement imposed by paragraph 8 above, the authority may order that person to comply with the requirement within such time and in such manner as may be specified in the order. (2) An application under sub-paragraph (1) above shall be made— (a) in the case of a failure to comply with any of the requirements imposed by sub-paragraphs (1) and (2) of paragraph 8 above, by the occupier of the premises from which the thing in question was removed or by the person who had custody or control of it immediately before it was so removed, and (b) in any other case, by the person who had such custody or control. (3) In this paragraph “the appropriate judicial authority” means— (a) in England and Wales, a magistrates’ court; (b) in Scotland, the sheriff; (c) in Northern Ireland, a court of summary jurisdiction, as defined in Article 2(2)(a) of the Magistrates’ Court (Northern Ireland) Order 1981. (4) In England and Wales and Northern Ireland, an application for an order under this paragraph shall be made by way of complaint; and sections 21 and 42(2) of the Interpretation Act (Northern Ireland) 1954 shall apply as if any reference in those provisions to any enactment included a reference to this paragraph. Power to take samples 10 (1) An authorised person, if it appears to him necessary for the protection of the revenue against mistake or fraud, may at any time take, from material which he has reasonable cause to believe is intended to be, is being, or has been disposed of ..., such samples as he may require with a view to determining how the material ought to be or to have been treated for the purposes of tax. (1A) An authorised person, if it appears to the person necessary for the protection of the revenue against mistake or fraud, may at any time take, from material which the person has reasonable cause to believe is an amount of fines retained under paragraph 2C(1)(a), such samples as the person may require with a view to determining how the fines tested ought to be or to have been treated for the purposes of tax. (2) Any sample taken under this paragraph shall be disposed of in such manner as the Commissioners may direct. Part III Recovery General 11 Tax due from any person shall be recoverable as a debt due to the Crown. Preferential and preferred debts 12 (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) In paragraph 2 the following sub-paragraph shall be inserted after sub-paragraph (1A)— (1B) Any landfill tax which is referable to the period of six months next before the relevant date. (4) The following shall be inserted after paragraph 8A— Periods to which landfill tax referable 8B (1) For the purpose of paragraph 2(1B) of Part I of this Schedule— (a) where the whole of the accounting period to which any landfill tax is attributable falls within the period of six months next before the relevant date (“the relevant period”), the whole amount of that tax shall be referable to the relevant period; and (b) in any other case the amount of any landfill tax which shall be referable to the relevant period shall be the proportion of the tax which is equal to such proportion (if any) of the accounting period in question as falls within the relevant period. (2) In sub-paragraph (1) above “accounting period” shall be construed in accordance with Part III of the Finance Act 1996. (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Distress and diligence 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recovery of overpaid tax 14 (1) Where a person has paid an amount to the Commissioners by way of tax which was not tax due to them, they shall be liable to repay the amount to him. (2) The Commissioners shall only be liable to repay an amount under this paragraph on a claim being made for the purpose. (3) It shall be a defence, in relation to a claim under this paragraph, that repayment of an amount would unjustly enrich the claimant. (4) The Commissioners shall not be liable, on a claim made under this paragraph, to repay any amount paid to them more than 4 years before the making of the claim. (5) A claim under this paragraph shall be made in such form and manner and shall be supported by such documentary evidence as may be prescribed by regulations. (6) Except as provided by this paragraph, the Commissioners shall not be liable to repay an amount paid to them by way of tax by virtue of the fact that it was not tax due to them. Part IV Criminal Penalties Criminal offences 15 (1) A person is guilty of an offence if— (a) being a registrable person, he is knowingly concerned in, or in the taking of steps with a view to, the fraudulent evasion of tax by him or another registrable person, or (b) not being a registrable person, he is knowingly concerned in, or in the taking of steps with a view to, the fraudulent evasion of tax by a registrable person. (2) Any reference in sub-paragraph (1) above to the evasion of tax includes a reference to the obtaining of a payment under regulations under section 51(2)(c) or (d) or (f) of this Act. (3) A person is guilty of an offence if with the requisite intent— (a) he produces, furnishes or sends, or causes to be produced, furnished or sent, for the purposes of this Part of this Act any document which is false in a material particular, or (b) he otherwise makes use for those purposes of such a document; and the requisite intent is intent to deceive or to secure that a machine will respond to the document as if it were a true document. (4) A person is guilty of an offence if in furnishing any information for the purposes of this Part of this Act he makes a statement which he knows to be false in a material particular or recklessly makes a statement which is false in a material particular. (5) A person is guilty of an offence by virtue of this sub-paragraph if his conduct during any specified period must have involved the commission by him of one or more offences under the preceding provisions of this paragraph; and the preceding provisions of this sub-paragraph apply whether or not the particulars of that offence or those offences are known. (6) A person is guilty of an offence if— (a) he enters into a taxable landfill contract, or (b) he makes arrangements for other persons to enter into such a contract, with reason to believe that tax in respect of the disposal concerned will be evaded. (7) A person is guilty of an offence if he carries out taxable activities without giving security (or further security) he has been required to give under paragraph 31 below. (8) For the purposes of this paragraph a taxable landfill contract is a contract under which there is to be a taxable disposal. Criminal penalties 16 (1) A person guilty of an offence under paragraph 15(1) above is liable— (a) on summary conviction, to a penalty of the statutory maximum £20,000 or of three times the amount of the tax, whichever is the greater, or to imprisonment for a term not exceeding six months or to both; (b) on conviction on indictment, to a penalty of any amount or to imprisonment for a term not exceeding 14 years or to both. (2) The reference in sub-paragraph (1) above to the amount of the tax shall be construed, in relation to tax itself or a payment falling within paragraph 15(2) above, as a reference to the aggregate of— (a) the amount (if any) falsely claimed by way of credit, and (b) the amount (if any) by which the gross amount of tax was falsely understated. (3) A person guilty of an offence under paragraph 15(3) or (4) above is liable— (a) on summary conviction, to a penalty of the statutory maximum £20,000 (or, where sub-paragraph (4) below applies, to the alternative penalty there specified if it is greater) or to imprisonment for a term not exceeding six months or to both; (b) on conviction on indictment, to a penalty of any amount or to imprisonment for a term not exceeding 14 years or to both. (4) Where— (a) the document referred to in paragraph 15(3) above is a return required under this Part of this Act, or (b) the information referred to in paragraph 15(4) above is contained in or otherwise relevant to such a return, the alternative penalty is a penalty equal to three times the aggregate of the amount (if any) falsely claimed by way of credit and the amount (if any) by which the gross amount of tax was understated. (5) A person guilty of an offence under paragraph 15(5) above is liable— (a) on summary conviction, to a penalty of the statutory maximum £20,000 (or, if greater, three times the amount of any tax that was or was intended to be evaded by his conduct) or to imprisonment for a term not exceeding six months or to both; (b) on conviction on indictment, to a penalty of any amount or to imprisonment for a term not exceeding 14 years or to both; and paragraph 15(2) and sub-paragraph (2) above shall apply for the purposes of this sub-paragraph as they apply respectively for the purposes of paragraph 15(1) and sub-paragraph (1) above. (6) A person guilty of an offence under paragraph 15(6) above is liable on summary conviction to a penalty of level 5 on the standard scale £20,000 or three times the amount of the tax, whichever is the greater. (7) A person guilty of an offence under paragraph 15(7) above is liable on summary conviction to a penalty of level 5 on the standard scale £20,000. (8) In this paragraph— (a) “credit” means credit for which provision is made by regulations under section 51 of this Act; (b) “the gross amount of tax” means the total amount of tax due before taking into account any deduction for which provision is made by regulations under section 51(2) of this Act. Criminal proceedings etc. 17 Sections 145 to 155 of the Customs and Excise Management Act 1979 (proceedings for offences, mitigation of penalties and certain other matters) shall apply in relation to offences under paragraph 15 above and penalties imposed under paragraph 16 above as they apply in relation to offences and penalties under the customs and excise Acts as defined in that Act. Part V Civil Penalties Evasion 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Misdeclaration or neglect 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Registration 21 (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) A person who fails to comply with section 47(4) of this Act is liable to a penalty of £250. (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Information 22 (1) If a person— (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) fails to make records as required by any provision of regulations made under paragraph 2 or 2A above, he is liable to a penalty of £250; but this is subject to sub-paragraph (4) below. (2) Where— (a) a penalty (an initial penalty) is imposed on a person under sub-paragraph (1) above, and (b) the failure which led to the initial penalty continues after its imposition, he is (subject to sub-paragraph (4) below) liable to a further penalty of £20 for each day during which (or any part of which) the failure continues after the day on which the initial penalty was imposed. (3) A person who— (a) fails to preserve records in compliance with any provision of regulations made under paragraph 2 (read with that paragraph and any direction given under the regulations), or (b) fails to preserve records in compliance with any provision of regulations made under paragraph 2A (read with that paragraph and any direction given under the regulations), is liable to a penalty of £250; but this is subject to sub-paragraph (4) below. (4) Where by reason of a failure falling within sub-paragraph (1) or (3) above— (a) a person is convicted of an offence (whether under this Part of this Act or otherwise), or (b) a person is assessed to a penalty under paragraph 18 above or a penalty for a deliberate inaccuracy under Schedule 24 to the Finance Act 2007 (penalties for errors) or a penalty under Schedule 41 to the Finance Act 2008 (penalties: failure to notify and certain VAT and excise wrongdoing), that failure shall not also give rise to liability to a penalty under this paragraph. Breach of regulations 23 (1) Where regulations made under this Part of this Act impose a requirement on any person, they may provide that if the person fails to comply with the requirement he shall be liable to a penalty of £250; but this is subject to sub-paragraphs (2) and (3) below. (2) Where by reason of any conduct— (a) a person is convicted of an offence (whether under this Part of this Act or otherwise), or (b) a person is assessed to a penalty under paragraph 18 above or a penalty for a deliberate inaccuracy under Schedule 24 to the Finance Act 2007 (penalties for errors) or a penalty under Schedule 41 to the Finance Act 2008 (penalties: failure to notify and certain VAT and excise wrongdoing), that conduct shall not also give rise to liability to a penalty under the regulations. (3) Sub-paragraph (1) above does not apply to any failure mentioned in paragraph 22 above. Controlled Goods Agreements 23A (1) This paragraph applies where an enforcement agent acting under the power conferred by section 51(A1) of the Finance Act 1997 (power to use the procedure in Schedule 12 to the Tribunals, Courts and Enforcement Act 2007) has entered into a controlled goods agreement with the person against whom the power is exercisable (“the person in default”). (2) In this paragraph, “controlled goods agreement” has the meaning given by paragraph 13(4) of that Schedule. (3) If the person in default removes or disposes of goods (or permits their removal or disposal) in breach of the controlled goods agreement, he is liable to a penalty equal to half of the tax or other amount recoverable under section 51(A1) of the Finance Act 1997. (4) The person in default shall not be liable to a penalty under sub-paragraph (3) above if he satisfies the Commissioners or, on appeal, an appeal tribunal, that there is a reasonable excuse for the breach in question. (5) This paragraph extends only to England and Wales. Walking possession agreements 24 (1) This paragraph applies where— (a) in accordance with regulations under section 51 of the Finance Act 1997 (enforcement by distress) a distress is authorised to be levied on the goods and chattels of a person (a person in default) who has refused or neglected to pay any tax due from him or any amount recoverable as if it were tax due from him, and (b) the person levying the distress and the person in default have entered into a walking possession agreement. (2) For the purposes of this paragraph a walking possession agreement is an agreement under which, in consideration of the property distrained upon being allowed to remain in the custody of the person in default and of the delaying of its sale, the person in default— (a) acknowledges that the property specified in the agreement is under distraint and held in walking possession, and (b) undertakes that, except with the consent of the Commissioners and subject to such conditions as they may impose, he will not remove or allow the removal of any of the specified property from the premises named in the agreement. (3) If the person in default is in breach of the undertaking contained in a walking possession agreement, he is liable to a penalty equal to half of the tax or other amount referred to in sub-paragraph (1)(a) above. (4) This paragraph extends only to Northern Ireland. Mitigation of penalties 25 (1) Where a person is liable to a penalty under this Part of this Schedule the Commissioners or, on appeal, an appeal tribunal may reduce the penalty to such amount (including nil) as they think proper. (2) Where the person concerned satisfies the Commissioners or, on appeal, an appeal tribunal that there is a reasonable excuse for any breach, failure or other conduct, that is a factor which (among other things) may be taken into account under sub-paragraph (1) above. (3) In the case of a penalty reduced by the Commissioners under sub-paragraph (1) above an appeal tribunal, on an appeal relating to the penalty, may cancel the whole or any part of the reduction made by the Commissioners. Part VI Interest Interest on under-declared tax 26 (1) Sub-paragraph (2) below applies where— (a) under section 50(1) of this Act the Commissioners assess an amount of tax due from a registered person for an accounting period and notify it to him, and (b) the assessment is made on the basis that the amount (the additional amount) is due from him in addition to any amount shown in a return made in relation to the accounting period. (2) The additional amount shall carry interest for the period which— (a) begins with the day after that on which the person is required by provision made under section 49 of this Act to pay tax due from him for the accounting period, and (b) ends with the day before the relevant day. (3) For the purposes of sub-paragraph (2) above the relevant day is the earlier of— (a) the day on which the assessment is notified to the person; (b) the day on which the additional amount is paid. (4) Sub-paragraph (5) below applies where under section 50(2) of this Act the Commissioners assess an amount as being tax due from a registered person for an accounting period and notify it to him. (5) The amount shall carry interest for the period which— (a) begins with the day after that on which the person is required by provision made under section 49 of this Act to pay tax due from him for the accounting period, and (b) ends with the day before the relevant day. (6) For the purposes of sub-paragraph (5) above the relevant day is the earlier of— (a) the day on which the assessment is notified to the person; (b) the day on which the amount is paid. (7) Interest under this paragraph shall be payable at the rate applicable under section 197 of this Act. (8) Interest under this paragraph shall be paid without any deduction of income tax. (9) Sub-paragraph (10) below applies where— (a) an amount carries interest under this paragraph (or would do so apart from that sub-paragraph), and (b) all or part of the amount turns out not to be due. (10) In such a case— (a) the amount or part (as the case may be) shall not carry interest under this paragraph and shall be treated as never having done so, and (b) all such adjustments as are reasonable shall be made, including adjustments by way of repayment by the Commissioners where appropriate. Interest on unpaid tax etc. 27 (1) Sub-paragraph (2) below applies where— (a) a registered person makes a return under provision made under section 49 of this Act (whether or not he makes it at the time required by such provision), and (b) the return shows that an amount of tax is due from him for the accounting period in relation to which the return is made. (2) The amount shall carry interest for the period which— (a) begins with the day after that on which the person is required by provision made under section 49 of this Act to pay tax due from him for the accounting period, and (b) ends with the day before that on which the amount is paid. (3) Sub-paragraph (4) below applies where— (a) under section 50(1) of this Act the Commissioners assess an amount of tax due from a registered person person for an accounting period and notify it to him, and (b) the assessment is made on the basis that no return required by provision made under section 49 of this Act has been made by the person in relation to the accounting period. (4) The amount shall carry interest for the period which— (a) begins with the day after that on which the person is required by provision made under section 49 of this Act to pay tax due from him for the accounting period, and (b) ends with the day before that on which the amount is paid. (5) Sub-paragraph (6) below applies where— (a) under section 50(1) of this Act the Commissioners assess an amount of tax due from a registered person for an accounting period and notify it to him, and (b) the assessment (the supplementary assessment) is made on the basis that the amount (the additional amount) is due from him in addition to any amount shown in a return, or in any previous assessment, made in relation to the accounting period. (6) The additional amount shall carry interest for the period which— (a) begins with the day on which the supplementary assessment is notified to the person, and (b) ends with the day before that on which the additional amount is paid. (7) Sub-paragraph (8) below applies where under section 50(2) of this Act the Commissioners assess an amount as being tax due from a registered person for an accounting period and notify it to him. (8) The amount shall carry interest for the period which— (a) begins with the day on which the assessment is notified to the person, and (b) ends with the day before that on which the amount is paid. (8A) Sub-paragraph (8B) below applies where under section 50A of this Act the Commissioners assess an amount as being due from a person who is not a registered person in respect of a taxable disposal and notify it to the person. (8B) The amount shall carry interest for the period which— (a) begins with the day (or the last day of the period) notified under section 50A(2)(b), and (b) ends with the day before that on which the amount is paid. (9) Sub-paragraph (10) below applies where under paragraph 32 below the Commissioners— (a) assess an amount due from a person by way of penalty under Part V of this Schedule or under Schedule 41 to the Finance Act 2008 and notify it to him, or (b) assess an amount due from a person by way of interest under paragraph 26 above and notify it to him. (10) The amount shall carry interest for the period which— (a) begins with the day on which the assessment is notified to the person, and (b) ends with the day before that on which the amount is paid. (11) Interest under this paragraph shall be compound interest calculated— (a) at the penalty rate, and (b) with monthly rests; and the penalty rate is the rate found by taking the rate at which interest is payable under paragraph 26 above and adding 10 percentage points to that rate. (12) Interest under this paragraph shall be paid without any deduction of income tax. (13) Where— (a) the Commissioners assess and notify an amount as mentioned in sub-paragraph (5)(a) or (7) or (8A) or (9)(a) or (b) above, (b) they also specify a date for the purposes of this sub-paragraph, and (c) the amount concerned is paid on or before that date, the amount shall not carry interest by virtue of sub-paragraph (6) or (8) or (8B) or (10) above (as the case may be). (14) Sub-paragraph (15) below applies where— (a) an amount carries interest under this paragraph (or would do so apart from that sub-paragraph), and (b) all or part of the amount turns out not to be due. (15) In such a case— (a) the amount or part (as the case may be) shall not carry interest under this paragraph and shall be treated as never having done so, and (b) all such adjustments as are reasonable shall be made, including adjustments by way of repayment by the Commissioners where appropriate. 28 (1) Where a person is liable to pay interest under paragraph 27 above the Commissioners or, on appeal, an appeal tribunal may reduce the amount payable to such amount (including nil) as they think proper. (2) Where the person concerned satisfies the Commissioners or, on appeal, an appeal tribunal that there is a reasonable excuse for the conduct giving rise to the liability to pay interest, that is a factor which (among other things) may be taken into account under sub-paragraph (1) above. (3) In the case of interest reduced by the Commissioners under sub-paragraph (1) above an appeal tribunal, on an appeal relating to the interest, may cancel the whole or any part of the reduction made by the Commissioners. Interest payable by Commissioners 29 (1) Where, due to an error on the part of the Commissioners, a person— (a) has paid to them by way of tax an amount which was not tax due and which they are in consequence liable to repay to him, (b) has failed to claim payment of an amount to the payment of which he was entitled in pursuance of provision made under section 51(2)(c) or (d) or (f) of this Act, or (c) has suffered delay in receiving payment of an amount due to him from them in connection with tax, then, if and to the extent that they would not be liable to do so apart from this paragraph, they shall (subject to the following provisions of this paragraph) pay interest to him on that amount for the applicable period. (1A) In sub-paragraph (1) above— (a) the reference in paragraph (a) to an amount which the Commissioners are liable to repay in consequence of the making of a payment that was not due is a reference to only so much of that amount as is the subject of a claim that the Commissioners are required to satisfy or have satisfied; and (b) the amounts referred to in paragraph (c) do not include any amount payable under this paragraph. (2) The applicable period, in a case falling within sub-paragraph (1)(a) above, is the period— (a) beginning with the date on which the payment is received by the Commissioners, and (b) ending with the date on which they authorise payment of the amount on which the interest is payable. (3) The applicable period, in a case falling within sub-paragraph (1)(b) or (c) above, is the period— (a) beginning with the date on which, apart from the error, the Commissioners might reasonably have been expected to authorise payment of the amount on which the interest is payable, and (b) ending with the date on which they in fact authorise payment of that amount. (4) In determining the applicable period for the purposes of this paragraph there shall be left out of account any period by which the Commissioners’ authorisation of the payment of interest is delayed by the conduct of the person who claims the interest. (4A) The reference in sub-paragraph (4) above to a period by which the Commissioners’ authorisation of the payment of interest is delayed by the conduct of the person who claims it includes, in particular, any period which is referable to— (a) any unreasonable delay in the making of the claim for interest or in the making of any claim for the payment or repayment of the amount on which interest is claimed; (b) any failure by that person or a person acting on his behalf or under his influence to provide the Commissioners— (i) at or before the time of the making of a claim, or (ii) subsequently in response to a request for information by the Commissioners, with all the information required by them to enable the existence and amount of the claimant’s entitlement to a payment or repayment, and to interest on that payment or repayment, to be determined; and (c) the making, as part of or in association with either— (i) the claim for interest, or (ii) any claim for the payment or repayment of the amount on which interest is claimed, of a claim to anything to which the claimant was not entitled. (5) In determining for the purposes of sub-paragraph (4A) above whether any period of delay is referable to a failure by any person to provide information in response to a request by the Commissioners, there shall be taken to be so referable, except so far as may be provided for by regulations, any period which— (a) begins with the date on which the Commissioners require that person to provide information which they reasonably consider relevant to the matter to be determined; and (b) ends with the earliest date on which it would be reasonable for the Commissioners to conclude— (i) that they have received a complete answer to their request for information; (ii) that they have received all that they need in answer to that request; or (iii) that it is unnecessary for them to be provided with any information in answer to that request. (7) The commissioners shall only be liable to pay interest under under this paragraph on a claim made in writing for that purpose. (8) A claim under this paragraph shall not be made more than 4 years after the end of the applicable period to which it relates. (9) References in this paragraph— (a) to receiving payment of any amount from the Commissioners, or (b) to the authorisation by the Commissioners of the payment of any amount, include references to the discharge by way of set-off (whether in accordance with regulations under paragraph 42 or 43 below or otherwise) of the Commissioners’ liability to pay that amount. (10) Interest under this paragraph shall be payable at the rate applicable under section 197 of this Act. 30 (1) Where— (a) any interest is payable by the Commissioners to a person on a sum due to him under this Part of this Act, and (b) he is a person to whom regulations under section 51 of this Act apply, the interest shall be treated as an amount to which he is entitled by way of credit in pursuance of the regulations. (2) Sub-paragraph (1) above shall be disregarded for the purpose of determining a person’s entitlement to interest or the amount of interest to which he is entitled. Part VII Miscellaneous Security for tax 31 Where it appears to the Commissioners requisite to do so for the protection of the revenue they may require a registrable person, as a condition of his carrying out taxable activities, to give security (or further security) of such amount and in such manner as they may determine for the payment of any tax which is or may become due from him. Assessments to penalties etc. 32 (1) Where a person is liable— (a) to a penalty under Part V of this Schedule, or (b) for interest under paragraph 26 or 27 above, the Commissioners may, subject to sub-paragraph (2) below, assess the amount due by way of penalty or interest (as the case may be) and notify it to him accordingly; and the fact that any conduct giving rise to a penalty under Part V of this Schedule may have ceased before an assessment is made under this paragraph shall not affect the power of the Commissioners to make such an assessment. (2) In the case of the penalties and interest referred to in the following paragraphs of this sub-paragraph, the assessment under this paragraph shall be of an amount due in respect of the accounting period which in the paragraph concerned is referred to as the relevant period— (a) in the case of a penalty under paragraph 18 above relating to the evasion of tax, and in the case of interest under paragraph 27 above on an amount due by way of such a penalty, the relevant period is the accounting period for which the tax evaded was due; (b) in the case of a penalty under paragraph 18 above relating to the obtaining of a payment under regulations under section 51(2)(c) or (d) or (f) of this Act, and in the case of interest under paragraph 27 above on an amount due by way of such a penalty, the relevant period is the accounting period in respect of which the payment was obtained; (c) in the case of interest under paragraph 26 above, and in the case of interest under paragraph 27 above on an amount due by way of interest under paragraph 26 above, the relevant period is the accounting period in respect of which the tax was due; (d) in the case of interest under paragraph 27 above on an amount of tax, the relevant period is the accounting period in respect of which the tax was due. (3) In a case where the amount of any penalty or interest falls to be calculated by reference to tax which was not paid at the time it should have been and that tax cannot be readily attributed to any one or more accounting periods, it shall be treated for the purposes of this Part of this Act as tax due for such period or periods as the Commissioners may determine to the best of their judgment and notify to the person liable for the tax and penalty or interest. (4) Where a person is assessed under this paragraph to an amount due by way of any penalty or interest falling within sub-paragraph (2) above and is also assessed under subsection (1) or (2) of section 50 of this Act for the accounting period which is the relevant period under sub-paragraph (2) above, the assessments may be combined and notified to him as one assessment, but the amount of the penalty or interest shall be separately identified in the notice. (5) Sub-paragraph (6) below applies in the case of an amount due by way of interest under paragraph 27 above. (6) Where this sub-paragraph applies in the case of an amount— (a) a notice of assessment under this paragraph shall specify a date, being not later than the date of the notice, to which the amount of interest which is assessed is calculated, and (b) if the interest continues to accrue after that date, a further assessment or further assessments may be made under this paragraph in respect of amounts which so accrue. (7) If, within such period as may be notified by the Commissioners to the person liable for the interest under paragraph 27 above, the amount referred to in paragraph 27(2), (4), (6), (8) or (10) above (as the case may be) is paid, it shall be treated for the purposes of paragraph 27 above as paid on the date specified as mentioned in sub-paragraph (6)(a) above. (8) Where an amount has been assessed and notified to any person under this paragraph it shall be recoverable as if it were tax due from him unless, or except to the extent that, the assessment has subsequently been withdrawn or reduced. (9) Subsection (8) of section 50 of this Act shall apply for the purposes of this paragraph as it applies for the purposes of that section. Assessments: time limits 33 (1) Subject to the following provisions of this paragraph, an assessment under— (a) any provision of section 50 or 50A of this Act, or (b) paragraph 32 above, shall not be made more than 4 years after the relevant event. (1A) In this paragraph “the relevant event”, in relation to an assessment, means— (a) the end of the accounting period concerned, ... (aa) in the case of an assessment under section 50A, evidence of facts, sufficient in the Commissioners' opinion to justify the making of the assessment, coming to their knowledge, or (b) in the case of an assessment under paragraph 32 of an amount due by way of a penalty other than a penalty referred to in paragraph 32(2), the event giving rise to the penalty. (2) Subject to sub-paragraph (5) below, an assessment under paragraph 32 above of— (a) an amount due by way of any penalty referred to in sub-paragraph (2) of that paragraph, or (b) an amount due by way of interest, may be made at any time before the expiry of the period of two years beginning with the time when the amount of tax due for the accounting period concerned has been finally determined. (3) In relation to an assessment under paragraph 32 above, any reference in sub-paragraph (1A) or (2) above to the accounting period concerned is a reference to that period which, in the case of the penalty or interest concerned, is the relevant period referred to in sub-paragraph (2) of that paragraph. (4) An assessment of an amount due from a person in a case involving a loss of tax— (a) brought about deliberately by the person (or by another person acting on that person's behalf), or (b) attributable to a failure by the person to comply with an obligation under section 47(2) or (3), may be made at any time not more than 20 years after the relevant event (subject to sub-paragraph (5)). (4A) In sub-paragraph (4)(a) the reference to a loss brought about deliberately by the person includes a loss brought about as a result of a deliberate inaccuracy in a document given to Her Majesty's Revenue and Customs by or on behalf of that person. (5) Where after a person’s death the Commissioners propose to assess an amount as due by reason of some conduct of the deceased— (a) the assessment shall not be made more than 4 years after the death, ... (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Supplementary assessments 34 If, otherwise than in circumstances falling within subsection (5)(b) of section 50 of this Act, it appears to the Commissioners that the amount which ought to have been assessed in an assessment under any provision of that section or under paragraph 32 above exceeds the amount which was so assessed, then— (a) under the like provision as that assessment was made, and (b) on or before the last day on which that assessment could have been made, the Commissioners may make a supplementary assessment of the amount of the excess and shall notify the person concerned accordingly. Disclosure of information 35 (1) Notwithstanding any obligation not to disclose information that would otherwise apply, the Commissioners may disclose information to— (a) the Secretary of State, (b) the Environment Agency, (ba) the Natural Resources Body for Wales; (c) the Scottish Environment Protection Agency, (d) the Department of the Environment for Northern Ireland, (e) a district council in Northern Ireland, or (f) an authorised officer of any person (a principal) mentioned in paragraphs (a) to (e) above, for the purpose of assisting the principal concerned in the performance of the principal’s duties. (2) Notwithstanding any such obligation as is mentioned in sub-paragraph (1) above, any person mentioned in sub-paragraph (1)(a) to (f) above may disclose information to the Commissioners or to an authorised officer of the Commissioners for the purpose of assisting the Commissioners in the performance of duties in relation to tax. (3) Information that has been disclosed to a person by virtue of this paragraph shall not be disclosed by him except— (a) to another person to whom (instead of him) disclosure could by virtue of this paragraph have been made, or (b) for the purpose of any proceedings connected with the operation of any provision of, or made under, any enactment in relation to the environment or to tax. (4) References in the preceding provisions of this paragraph to an authorised officer of any person (the principal) are to any person who has been designated by the principal as a person to and by whom information may be disclosed by virtue of this paragraph. (5) The Secretary of State shall notify the Commissioners in writing of the name of any person designated by the Secretary of State under sub-paragraph (4) above. (6) No charge may be made for a disclosure made by virtue of this paragraph. Publication of information by Commissioners 36 (1) The Commissioners may publish, by such means as they think fit, information which— (a) is derived from the register kept under section 47 of this Act, and (b) falls within any of the descriptions set out below. (2) The descriptions are— (a) the names of registered persons; (b) the addresses of any sites or other premises at which they carry on business; (c) the registration numbers assigned to them in the register; (d) the fact (where it is the case) that the registered person is a body corporate which under section 59 of this Act is treated as a member of a group; (e) the names of the other bodies corporate treated under that section as members of the group; (f) the addresses of any sites or other premises at which those other bodies carry on business. (2A) The Commissioners may publish, by such means as they think fit— (a) the names of persons assessed to tax under section 50A in respect of taxable disposals not made at a landfill site; (b) the addresses of any places used by persons within paragraph (a) for making taxable disposals or otherwise for carrying on business. This sub-paragraph does not apply where the assessment in question is subject to an outstanding appeal. (3) Information may be published in accordance with this paragraph notwithstanding any obligation not to disclose the information that would otherwise apply. Evidence by certificate etc. 37 (1) A certificate of the Commissioners— (a) that a person was or was not at any time registered under section 47 of this Act or, (b) that any return required by regulations made under section 49 of this Act has not been made or had not been made at any time, ... (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . shall be sufficient evidence of that fact until the contrary is proved. (2) A photograph of any document furnished to the Commissioners for the purposes of this Part of this Act and certified by them to be such a photograph shall be admissible in any proceedings, whether civil or criminal, to the same extent as the document itself. (3) Any document purporting to be a certificate under sub-paragraph (1) or (2) above shall be taken to be such a certificate until the contrary is proved. Service of notices etc. 38 Any notice, notification or requirement to be served on, given to or made of any person for the purposes of this Part of this Act may be served, given or made by sending it by post in a letter addressed to that person at his last or usual residence or place of business. 39 (1) This paragraph applies to directions, specifications and conditions which the Commissioners or an authorised person may give or impose under any provision of this Part. (2) A direction, specification or condition given or imposed by the Commissioners may be withdrawn or varied by them. (3) A direction, specification or condition given or imposed by an authorised person may be withdrawn or varied by him or by another authorised person. (4) No direction, specification or condition shall have effect as regards any person it is intended to affect unless— (a) a notice containing it is served on him, or (b) other reasonable steps are taken with a view to bringing it to his attention. (5) No withdrawal or variation of a direction, specification or condition shall have effect as regards any person the withdrawal or variation is intended to affect unless— (a) a notice containing the withdrawal or variation is served on him, or (b) other reasonable steps are taken with a view to bringing the withdrawal or variation to his attention. No deduction of penalties or interest 40 In section 827 of the Taxes Act 1988 (no deduction for penalties etc.) the following subsection shall be inserted after subsection (1B)— (1C) Where a person is liable to make a payment by way of— (a) penalty under Part V of Schedule 5 to the Finance Act 1996 (landfill tax), or (b) interest under paragraph 26 or 27 of that Schedule, the payment shall not be allowed as a deduction in computing any income, profits or losses for any tax purposes. Destination of receipts 41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Set-off of amounts 42 (1) Regulations may make provision in relation to any case where— (a) a person is under a duty to pay to the Commissioners at any time an amount or amounts in respect of landfill tax, and (b) the Commissioners are under a duty to pay to that person at the same time an amount or amounts in respect of any tax (or taxes) under their care and management. (2) The regulations may provide that if the total of the amount or amounts mentioned in sub-paragraph (1)(a) above exceeds the total of the amount or amounts mentioned in sub-paragraph (1)(b) above, the latter shall be set off against the former. (3) The regulations may provide that if the total of the amount or amounts mentioned in sub-paragraph (1)(b) above exceeds the total of the amount or amounts mentioned in sub-paragraph (1)(a) above, the Commissioners may set off the latter in paying the former. (4) The regulations may provide that if the total of the amount or amounts mentioned in sub-paragraph (1)(a) above is the same as the total of the amount or amounts mentioned in sub-paragraph (1)(b) above no payment need be made in respect of the former or the latter. (4A) The regulations may provide for any limitation on the time within which the Commissioners are entitled to take steps for recovering any amount due to them in respect of landfill tax to be disregarded, in such cases as may be described in the regulations, in determining whether any person is under such a duty to pay as is mentioned in sub-paragraph (1)(a) above. (5) The regulations may include provision treating any duty to pay mentioned in sub-paragraph (1) above as discharged accordingly. (6) References in sub-paragraph (1) above to an amount in respect of a particular tax include references not only to an amount of tax itself but also to other amounts such as interest and penalty. (7) In this paragraph “tax” includes “duty”. 43 (1) Regulations may make provision in relation to any case where— (a) a person is under a duty to pay to the Commissioners at any time an amount or amounts in respect of any tax (or taxes) under their care and management, and (b) the Commissioners are under a duty to pay to that person at the same time an amount or amounts in respect of landfill tax. (2) The regulations may provide that if the total of the amount or amounts mentioned in sub-paragraph (1)(a) above exceeds the total of the amount or amounts mentioned in sub-paragraph (1)(b) above, the latter shall be set off against the former. (3) The regulations may provide that if the total of the amount or amounts mentioned in sub-paragraph (1)(b) above exceeds the total of the amount or amounts mentioned in sub-paragraph (1)(a) above, the Commissioners may set off the latter in paying the former. (4) The regulations may provide that if the total of the amount or amounts mentioned in sub-paragraph (1)(a) above is the same as the total of the amount or amounts mentioned in sub-paragraph (1)(b) above no payment need be made in respect of the former or the latter. (4A) The regulations may provide for any limitation on the time within which the Commissioners are entitled to take steps for recovering any amount due to them in respect of any of the taxes under their care and management to be disregarded, in such cases as may be described in the regulations, in determining whether any person is under such a duty to pay as is mentioned in sub-paragraph (1)(a) above. (5) The regulations may include provision treating any duty to pay mentioned in sub-paragraph (1) above as discharged accordingly. (6) References in sub-paragraph (1) above to an amount in respect of a particular tax include references not only to an amount of tax itself but also to other amounts such as interest and penalty. (7) In this paragraph “tax” includes “duty”. Amounts shown as tax on invoices 44 (1) Where— (a) a registrable person issues an invoice showing an amount as tax chargeable on an event, and (b) no tax is in fact chargeable on the event, an amount equal to the amount shown as tax shall be recoverable from the person as a debt due to the Crown. (2) Where— (a) a registrable person issues an invoice showing an amount as tax chargeable on a taxable disposal, and (b) the amount shown as tax exceeds the amount of tax in fact chargeable on the disposal, an amount equal to the excess shall be recoverable from the person as a debt due to the Crown. (3) References in this paragraph to an invoice are to any invoice, whether or not it is a landfill invoice within the meaning of section 61 of this Act. Adjustment of contracts 45 (1) This paragraph applies where— (a) material undergoes a ... disposal, (b) a payment falls to be made under a disposal contract relating to the material, and (c) after the making of the contract there is a change in the tax chargeable on the ... disposal. (2) In such a case the amount of any payment mentioned in sub-paragraph (1)(b) above shall be adjusted, unless the disposal contract otherwise provides, so as to reflect the tax chargeable on the ... disposal. (3) For the purposes of this paragraph a disposal contract relating to material is a contract providing for the disposal of the material, and it is immaterial— (a) when the contract was made; (b) whether the contract also provides for other matters; (c) whether the contract provides for a method of disposal and (if it does) what method it provides for. (4) The reference in sub-paragraph (1) above to a change in the tax chargeable is a reference to a change— (a) to or from no tax being chargeable, or (b) in the amount of tax chargeable. 46 (1) This paragraph applies where— (a) work is carried out under a construction contract, (b) as a result of the work, material undergoes a ... disposal, (c) the contract makes no provision as to the disposal of such material, and (d) the contract was made on or before 29th November 1994 (when the proposal to create tax was announced). (2) In such a case the amount of any payment which falls to be made— (a) under the construction contract, and (b) in respect of the work, shall be adjusted, unless the contract otherwise provides, so as to reflect the tax (if any) chargeable on the disposal. (3) For the purposes of this paragraph a construction contract is a contract under which all or any of the following work is to be carried out— (a) the preparation of a site; (b) demolition; (c) building; (d) civil engineering. Adjustment of rent etc. 47 (1) This paragraph applies where— (a) an agreement with regard to any sum payable in respect of the use of land (whether the sum is called rent or royalty or otherwise) provides that the amount of the sum is to be calculated by reference to the turnover of a business, (b) the agreement was made on or before 29th November 1994 (when the proposal to create tax was announced), and (c) the circumstances are such that (had the agreement been made after that date) it can reasonably be expected that it would have provided that tax be ignored in calculating the turnover. (2) In such a case the agreement shall be taken to provide that tax be ignored in calculating the turnover. Part VIII Secondary liability: controllers of landfill sites Meaning of controller 48 (1) For the purposes of this Part of this Schedule a person is the controller of the whole, or a part, of a landfill site at a given time if he determines, or is entitled to determine, what disposals of material, if any, may be made— (a) at every part of the site at that time, or (b) at that part of the site at that time, as the case may be. (2) But a person who, because he is an employee or agent of another, determines or is entitled to determine what disposals may be made at a landfill site or any part of a landfill site is not the controller of that site or, as the case may be, that part of that site. (3) Where a person is the controller of the whole or a part of a landfill site, that site or, as the case may be, that part of the site is referred to in this Part of this Schedule as being under his control. (4) Any reference in this Part of this Schedule to a controller (without more) is a reference to a controller of the whole or a part of a landfill site. Secondary liability 49 (1) Where— (a) a taxable disposal is made at a landfill site, (b) at the time when that disposal is made a person is the operator of the landfill site by virtue of section 67(a), (c) or (e) of this Act, and (c) at that time a person other than the operator mentioned in paragraph (b) above is the controller of the whole or a part of the landfill site, the controller shall be liable to pay to the Commissioners an amount of the landfill tax chargeable on the disposal. (2) The amount which the controller is liable to pay shall be determined in accordance with the following provisions of this paragraph. (3) In a case where the whole of the landfill site is under the control of the controller, he shall be liable to pay the whole of the landfill tax chargeable. (4) In a case where a part of the landfill site is under the control of the controller, he shall be liable to pay an amount of the landfill tax calculated in accordance with sub-paragraphs (5) and (6) below. (5) The amount of landfill tax which the controller is liable to pay is the amount which would have been chargeable had a separate taxable disposal consisting of the amount of material referred to in sub-paragraph (6) below been made at the time of the disposal mentioned in sub-paragraph (1)(a) above. (6) That amount of material is the amount by weight of the material comprised in the disposal mentioned in sub-paragraph (1)(a) above which was disposed of on the part of the landfill site under the control of the controller. (7) If the amount mentioned in sub-paragraph (6) above is nil, the controller shall have no liability under sub-paragraph (1) above in relation to landfill tax chargeable on the disposal. (8) For the purposes of sub-paragraph (1)(b) and (c) above— (a) section 61 of this Act, and (b) any regulations made under section 62 of this Act, shall not apply for determining the time when the disposal in question is made. Operator entitled to credit 50 (1) This paragraph applies where— (a) the operator of a landfill site is liable to pay landfill tax on a taxable disposal by reference to a particular accounting period, (b) a controller of the whole or a part of that site is (apart from this paragraph) liable under paragraph 49 above to pay an amount of that tax, and (c) for the accounting period in question the operator is entitled to credit under regulations made under section 51 of this Act. (2) The amount of the tax which the controller is (apart from this sub-paragraph) liable to pay shall be reduced by the amount calculated in accordance with the following formula— A x C G where— A is the amount of tax mentioned in sub-paragraph (1)(b) above; C is the amount of credit mentioned in sub-paragraph (1)(c) above; and G is the operator’s gross tax liability for the accounting period in question. (3) For the purposes of sub-paragraph (2) above, the operator’s gross tax liability for the accounting period in question is the gross amount of landfill tax— (a) which is chargeable on disposals made at all landfill sites of which he is the operator, and (b) for which he is required to account by reference to that accounting period. (4) In sub-paragraph (3) above, the gross amount of landfill tax means the amount of tax before any credit or any other adjustment is taken into account in the period in question. (5) If the amount calculated in accordance with the formula in sub-paragraph (2) above is greater than the amount of tax mentioned in sub-paragraph (1)(b) above, the amount of the tax which the controller is liable to pay shall be reduced to nil. Payment of secondary liability 51 (1) This paragraph applies where a controller is liable under paragraph 49 above (after taking account of any reduction under paragraph 50 above) to pay an amount of landfill tax (“the relevant amount”). (2) The controller is required to pay the relevant amount to the Commissioners only if— (a) a notice containing the required information is served on him, or (b) other reasonable steps are taken with a view to bringing the required information to his attention, before the end of the period of two years beginning with the day immediately following the relevant accounting day. (3) The relevant accounting day is the last day of the accounting period by reference to which the landfill site operator liable to pay the landfill tax in question is required to account for that tax. (4) If the controller is required to pay the relevant amount by virtue of this paragraph, the amount shall be paid before the end of the period of thirty days beginning with the day immediately following the notification day. (5) The notification day is— (a) in a case where notice is served on a controller as mentioned in sub-paragraph (2)(a) above, the day on which the notice is served, or (b) in a case where other reasonable steps are taken as mentioned in sub-paragraph (2)(b) above, the day on which the last of those steps is taken. (6) For the purposes of sub-paragraph (2) above the required information is the relevant amount and, if that amount is one reduced in accordance with paragraph 50 above, also— (a) the amount of the controller’s liability under paragraph 49 above apart from the reduction, (b) the amount of credit to which the operator is entitled, and (c) the operator’s gross tax liability. Assessments 52 (1) Where an amount of landfill tax is— (a) assessed under section 50 of this Act, and (b) notified to a licensed operator, the Commissioners may also determine that a controller of the whole or a part of any landfill site operated by the licensed operator shall be liable to pay so much of the amount assessed as they consider just and equitable. (2) A controller is required to pay an amount determined under sub-paragraph (1) above only if— (a) a notice stating the amount is served on him, or (b) other reasonable steps are taken with a view to bringing the amount of the liability to his attention, before the expiry of the period of two years beginning with the day immediately following the assessment day. (3) The assessment day is the day on which the assessment in question is notified to the licensed operator. (4) If a controller is required to pay an amount by virtue of this paragraph, it shall be paid before the end of the period of thirty days beginning with the day immediately following the notification day. (5) The notification day is— (a) in a case where notice is served on a controller as mentioned in sub-paragraph (2)(a) above, the day on which the notice is served, or (b) in a case where other reasonable steps are taken as mentioned in sub-paragraph (2)(b) above, the day on which the last of those steps is taken. (6) For the purposes of this paragraph a licensed operator is a person who is the operator of a landfill site by virtue of section 67(a), (c) or (e) of this Act. Assessment withdrawn or reduced 53 (1) Where— (a) a controller is liable to pay an amount determined under paragraph 52 above, and (b) the assessment notified to the licensed operator is withdrawn or reduced, the Commissioners may determine that the controller’s liability is to be cancelled or to be reduced to such an amount as they consider just and equitable. (2) Sub-paragraphs (3) to (5) below apply where the Commissioners make a determination under sub-paragraph (1) above that the controller’s liability is to be reduced (but not cancelled). (3) In such a case they shall— (a) serve the controller with notice stating the amount of the reduced liability, or (b) take other reasonable steps with a view to bringing the reduced amount to the controller’s attention. (4) If the controller has already been served with notice of the amount determined under paragraph 52 above, or if other steps have already been taken to bring that amount to his attention— (a) the Commissioners shall serve the notice mentioned in sub-paragraph (3)(a) above, or take the steps mentioned in sub-paragraph (3)(b) above, before the end of the period of thirty days beginning with the day immediately following that on which they make the determination under sub-paragraph (1) above, and (b) the reduced amount shall be payable, or treated as having been payable, on or before the day on which the amount referred to in sub-paragraph (1)(a) above would have been payable apart from this paragraph. (5) In a case where the controller has not been served with notice of the amount determined under paragraph 52 above, or no other steps have been taken to bring that amount to his attention, he shall be liable to pay the reduced amount only if— (a) the notice mentioned in sub-paragraph (3)(a) above is served, or (b) the other steps mentioned in sub-paragraph (3)(b) above are taken, before the expiry of the period of two years beginning with the day immediately following that on which the Commissioners make the determination under sub-paragraph (1) above. (6) Sub-paragraph (7) below applies where— (a) the Commissioners make a determination under sub-paragraph (1) above that the controller’s liability is to be cancelled, and (b) the controller has already been served with notice of the amount determined under paragraph 52 above, or other steps have already been taken to bring that amount to his attention. (7) In such a case the Commissioners shall— (a) serve the controller with notice stating that the liability has been cancelled, or (b) take other reasonable steps with a view to bringing the cancellation to the controller’s attention, before the end of the period of thirty days beginning with the day immediately following that on which they make the determination that the liability is to be cancelled. Adjustments 54 (1) This paragraph applies in any case where the liability of a licensed operator to pay landfill tax is adjusted otherwise than by— (a) his being entitled to credit under regulations made under section 51 of this Act, (b) his being notified of an amount assessed under section 50 of this Act, or (c) the withdrawal or reduction of an assessment under section 50 of this Act which was notified to him. (2) In such a case the Commissioners may determine that a controller of the whole or any part of a landfill site operated by the licensed operator— (a) shall be liable to pay to the Commissioners such an amount as they consider just and equitable, or (b) shall be entitled to an allowance of such an amount as they consider just and equitable. (3) A controller is required to pay an amount determined under sub-paragraph (2)(a) above only if— (a) a notice stating the amount is served on him, or (b) other reasonable steps are taken with a view to bringing the amount of the liability to his attention, before the end of the period of two years beginning with the day immediately following the relevant accounting day. (4) The relevant accounting day is the last day of the accounting period of the operator within which the adjustment in question was taken into account. (5) If a controller is required to pay an amount by virtue of sub-paragraph (3) above, it shall be paid before the end of the period of thirty days beginning with the day immediately following the notification day. (6) The notification day is— (a) in a case where notice is served on a controller as mentioned in sub-paragraph (3)(a) above, the day on which the notice is served, or (b) in a case where other reasonable steps are taken as mentioned in sub-paragraph (3)(b) above, the day on which the last of those steps is taken. (7) The Commissioners may determine in what manner a controller is to benefit from an allowance determined under sub-paragraph (2)(b) above. (8) For the purposes of this paragraph a licensed operator is a person who is the operator of a landfill site by virtue of section 67(a), (c) or (e) of this Act. Amounts payable to be treated as tax 55 An amount which a controller is required to pay under paragraph 52, 53 or 54(2)(a) above or under paragraph 58 below shall be deemed to be an amount of tax due from him and shall be recoverable accordingly. Controller not carrying out taxable activity 56 A controller is not to be treated for the purposes of this Act as carrying out a taxable activity by reason only of any liability under this Part of this Schedule. Joint and several liability 57 (1) In any case where the condition in sub-paragraph (4), (5) or (6) below is satisfied, the controller and the operator shall be jointly and severally liable for the principal liability. (2) But the amount which may be recovered from the controller in consequence of such liability shall not exceed the amount of the secondary liability. (3) For the purposes of this paragraph— (a) the principal liability is the amount referred to in sub-paragraph (4)(a), (5)(a) or (6)(a) below, as the case may be, and (b) the secondary liability is the amount referred to in sub-paragraph (4)(b), (5)(b) or (6)(b) below, as the case may be. (4) The condition in this sub-paragraph is satisfied if— (a) the operator of a landfill site is liable under section 41 of this Act for landfill tax, and (b) a controller is liable under paragraph 49 above, after taking account of any reduction under paragraph 50 above, to pay an amount of that tax. (5) The condition in this sub-paragraph is satisfied if— (a) the operator of a landfill site is notified of the amount of an assessment made under section 50 of this Act, and (b) in consequence of a determination made under paragraph 52 above by the Commissioners in connection with the assessment, a controller is liable to pay an amount (after taking account of any reduction under paragraph 53 above). (6) The condition in this sub-paragraph is satisfied if— (a) the liability of the operator of a landfill site to pay landfill tax is adjusted in such a way that paragraph 54 above applies, and (b) in consequence of a determination made under paragraph 54(2)(a) above by the Commissioners in connection with the adjustment, a controller is liable to pay an amount. Interest payable by a controller 58 (1) This paragraph applies where— (a) the operator of a landfill site and the controller of the whole or a part of that site are by virtue of paragraph 57 above jointly and severally liable for an amount, and (b) that amount carries interest by virtue of any provision of this Schedule. (2) The controller and the operator shall be jointly and severally liable to pay the interest. (3) But the amount which may be recovered from the controller in consequence of such liability shall not exceed the amount calculated in accordance with the following formula— ( I - [ A + B ] ) × S P where— I is the total amount of interest in question; A is the amount of interest carried for the period which— (a) begins with the first day of the period for which interest is carried, and (b) ends with the day on which the controller becomes liable to pay the secondary liability; B is the amount of interest carried for any day falling after that on which the secondary liability is met in full; S is the amount of the secondary liability; P is the amount of the principal liability. In this paragraph secondary liability and principal liability have the same meaning as in paragraph 57 above. (4) The controller is liable for an amount of interest only if— (a) a notice stating the amount is served on him, or (b) other reasonable steps are taken with a view to bringing the amount of the liability to his attention, before the end of the period of two years beginning with the day immediately following the final day. (5) The final day is the last day of the period for which the interest in question is carried. (6) If the controller is required to pay an amount in accordance with this paragraph, it shall be paid before the end of the period of thirty days beginning with the day immediately following the notification day. (7) The notification day is— (a) in a case where notice is served on a controller as mentioned in sub-paragraph (4)(a) above, the day on which the notice is served, or (b) in a case where other reasonable steps are taken as mentioned in sub-paragraph (4)(b) above, the day on which the last of those steps is taken. (8) Where by virtue of sub-paragraph (2) above a controller is liable to pay interest which arises under paragraph 27 above, paragraph 28 above shall apply in relation to that interest as it applies to interest which a person is liable under paragraph 27 above to pay. Reviews and Appeals 59 Sections 54 to 56 of this Act shall apply to a decision of the Commissioners under this Part of this Schedule— (a) that a person is a controller, (b) that a person is liable under this Part of this Schedule to pay any amount (including a penalty under paragraph 60 below), (c) that a person is not entitled under this Part of this Schedule to an allowance, or (d) as to the amount of any liability or any allowance under this Part of this Schedule, as they apply to the other decisions of the Commissioners specified in section 54(1). Notice that person is, or is no longer, a controller 60 (1) This paragraph applies where— (a) on the date when this paragraph comes into force, a person is a controller of the whole or a part of a landfill site, or (b) after that date, a person becomes or ceases to be a controller of the whole or a part of a landfill site. (2) The controller, and the operator of the landfill site in question, shall be under a duty to secure that notice which complies with the requirements of sub-paragraph (3) below appropriate to the case in question is given to the Commissioners. (3) The requirements of this sub-paragraph are that the notice— (a) states that a person is, has become or has ceased to be a controller, (b) identifies that person and the site under his control or formerly under his control, (c) states the date when he became or ceased to be the controller, and (d) is given within the period of thirty days beginning with the day immediately following— (i) the day when this paragraph comes into force, in a case falling within sub-paragraph (1)(a) above, or (ii) the day when the person in question becomes or ceases to be the controller, in a case falling within sub-paragraph (1)(b) above. (4) If a person fails to comply with sub-paragraph (2) above, he is liable to a penalty of £250. (5) Paragraph 25 above applies to a penalty under sub-paragraph (4) above as it applies to a penalty under Part V of this Schedule. Extension of time limits where notice not served 61 (1) This paragraph applies where— (a) a person is liable under paragraph 49 above to pay an amount of landfill tax or liable under paragraph 58 above to pay interest, or (b) the Commissioners are entitled under paragraph 52, 53 or 54 above to determine an amount which a person is liable to pay. (2) The reference to two years in paragraph 51(2), 52(2), 53(5), 54(3) or 58(4) above (as the case may be) shall be treated as a reference to twenty years if the requirement of paragraph 60(2) above to give notice to the Commissioners in relation to the person mentioned in sub-paragraph (1) above being or becoming a controller has not been complied with.

SCHEDULE 6 Taxation of savings at the lower rate

Section 73. The Taxes Management Act 1970 (c. 9) The Taxes Act 1988 4 (1) Subject to sub-paragraph (2) below, in subsection (1)(b) of section 51B of that Act (periodic returns of tax on gilts), for “basic rate” there shall be substituted “ lower rate ”. (2) Sub-paragraph (1) above has effect for the purposes only of the exercise on or after the day on which this Act is passed of the Treasury’s power to make regulations under that section; but that power may be exercised on or after that day for the purpose of making provision, with retrospective effect, on the basis that the assumption to be applied in relation to all payments made on or after 6th April 1996 was an assumption that such payments bear tax at the lower rate. 5 In paragraph (c) of section 246D(2) of that Act (application of section 207A to certain foreign income dividends), for the words from “as income” to the end of the paragraph there shall be substituted “ (without prejudice to paragraph (a) above) as if it were income to which section 1A applies; ”. 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) Sections 468E and 468EE of that Act (rate of corporation tax on authorised unit trusts) shall not apply in relation to any accounting period ending after 31st March 1996 except so far as those sections relate to the financial year 1995. 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 (1) In subsection (1) of section 737 of that Act (deductions from manufactured payments), after “shall apply” there shall be inserted “ (subject to subsection (1A) below) ”, and for subsection (1A) of that section there shall be substituted the following subsection— (1A) The deduction of tax which is deemed to have been made under subsection (1) above shall be taken to have been made at the lower rate as if the deemed annual payment were income to which section 1A applied; and— (a) the reference to the applicable rate in subsection (1) of section 350, so far as it has effect by virtue of subsection (1) above, and (b) Schedule 16, so far as it so has effect, shall be construed accordingly. (2) This paragraph has effect in relation to payments on or after 6th April 1996. 19 In section 737C(6) of that Act (computation of amount of deemed manufactured interest), for “basic” there shall be substituted “ lower ”. 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 In section 822(1) of that Act (over-deductions from interest on loan capital etc. made before the passing of annual Act where basic rate for the year is lower than in the previous year), for “basic rate lower” there shall be substituted “ lower rate less ”. 24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Finance Act 1989 (c. 26) 26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Taxation of Chargeable Gains Act 1992 (c. 12) 27 In section 4(3A) of the Taxation of Chargeable Gains Act 1992 (disregard of income chargeable at lower rate in accordance with section 207A of the Taxes Act 1988), for “section 207A” there shall be substituted “ section 1A ”. Commencement of Schedule 28 Subject to any express provisions as to commencement that are contained in the preceding provisions of this Schedule, this Schedule has effect for the year 1996-97 and subsequent years of assessment.

SCHEDULE 7 Transfer of charge under Schedule C to Schedule D

Section 79. Amendments of the Taxes Act 1988 1 The Taxes Act 1988 shall be amended in accordance with paragraphs 2 to 28 below. 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 17 (Schedule C) shall be omitted. 4 (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) In subsection (3) of that section— (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) in Case IV, the words “except such income as is charged under Schedule C” shall be omitted; and (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 For the heading to Part III there shall be substituted the following heading— “ Government Securities ” 7 Section 44 (mode of charge of tax under Schedule C) shall be omitted. 8 Section 45 (interpretation of Part III) shall be omitted. 9 Section 48 (securities of foreign states) shall be omitted. 10 In section 49 (stock and dividends in name of Treasury etc.), after subsection (2) there shall be inserted the following subsection— (3) In this section “dividends” means any interest, public annuities, dividends or shares of annuities. 11 In sections 50(1) and 51A(1) (which provide for interest on certain securities to be paid without deduction of tax), the words “but shall be chargeable to tax under Case III of Schedule D” shall in each case be omitted. 12 Section 52 (taxation of interest on converted securities and interest which becomes subject to deduction) shall be omitted. 13 Section 123 (foreign dividends) shall be omitted. 14 In section 124— (a) in subsection (6) (definitions in connection with quoted Eurobonds), the definitions of “recognised clearing system” and “relevant foreign securities”, and the word “and” immediately preceding those definitions, and (b) subsection (7), shall be omitted. 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 In section 398 (transactions in deposits with and without certificates or in debts), in paragraph (b), the words “C or” shall be omitted. 17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 In section 474 (treatment of tax-free income), subsections (1) and (3) shall be omitted. 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 (1) In section 516 (government securities held by non-resident central banks), in subsection (1), for “dividends (within the meaning of Schedule C) paid out of the public revenue of the United Kingdom where they are” there shall be substituted “ income from securities which is payable out of the public revenue of the United Kingdom and which is ”. (2) In subsection (2) of that section, for “such dividends” there shall be substituted “ such income ”. 22 In section 582A (designated international organisations), subsection (3) shall be omitted. 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 In section 832(1) (interpretation of the Tax Acts), the definition of “recognised clearing system” shall be omitted. 26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Schedule 3 (machinery for payment of income tax under Schedule C and, in certain cases, Schedule D) shall be omitted. 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other amendments 29 In the Table in section 98 of the Taxes Management Act 1970 (penalties in respect of certain information provisions)— (a) in the first column, the entry relating to paragraph 13(1) of Schedule 3 to the Taxes Act 1988, and (b) in the second column, the entry relating to paragraph 6C of that Schedule, shall be omitted. 30 In section 178(2)(m) of the Finance Act 1989 (provisions to which power to set rates of interest applies), the words “and paragraph 6B of Schedule 3 to” shall be omitted. 31 In section 128 of the Finance Act 1995 (limit on income chargeable on non-residents: income tax), in subsection (3)(a), the words “Schedule C,” shall be omitted. Commencement, etc. 32 Subject to paragraphs 33 and 34 below, this Schedule has effect— (a) for the purposes of income tax, for the year 1996-97 and subsequent years of assessment; (b) for the purposes of corporation tax, for accounting periods ending after 31st March 1996. Position of paying and collecting agents 33 (1) Subject to the following provisions of this paragraph and paragraph 34 below— (a) nothing in section 79 of this Act or this Schedule shall affect the obligations of any person under Schedule 3, in relation to times to which this paragraph applies, to set apart, retain or pay any amount of tax; and (b) Schedule 3 shall have effect accordingly in relation to amounts set apart, retained or paid in pursuance of those obligations. (2) The repeal of Schedule 3 shall not affect the operation of paragraph 6B of that Schedule in relation to any amount— (a) which became due and payable in relation to a transaction occurring before the day on which this Act was passed; but (b) which remains unpaid at any time on or after that day. (3) The Board may by regulations make provision with respect to returns to be made for the quarter which includes both times before the day on which this Act was passed and times on and after that day. (4) Regulations under sub-paragraph (3) above may, in particular, provide that section 98 of the Taxes Management Act 1970 shall have effect as if it included a reference in the second column of the Table to any specified provision of the regulations. (5) In this paragraph “Schedule 3” means Schedule 3 to the Taxes Act 1988. Position of taxpayers 34 (1) Transitional payments of tax made on a person’s behalf in relation to times to which this paragraph applies shall be treated as made only for the purpose of being applied in the discharge of that person’s liability to tax charged under Schedule D. (2) If a transitional payment of tax has been made on a person’s behalf, but it appears to the Board that— (a) that person was not liable to tax, or (b) the sum paid exceeded his liability, the Board shall make or allow such repayments, adjustments or set-offs against unpaid tax as they think appropriate. (3) In this paragraph “transitional payment of tax” means a payment to which paragraph 33 above applies. Times to which paragraphs 33 and 34 apply 35 Paragraphs 33 and 34 above apply in relation to times falling— (a) within a year of assessment or an accounting period mentioned in paragraph 32 above, but (b) before the day on which this Act was passed.

SCHEDULE 12

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SCHEDULE 14 Loan relationships: minor and consequential amendments

Section 104. The Taxes Management Act 1970 (c. 9) 1 (1) In subsection (4A) of section 87A of the Taxes Management Act 1970 (interest on overdue corporation tax)— (a) in paragraph (a), for the words from “a relievable amount” to the end of the paragraph there shall be substituted “ a non-trading deficit on the company’s loan relationships, ”; and (b) in paragraph (b), for the words from “subsection (5)” to “subsection (10) of that section)” there shall be substituted “ section 83(2)(c) of the Finance Act 1996 or paragraph 4(3) of Schedule 11 to that Act the whole or part of the deficit for the later period is set off against profits ”. (2) In subsection (4B) of that section, for the words “section 131(5) or (6) of the Finance Act 1993”, in each place where they occur, there shall be substituted “ section 83(2)(c) of the Finance Act 1996 or paragraph 4(3) of Schedule 11 to that Act ”. The Inheritance Tax Act 1984 (c. 51) 2 (1) In section 174(1)(b) of the Inheritance Tax Act 1984 (unpaid tax relating to deep discount securities deemed to be transferred on death), for the words from “paragraph 4” onwards there shall be substituted “ Schedule 13 to the Finance Act 1996 (discounted securities) on a transfer which is treated as taking place by virtue of paragraph 4(2) of that Schedule. ” (2) This paragraph applies in relation to deaths on or after 6th April 1996. The Airports Act 1986 (c. 31) 3 In section 77 of the Airports Act 1986 (taxation provisions), for subsection (3) there shall be substituted the following subsection— (3) For the purposes of Part VI of the Income and Corporation Taxes Act 1988 (company distributions) and Chapter II of Part IV of the Finance Act 1996 (loan relationships), any debentures of the company issued in pursuance of section 4 shall be treated as having been issued for new consideration equal to the principal sum payable under the debenture. The Gas Act 1986 (c. 44) 4 In section 60 of the Gas Act 1986 (taxation provisions), for subsection (3) there shall be substituted the following subsection— (3) For the purposes of Part VI of the Income and Corporation Taxes Act 1988 (company distributions) and Chapter II of Part IV of the Finance Act 1996 (loan relationships), any debentures issued in pursuance of section 51 above shall be treated as having been issued for new consideration equal to the principal sum payable under the debenture. The Taxes Act 1988 5 In section 18 of the Taxes Act 1988 (Schedule D), the following subsection shall be inserted after subsection (3)— (3A) For the purposes of corporation tax subsection (3) above shall have effect as if the following Case were substituted for Cases III and IV, that is to say— Case III: | tax in respect of— (a) profits and gains which, as profits and gains arising from loan relationships, are to be treated as chargeable under this Case by virtue of Chapter II of Part IV of the Finance Act 1996; (b) any annuity or other annual payment which— (i) is payable (whether inside or outside the United Kingdom and whether annually or at shorter or longer intervals) in respect of anything other than a loan relationship; and (ii) is not a payment chargeable under Schedule A; (c) any discount arising otherwise than in respect of a loan relationship; and as if Case V did not include tax in respect of any income falling within paragraph (a) of the substituted Case III. 6 In section 56 of that Act (transactions in deposits with or without certificates or in debts), after subsection (4) there shall be inserted the following subsections— (4A) This section and section 56A shall not apply for the purposes of corporation tax except in relation to rights in existence before 1st April 1996. (4B) For the purposes of corporation tax, where any profits or gains arising from the disposal or exercise of a right in existence before 1st April 1996 are, or (if there were any) would be, chargeable under this section, nothing in Chapter II of Part IV of the Finance Act 1996 (loan relationships) shall require any amount relating to that disposal, or to the exercise of that right, to be brought into account for the purposes of that Chapter. 7 In section 70(3) of that Act (extension of Cases IV and V of Schedule D to non-resident companies), for “Cases IV and V” there shall be substituted “ Cases III and V ”. 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 (1) Section 78 of that Act (discounted bills of exchange) shall cease to have effect except in relation to bills of exchange drawn before 1st April 1996. (2) Where any bill so drawn is paid on or after 1st April 1996— (a) the amount which subsection (2) of that section provides to be treated as a deduction against total profits and as a charge on income shall (instead of being so treated) be brought into account for the purposes of this Chapter as a non-trading debit; and (b) that amount shall be the only amount brought into account for the purposes of this Chapter in respect of the discount in question. 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 (1) In subsection (2) of section 242 of that Act (set off of losses against surplus franked investment income), for paragraph (f) there shall be substituted— (f) the setting of amounts against profits in pursuance of a claim under section 83 of the Finance Act 1996 (non-trading deficits on loan relationships) or paragraph 4 of Schedule 11 to that Act (deficits of insurance companies). (2) In subsection (8) of that section, for paragraph (e) there shall be substituted the following paragraph— (e) if and so far as the purpose for which the claim is made is the setting of an amount against profits in pursuance of a claim under— (i) section 83 of the Finance Act 1996 (non-trading deficits on loan relationships), or (ii) paragraph 4 of Schedule 11 to that Act (deficits of insurance companies), the time limit that by virtue of subsection (6) of that section or sub-paragraph (15) of that paragraph would be applicable to such a claim. 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 (1) In subsection (2)(b) of section 337 of that Act (deduction of yearly interest etc. in computing income), for “yearly interest, annuity or other annual payment” there shall be substituted “ annuity or other annual payment which is not interest ”. (2) Subsection (3) of that section (deduction of yearly interest payable to a bank) shall cease to have effect. 15 After section 337 of that Act there shall be inserted the following section— Interest payable by companies. 337A No deduction shall be made in respect of interest in computing a company’s income from any source except in accordance with Chapter II of Part IV of the Finance Act 1996 (loan relationships). 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Sections 338A, 340 and 341 of that Act (charges on income to include certain loans to buy land, provisions relating to interest payable to non-residents and provisions relating to payments between related companies) shall cease to have effect. 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 (1) In section 401 of that Act (relief for pre-trading expenditure), after subsection (1) there shall be inserted the following subsections— (1AA) Subsection (1) above shall not apply to any expenditure in relation to which any debit falls, or (but for subsection (1AB) below) would fall, to be brought into account for the purposes of Chapter II of Part IV of the Finance Act 1996 (loan relationships). (1AB) Where, in the case of any company— (a) a non-trading debit is given for any accounting period for the purposes of Chapter II of Part IV of the Finance Act 1996 (loan relationships), and (b) an election for the purposes of this section is made by that company with respect to that debit within the period of 2 years beginning with the end of that accounting period, that debit shall not be brought into account for the purposes of that Chapter as a non-trading debit for that period, but subsection (1AC) below shall apply instead. (1AC) If a company— (a) begins to carry on a trade within the period of seven years after the end of the accounting period for which a non-trading debit is given for the purposes of Chapter II of Part IV of the Finance Act 1996 (loan relationships), (b) that debit is such that, if it had been given for the accounting period in which the company begins to carry on that trade, it would have been brought into account by reference to that trade in accordance with section 82(2) of that Act (trading debits and credits), and (c) an election is or has been made with respect to that debit under subsection (1AB) above, that debit shall be treated for the purposes of that Chapter as if it were a debit for the accounting period in which the company begins to carry on the trade and shall be brought into account for that period in accordance with section 82(2) of that Act. (2) Subsection (1A) of that section shall cease to have effect. 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Where this Chapter has effect in relation to any accounting period in relation to which section 434B of that Act (treatment of interest and annuities in the case of insurance companies) has effect without the amendments made by section 165 of this Act, that section of that Act shall have effect in relation to that period as if the words “interest or”, in each place where they occur, were omitted. 25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 (1) In subsection (3) of section 477A of that Act (building societies: regulations for deducting tax), for paragraph (a) there shall be substituted the following paragraphs— (a) liability to pay the dividends or interest shall be treated for the purposes of Chapter II of Part IV of the Finance Act 1996 as a liability arising under a loan relationship of the building society; (aa) if the dividends or interest are payable to a company, they shall be treated for those purposes as payable to that company in pursuance of a right arising under a loan relationship of that company; . (2) Subsections (3A) to (3C) of that section shall cease to have effect. 29 Sections 484 and 485 of that Act (savings banks: exemption from tax) shall cease to have effect. 30 In section 486 of that Act (industrial and provident societies)— (a) in subsection (1), for the words from “and, subject to subsection (7)” onwards there shall be substituted “ but interest payable by such a society (whether as share interest or loan interest) shall be treated for the purposes of corporation tax as interest under a loan relationship of the society. ”; and (b) in subsection (7), for the words from “not be deductible” onwards there shall be substituted “ not be brought into account in that period for the purposes of Chapter II of Part IV of the Finance Act 1996 (loan relationships). ” 31 (1) In subsection (1) of section 487 of that Act (credit unions), for paragraph (b) there shall be substituted the following paragraph— (b) no credits shall be brought into account for the purposes of Chapter II of Part IV of the Finance Act 1996 in respect of any loan relationship of a credit union as respects which a member of the union stands in the position of a debtor as respects the debt in question. (2) In subsection (3) of that section— (a) for “No share interest, loan interest or annuity or other annual payment” there shall be substituted “ An annuity or other annual payment (not being a payment of share interest or loan interest) which is ”; and (b) after “shall” there shall be inserted “ not ”. (3) After that subsection there shall be inserted the following subsection— (3A) No debits shall be brought into account for the purposes of Chapter II of Part IV of the Finance Act 1996 in respect of any loan relationship of a credit union as respects which a member of the union stands in the position of a creditor as respects the debt in question. 32 (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) For subsection (4) of that section (charges on income), there shall be substituted the following subsections— (4) Subsection (7) of section 403 shall have effect as if the reference in that subsection to the profits of the surrendering company for an accounting period did not include the relevant part of the company’s ring fence profits for that period. (5) For the purposes of subsection (4) above the relevant part of a company’s ring fence profits for an accounting period are— (a) if for that period— (i) there are no charges on income paid by the company that are allowable under section 338, or (ii) the only charges on income so allowable are charges to which subsection (3) above applies, all the company’s ring fence profits; and (b) in any other case, so much of its ring fence profits as exceeds the amount of the charges on income paid by the company as are so allowable for that period and are not charges to which subsection (3) above applies. 33 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 In section 614 of that Act (exemptions and reliefs in respect of income from certain pension funds etc.), after subsection (2) of that section there shall be inserted the following subsection— (2A) The reference in subsection (2) above to interest on sums forming part of a fund include references to any amount which is treated as income by virtue of paragraph 1 of Schedule 13 to the Finance Act 1996 (relevant discounted securities) and derives from any investment forming part of that fund. 35 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 In section 737(5A) of that Act (relief in respect of manufactured dividends), after “a manufactured dividend” there shall be inserted “ that is not manufactured interest to which section 97 of the Finance Act 1996 applies ”. 39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 (1) In subsection (7C) of section 826 of that Act (interest on tax overpaid)— (a) in paragraph (a), for the words from “a relievable amount” to the end of the paragraph there shall be substituted “ a non-trading deficit on the company’s loan relationships, ”; (b) in paragraph (b), for the words from “subsection (5)” to “subsection (10) of that section)” there shall be substituted “ section 83(2)(c) of the Finance Act 1996 or paragraph 4(3) of Schedule 11 to that Act the whole or part of the deficit for the later period is set off against profits ”; and (c) in the words after paragraph (c), for “subsection (5) or (6) (as the case may be) of that section” there shall be substituted “ section 83(2)(c) of that Act or, as the case may be, paragraph 4(3) of Schedule 11 to that Act ”. (2) In subsection (7CA) of that section, for the words “section 131(5) or (6) of the Finance Act 1993”, in each place where they occur, there shall be substituted “ section 83(2)(c) of the Finance Act 1996 or paragraph 4(3) of Schedule 11 to that Act ”. 49 In subsection (1) of section 834 of that Act (definitions for the purposes of the Corporation Tax Acts), after the definition of “group relief” there shall be inserted the following definitions— “loan relationship” has the same meaning as it has for the purposes of Chapter II of Part IV of the Finance Act 1996; “non-trading deficit”, in relation to a company’s loan relationships, shall be construed in accordance with section 82 of the Finance Act 1996. 50 Schedule 4 to that Act (deep discount securities) shall cease to have effect. 51 In paragraph 5B(2) of Schedule 19AC to that Act (overseas life companies), the following paragraph shall be inserted after paragraph (d)— (e) the setting of amounts against profits under, or in pursuance of a claim under, paragraph 4 of Schedule 11 to the Finance Act 1996 (loan relationships of insurance companies). 52 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 In Schedule 26 to that Act (controlled foreign companies), in paragraph 1(3), the word “and” shall be inserted at the end of paragraph (e), and after that paragraph there shall be inserted the following paragraph— (f) any non-trading deficit on its loan relationships. 54 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The British Steel Act 1988 (c. 35) 55 In section 11 of the British Steel Act 1988 (taxation provisions), for subsection (7) there shall be substituted the following subsection— (7) For the purposes of Part VI of the Income and Corporation Taxes Act 1988 (company distributions) and Chapter II of Part IV of the Finance Act 1996 (loan relationships), any debentures issued in pursuance of section 3 above shall be treated as having been issued for new consideration equal to the principal sum payable under the debenture. The Finance Act 1989 (c. 26) 56 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Schedule 11 to that Act (deep gain securities) shall cease to have effect. The Finance Act 1990 (c. 29) 58 Schedule 10 to the Finance Act 1990 (convertible securities) shall cease to have effect. The Taxation of Chargeable Gains Act 1992 (c. 12) 59 In section 108(1) of the Taxation of Chargeable Gains Act 1992 (meaning of relevant securities), after paragraph (a) there shall be inserted the following paragraph— (aa) qualifying corporate bonds; . 60 (1) Section 116 of that Act (reorganisations, conversions and reconstructions) shall be amended as follows. (2) After subsection (4) there shall be inserted the following subsection— (4A) In determining for the purposes of subsections (1) to (4) above, as they apply for the purposes of corporation tax— (a) whether sections 127 to 130 would apply in any case, and (b) what, in a case where they would apply, would constitute the original shares and the new holding, it shall be assumed that every asset representing a loan relationship of a company is a security within the meaning of section 132. (3) After subsection (8) there shall be inserted the following subsection— (8A) Where subsection (6) above applies for the purposes of corporation tax in a case where the old asset consists of a qualifying corporate bond, Chapter II of Part IV of the Finance Act 1996 (loan relationships) shall have effect so as to require such debits and credits to be brought into account for the purposes of that Chapter in relation to the relevant transaction as would have been brought into account if the transaction had been a disposal of the old asset at the market value mentioned in that subsection. (4) After subsection (15) there shall be inserted the following subsection— (16) This section has effect for the purposes of corporation tax notwithstanding anything in section 80(5) of the Finance Act 1996 (matters to be brought into account in the case of loan relationships only under Chapter II of Part IV of that Act). 61 (1) In section 117 of that Act (meaning of “qualifying corporate bond”), before subsection (1) there shall be inserted the following subsection— (A1) For the purposes of corporation tax “qualifying corporate bond” means (subject to sections 117A and 117B below) any asset representing a loan relationship of a company; and for purposes other than those of corporation tax references to a qualifying corporate bond shall be construed in accordance with the following provisions of this section. (2) After subsection (2) of that section there shall be inserted the following subsection— (2AA) For the purposes of this section “corporate bond” also includes any asset which is not included in the definition in subsection (1) above and which is a relevant discounted security for the purposes of Schedule 13 to the Finance Act 1996. (3) After subsection (6A) of that section there shall be inserted the following subsections— (6B) An excluded indexed security issued on or after 6th April 1996 is not a corporate bond for the purposes of this section; and an excluded indexed security issued before that date shall be taken to be such a bond for the purposes of this section only if— (a) it would be so taken apart from this subsection; and (b) the question whether it should be so taken arises for the purposes of section 116(10). (6C) In subsection (6B) above “excluded indexed security” has the same meaning as in Schedule 13 to the Finance Act 1996 (relevant discounted securities). (4) After subsection (8) of that section there shall be inserted the following subsection— (8A) A corporate bond falling within subsection (2AA) above is a qualifying corporate bond whatever its date of issue. 62 After section 117 of that Act there shall be inserted the following sections— Assets that are not qualifying corporate bonds for corporation tax purposes. 117A (1) An asset to which this section applies is not a qualifying corporate bond for the purposes of corporation tax in relation to any disposal of that asset. (2) This section applies to any asset representing a loan relationship of a company where— (a) subsection (3) or (4) below applies to the asset; and (b) it is held in exempt circumstances. (3) This subsection applies to an asset if— (a) the settlement currency of the debt to which it relates is a currency other than sterling; and (b) that debt is not a debt on a security. (4) This subsection applies to an asset if the debt to which it relates is a debt on a security and is in a foreign currency. (5) For the purposes of subsection (4) above a debt is a debt in a foreign currency if it is— (a) a debt expressed in a currency other than sterling; (b) a debt the amount of which in sterling falls at any time to be determined by reference to the value at that time of a currency other than sterling; or (c) subject to subsection (6) below, a debt as respects which provision is made for its conversion into, or redemption in, a currency other than sterling. (6) A debt is not a debt in a foreign currency for those purposes by reason only that provision is made for its redemption on payment of an amount in a currency other than sterling equal, at the rate prevailing at the date of redemption, to a specified amount in sterling. (7) The provisions specified in subsection (8) below, so far as they require a disposal to be treated as a disposal on which neither a gain nor a loss accrues, shall not apply to any disposal of an asset to which this section applies. (8) The provisions referred to in subsection (7) above are— (a) sections 139, 140A, 171 and 172 of this Act; and (b) section 486(8) of the Taxes Act. (9) Paragraph 3 of Schedule 17 to the Finance Act 1993 shall have effect for construing the reference in subsection (2)(b) above to exempt circumstances as if references to a currency were references to the debt to which the relationship relates. (10) In this section “security” includes a debenture that is deemed to be a security for the purposes of section 251 by virtue of subsection (6) of that section. Holdings in unit trusts and offshore funds excluded from treatment as qualifying corporate bonds. 117B (1) For the purposes of corporation tax an asset to which this section applies is not a qualifying corporate bond in relation to any disposal of that asset in an accounting period for which that asset falls, under paragraph 4 of Schedule 10 to the Finance Act 1996 (holdings in unit trusts and offshore funds), to be treated as a right under a creditor relationship of a company. (2) This section applies to an asset which is comprised in a relevant holding (within the meaning of paragraph 4 of Schedule 10 to the Finance Act 1996) if— (a) it is denominated in a currency other than sterling; and (b) it is held in exempt circumstances. (3) For the purposes of this section— (a) a unit in a unit trust scheme, or (b) a right (other than a share in a company) which constitutes a relevant interest in an offshore fund, shall be taken to be denominated in a currency other than sterling if the price at which it may be acquired from, or disposed of to, persons concerned in the management of the trust or fund is fixed by those persons in a currency other than sterling. (4) For the purposes of this section shares constituting a relevant interest in an offshore fund shall be taken to be denominated in a currency other than sterling if their nominal value is expressed in such a currency. (5) The provisions specified in subsection (6) below, so far as they require a disposal to be treated as a disposal on which neither a gain nor a loss accrues, shall not apply to any disposal in relation to which this section applies. (6) The provisions referred to in subsection (5) above are— (a) sections 139, 140A, 171 and 172 of this Act; and (b) section 486(8) of the Taxes Act. (7) Paragraph 3 of Schedule 17 to the Finance Act 1993 shall have effect for construing the reference in subsection (2)(b) above to exempt circumstances as if references to a currency were references to the asset in question. (8) Paragraph 7 of Schedule 10 to the Finance Act 1996 shall apply for construing any reference in this section to a relevant interest in an offshore fund as it applies for the purposes of paragraph 4 of that Schedule. 63 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 In section 251 of that Act (exclusion for debts that are not debts on a security), after subsection (6) there shall be inserted the following subsections— (7) Where any instrument specified in subsection (8) below is not a security (as defined in section 132), that instrument shall be deemed to be such a security for the purposes of this section, other than the purposes of determining what is or is not an allowable loss in any case. (8) The instruments mentioned in subsection (7) above are— (a) any instrument that would fall to be treated for the purposes of this Act as an asset representing a loan relationship of a company if the provisions of sections 92(4) and 93(4) of the Finance Act 1996 (convertible securities and assets linked to the value of chargeable assets) were disregarded; or (b) any instrument which (even apart from those provisions) is not a loan relationship of a company but which would be a relevant discounted security for the purposes of Schedule 13 to that Act if paragraph 3(2)(c) of that Schedule (excluded indexed securities) were omitted. 65 In section 253(3) of that Act (relief for loans to traders), in the words after paragraph (c), at the beginning there shall be inserted— then, to the extent that that amount is not an amount which, in the case of the claimant, falls to be brought into account as a debit given for the purposes of Chapter II of Part IV of the Finance Act 1996 (loan relationships), . 66 (1) In section 254 of that Act (relief for debts on qualifying corporate bonds), in subsection (1)(c), after “bond” there shall be inserted “ but is not a relevant discounted security for the purposes of Schedule 13 to the Finance Act 1996 ”. (2) After subsection (12) of that section there shall be inserted the following subsection— (13) This section does not apply for the purposes of corporation tax. The Finance Act 1993 (c. 34) 67 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Finance Act 1994 (c. 9) 75 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE 15 Loan relationships: savings and transitional provisions

Section 105. Part I Corporation tax Application and interpretation of Part I 1 (1) This Part of this Schedule has effect for the purposes of corporation tax. (2) In this Part of this Schedule— “the 1992 Act” means the Taxation of Chargeable Gains Act 1992; “continuing loan relationship”, in relation to any company, means any loan relationship to which the company was a party both immediately before and on 1st April 1996; “first relevant accounting period”, in relation to a company, means the first accounting period of the company to end after 31st March 1996; and “transitional accounting period”, in relation to a company, means any accounting period of the company beginning before and ending on or after 1st April 1996. (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) In this Part of this Schedule references to this Chapter include references to any repeals having effect for the purposes of this Chapter. Loan relationships terminated before 1st April 1996 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Basic rules for transitional accounting periods 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjustment of opening value where new accounting basis adopted as from an accounting period beginning on 1st April 1996 3A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Application of accruals basis to pre-commencement relationships 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjustments in respect of pre-commencement trading relationships 5 (1) This paragraph applies in the case of any continuing loan relationship of a company as respects which any amounts would have been brought into account for the purposes of corporation tax in computing the profits or losses of the company from any trade carried on by it if— (a) the company had ceased to be a party to the relationship on 31st March 1996; and (b) where it is not otherwise the case, an accounting period of the company had ended on that date. (2) Where there is a difference between— (a) the notional closing value of the relationship as at 31st March 1996, and (b) the adjusted closing value of that relationship as at that date, that difference shall be brought into account as provided for in paragraph 6 below. (3) Except where sub-paragraph (4) or (6) below applies, the notional closing value as at 31st March 1996 of a loan relationship of a company shall be taken for the purposes of this paragraph to be the amount which, for the purposes of computing the profits or losses of the company from any trade carried on by it— (a) was as at that date, or (b) had an accounting period of the company ended on that date, would have been, the amount falling to be brought into account as representing the value of the company’s rights or liabilities under the relationship. (4) Except where sub-paragraph (6) below applies, if no amount is given by sub-paragraph (3) above, the notional closing value as at 31st March 1996 of a loan relationship of a company shall be taken for the purposes of this paragraph to be the amount which, for the purposes of computing the profits or losses of the company from any trade carried on by it, would have been deductible as representing the cost of becoming a party to the relationship if the company had ceased to be a party to the relationship on 31st March 1996. (4A) In sub-paragraph (4) above the reference, in relation to a creditor relationship, to the amount deductible as representing the cost of a company’s becoming a party to the relationship shall not, except where sub-paragraph (4B) or (4C) below applies, include a reference to so much of that amount as would represent the cost of acquiring any right to accrued interest under the loan relationship. (4B) This sub-paragraph applies where— (a) the company became a party to the relationship before the beginning of its first relevant accounting period, (b) interest accruing under the relationship before the company became a party to it was paid to the company after it became a party to it but before the beginning of the company’s first relevant accounting period, and (c) the interest under the relationship which, in the case of that company, has been brought into account for the purposes of corporation tax has included interest accruing under the relationship before the company became a party to it but paid afterwards. (4C) This sub-paragraph applies where— (a) the company became a party to the loan relationship in a transitional accounting period, and (b) in the case of that company, interest under the relationship which— (i) accrued before the company became a party to the relationship, but (ii) became due and payable afterwards, is brought into account for the purposes of this Chapter in accordance with an authorised mark to market basis of accounting. (5) Except where sub-paragraph (6) below applies, the adjusted closing value of that relationship as at that date shall be taken for the purposes of this paragraph to be the amount which for the purposes of this Chapter (as it had effect immediately before 1st April 2009) was the opening value as at 1st April 1996 of the company’s rights and liabilities under the relationship. (6) For the purposes of this paragraph where the asset representing a loan relationship of a company is a relevant qualifying asset of the company, or the liabilities of the company under the relationship are relevant liabilities— (a) the notional closing value of the relationship as at 31st March 1996 shall be taken for the purposes of this paragraph to be the value given by paragraph 12 below as the notional closing value as at 31st March 1996 of that asset or, as the case may be, of those liabilities; and (b) the adjusted closing value of the relationship as at 31st March 1996 shall be taken for those purposes to be the amount which was as at 1st April 1996 the opening value of the asset or liabilities for the purposes of this Chapter (as it had effect immediately before 1st April 2009). (7) For the purposes of this paragraph, where an accruals basis of accounting is used as respects a loan relationship for the first relevant accounting period of the company, the opening value as at 1st April 1996 of the company’s rights and liabilities under the relationship shall be taken to have been the value which (disregarding interest) was treated in accordance with paragraph 4 above (as it had effect immediately before 1st April 2009) as having accrued to the company before that date. (8) In this paragraph— “attributed amount” means any attributed gain or loss falling to be calculated in accordance with any regulations made under Schedule 16 to the Finance Act 1993 (transitional provisions for exchange gains and losses) which contain any such provision as is mentioned in paragraph 3(1) of that Schedule; “commencement day”, in relation to a company, means its commencement day for the purposes of Chapter II of Part II of the Finance Act 1993; “market value” has the same meaning as in the 1992 Act; “relevant liability”, in relation to a company, means any liability under a loan relationship the value of which has been determined as at the company’s commencement day for the purpose of calculating any attributed amount; “relevant qualifying asset”, in relation to a company, means any qualifying asset for the purposes of Chapter II of Part II of the Finance Act 1993 the value of which has been determined as at the company’s commencement day for the purpose of calculating any attributed amount. Method of giving effect to paragraph 5 adjustments 6 (1) Subject to sub-paragraph (4) below, the difference mentioned in paragraph 5(2) above shall be brought into account in accordance with sub-paragraph (2) or (3) below in the accounting period in which the company ceases to be a party to the relationship. (2) If— (a) the relationship is a creditor relationship and the difference consists in an excess of the amount mentioned in paragraph 5(2)(b) above over the amount mentioned in paragraph 5(2)(a) above, or (b) the relationship is a debtor relationship and the difference consists in an excess of the amount mentioned in paragraph 5(2)(a) above over the amount mentioned in paragraph 5(2)(b) above, the difference shall be brought into account as a credit given for the purposes of this Chapter for the period mentioned in sub-paragraph (1) above. (3) In any other case, the difference shall be brought into account as a debit given for the purposes of Part 5 of the Corporation Tax Act 2009 for the period so mentioned. (4) Sub-paragraphs (1) to (3) above do not apply if the company duly made an election for the purposes of this sub-paragraph as it had effect on 30th September 1996. (8) Where any credit or debit falls to be brought into account under this paragraph for any accounting period for the whole or any part of which the company carries on the trade in question, the credit or debit shall be brought into account under section 297 of the Corporation Tax Act 2009 in relation to that trade; and, in any other case, it shall be brought into account as a non-trading credit or non-trading debit under Part 5 of that Act. General savings for the taxation of chargeable gains 7 The amendments of the 1992 Act contained in Schedule 14 to this Act and the related repeals made by this Act— (a) so far as they relate to section 253 of the 1992 Act, do not apply to any loan the outstanding amount of principal on which became irrecoverable before 1st April 1996; (b) so far as they relate to section 254 of the 1992 Act, do not apply to any security whose value became negligible before 1st April 1996; (c) so far as they relate to anything else, do not apply in relation to any disposal made, or deemed to be made, before 1st April 1996. Transitional provision for chargeable assets held after commencement 8 (1) This paragraph applies where— (a) on 31st March 1996 any company (“the relevant company”) held any asset representing, in whole or in part, any loan relationship to which it was a party on that date; (b) the company did not dispose of that asset on that date and does not fall (apart from by virtue of this paragraph) to be treated for the purposes of the 1992 Act as having made a disposal of it on that date; (c) the asset is not one to which section 92 of this Act or paragraph 15 below applies; (d) that asset is not an asset representing a loan relationship to which section 93 of this Act applies; (e) that asset is not a relevant qualifying asset; and (f) a relevant event occurs. (2) For the purposes of this paragraph a relevant event occurs on the first occasion after 31st March 1996 when the relevant company or any other company falls to be treated for the purposes of the 1992 Act as making a disposal, other than one to which section 139, 140A, or 171(1) of that Act (disposals on which neither a gain nor a loss accrues) applies, of— (a) the asset in question, so far as it has not come to be represented by an asset falling within paragraph (b) below, or (b) any such asset as falls to be treated for the purposes of that Act as the same as that asset. (3) The amount of any chargeable gain or allowable loss which would have been treated as accruing to the relevant company on the assumption— (a) that it had made a disposal of the asset on 31st March 1996, and (b) (so far as relevant for the purpose of computing the amount of that gain or loss) that the disposal had been for a consideration equal to the market value of the asset, shall be brought into account (subject to the following provisions of this paragraph and to paragraph 9 below) as one accruing to the company (“the chargeable company”) which makes the disposal constituting the relevant event, and shall be so brought into account in the accounting period in which that event occurs. (4) The amount of the deemed chargeable gain or deemed allowable loss falling to be brought into account in accordance with sub-paragraph (3) above shall be treated as reduced by the extent (if any) to which it is, in relation to the company, an amount that already has been, or falls to be, taken into account for the purposes of corporation tax by virtue of the use of any accruals or mark to market basis of accounting— (a) for those purposes; (b) as respects times before 1st April 1996; and (c) in relation to the asset in question. (5) To the extent that any deemed chargeable gain or deemed allowable loss falling to be brought into account under sub-paragraph (3) above includes any gain or loss deemed to accrue under section 116(10)(b) of the 1992 Act (qualifying corporate bonds acquired in a reorganisation etc.), that gain or loss shall be deemed to have accrued for the purposes of that sub-paragraph and (without prejudice to its being brought into account in accordance with that sub-paragraph) shall not be taken to accrue again on the occurrence of the relevant event or any subsequent disposal of any asset. (5A) In any case where the relevant event has not occurred before 14th November 1996, the deemed chargeable gain or deemed allowable loss falling to be brought into account in accordance with sub-paragraph (3) above shall be computed without any account being taken of the provisions of section 119(6) and (7) of the 1992 Act (transfer of securities with or without accrued interest). (6) In any case where— (a) the relevant company is one which at any time before 1st April 1996 was not resident in the United Kingdom, (b) the asset was held by the relevant company at such a time, and (c) if the asset had been disposed of at that time and a gain had accrued to the relevant company on that disposal, it would not have been included in the company’s chargeable profits by virtue of section 10B of the 1992 Act (gain attributable to a permanent establishment of a non-resident company), the relevant company shall be deemed for the purposes of sub-paragraph (3) above to have acquired the asset, at market value, on the first day on which any relevant gain would have been included in the company’s chargeable profits for the purposes of corporation tax (whether because it is a day on which the company became resident, or the asset became situated, in the United Kingdom or for any other reason). (7) In sub-paragraph (6) above the reference, in relation to a company, to a relevant gain is a reference to any gain which would have accrued to the company on the following assumptions, that is to say— (a) that the relevant company disposed of the asset on the day in question; (b) that that disposal gave rise to a gain; and (c) that any allowable losses which might have been available for deduction under section 8(1) of, or Schedule 7A to, the 1992 Act were to be disregarded. (8) In any case where the company acquired the asset on a disposal on which, by virtue of any enactment specified in section 35(3)(d) of the 1992 Act, neither a gain nor a loss accrued to the person making the disposal, the reference in sub-paragraph (6) or (7) above to the relevant company includes— (a) a reference to the company from which it acquired the asset; and (b) if that company also acquired the asset on such a disposal, a reference to the company from which the asset was acquired by that company, and so on through any number of such disposals. (9) In any case where section 176 of the 1992 Act (depreciatory transactions within a group) would have applied in relation to the disposal referred to in sub-paragraph (3) above if that disposal had actually taken place, that section shall apply for the calculation of any deemed allowable loss to be brought into account by virtue of that sub-paragraph. (10) For the purposes of this paragraph a company that ceases to be within the charge to corporation tax shall be deemed to make a disposal of all its assets at their market value immediately before ceasing to be within that charge. (11) In this section— “market value” has the same meaning as in the 1992 Act; and “relevant qualifying asset” has the same meaning as in paragraph 5 above. Election for alternative treatment of amounts specified in paragraph 8 9 (1) Subject to the following provisions of this paragraph, where (apart from this paragraph) any amount representing a deemed allowable loss would fall in the case of any company to be brought into account for any accounting period in accordance with sub-paragraph (3) of paragraph 8 above, the chargeable company may elect for that amount to be brought into account for that period for the purposes of this Chapter or Part 5 of the Corporation Tax Act 2009, instead of in accordance with that sub-paragraph. (2) An amount brought into account for the purposes of this Chapter or that Part by virtue of an election under this paragraph shall be so brought into account as a debit given for that period for the purposes of this Chapter or, as the case may be, that Part. (3) The question whether or not any debit brought into account for any accounting period in accordance with sub-paragraph (2) above is to be brought into account for that period as a non-trading debit shall be determined according to how other credits or debits relating to the loan relationship in question are, or (if there were any) would be, brought into account for that period. (4) No election shall be made under this paragraph in respect of any deemed allowable loss in any case where the asset in respect of which that loss is deemed to have accrued was one which, as at 1st April 1996, either— (a) fell in accordance with section 127 or 214(9) of the 1992 Act (equation of new holding with previous holding) to be treated as the same as an asset which was not an asset representing a loan relationship; or (b) would have so fallen but for section 116(5) of that Act. (5) An election shall not be made under this paragraph at any time more than two years after the occurrence of the relevant event by virtue of which the amount to which the election relates would fall to be brought into account in accordance with paragraph 8(3) above. Adjustments of opening value for mark to market accounting in the case of chargeable assets 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other adjustments in the case of chargeable assets etc. 11 (1) Where— (a) an authorised accruals basis of accounting is applied as respects any continuing loan relationship of a company for the company’s first relevant accounting period, (b) an asset representing that relationship is a relevant asset or any liability under it is a relevant liability, and (c) the relationship is not one as respects which, if the company had ceased to be a party to the relationship on 31st March 1996, any amounts would have been brought into account in computing, for an accounting period ending on or after that date, the profits or losses of the company from any trade carried on by it, that accounting method shall be taken for the purposes of Part 5 of the Corporation Tax Act 2009 to require the asset or liability to be given a notional closing value as at 31st March 1996 in accordance with paragraph 12 below and the following provisions of this paragraph shall apply if there is any difference in the case of that relationship between the amounts mentioned in sub-paragraph (2) below. (2) Those amounts are— (a) the notional closing value of the relationship as at 31st March 1996; and (b) the amount which would be taken on a computation made— (i) in accordance with an authorised accruals basis of accounting, and (ii) on the assumption that such a basis of accounting had always been used as respects that relationship, to represent the accrued value of the loan relationship in question on 1st April 1996. (2A) If, in a case where the continuing loan relationship is a creditor relationship,— (a) the company acquired its rights under the relationship on or before 31st March 1996 by virtue of an arm’s length transaction, (b) for the accounting period in which it acquired those rights— (i) there was no connection (as defined in sub-paragraph (2C) below) between the company and the person from whom the company acquired the asset, but (ii) there was such a connection between the company and a company standing in the position of a debtor as respects the money debt, and (c) there had been no such connection between the companies mentioned in paragraph (b)(ii) above at any time in the period which— (i) begins 4 years before the date on which the company acquired those rights, and (ii) ends twelve months before that date, this paragraph shall have effect as if the amount mentioned in sub-paragraph (2)(b) above were an amount equal to the greater of the amounts mentioned in sub-paragraph (2B) below. (2B) Those amounts are— (a) the fair value of the rights at the time when the company ceases to be a party to the loan relationship; and (b) the fair value of the rights on 1st April 1996. (2C) For the purposes of sub-paragraph (2A) above there is a connection between a company and another person at any time if at that time— (a) the other person is a company and one of the companies has control of the other, (b) the other person is a company and both companies are under the control of the same person, or (c) the company is a close company and the other person is a participator in that company or the associate of a person who is such a participator, and there is a connection between a company and another person for an accounting period if there is a connection (within paragraphs (a) to (c) above) between the company and the person at any time in that accounting period. (2D) For the purposes of sub-paragraph (2C) above— (a) sections 450 and 451 of the Corporation Tax Act 2010 (meaning of control) apply as they apply for the purposes of Part 10 of that Act; (b) subject to paragraph (c) below, “associate” and “participator” have the same meaning as in that Part (see sections 448 and 454 of that Act); (c) a person shall not be regarded as a participator in relation to a company by reason only that he is a loan creditor of the company. (3) Where there is a difference between the amounts mentioned in sub-paragraph (2) above, that difference shall be brought into account— (a) where the amount mentioned in paragraph (a) of that sub-paragraph is the smaller, as a credit given for the purposes of Part 5 of the Corporation Tax Act 2009 for the accounting period in which the company ceases to be a party to the relationship; and (b) in any other case, as a debit so given. (5) Where the company ceases to be within the charge to corporation tax, it shall be deemed for the purposes of this paragraph to have ceased to be a party to the relationship in question immediately before ceasing to be within that charge. (6) A credit or debit brought into account under this paragraph shall be brought into account as a non-trading credit or non-trading debit under Part 5 of the Corporation Tax Act 2009 . (7) In this paragraph— “chargeable asset”, in relation to a company, means (subject to sub-paragraph (8) below) any asset held by the company on 31st March 1996 in the case of which one of the following conditions is satisfied, that is to say— a gain accruing to the company on a disposal of that asset on that date would have fallen to be treated in relation to the company as a chargeable gain; or a chargeable gain or allowable loss would be deemed to have accrued to the company on any disposal of that asset on that date; and “relevant asset” means a chargeable asset or a relevant qualifying asset. (8) An asset is not a chargeable asset for the purposes of this paragraph if (disregarding the provisions of this Chapter and Part 5 of the Corporation Tax Act 2009 ) it is an asset any disposal of which on 31st March 1996 would have fallen to be regarded for the purposes of the 1992 Act as a disposal of a qualifying corporate bond. (9) Expressions used in this paragraph and paragraph 5 above have the same meanings in this paragraph as in that paragraph. Reduction of paragraph 11 credit where s.251(4) of 1992 Act prevents paragraph 8 loss 11A (1) This paragraph applies where, in the case of any asset representing in whole or in part a loan relationship of a company, an amount representing a deemed allowable loss would (apart from this paragraph) fall or have fallen to be brought into account in accordance with paragraph 8(3) above for an accounting period (whenever beginning or ending), but for section 251(4) of the 1992 Act (no allowable loss on disposal of debt acquired from connected person). (2) Where this paragraph applies, the amount of any credit falling within sub-paragraph (3) below shall be treated for the purposes of Part 5 of the Corporation Tax Act 2009 as reduced (but not below nil) by the amount described in sub-paragraph (1) above. (3) A credit falls within this sub-paragraph if (apart from this paragraph)— (a) the credit falls to be given by virtue of paragraph 11(3)(a) above for an accounting period beginning on or after 1st October 2002; and (b) the loan relationship mentioned in paragraph 11(1)(a) above in the case of the credit is the same loan relationship as the one mentioned in sub-paragraph (1) above. Notional closing values of relevant assets 12 (1) Subject to sub-paragraph (2) below, the notional closing value as at 31st March 1996 of any relevant asset representing a loan relationship of a company, or of any relevant liability, shall be taken for the purposes of paragraphs 5 and 11 above, to be an amount equal to the following amount, that is to say— (a) in the case of a chargeable asset, its market value on that date; (b) in the case of a relevant qualifying asset or relevant liability, the value given to it as at the company’s commencement day for the purpose of computing any attributed amount. (2) Sub-paragraph (3) below applies where a company, by notice in writing given on or before 30th September 1996 to an officer of the Board, made an election for the purposes of that sub-paragraph in relation to all of its relevant qualifying assets which— (a) apart from the election, would be given a notional closing value as at 31st March 1996 by sub-paragraph (1) above; and (b) but for Chapter II of Part II of the Finance Act 1993 (exchange gains and losses), would be chargeable assets. (3) Where such an election was made as respects those assets— (a) sub-paragraph (1) above shall not apply as respects those assets; but (b) the value of each of those assets as at 1st April 1996 shall be taken for the purposes of this Chapter and Part 5 of the Corporation Tax Act 2009 to be its market value on that date. (4) In this paragraph “chargeable asset” and “relevant asset” have the same meanings as in paragraph 11 above; and expressions used in this paragraph and paragraph 5 above have the same meanings in this paragraph as in that paragraph. Further transitional rules for interest under loan relationships 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transitional in respect of incidental expenses already allowed 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Holdings of unit trusts etc. 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bad debt relieved before commencement 16 (1) This paragraph applies where— (a) an amount becomes, or is to become, due and payable under a creditor relationship of a company in an accounting period ending on or after 1st April 1996, but (b) by virtue of any of sub-paragraphs (i) to (iii) of section 74(1)(j) of the Taxes Act 1988 (or any enactment re-enacted in those sub-paragraphs), a deduction of an amount representing the whole or any part of the amount payable was authorised to be made, and was made, in computing for the purposes of corporation tax the profits of the company for any accounting period ending before that date. (2) Subject to sub-paragraph (3) below, nothing in this Chapter or Part 5 of the Corporation Tax Act 2009 shall require it to be assumed for the purposes of this Chapter or that Part that any part of the amount to which the deduction relates will be paid in full as it becomes due. (3) Subject to sub-paragraph (4) below, where— (a) the deduction relates to an amount payable under a creditor relationship of a company which has been proved or estimated to be a bad debt, but (b) in an accounting period ending on or after 1st April 1996 the whole or any part of the liability under that relationship to pay that amount is discharged by payment, this Chapter and Part 5 of the Corporation Tax Act 2009 shall have effect, in the case of that company, as if there were a credit equal to the amount of the payment to be brought into account for the purposes of this Chapter and that Part for that period. (4) Sub-paragraph (3) above does not apply to so much of any payment as is an amount in relation to which a credit fell to be brought into account for the purposes of this Chapter in accordance with paragraph 13(4) above. Transitional for overseas sovereign debt etc. 17 (1) Subject to any regulations under sub-paragraph (4) below and notwithstanding anything in the preceding provisions of this Schedule, the value which for the purposes of this Chapter and Part 5 of the Corporation Tax Act 2009 is to be taken to be the value as at 1st April 1996 of a company’s rights under any creditor relationship relating to a relevant overseas debt any part of which falls to be estimated as bad, is the following amount— (a) where the company was not entitled to the debt before the end of its last period of account to end before 1st April 1996, the amount for which the company acquired those rights; and (b) in any other case, the amount of so much of that debt as did not fall, in accordance with section 88B of the Taxes Act 1988, to be estimated as at the end of that period to be bad. (2) Subject to any regulations under sub-paragraph (4) below, sub-paragraph (3) below shall apply where there is a loss incurred before 1st April 1996 to which section 88C of the Taxes Act 1988 has applied or applies by virtue of paragraph 2 above. (3) Where, apart from this Chapter and Part 5 of the Corporation Tax Act 2009 , any amount would have been allowed in respect of the loss as a deduction for any accounting period ending after 31st March 1996, that amount shall not be so allowed but shall, instead, be brought into account for the purposes of this Chapter and that Part as if it were a debit given for that accounting period by paragraph 9 of Schedule 9 to this Act in respect of a loss incurred on or after 1st April 1996. (4) The Treasury may by regulations— (a) make such transitional provision as they consider appropriate for purposes connected with the coming into force of paragraphs 8 and 9 of Schedule 9 to this Act and the repeal of sections 88A to 88C of the Taxes Act 1988 (which contained corresponding provisions); and (b) in connection with any such provision, make such modifications of this Schedule (including sub-paragraphs (1) to (3) above) as they consider appropriate; and regulations made by virtue of this sub-paragraph may have retrospective effect in relation to any accounting periods ending on or after 1st April 1996. (5) The Treasury shall not make any regulations under sub-paragraph (4) above unless a draft of them has been laid before and approved by a resolution of the House of Commons. (6) In this paragraph “relevant overseas debt” has the same meaning as in paragraphs 8 and 9 of Schedule 9 to this Act. Transitional for accrued income scheme 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deep discount securities 19 (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) The repeal by this Act of section 64 of the Finance Act 1993 (deemed transfers in the case of deep discount securities) and of enactments relating to that section shall not apply in relation to relevant times falling before 1st April 1996; but for the purposes of that section and this sub-paragraph 31st March 1996 shall be deemed (where it would not otherwise be so) to be the last day of an accounting period. (3A) Any income that is treated as arising at the time mentioned in subsection (5) of that section, as it applies by virtue of sub-paragraph (3) above, shall be brought into account as a non-trading credit given for the purposes of Part 5 of the Corporation Tax Act 2009 for the accounting period in which that time falls. (4) Where— (a) a company issued a deep discount security before 1st April 1996 which was not redeemed before that date, and (b) there is a difference between the adjusted issue price of the security as at 31st March 1996 and the adjusted closing value of that security as at that date, the amount of that difference shall, in the case of that company, be brought into account for the purposes of Part 5 of the Corporation Tax Act 2009 in accordance with sub-paragraph (5) below. (5) An amount falling to be brought into account for the purposes of Part 5 of the Corporation Tax Act 2009 in accordance with this sub-paragraph shall be brought into account for those purposes for the accounting period in which the security is redeemed— (a) if the adjusted issue price of the security as at 31st March 1996 is greater than the adjusted closing value of the security as at that date, as a non-trading credit; and (b) if the adjusted closing value of the security as at that date is the greater, as a non-trading debit. (6) Where— (a) a company held a deep discount security on 31st March 1996, (b) the company did not make any disposal of that security on that date, (c) the security is not one in relation to which there is, or is deemed to be, a relevant time on that date for the purposes of section 64 of the Finance Act 1993, and (d) there is an amount which, if the company had made a disposal of that security on that date, would have been treated under paragraph 4 of Schedule 4 to the Taxes Act 1988 as income chargeable to tax under Case III or IV of Schedule D, that amount shall be brought into account as a non-trading credit given for the purposes of Part 5 of the Corporation Tax Act 2009 for the accounting period mentioned in sub-paragraph (9) below. (7) Where— (a) a company held a deep discount security on 31st March 1996, (b) the company did not make any disposal of that security on that date, (c) the security is not an asset falling to be treated as a relevant asset of the company for the purposes of paragraph 11 above, and (d) there is a difference between the adjusted issue price of the security as at 31st March 1996 and the adjusted closing value of that security as at that date, the amount of that difference (in addition to any amount given by sub-paragraph (6) above) shall, in the case of that company, be brought into account for the purposes of Part 5 of the Corporation Tax Act 2009 in accordance with sub-paragraph (8) below. (8) An amount falling to be brought into account for the purposes of Part 5 of the Corporation Tax Act 2009 in accordance with this sub-paragraph shall be brought into account for those purposes for the accounting period mentioned in sub-paragraph (9) below— (a) if the adjusted issue price of the security as at 31st March 1996 is greater than the adjusted closing value of the security as at that date, as a non-trading debit; and (b) if the adjusted closing value of the security as at that date is the greater, as a non-trading credit. (9) That period is the accounting period in which falls whichever is the earliest of the following, that is to say— (a) the earliest day after 31st March 1996 on which, under the terms on which the security was issued, the company holding the security is entitled to require it to be redeemed; (b) the day on which the security is redeemed; and (c) the day on which the company makes a disposal of that security. (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11) For the purposes of this paragraph, in relation to any company— (a) the adjusted issue price of a deep discount security as at 31st March 1996 is whatever for the purposes of Schedule 4 to the Taxes Act 1988 would have been the adjusted issue price of that security for an income period beginning with 1st April 1996; and (b) the adjusted closing value of a security as at 31st March 1996 is the amount which for the purposes of this Chapter was is the opening value as at 1st April 1996 of the company’s rights and liabilities under the loan relationship of the company that is represented by that security; and sub-paragraph (7) of paragraph 5 above shall apply for the purposes of this sub-paragraph as it applies for the purposes of that paragraph. (12) In this paragraph “deep discount security”, “disposal” and “income period” have the same meanings as in Schedule 4 to the Taxes Act 1988. Deep gain securities 20 (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) The repeal by this Act of section 65 of the Finance Act 1993 (deemed transfers in the case of deep gain securities) and of enactments relating to that section shall not apply in relation to relevant days falling before 1st April 1996; but for the purposes of that section and this sub-paragraph 31st March 1996 shall be deemed (where it would not otherwise be so) to be the last day of an accounting period. (2A) Any income that is treated as arising on the day mentioned in subsection (5) of that section, as it applies by virtue of sub-paragraph (2) above, shall be brought into account as a non-trading credit given for the purposes of Part 5 of the Corporation Tax Act 2009 for the accounting period in which that day falls. (3) Where— (a) a company held a deep gain security on 31st March 1996, (b) the security was not transferred or redeemed by that company on that date, (c) the security is not one in relation to which that date is, or is deemed to be, a relevant day for the purposes of section 65 of the Finance Act 1993, and (d) there is an amount which, if the company had made a transfer of that security on that date by selling it for its adjusted closing value, would have been treated under paragraph 5 of Schedule 11 to the Finance Act 1989 as income chargeable to tax under Case III or IV of Schedule D, that amount shall be brought into account as a non-trading credit given for the purposes of Part 5 of the Corporation Tax Act 2009 for the accounting period mentioned in sub-paragraph (4) below. (4) That period is the accounting period in which falls whichever is the earliest of the following, that is to say— (a) the earliest day after 31st March 1996 on which, under the terms on which the security was issued, the company holding the security is entitled to require it to be redeemed; (b) the day on which the security is redeemed; and (c) the day on which the company makes a disposal of that security. (5) For the purposes of this paragraph the adjusted closing value of a deep gain security held by a company on 31st March 1996 shall be the amount which for the purposes of this Chapter (as it had effect immediately before 1st April 2009) was the opening value as at 1st April 1996 of the company’s rights and liabilities under the relationship represented by that security; and sub-paragraph (7) of paragraph 5 above shall apply for the purposes of this sub-paragraph as it applies for the purposes of that paragraph. (6) In this paragraph “deep gain security” and “transfer” have the same meanings as in Schedule 11 to the Finance Act 1989. Convertible securities 21 (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) Where— (a) a company held a qualifying convertible security on 31st March 1996, (b) that date was not a date on which any chargeable event occurred in relation to that security, and (c) there is an amount which, if there had been a chargeable event on that date, would have been treated under paragraph 12 of Schedule 10 to the Finance Act 1990 as income chargeable to tax under Case III or IV of Schedule D, that amount shall be brought into account, in the case of that company, as a non-trading credit given for the purposes of Part 5 of the Corporation Tax Act 2009 for the accounting period mentioned in sub-paragraph (3) below. (3) That period is the accounting period in which falls whichever is the earliest of the following, that is to say— (a) the earliest day after 31st March 1996 on which, under the terms on which the security was issued, the company holding the security is entitled to require it to be redeemed; (b) the day on which the security is redeemed; and (c) the day on which the company makes a disposal of that security. (4) Where— (a) any qualifying convertible security is redeemed, and (b) that security is one in the case of which any amount falls to be brought into account under sub-paragraph (2) above, an amount equal to that amount shall be brought into account, in the case of the company that issued the security, as a non-trading debit given for the purposes of Part 5 of the Corporation Tax Act 2009 for the accounting period in which the redemption occurs. (5) In this paragraph “chargeable event” and “qualifying convertible security” have the same meanings as in Schedule 10 to the Finance Act 1990. Transitional and savings for Chapter II of Part II of the Finance Act 1993 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Carrying back non-trading losses against exchange profits etc. 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exchange losses etc. carried forward from before 1st April 1996 24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transitional for debt contracts and options to which Chapter II of Part IV of the Finance Act 1994 is applied 25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Part II Income tax and capital gains tax Application and interpretation of Part II 26 (1) This Part of this Schedule (except paragraph 29) has effect for the purposes of income tax and capital gains tax but not for the purposes of corporation tax. (2) In this Part of this Schedule— “the 1992 Act” means the Taxation of Chargeable Gains Act 1992; “market value” has the same meaning as in the 1992 Act; “qualifying indexed security” has the meaning given by paragraph 2 of Schedule 11 to the Finance Act 1989; and “deeply discounted security” has the same meaning as in Chapter 8 of Part 4 of the Income Tax (Trading and Other Income) Act 2005 (see section 430). (3) References in this Part of this Schedule to a disposal within marriage or civil partnership are references to any disposal to which section 58 of the 1992 Act applies. Qualifying indexed securities 27 (1) This paragraph applies where— (a) on 5th April 1996 any person (“the relevant person”) held a qualifying indexed security; (b) that person did not dispose of that security on that date and does not fall (apart from by virtue of this paragraph) to be treated for the purposes of the 1992 Act as having made a disposal of it on that date; and (c) a relevant event occurs. (2) For the purposes of this paragraph a relevant event occurs on the first occasion after 5th April 1996 when the relevant person, or a person to whom that person has made a disposal of the security within marriage or civil partnership, falls to be treated for the purposes of the 1992 Act as making a disposal (otherwise than within marriage or civil partnership) which is— (a) a disposal of the security in question; or (b) a disposal of any such asset as falls to be treated for the purposes of that Act as the same as that security. (3) The amount of any chargeable gain or allowable loss which would have been treated as accruing to the relevant person if— (a) he had made a disposal of the asset on 5th April 1996, and (b) that disposal had been for a consideration equal to the market value of the asset, shall be brought into account as one accruing to the person who makes the disposal constituting the relevant event in the year of assessment in which that event occurs. 28 For the purposes of Chapter 8 of Part 4 of the Income Tax (Trading and Other Income) Act 2005 (profits from deeply discounted securities) where— (a) a person held a qualifying indexed security both on and immediately after 5th April 1996, and (b) that security is a deeply discounted security, the amount which that person shall be taken to have paid in respect of his acquisition of that security on or before 5th April 1996 shall be an amount equal to its market value on that date. 29 For the purposes of paragraph 2 of Schedule 10 to this Act, paragraphs 27 and 28 above shall have effect in relation to an authorised unit trust for the first of its accounting periods to end after 31st March 1996 as if references in those paragraphs to 5th April 1996 were references to 31st March 1996. Transitional in relation to qualifying corporate bonds 30 (1) This paragraph applies where— (a) any person holds any asset on and immediately after 5th April 1996; (b) that asset is one which came to be held by that person as a result of a transaction to which section 127 of the 1992 Act applies; and (c) that asset falls from 5th April 1996 to be treated as a deeply discounted security but is neither a qualifying indexed security nor such that it would have fallen to be treated as a qualifying corporate bond in relation to any disposal of it on that date. (2) Section 116 of the 1992 Act (reorganisations etc. involving qualifying corporate bonds) shall have effect as if— (a) there had been a transaction on 5th April 1996 by which the person holding the asset had disposed of it and immediately re-acquired it; (b) the asset re-acquired had been a qualifying corporate bond; and (c) the transaction had been a transaction to which section 127 of the 1992 Act would have applied but for section 116(5) of that Act.

SCHEDULE 17 Claims for relief involving two or more years

Section 128. Preliminary 1 (1) In this Schedule— (a) any reference to a claim includes a reference to an election or notice; and (b) any reference to the amount in which a person is chargeable to tax is a reference to the amount in which he is so chargeable after taking into account any relief or allowance for which a claim is made. (2) For the purposes of this Schedule, two or more claims to which this Schedule applies which are made by the same person are associated with each other in so far as the same year of assessment is the earlier year in relation to each of those claims. (3) In sub-paragraph (2) above, any reference to claims to which this Schedule applies includes a reference to amendments and revocations to which paragraph 4 below applies. Loss relief 2 (1) This paragraph applies where a person makes a claim requiring relief for a loss incurred or treated as incurred, or a payment made, in one year of assessment (“the later year”) to be given in an earlier year of assessment (“the earlier year”). (2) Section 42(2) of this Act shall not apply in relation to the claim. (3) The claim shall relate to the later year. (4) Subject to sub-paragraph (5) below, the claim shall be for an amount equal to the difference between— (a) the amount in which the person is chargeable to tax for the earlier year (“amount A”); and (b) the amount in which he would be so chargeable on the assumption that effect could be, and were, given to the claim in relation to that year (“amount B”). (5) Where effect has been given to one or more associated claims, amounts A and B above shall each be determined on the assumption that effect could have been, and had been, given to the associated claim or claims in relation to the earlier year. (6) Effect shall be given to the claim in relation to the later year, whether by repayment or set-off, or by an increase in the aggregate amount given by section 59B(1)(b) of this Act, or otherwise. (7) For the purposes of this paragraph, any deduction made under section 62(2) of the 1992 Act (death: general provisions) in respect of an allowable loss shall be deemed to be made in pursuance of a claim requiring relief to be given in respect of that loss. Relief for fluctuating profits of farming etc. 3 (1) This paragraph applies where a person who is or has been carrying on a trade of farming or market gardening claims that subsection (2) or (3) of section 96 of the principal Act shall have effect in relation to his profits from that trade for two consecutive years of assessment (“the earlier year” and “the later year”). (2) The claim shall relate to the later year. (3) Subject to sub-paragraph (4) below, in so far as the claim relates to the profits of the earlier year, the claim shall be for an amount equal to the difference between— (a) the amount in which the person is chargeable to tax for the earlier year (“amount A”); and (b) the amount in which he would be so chargeable on the assumption that effect could be, and were, given to the claim in relation to that year (“amount B”). (4) Where effect has been given to one or more associated claims, amounts A and B above shall each be determined on the assumption that effect could have been, and had been, given to the associated claim or claims in relation to the earlier year. (5) In so far as the claim relates to the profits of the earlier year, effect shall be given to the claim in relation to the later year by an increase in the amount of tax payable or, as the case may require, in the aggregate amount given by section 59B(1)(b) of this Act. (6) Where this paragraph applies twice in relation to the same year of assessment, the increase or reduction in the amount of tax payable for that year which is required by sub-paragraph (5) above on the earlier application shall be disregarded in determining amounts A and B above for the purposes of the later application. Relief claimed by virtue of section 96(9) 4 (1) This paragraph applies where— (a) a person who claims that subsection (2) or (3) of section 96 of the principal Act shall have effect for two consecutive years of assessment (“the earlier year” and “the later year”) makes or amends a claim for relief under any other provision of the Income Tax Acts for either of those years; and (b) the making or amendment of the claim would be out of time but for subsection (9) of that section. (2) The claim or amendment shall relate to the later year. (3) Subject to sub-paragraph (4) below, in so far as the claim or amendment relates to income of the earlier year, the amount claimed, or (as the case may be) the increase or reduction in the amount claimed, shall be equal to the difference between— (a) the amount in which the person is chargeable to tax for the earlier year (“amount A”); and (b) the amount in which he would be so chargeable on the assumption that effect could be, and were, given to the claim or amendment in relation to that year (“amount B”). (4) Where effect has been given to one or more associated claims, amounts A and B above shall each be determined on the assumption that effect could have been, and had been, given to the associated claim or claims in relation to the earlier year. (5) In so far as the claim or amendment relates to income of the earlier year, effect shall be given to the claim or amendment in relation to the later year by an increase in the amount of tax payable or, as the case may require, in the aggregate amount given by section 59B(1)(b) of this Act. (6) In this paragraph “amend” includes revoke and “amendment” shall be construed accordingly. Carry-back of post-cessation etc. receipts 5 (1) This paragraph applies where a person who has received a sum to which section 108 of the principal Act applies (election for carry-back) makes an election under that section requiring tax to be charged as if the sum were received on the date on which the discontinuance took place or, as the case may be, on the last day of the period at the end of which the change of basis took place; and in this paragraph— “the earlier year” means the year in which the sum is treated as received; “the later year” means the year in which the sum is received. (2) The claim shall relate to the later year. (3) Subject to sub-paragraph (4) below, the claim shall be for an amount equal to the difference between— (a) the amount in which the person is chargeable to tax for the earlier year (“amount A”); and (b) the amount in which he would be so chargeable on the assumption that effect could be, and were, given to the claim in relation to that year (“amount B”). (4) Where effect has been given to one or more associated claims, amounts A and B above shall each be determined on the assumption that effect could have been, and had been, given to the associated claim or claims in relation to the earlier year. (5) In computing amount B for the purposes of this paragraph, no further deduction or relief shall be made or given in respect of any loss or allowance deducted in pursuance of section 105 of the principal Act. (6) Effect shall be given to the claim in relation to the later year by an increase in the amount of tax payable. Backward spreading of certain payments 6 (1) This paragraph applies where a person who has received a payment to which any of the following sections applies, namely— (a) section 534 of the principal Act (relief for copyright payments etc.); (b) section 537A of that Act (relief for payments in respect of designs); and (c) section 538 of that Act (relief for painters, sculptors and other artists), makes a claim under subsection (1) of that section requiring that effect be given to the following provisions of that section in connection with that payment. (2) The claim shall relate to the year of assessment in which the payment in question is receivable (“the payment year”); and for the purposes of this sub-paragraph a payment shall be regarded as receivable in the year of assessment in computing the amount of the profits or gains of which it would, but for the relevant section, be included. (3) Subject to sub-paragraph (4) below, in so far as the claim relates to the profits or gains of a year of assessment earlier than the payment year (“the earlier year”), the claim shall be for an amount equal to the difference between— (a) the amount in which the person is chargeable to tax for the earlier year (“amount A”); and (b) the amount in which he would be so chargeable on the assumption that effect could be, and were, given to the claim or amendment in relation to that year (“amount B”). (4) Where effect has been given to one or more associated claims, amounts A and B above shall each be determined on the assumption that effect could have been, and had been, given to the associated claim or claims in relation to the earlier year. (5) In so far as the claim relates to the profits or gains of the earlier year, effect shall be given to the claim in relation to the payment year by an increase in the amount of tax payable.

SCHEDULE 18 Overdue tax and excessive payments by the Board

Section 132. The Taxes Management Act 1970 1 In section 55 of the Taxes Management Act 1970 (recovery of tax not postponed) in subsection (1) (which specifies the appeals to which section 55 applies) for paragraph (b) (assessments under section 29) there shall be substituted— (b) an assessment to tax made otherwise than under section 9 of this Act, . 2 (1) Section 59A of the Taxes Management Act 1970 (payments on account of income tax) shall be amended in accordance with the following provisions of this paragraph. (2) In subsection (2) (requirement to make payments on account and determination, subject to subsections (4) and (4A), of the amount of such payments) for “(4) and (4A)” there shall be substituted “ (4) to (4B) ”. (3) In subsection (4A) (determination, subject to subsections (3) and (4), of amount of payments on account in the case of late or amended assessments), after “subsections (3) and (4) above” there shall be inserted “ and subsection (4B) below ”. (4) After subsection (4A) there shall be inserted— (4B) If as regards the year immediately preceding the year of assessment the taxpayer is assessed to income tax under section 29 of this Act in any amount, then, subject to subsections (3) and (4) above and to any subsequent application of this subsection, the amount of each payment on account shall be, and shall be deemed always to have been, the total of— (a) the amount which, immediately before the making of the assessment under section 29, is the amount of that payment, and (b) an amount equal to 50 per cent. of the amount in which he is assessed under that assessment; and if that assessment is varied, the amount in which he is assessed under it shall be taken for the purposes of paragraph (b) above to be the amount of the assessment as varied. (5) In subsection (5) (adjustments to be made where subsection (4A) applies) after “subsection (4A)” there shall be inserted “ or (4B) ”. 3 (1) Section 86 of the Taxes Management Act 1970 (interest on overdue income tax and capital gains tax) shall be amended in accordance with the following provisions of this paragraph. (2) In subsection (4) (subsection (5) to apply with respect to interest in cases where taxpayer makes a claim under section 59A(3) or (4) but an amount becomes payable by him under certain provisions of section 59B) in paragraph (b), after “payable by him” there shall be inserted “ (i) ” and at the end of that paragraph there shall be added or (ii) in accordance with section 59B(6) of this Act in respect of income tax assessed under section 29 of this Act. (3) In subsection (6) (determination of what amount is payable in accordance with section 59B(3), (4) or (5)) after “section 59B(3), (4) or (5) of this Act” there shall be inserted “ or, in respect of income tax assessed under section 29 of this Act, in accordance with section 59B(6) of this Act ”. 4 (1) Section 88 of the Taxes Management Act 1970 (which relates to interest on tax recovered to make good loss due to the taxpayer’s fault and which is superseded by section 86 of that Act, as substituted by the Finance Act 1995) shall cease to have effect. (2) In consequence of the repeal of section 88 of the Taxes Management Act 1970— (a) section 88A of that Act (determinations under section 88) shall cease to have effect; (b) in section 91 of that Act (effect of interest on reliefs) in subsection (1)— (i) the words “or section 88” shall cease to have effect; and (ii) for the words “those provisions”, in each place where they occur, there shall be substituted “ that section ”; and (c) in section 113 of that Act (form of returns and other documents) subsection (1C) shall cease to have effect. The Taxes Act 1988 5 In section 307 of the Taxes Act 1988 (enterprise investment scheme and business expansion scheme: withdrawal of relief) in subsection (6) (application of section 86 of the Taxes Management Act 1970 to assessments made by virtue of section 307 as if the reckonable date were as specified in that subsection) for “the reckonable date” there shall be substituted “ the relevant date ”. 6 (1) Section 369 of the Taxes Act 1988 (MIRAS) shall be amended in accordance with the following provisions of this paragraph. (2) In subsection (7)— (a) for paragraph (a) (which applies section 29(3)(c) of the Taxes Management Act 1970) there shall be substituted— (a) section 29(1)(c) (excessive relief) as it has effect apart from section 29(2) to (10) of that Act; ; (b) in paragraph (b) (which applies section 30 of the Taxes Management Act 1970) after the words in parentheses there shall be inserted “ apart from subsection (1B) ”; (c) in paragraph (c) (which applies section 88 of the Taxes Management Act 1970) for “section 88” there shall be substituted “ section 86 ”; and (d) in the words following paragraph (d) after “as if it had been repaid” there shall be inserted “ as respects a chargeable period ”. (3) After subsection (7) there shall be inserted— (8) In the application of section 86 of the Management Act by virtue of subsection (7) above in relation to sums due and payable by virtue of an assessment made for the whole or part of a year of assessment (“the relevant year of assessment”) under section 29(1)(c) or 30 of that Act, as applied by that subsection, the relevant date— (a) is 1st January in the relevant year of assessment in a case where the person falling within subsection (6) above has made a relevant interim claim; and (b) in any other case, is the later of the following dates, that is to say— (i) 1st January in the relevant year of assessment; or (ii) the date of the making of the payment by the Board which gives rise to the assessment. (9) In this section— “financial year”, in relation to any person, means a financial year of that person for the purposes of the relevant regulations; “interim claim” means an interim claim within the meaning of the relevant regulations; “relevant interim claim” means, in relation to an assessment made for a period coterminous with, or falling wholly within, a person’s financial year, an interim claim made for a period falling wholly or partly within that financial year; and “the relevant regulations” means regulations made under section 378(3) for the purposes of subsection (6) above. 7 In section 374A of the Taxes Act 1988 (interest which never has been relevant loan interest etc) in subsection (4) (which provides for the application of the Taxes Management Act 1970 to an assessment under subsection (3) of that section as if it were an assessment to income tax and as if certain other things were the case) the words from “and as if” onwards shall be omitted. 8 In section 375 of the Taxes Act 1988 (interest ceasing to be relevant loan interest etc) in subsection (4) (which provides for the application of the Taxes Management Act 1970 to an assessment under subsection (3) of that section as it applies by virtue of section 374A(4) to an assessment under section 374A(3)) for “as it applies, by virtue of subsection (4) of section 374A, to an assessment under subsection (3) of that section” there shall be substituted “ as if it were an assessment to income tax for the year of assessment in which the deduction was made ”. 9 In section 412(4) of the Taxes Act 1988 (group relief: power to assess under section 412(3) is without prejudice to the making of assessments under section 29(3)(c) of the Taxes Management Act 1970) for “section 29(3)(c)” there shall be substituted “ section 29(1)(c) ”. 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 (1) Schedule 14 to the Taxes Act 1988 (life assurance premium relief: provisions ancillary to section 266) shall be amended in accordance with the following provisions of this paragraph. (2) In paragraph 6(2) (which provides for the application of the Taxes Management Act 1970 to an assessment under paragraph 6 of that Schedule as if it were an assessment to tax for the year of assessment in which the relief was given and as if certain other things were the case) the words from “and as if” onwards shall be omitted. (3) In paragraph 7(3) (which applies specified provisions of the Taxes Management Act 1970 to the payment of a sum claimed under section 266(5)(b))— (a) for paragraph (a) (which applies section 29(3)(c) of the Taxes Management Act 1970) there shall be substituted— (a) section 29(1)(c) (excessive relief) as it has effect apart from section 29(2) to (10) of that Act; ; (b) in paragraph (b) (which applies section 30 of the Taxes Management Act 1970) after the words in parentheses there shall be inserted “ apart from subsection (1B) ”; (c) in paragraph (c) (which applies section 88 of the Taxes Management Act 1970) for “section 88” there shall be substituted “ section 86 ”; and (d) for the words following paragraph (d) there shall be substituted— shall apply in relation to an amount which is paid to any person by the Board as an amount recoverable by virtue of section 266(5)(b) but to which that person is not entitled as if it were income tax which ought not to have been repaid and, where that amount was claimed by that person, as if it had been repaid as respects a chargeable period as a relief which was not due. (4) After paragraph 7(3) there shall be added— (4) In the application of section 86 of the Management Act by virtue of sub-paragraph (3) above in relation to sums due and payable by virtue of an assessment made for the whole or part of a year of assessment (“the relevant year of assessment”) under section 29(1)(c) or 30 of that Act, as applied by that sub-paragraph, the relevant date— (a) is 1st January in the relevant year of assessment in a case where the person falling within section 266(5)(b) has made a relevant interim claim; and (b) in any other case, is the later of the following dates, that is to say— (i) 1st January in the relevant year of assessment; or (ii) the date of the making of the payment by the Board which gives rise to the assessment. (5) In this paragraph— “financial year”, in relation to any person, means a financial year of that person for the purposes of the relevant regulations; “interim claim” means an interim claim within the meaning of the relevant regulations; “relevant interim claim” means, in relation to an assessment made for a period coterminous with, or falling wholly within, a person’s financial year, an interim claim made for a period falling wholly or partly within that financial year; “the relevant regulations” means regulations made under sub-paragraph (1) above. The Finance Act 1989 12 (1) Section 57 of the Finance Act 1989 (medical insurance: supplementary) shall be amended in accordance with the following provisions of this paragraph. (2) In subsection (3) (which applies specified provisions of the Taxes Management Act 1970 to the payment of an amount claimed under section 54(6)(b))— (a) for paragraph (a) (which applies section 29(3)(c) of the Taxes Management Act 1970) there shall be substituted— (a) section 29(1)(c) (excessive relief) as it has effect apart from section 29(2) to (10) of that Act; ; (b) in paragraph (b) (which applies section 30 of the Taxes Management Act 1970) after the words in parentheses there shall be inserted “ apart from subsection (1B) ”; (c) in paragraph (c) (which applies section 88 of the Taxes Management Act 1970) for “section 88” there shall be substituted “ section 86 ”; and (d) for the words following paragraph (d) there shall be substituted— shall apply in relation to an amount which is paid to any person by the Board as an amount recoverable by virtue of section 54(6)(b) above but to which that person is not entitled as if it were income tax which ought not to have been repaid and, where that amount was claimed by that person, as if it had been repaid as respects a chargeable period as a relief which was not due. (3) After subsection (3) there shall be inserted— (3A) In the application of section 86 of the Taxes Management Act 1970 by virtue of subsection (3) above in relation to sums due and payable by virtue of an assessment made under section 29(1)(c) or 30 of that Act, as applied by that subsection, the relevant date— (a) in a case where the person falling within section 54(6) above has made any interim claim, within the meaning of regulations made under subsection (1) and section 54(4) above, as respects some part of the year of assessment for which the assessment is made, is 1st January in that year of assessment; and (b) in any other case, is the later of the following dates, that is to say— (i) 1st January in the year of assessment for which the assessment is made; or (ii) the date of the making of the payment by the Board which gives rise to the assessment. 13 In section 178 of the Finance Act 1989 (setting rates of interest) in subsection (2)(f) (which specifies the provisions of the Taxes Management Act 1970 to which the section applies) the words “88” shall be omitted. The Finance Act 1991 14 (1) Section 33 of the Finance Act 1991 (vocational training) shall be amended in accordance with the following provisions of this paragraph. (2) In subsection (3) (which applies specified provisions of the Taxes Management Act 1970 to the payment of an amount claimed under section 32(5)(b))— (a) for paragraph (a) (which applies section 29(3)(c) of the Taxes Management Act 1970) there shall be substituted— (a) section 29(1)(c) (excessive relief) as it has effect apart from section 29(2) to (10) of that Act; ; (b) in paragraph (b) (which applies section 30 of the Taxes Management Act 1970) after the words in parentheses there shall be inserted “ apart from subsection (1B) ”; (c) in paragraph (c) (which applies section 88 of the Taxes Management Act 1970) for “section 88” there shall be substituted “ section 86 ”; and (d) for the words following paragraph (d) there shall be substituted— shall apply in relation to an amount which is paid to any person by the Board as an amount recoverable by virtue of section 32(5)(b) above but to which that person is not entitled as if it were income tax which ought not to have been repaid and, where that amount was claimed by that person, as if it had been repaid as respects a chargeable period as a relief which was not due. (3) After subsection (3) there shall be inserted— (3A) In the application of section 86 of the Taxes Management Act 1970 by virtue of subsection (3) above in relation to sums due and payable by virtue of an assessment made under section 29(1)(c) or 30 of that Act, as applied by that subsection, the relevant date— (a) in a case where the person falling within section 32(5) above has made any interim claim, within the meaning of regulations made under subsection (1) above, as respects some part of the year of assessment for which the assessment is made, is 1st January in that year of assessment; and (b) in any other case, is the later of the following dates, that is to say— (i) 1st January in the year of assessment for which the assessment is made; or (ii) the date of the making of the payment by the Board which gives rise to the assessment. The Taxation of Chargeable Gains Act 1992 15 (1) Section 281 of the Taxation of Chargeable Gains Act 1992 (payment by instalments of tax on gifts) shall be amended in accordance with the following provisions of this paragraph. (2) In subsection (5), for paragraph (a) (tax payable by instalments to carry interest in accordance with Part IX of the Taxes Management Act 1970, except section 88) there shall be substituted— (a) tax payable by instalments by virtue of this section carries interest in accordance with Part IX of the Management Act as that Part applies where no election is made under subsection (2) above, and . (3) In subsection (6) (power to pay at any time unpaid tax payable by instalments, with interest to the date of payment) after “with interest” there shall be inserted “ (determined in accordance with subsection (5)(a) above) ”. (4) In subsection (7) (cases where tax payable by instalments, with interest to the date of payment, becomes due and payable immediately) after “with interest” there shall be inserted “ (determined in accordance with subsection (5)(a) above as if the tax were tax payable by instalments by virtue of this section) ”. The Finance Act 1995 16 In section 73(4) of the Finance Act 1995 (power to apply certain provisions of the Taxes Management Act 1970 in relation to certain sums payable in connection with venture capital trusts)— (a) for “section 29(3)(c)” there shall be substituted “ section 29(1)(c) ”; (b) for “section 88” there shall be substituted “ section 86 ”; and (c) after paragraph (d) there shall be added— and section 86 of that Act may be so applied with such modifications as respects the relevant date as may be specified in the regulations. Commencement 17 (1) Paragraphs 1 to 3, 6(2)(a) and (b), 8, ... 11(3)(a) and (b), 12(2)(a) and (b), 14(2)(a) and (b) and 16(a) above have effect, subject to sub-paragraph (2) below— (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). (2) Paragraphs 1, 3, 6(2)(a) and (b), ... 11(3)(a) and (b), 12(2)(a) and (b) and 14(2)(a) and (b) above, so far as relating to partnerships whose trades, professions or businesses were set up and commenced before 6th April 1994, has effect as respects the year 1997-98 and subsequent years of assessment. (3) Paragraphs 4, 5, 6(2)(c) and (3), 11(3)(c) and (4), 12(2)(c) and (3), 13, 14(2)(c) and (3), 15 and 16(b) and (c) above have effect, subject to sub-paragraph (4) below— (a) as respects the year 1996-97 and subsequent years of assessment; and (b) in relation to any income tax or capital gains tax which— (i) is charged by an assessment made on or after 6th April 1998; and (ii) is for the year 1995-96 or any earlier year of assessment; and where sub-paragraph (4) of paragraph 11, sub-paragraph (3) of paragraph 12, or sub-paragraph (3) of paragraph 14 has effect by virtue of paragraph (b) of this sub-paragraph it shall have effect with the substitution, in the provision inserted by that sub-paragraph, for “section 29(1)(c)” of “ section 29(3)(c) ”. (4) Paragraphs 4, 6(2)(c) and (3), 11(3)(c) and (4), 12(2)(c) and (3), 13 and 14(2)(c) and (3) above, so far as relating to partnerships whose trades, professions or businesses were set up and commenced before 6th April 1994 have effect— (a) as respects the year 1997-98 and subsequent years of assessment; and (b) in relation to any income tax which— (i) is charged by an assessment made on or after 6th April 1998; and (ii) is for the year 1995-96 or any earlier year of assessment. (5) Paragraphs 7 and 11(2) above have effect— (a) as respects the year 1996-97 and subsequent years of assessment; and (b) subject to sub-paragraphs (6) and (7) below, in relation to any income tax or capital gains tax which— (i) is charged by an assessment made on or after 6th April 1998; and (ii) is for the year 1995-96 or any earlier year of assessment. (6) Sub-paragraph (5)(b) above does not apply to paragraph 7 above so far as paragraph 7 provides for the omission of— (a) paragraph (a) of subsection (4) of section 374A of the Taxes Act 1988, and (b) the words “and as if” so far as they relate to paragraph (a) of that subsection. (7) Sub-paragraph (5)(b) above does not apply to paragraph 11(2) above so far as paragraph 11(2) provides for the omission of— (a) the words “sections 55(1) (recovery of tax not postponed) and”, and (b) the words and as if— (a) the assessment were among those specified in so far as those words relate to the words mentioned in paragraph (a) of this sub-paragraph. (8) Paragraphs 6(2)(d), 11(3)(d), 12(2)(d) and 14(2)(d) above shall not apply in relation to any payment if the payment, or the claim on which it is made, was made before the day on which this Act is passed. (9) Paragraph 9 above has effect 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). (10) Any power to make regulations exercisable by virtue of an amendment made by any of the preceding provisions of this Schedule may be exercised so as to make provision having effect in relation to any year of assessment in relation to which that provision has effect in accordance with sub-paragraphs (1) to (9) above.