Finance (No. 2) Act 1992

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40A Revenue nature of expenditure on master versions of films

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40B Allocation of expenditure to periods

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40C Cases where section 40B does not apply

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40D Election for sections 40A and 40B not to apply

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41 Relief for preliminary expenditure.

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42 Relief for production or acquisition expenditure.

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43 Interpretation of sections 41 and 42.

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44 Transfer of a UK trade: amendment of 1992 Act.

The Taxation of Chargeable Gains Act 1992 shall have effect, and be deemed always to have had effect, with the insertion of the following after section 140— Transfers concerning companies of different member States Transfer of a UK trade. 140A (1) This section applies where— (a) a qualifying company resident in one member State (company A) transfers the whole or part of a trade carried on by it in the United Kingdom to a qualifying company resident in another member State (company B), (b) the transfer is wholly in exchange for securities issued by company B to company A, (c) a claim is made under this section by company A and company B, (d) section 140B does not prevent this section applying, and (e) the appropriate condition is met in relation to company B immediately after the time of the transfer. (2) Where immediately after the time of the transfer company B is not resident in the United Kingdom, the appropriate condition is that were it to dispose of the assets included in the transfer any chargeable gains accruing to it on the disposal would form part of its chargeable profits for corporation tax purposes by virtue of section 10(3). (3) Where immediately after the time of the transfer company B is resident in the United Kingdom, the appropriate condition is that none of the assets included in the transfer is one in respect of which, by virtue of the asset being of a description specified in double taxation relief arrangements, the company falls to be regarded for the purposes of the arrangements as not liable in the United Kingdom to tax on gains accruing to it on a disposal. (4) Where this section applies— (a) the two companies shall be treated, so far as relates to corporation tax on chargeable gains, as if any assets included in the transfer were acquired by company B from company A for a consideration of such amount as would secure that on the disposal by way of transfer neither a gain nor a loss would accrue to company A; (b) section 25(3) shall not apply to any such assets by reason of the transfer (if it would apply apart from this paragraph). (5) For the purposes of subsection (1)(a) above, a company shall be regarded as resident in a member State if it is within a charge to tax under the law of the State because it is regarded as resident for the purposes of the charge. (6) For the purposes of subsection (5) above, a company shall be treated as not within a charge to tax under the law of a member State if it falls to be regarded for the purposes of any double taxation relief arrangements to which the State is a party as resident in a territory which is not within any of the member States. (7) In this section— “qualifying company” means a body incorporated under the law of a member State; “securities” includes shares. Section 140A: anti-avoidance. 140B (1) Section 140A shall not apply unless the transfer of the trade or part is effected for bona fide commercial reasons and does not form part of a scheme or arrangements of which the main purpose, or one of the main purposes, is avoidance of liability to income tax, corporation tax or capital gains tax. (2) Subsection (1) above shall not apply where, before the transfer, the Board have on the application of company A and company B notified those companies that the Board are satisfied that the transfer will be effected for bona fide commercial reasons and will not form part of any such scheme or arrangements as are mentioned in that subsection. (3) Subsections (2) to (5) of section 138 shall have effect in relation to subsection (2) above as they have effect in relation to subsection (1) of that section.

45 Transfer of a non-UK trade: amendment of 1992 Act.

The Taxation of Chargeable Gains Act 1992 shall have effect, and be deemed always to have had effect, with the insertion of the following sections after section 140B— Transfer of a non-UK trade. 140C (1) This section applies where— (a) a qualifying company resident in the United Kingdom (company A) transfers to a qualifying company resident in another member State (company B) the whole or part of a trade which, immediately before the time of the transfer, company A carried on in a member State other than the United Kingdom through a branch or agency, (b) the transfer includes the whole of the assets of company A used for the purposes of the trade or part (or the whole of those assets other than cash), (c) the transfer is wholly or partly in exchange for securities issued by company B to company A, (d) the aggregate of the chargeable gains accruing to company A on the transfer exceeds the aggregate of the allowable losses so accruing, (e) a claim is made under this section by company A, and (f) section 140D does not prevent this section applying. (2) In a case where this section applies, this Act shall have effect in accordance with subsection (3) below. (3) The allowable losses accruing to company A on the transfer shall be set off against the chargeable gains so accruing and the transfer shall be treated as giving rise to a single chargeable gain equal to the aggregate of those gains after deducting the aggregate of those losses. (4) No claim may be made under this section as regards a transfer in relation to which a claim is made under section 140. (5) In a case where this section applies, section 815A of the Taxes Act shall also apply. (6) For the purposes of subsection (1)(a) above— (a) a company shall not be regarded as resident in the United Kingdom if it falls to be regarded for the purposes of any double taxation relief arrangements to which the United Kingdom is a party as resident in a territory which is not within any of the member States; (b) a company shall be regarded as resident in another member State if it is within a charge to tax under the law of the State because it is regarded as resident for the purposes of the charge. (7) For the purposes of subsection (6)(b) above, a company shall be treated as not within a charge to tax under the law of a member State if it falls to be regarded for the purposes of any double taxation relief arrangements to which the State is a party as resident in a territory which is not within any of the member States. (8) Section 442(3) of the Taxes Act (overseas business of UK insurance companies) shall be ignored in arriving at the chargeable gains accruing to company A on the transfer, and the allowable losses so accruing, for the purposes of subsections (1)(d) and (3) above. (9) In this section— “qualifying company” means a body incorporated under the law of a member State; “securities” includes shares. Section 140C: anti-avoidance. 140D (1) Section 140C shall not apply unless the transfer of the trade or part is effected for bona fide commercial reasons and does not form part of a scheme or arrangements of which the main purpose, or one of the main purposes, is avoidance of liability to income tax, corporation tax or capital gains tax. (2) Subsection (1) above shall not apply where, before the transfer, the Board have on the application of company A notified that company that the Board are satisfied that the transfer will be effected for bona fide commercial reasons and will not form part of any such scheme or arrangements as are mentioned in that subsection. (3) Subsections (2) to (5) of section 138 shall have effect in relation to subsection (2) above as they have effect in relation to subsection (1) of that section.

46 Transfer of a trade: supplementary (1).

(1) The Taxation of Chargeable Gains Act 1992 shall have effect, and be deemed always to have had effect, with the following amendments. (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) In section 116(11) (qualifying corporate bonds) after “139," there shall be inserted “ 140A, ”. (4) In section 140 (transfer of assets to non-resident company) the following subsection shall be inserted after subsection (6)— (6A) No claim may be made under this section as regards a transfer in relation to which a claim is made under section 140C. (5) In section 174 (disposal or acquisition outside a group)— (a) in subsection (2) after the word “section" (in the first place where it occurs) there shall be inserted “ 140A, ”; (b) in subsection (3) after “section" there shall be inserted “ 140A, ”. (6) In section 177(2) (dividend stripping) after “which section" there shall be inserted “ 140A, ”. (7) In section 184(2) (indexation)— (a) after the word “section" (in the first place where it occurs) there shall be inserted “ 140A, ”; (b) for “either" there shall be substituted “ one ”.

47 Transfer of a UK trade: amendment of 1970 Act.

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48 Transfer of a non-UK trade: amendment of 1970 Act.

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49 Transfer of a trade: supplementary (2).

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50 Transfer of a non-UK trade.

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51 The Arbitration Convention.

(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) The following section shall be inserted after section 182 of the Finance Act 1989 (disclosure of information)— Double taxation: disclosure of information. 182A (1) A person who discloses any information acquired by him in the exercise of his functions as a member of an advisory commission set up under the Arbitration Convention is guilty of an offence. (2) Subsection (1) above does not apply to any disclosure of information— (a) with the consent of the person who supplied the information to the commission, or (b) which has been lawfully made available to the public before the disclosure is made. (3) It is a defence for a person charged with an offence under this section to prove that at the time of the alleged offence he believed that the information in question had been lawfully made available to the public before the disclosure was made and had no reasonable cause to believe otherwise. (4) A person guilty of an offence under this section is liable— (a) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine or both; (b) on summary conviction, to imprisonment for a term not exceeding six months or a fine not exceeding the statutory maximum or both. (5) No prosecution for an offence under this section shall be instituted in England and Wales or in Northern Ireland except— (a) by the Board, or (b) by or with the consent of the Director of Public Prosecutions or, in Northern Ireland, the Director of Public Prosecutions for Northern Ireland. (6) In this section— “the Arbitration Convention” has the meaning given by section 815B(4) of the Taxes Act 1988; “the Board” means the Commissioners of Inland Revenue.

52 Interest.

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53 Car fuel: cash equivalents.

(1) Section 158 of the Taxes Act 1988 (car fuel) shall be amended as follows. (2) For subsection (2) (cash equivalents) there shall be substituted— (2) Subject to the provisions of this section, the cash equivalent of that benefit shall be ascertained from— (a) Table A below where the car has an internal combustion engine with one or more reciprocating pistons and is not a diesel car; (b) Table AB below where the car has an internal combustion engine with one or more reciprocating pistons and is a diesel car; (c) Table B below where the car does not have an internal combustion engine with one or more reciprocating pistons. TABLE A Cylinder capacity of car in cubic centimetres | Cash equivalent 1,400 or less | £500 More than 1,400 but not more than 2,000 | £630 More than 2,000 | £940 TABLE AB Cylinder capacity of car in cubic centimetres | Cash equivalent 2,000 or less | £460 More than 2,000 | £590 TABLE B Original market value of car | Cash equivalent Less than £6,000 | £500 £6,000 or more but less than £8,500 | £630 £8,500 or more | £940 (2A) For the purposes of subsection (2) above a diesel car is a car which uses heavy oil as fuel; and “heavy oil” here means heavy oil as defined by section 1(4) of the Hydrocarbon Oil Duties Act 1979. (2B) For the purposes of Tables A and AB in subsection (2) above a car’s cylinder capacity is the capacity of its engine calculated as for the purposes of the Vehicles (Excise) Act 1971. (3) In subsection (4) (Treasury orders) for “either" there shall be substituted “ any ”. (4) This section shall have effect for the year 1992-93 and subsequent years of assessment.

54 Foreign earnings.

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55 Oil extraction activities: extended transportation.

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56 Friendly societies.

Schedule 9 to this Act (which makes provision in relation to friendly societies) shall have effect.

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59 Furnished accommodation.

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60 Deduction on account of certain payments.

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61 Qualifying maintenance payments: extension to member States.

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62 Qualifying maintenance payments: maintenance assessments etc.

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63 Paying and collecting agents etc.

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64 Reduced and composite rate.

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65 Life assurance business: I minus E basis.

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66 Banks etc. in compulsory liquidation.

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72 Increase of 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 | 150,000 | Nil 150,000 | 40 (2) Subsection (1) above shall apply to any chargeable transfer made on or after 10th March 1992, and section 8(1) of the Inheritance Tax Act 1984 (indexation of rate bands) shall not apply to chargeable transfers made in the year beginning 6th April 1992.

73 Business and agricultural property relief.

Schedule 14 to this Act (which makes provision in relation to relief in respect of business property and agricultural property) shall have effect.

74 Oil exported direct from United Kingdom off-shore fields.

(1) The enactments specified in Schedule 15 to this Act (being enactments relating to oil taxation) shall have effect subject to the amendments in that Schedule, being amendments— (a) which take account, for the purpose of determining assessable profits and allowable losses, of certain cases where oil which is won from an off-shore oil field is, or could reasonably be expected to be, first landed in a country other than the United Kingdom; or (b) which are consequential upon, or incidental to, the amendments referred to in paragraph (a) above. (2) For the purposes of subsection (1)(a) above an oil field is an off-shore oil field if the whole of it is situated outside the geographical area of the United Kingdom (as determined under section 108 of the Finance Act 1986 - the on-shore/off-shore boundary). (3) In the amendments in Schedule 15 to this Act, any reference to a country other than the United Kingdom shall be treated as a reference to the geographical area of that country exclusive of any land (or waters) to the seaward side of the high-water line along the coast of that country, including the coast of all islands comprised in that country. (4) For the purpose of subsection (3) above, section 108(5) of the Finance Act 1986 (which provides a means of determining the high-water line at any place in the United Kingdom) shall, with any necessary modifications, apply to determine the high-water line at any place in a country other than the United Kingdom. (5) Except in so far as they have effect in relation to corporation tax or income tax, the amendments in Schedule 15 to this Act take effect as follows— (a) in so far as they relate to expenditure incurred, they take effect for claim periods ending after 27th November 1991; and (b) in so far as they relate to any other matter, they take effect for chargeable periods ending after 30th June 1992. (6) This section shall be construed as one with Part I of the Oil Taxation Act 1975.

75 Change of name.

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