Finance Act 2004
2004 c. 12
An Act to grant certain duties, to alter other duties, and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with finance.
[22nd July 2004]
Most Gracious Sovereign
WE, Your Majesty’s most dutiful and loyal subjects, the Commons of the United Kingdom in Parliament assembled, towards raising the necessary supplies to defray Your Majesty’s public expenses, and making an addition to the public revenue, have freely and voluntarily resolved to give and to grant unto Your Majesty the several duties hereinafter mentioned; and do therefore most humbly beseech Your Majesty that it may be enacted, and be it enacted by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
(1) For the Table of rates of duty in Schedule 1 to the Tobacco Products Duty Act 1979 (c. 7) substitute—
Table
1. Cigarettes | An amount equal to 22 per cent of the retail price plus £99.80 per thousand cigarettes.
2. Cigars | £145.35 per kilogram.
3. Hand-rolling tobacco | £104.47 per kilogram.
4. Other smoking tobacco and chewing tobacco | £63.90 per kilogram.
(2) This section shall be deemed to have come into force at 6 o'clock in the evening of 17th March 2004.
(1) In section 36(1AA)(a) of the Alcoholic Liquor Duties Act 1979 (c. 4) (rate of duty on beer) for “£12.22” substitute “ £12.59 ”.
(2) This section shall be deemed to have come into force at midnight on 21st March 2004.
(1) For Part 1 of the Table of rates of duty in Schedule 1 to the Alcoholic Liquor Duties Act 1979 (rates of duty on wine and made-wine) substitute—
Part 1 Wine and made-wine of a strength not exceeding 22 per cent
Description of wine or made-wine | Rates of duty per hectolitre
£
Wine or made-wine of a strength not exceeding 4 per cent | 50.38
Wine or made-wine of a strength exceeding 4 per cent but not exceeding 5.5 per cent | 69.27
Wine or made-wine of a strength exceeding 5.5 per cent but not exceeding 15 per cent and not sparkling | 163.47
Sparkling wine or sparkling made-wine of a strength exceeding 5.5 per cent but less than 8.5 per cent | 166.70
Sparkling wine or sparkling made-wine of a strength of 8.5 per cent or of a strength exceeding 8.5 per cent but not exceeding 15 per cent | 220.54
Wine or made-wine of a strength exceeding 15 per cent but not exceeding 22 per cent | 217.95
(2) This section shall be deemed to have come into force at midnight on 21st March 2004.
(1) At the beginning of Part 6 of the Alcoholic Liquor Duties Act 1979 (c. 4) (general control provisions) under the heading “Sale of dutiable alcoholic liquors” insert—
Retail containers of certain alcoholic liquors to be stamped
64A Schedule 2A to this Act (duty stamps) has effect.
.
(2) Before Schedule 3 to that Act insert the Schedule 2A set out in Schedule 1 to this Act.
(3) In section 12(2) of the Finance Act 1994 (c. 9) (defaults engaging Commissioners' power to assess excise duty to the best of their judgement) after paragraph (c) insert—
(ca) any failure by any person to comply with a requirement to which he is made subject by or under Schedule 2A to the Alcoholic Liquor Duties Act 1979 (duty stamps);
.
(4) In section 14(1) of that Act (reviewable decisions) after paragraph (bc) insert—
(bd) any decision by the Commissioners as to whether or not any person is entitled to any repayment or credit by virtue of regulations under paragraph 4(2)(h) of Schedule 2A to the Alcoholic Liquor Duties Act 1979 (duty stamps), or the amount of the repayment or credit to which any person is so entitled;
(be) any decision by the Commissioners made by virtue of regulations under paragraph 4(2)(i) of that Schedule that some or all of a payment made, or security provided, is forfeit, or the amount which is so forfeit;
.
(5) The amendments made by this section have effect in relation to retail containers containing alcoholic liquor if the excise duty point for the alcoholic liquor falls on or after such day as the Treasury may by order made by statutory instrument appoint.
(6) An order under subsection (5) may contain such supplemental and transitional provision and savings as the Treasury think fit in connection with the coming into effect of those amendments.
(7) In subsection (5) “excise duty point” has the meaning given by section 1 of the Finance (No. 2) Act 1992 (c. 48).
(1) In section 6 of the Hydrocarbon Oil Duties Act 1979 (c. 5) (hydrocarbon oil: rates of duty)—
(a) in subsection (1A)(a) (ultra low sulphur petrol) for “£0.4710” substitute “ £0.4902 ”,
(b) in subsection (1A)(b) (other light oil) for “£0.5620” substitute “ £0.5790 ”,
(c) in subsection (1A)(c) (ultra low sulphur diesel) for “£0.4710” substitute “ £0.4902 ”, and
(d) in subsection (1A)(d) (other heavy oil) for “£0.5327” substitute “ £0.5487 ”.
(2) In section 6AA(3) of that Act (biodiesel: rate of duty) for “£0.2710” substitute “ £0.2852 ”.
(3) In section 11(1) of that Act (rebate on heavy oil)—
(a) in paragraph (a) (fuel oil) for “£0.0382” substitute “ £0.0624 ”,
(b) in paragraph (b) (gas oil: general) for “£0.0422” substitute “ £0.0664 ”, and
(c) in paragraph (ba) (ultra low sulphur diesel) for “£0.0422” substitute “ £0.0664 ”.
(4) In section 13A(1) of that Act (rebate on unleaded petrol) for “£0.0601” substitute “ £0.0620 ”.
(5) In section 14(1) of that Act (rebate on light oil for use as furnace fuel) for “£0.0382” substitute “ £0.0624 ”.
(6) This section shall come into force on 1st September 2004.
(1) At the end of section 5 of the Hydrocarbon Oil Duties Act 1979 (road fuel gas) (which becomes subsection (1)) add—
(2) In this Act “natural road fuel gas”is road fuel gas with a methane content of not less than 80%.
(2) For section 8(3) of that Act (rate of duty on road fuel gas) substitute—
(3) The rate of the duty under this section shall be—
(a) in the case of natural road fuel gas, £0.1110 a kilogram, and
(b) in any other case, £0.1303 a kilogram.
(3) After section 21(2) of that Act (regulations) insert—
(2A) In the case of regulations made for the purposes mentioned in subsection (1)(c) above, different regulations may be made for different classes of road fuel gas.
(4) This section shall come into force on 1st September 2004.
(1) For section 1(3A) and (3B) of the Hydrocarbon Oil Duties Act 1979 (descriptions of hydrocarbon oil: ultra low sulphur petrol and unleaded petrol) substitute—
(3A) “Ultra low sulphur petrol” means unleaded petrol—
(a) the sulphur content of which does not exceed 0.005 per cent. by weight,
(b) the aromatics content of which does not exceed 35 per cent. by volume, and
(c) which is not sulphur-free petrol.
(3B) “Sulphur-free petrol” means unleaded petrol the sulphur content of which does not exceed 0.001 per cent. by weight (or is nil).
(3C) “Unleaded petrol” means petrol that contains not more than 0.013 grams of lead per litre of petrol; and petrol is “leaded petrol”if it is not unleaded petrol.
(2) For section 1(6) of that Act (ultra low sulphur diesel) substitute—
(6) “Ultra low sulphur diesel” means gas oil—
(a) the sulphur content of which does not exceed 0.005 per cent. by weight,
(b) the density of which does not exceed 835 kilograms per cubic metre at a temperature of 15°C,
(c) of which not less than 95 per cent. by volume distils at a temperature not exceeding 345°C, and
(d) which is not sulphur-free diesel.
(7) “Sulphur-free diesel” means gas oil the sulphur content of which does not exceed 0.001 per cent. by weight (or is nil).
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) For section 2A(1) of that Act (power to amend definitions) substitute—
(1) The Treasury may by order made by statutory instrument amend the definition for the purposes of this Act of—
(a) sulphur-free diesel;
(b) sulphur-free petrol;
(c) ultra low sulphur diesel;
(d) ultra low sulphur petrol;
(e) unleaded petrol and leaded petrol.
(5) In section 6(1A) of that Act (rates of duty)—
(a) after paragraph (a) insert—
(aa) £0.4852 a litre in the case of sulphur-free petrol;
,
(b) in paragraph (b) after “other than ultra low sulphur petrol” insert “ and sulphur-free petrol ”,
(c) after paragraph (c) insert—
(ca) £0.4852 a litre in the case of sulphur-free diesel;
, and
(d) in paragraph (d) after “other than ultra low sulphur diesel” insert “ and sulphur-free diesel ”.
(6) In section 13AA(6) of that Act (restrictions on use of rebated kerosene) after “which is not ultra low sulphur diesel” insert “ or sulphur-free diesel ”.
(7) In section 13A(1) of that Act (rebate on unleaded petrol) after “, other than ultra low sulphur petrol” insert “ and sulphur-free petrol ”.
(8) In section 27 of that Act (interpretation)—
(a) after the definition of “road vehicle” insert—
“sulphur-free diesel” has the meaning given by section 1(7) above;
“sulphur-free petrol” has the meaning given by section 1(3B) above;
, and
(b) in the definition of “unleaded petrol” and “leaded petrol” for “section 1(3B) above.” substitute “ section 1(3C) above. ”
(9) This section shall come into force on 1st September 2004.
Before section 2A(2) of the Hydrocarbon Oil Duties Act 1979 (c. 5) (power to amend definitions) insert—
(1C) The Treasury may by order made by statutory instrument amend the definition for the purposes of section 11 of “fuel oil”.
(1) For section 20AAA of the Hydrocarbon Oil Duties Act 1979 (mixing of rebated oil) substitute—
Mixing of rebated oil
20AAA (1) A duty of excise shall be charged on a mixture which is—
(a) produced by mixing fully rebated heavy oil with heavy oil which is not fully rebated, and
(b) supplied for use as fuel for any engine, motor or other machinery.
(2) A duty of excise shall be charged on a mixture which is—
(a) produced by mixing partially rebated heavy oil with heavy oil which is not partially rebated, and
(b) supplied for use as fuel for any engine, motor or other machinery;
but a mixture on which duty is charged under subsection (1) shall not be charged under this subsection.
(3) A duty of excise shall be charged on a mixture which is produced by mixing—
(a) fully or partially rebated heavy oil, with
(b) biodiesel or a substance containing biodiesel.
(4) The rate of duty on a mixture under subsection (1) or (2) shall be—
(a) in the case of a mixture supplied for use as fuel for a road vehicle, the rate of duty specified in section 6(1A)(d) (general rate for heavy oil), and
(b) in any other case, equivalent to the rate of rebate specified in section 11(1)(b) (general rate for gas oil).
(5) The rate of duty on a mixture under subsection (3) shall be the rate of duty specified in section 6(1A)(d).
(6) For the purposes of this section—
(a) oil is fully rebated if a rebate has been allowed in respect of it under section 11(1)(c) (general rebate for heavy oil),
(b) oil is partially rebated if a rebate has been allowed in respect of it under any other provision of section 11 or under section 13AA, and
(c) a reference to mixing is a reference to non-approved mixing (within the meaning given by section 20A(5)).
(7) The person liable to pay duty charged under this section on supply or production of a mixture is the person supplying or producing the mixture.
(8) Where duty under a provision of this Act has been paid on an ingredient of a mixture, the duty charged under this section shall be reduced by the amount of any duty that the Commissioners are satisfied has been paid on the ingredient (but not to a negative amount).
(9) The Commissioners may exempt a person from liability to pay duty under any provision of this Act in respect of production or supply of a mixture of a kind described in subsection (1)(a), (2)(a) or (3) if satisfied that—
(a) the liability was incurred accidentally, and
(b) in the circumstances the person should be exempted.
(2) In section 20AAB of that Act (mixing of rebated oil: supplementary)—
(a) for subsections (1) and (2) substitute—
(1) A person who supplies or produces a mixture on which duty is charged under section 20AAA above must notify the Commissioners of the supply or production—
(a) in advance, or
(b) within the period of seven days beginning with the date of supply or production.
, and
(b) in subsection (3) omit “or (2)”.
(3) Schedule 2A to that Act shall cease to have effect.
(4) This section—
(a) in so far as it imposes or relates to the charge specified in section 20AAA(1) or (2) of that Act (as substituted by subsection (1) above), shall have effect in relation to anything supplied on or after the date on which this Act is passed,
(b) in so far as it imposes or relates to the charge specified in section 20AAA(3) of that Act (as substituted by subsection (1) above), shall have effect in relation to anything produced on or after the date on which this Act is passed, and
(c) in so far as it causes sections 20AAA and 20AAB(1) and (2) of, and Schedule 2A to, that Act to cease to have effect in their present form, shall come into force on the day on which this Act is passed.
(5) But no duty shall be charged on the supply of a mixture under section 20AAA(1) or (2) of that Act (as substituted by subsection (1) above) if duty was charged on the production of the mixture under section 20AAA as it had effect before the date on which this Act is passed.
(1) After section 2AA of the Hydrocarbon Oil Duties Act 1979 (c. 5) (biodiesel) insert—
Bioethanol
2AB (1) In this Act “bioethanol” means a liquid fuel—
(a) consisting of ethanol produced from biomass, and
(b) capable of being used for the same purposes as light oil.
(2) In subsection (1)—
(a) “liquid” does not include any substance that is gaseous at a temperature of 15°C and under a pressure of 1013.25 millibars, and
(b) “biomass” means vegetable and animal substances constituting the biodegradable fraction of—
(i) products, wastes and residues from agriculture, forestry and related activities, or
(ii) industrial and municipal waste.
(3) A substance shall be treated as falling within subsection (1)(a) if it—
(a) is denatured alcohol for the purposes of section 5 of the Finance Act 1995 (c. 4), and
(b) would fall within subsection (1)(a) above (without reliance on this subsection) but for the presence of a component introduced—
(i) for the purpose of rendering the substance denatured alcohol, and
(ii) in the minimum proportion necessary for that purpose.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) After section 6AC of that Act (biodiesel: application of provisions relating to hydrocarbon oil) insert—
Excise duty on bioethanol
6AD (1) A duty of excise shall be charged on the setting aside for a chargeable use by any person, or (where it has not already been charged under this section) on the chargeable use by any person, of bioethanol.
(2) In subsection (1) “chargeable use” means use—
(a) as fuel for any engine, motor or other machinery,
(b) as an additive or extender in any substance so used, or
(c) for the production of bioethanol blend.
(3) The rate of duty under this section shall be £0.2852 a litre.
Excise duty on blends of bioethanol and hydrocarbon oil
6AE (1) A duty of excise shall be charged on bioethanol blend—
(a) imported into the United Kingdom, or
(b) produced in the United Kingdom and delivered for home use from a refinery or other premises used for the production of hydrocarbon oil or from any bonded storage for hydrocarbon oil, not being bioethanol blend chargeable with duty under paragraph (a) above.
(2) In this Act “bioethanol blend” means any mixture that is produced by mixing—
(a) bioethanol, and
(b) hydrocarbon oil not charged with excise duty.
(3) The rate at which the duty shall be charged on any bioethanol blend shall be a composite rate representing—
(a) in respect of the proportion of the blend that is hydrocarbon oil, the rate that would be applicable to the blend if it consisted entirely of hydrocarbon oil of the description that went into producing the blend, and
(b) in respect of the proportion of the blend that is bioethanol, the rate that would be applicable to the blend if it consisted entirely of bioethanol.
(4) A reference in subsection (3) to a proportion is to a proportion by volume to the nearest 0.001%.
(5) If the Commissioners are not satisfied as to the proportion of bioethanol in any bioethanol blend, the rate of duty chargeable shall be the rate that would be applicable to the blend if it consisted entirely of hydrocarbon oil of the description that went into producing the blend.
(6) Where imported bioethanol blend is removed to a refinery, the duty chargeable under subsection (1) above shall, instead of being charged at the time of the importation of the blend, be charged on the delivery of any goods from the refinery for home use and shall be the same as that which would be payable on the importation of like goods.
Application to bioethanol and bioethanol blend of provisions relating to hydrocarbon oil
6AF (1) The Commissioners may by regulations provide for—
(a) references in this Act, or specified references in this Act, to hydrocarbon oil to be construed as including references to—
(i) bioethanol;
(ii) bioethanol blend;
(b) references in this Act, or specified references in this Act, to duty on hydrocarbon oil to be construed as including references to duty under—
(i) section 6AD above;
(ii) section 6AE above;
(c) bioethanol, or bioethanol blend, to be treated for the purposes of such of the following provisions of this Act as may be specified as if it fell within a specified description of hydrocarbon oil.
(2) Where the effect of provision made under subsection (1) above is to extend any power to make regulations, provision made in exercise of the power as extended may be contained in the same statutory instrument as the provision extending the power.
(3) In this section “specified” means specified by regulations under this section.
(4) Regulations under this section may make different provision for different cases.
(5) Paragraph (b) of subsection (1) above shall not be taken as prejudicing the generality of paragraph (a) of that subsection.
(4) In section 6A(1) of that Act (fuel substitutes) for “which is not hydrocarbon oil, biodiesel or bioblend” substitute
which is not—
(a) hydrocarbon oil,
(b) biodiesel,
(c) bioblend,
(d) bioethanol, or
(e) bioethanol blend.
(5) At the end of section 11(6) of that Act (rebate on heavy oil: exception) add “ or bioethanol blend ”.
(6) At the end of section 13AA of that Act (restrictions on use of rebated kerosene) add—
(7) Nothing in this section has the effect of allowing a rebate on bioblend or bioethanol blend.
(7) In section 14 of that Act (rebate on light oil for use as furnace fuel) after subsection (1) insert—
(1A) No rebate shall be allowed under this section in respect of bioethanol blend.
(8) In section 22 of that Act (prohibition on use of petrol substitutes on which duty has not been paid)—
(a) after subsection (1AA) insert—
(1AB) Where any person—
(a) puts any bioethanol to a chargeable use (within the meaning of section 6AD above), and
(b) knows or has reasonable cause to believe that there is duty charged under section 6AD above on that bioethanol which has not been paid and is not lawfully deferred,
his putting the bioethanol to that use shall attract a penalty under section 9 of the Finance Act 1994 (c. 9) (civil penalties), and any goods in respect of which a person contravenes this section shall be liable to forfeiture.
, and
(b) in subsection (1A) for “subsection (1) or (1AA) above.” substitute “ subsection (1), (1AA) or (1AB) above. ”
(9) In section 27(1) of that Act (interpretation) after the definition of “biodiesel” insert—
“bioethanol” has the meaning given by section 2AB above;
“bioethanol blend” has the meaning given by section 6AE(2) above;
.
(10) This section shall come into force on 1st January 2005.
(11) But no duty shall be charged under section 6AD or 6AE of that Act (inserted by subsection (3) above) in respect of the chargeable use of any goods, or the setting aside of any goods for a chargeable use, if before 1st January 2005—
(a) the goods were used or set aside for a chargeable use within the meaning of section 6A of that Act, and
(b) a duty of excise was charged under that section on that use or setting aside.
(1) In section 6AA(2) of the Hydrocarbon Oil Duties Act 1979 (c. 5) (excise duty on biodiesel) after paragraph (b) add—
(c) for the production of bioblend.
(2) This section shall come into force on 1st January 2005.
(1) For section 6A(2)(b) of the Hydrocarbon Oil Duties Act 1979 (fuel substitutes: additives and extenders) substitute—
(b) as an additive or extender in any substance so used.
(2) This section shall have effect in relation to anything done on or after the date on which this Act is passed.
After section 23B of the Hydrocarbon Oil Duties Act 1979 (regulation of traders in controlled oil) insert—
Warehousing
23C (1) For the purposes of Part VIII of the Customs and Excise Management Act 1979 (c. 2) (warehousing) the substances specified in subsection (4) shall be treated as if they were chargeable with duty (and therefore within the scope of section 92(1)(a) or (c) of that Act) whether or not duty is in fact chargeable.
(2) The Commissioners may make regulations under section 93 of that Act (warehousing regulations) that relate to a substance specified in subsection (4).
(3) In respect of a substance specified in subsection (4) which has been or is to be deposited in an excise warehouse by virtue of subsection (2), the Commissioners may—
(a) treat the substance, or make provision by regulations for treating the substance, as if duty were chargeable in relation to it by virtue of a specified enactment;
(b) make any regulations, or do any other thing, of a kind that they could make or do (whether or not by virtue of a provision of Part VIII of that Act) in respect of a substance deposited in an excise warehouse under Part VIII of that Act.
(4) The substances referred to in subsection (1) are—
(a) petroleum gas,
(b) animal fat set aside for use as motor fuel or heating fuel,
(c) vegetable fat set aside for use as motor fuel or heating fuel,
(d) non-synthetic methanol set aside for use as motor fuel or heating fuel,
(e) biodiesel,
(f) a mixture of two or more substances specified in paragraphs (a) to (e), and
(g) any other substance specified for the purposes of this section in regulations made by the Commissioners.
(5) In subsection (4)—
(a) “petroleum gas” means any hydrocarbon which—
(i) is gaseous at a temperature of 15°C and under a pressure of 1013.25 millibars, and
(ii) is not natural gas (as defined in paragraph (b) below),
(b) “natural gas” means gas with a methane content of not less than 80%,
(c) “animal fat” means a triglyceride of animal origin,
(d) “vegetable fat” means a triglyceride of vegetable origin, and
(e) “non-synthetic methanol” means methyl alcohol of non-synthetic origin.
(6) Regulations under subsection (4)(g)—
(a) may make provision only if the Commissioners think it necessary or expedient for a purpose connected with Council Directive 92/12/EEC on the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products,
(b) may, in particular, make provision by reference to that Directive or any other EU instrument, and
(c) may, in particular, make provision by reference to the purpose for which a substance is intended to be used.
(1) Section 10 of the Finance Act 1993 (c. 34) (application of Hydrocarbon Oil Duties Act 1979 to certain substances) shall be amended as follows.
(2) In subsection (1) for “mineral oil” substitute “ energy product ”.
(3) In subsection (2)—
(a) after “as the equivalent of hydrocarbon oil” insert “ or road fuel gas ”, and
(b) for “as if it fell within such description of hydrocarbon oil” substitute “ as if it fell within such class or description of substance ”.
(4) In subsection (3)—
(a) for “a mineral oil” substitute “ an energy product ”, and
(b) for “hydrocarbon oil of the description” substitute “ the substance ”.
(5) For subsection (4) substitute—
(4) In this section “energy product” means a substance which—
(a) is an energy product for the purposes of Council Directive 2003/ 96/EC restructuring the Community framework for the taxation of energy products and electricity, and
(b) is not (apart from as a result of this section) hydrocarbon oil or road fuel gas within the meaning of the 1979 Act.
(6) For subsection (6) substitute—
(6) Where a duty of excise is charged on a substance under a provision of the 1979 Act by virtue of an order under this section, no duty shall be charged on the substance under any other provision of that Act.
(7) For the heading substitute “ Extension of Hydrocarbon Oil Duties Act 1979 to energy products ”.
(1) The Betting and Gaming Duties Act 1981 (c. 63) shall be amended as follows.
(2) For section 4 (pool betting, the Tote, &c.) substitute—
Pool betting on horse and dog races
4 (1) General betting duty shall be charged on pool betting which—
(a) relates only to horse racing or dog racing, and
(b) is not on-course betting.
(2) But subsection (1) does not apply to pool betting if—
(a) the promoter is outside the United Kingdom, and
(b) it is conducted otherwise than by means of a totalisator situated in the United Kingdom.
(3) The amount of duty charged under subsection (1) in respect of bets made by means of facilities provided by a person in an accounting period shall be 15 per cent. of the amount of his net stake receipts for the period.
(3) In section 5(7) (net stake receipts) and section 5B(4) (liability to pay) for “section 4(1) to (3)” substitute “ section 4(1) ”.
(4) In section 7B (conditions for charging pool betting duty)—
(a) in subsection (2)(b) omit “the bet is made otherwise than by means of a totalisator and”, and
(b) for subsection (3)(a) and (b) substitute—
(a) made wholly in relation to horse racing or dog racing,
.
(5) In section 9(2)(a) (prohibitions for protection of revenue)—
(a) at the end of sub-paragraph (i) add “ or ”, and
(b) in sub-paragraph (ii) for “in the case of bets made otherwise than by means of a totalisator,” substitute “ in any case, ”.
(6) In section 10(2) (definition of pool betting) for the definition of “totalisator odds” substitute—
“totalisator odds” means the odds paid on bets made—
(a) by means of a totalisator, and
(b) at the scene of the event to which the bets relate.
(7) In section 12(4) (interpretation)—
(a) for the definition of “bookmaker” substitute—
“bookmaker” means a person who—
(a) carries on the business of receiving or negotiating bets or conducting pool betting operations (whether as principal or agent and whether regularly or not), or
(b) holds himself out or permits himself to be held out, in the course of a business, as a person within paragraph (a);
;
(b) for the definition of “on-course bet” substitute—
“on-course bet” has the meaning given by subsection (4A);
, and
(c) omit the definition of “sponsored pool betting”.
(8) After section 12(4) insert—
(4A) A bet is an on-course bet for the purposes of this Part of this Act if it—
(a) is made by a person present at a horse or dog race meeting or by a bookmaker,
(b) is not made through an agent of an individual making the bet or though an intermediary, and
(c) is made—
(i) with a bookmaker present at the meeting, or
(ii) by means of a totalisator situated in the United Kingdom, using facilities provided at the meeting by or by arrangement with the person operating the totalisator.
(9) In paragraph 10(1) of Schedule 1 (betting duties: power of entry) omit the words “, or that facilities for sponsored pool betting on those events are being or are to be provided,”.
(10) The amendments made by this section have effect in relation to accounting periods ending on or after the date of the passing of this Act.
(1) For the Table in section 11(2) of the Finance Act 1997 (c. 16) (rates of gaming duty) substitute—
Table
Part of gross gaming yield | Rate
The first £516,500 | 2.5 per cent.
The next £1,146,500 | 12.5 per cent.
The next £1,146,500 | 20 per cent.
The next £2,007,500 | 30 per cent.
The remainder | 40 per cent.
(2) This section has effect in relation to accounting periods beginning on or after 1st April 2004.
(1) The Vehicle Excise and Registration Act 1994 (c. 22) is amended as follows.
(2) After section 19B insert—
Fee for payment of duty by credit card
19C (1) This section applies where—
(a) a person applies for a vehicle licence or a trade licence, and
(b) the Secretary of State, or an authorised body, accepts a credit card payment in respect of the duty payable on the licence.
(2) Before issuing the licence, the Secretary of State, or the authorised body, shall require—
(a) the applicant, or
(b) a person acting on behalf of the applicant,
to pay to him, or it, such fee (if any) in respect of the acceptance of the credit card payment as may be prescribed by, or determined in accordance with, regulations.
(3) In cases of such descriptions as the Secretary of State may, with the consent of the Treasury, determine, the whole or a part of a fee paid under this section may be refunded.
(4) In this section—
“authorised body” means a body (other than a Northern Ireland department) which is authorised by the Secretary of State to act as his agent for the purpose of issuing licences;
“credit card” has such meaning as may be prescribed by regulations;
“regulations” means regulations made by the Secretary of State.
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(3) In section 58 (fees prescribed by regulations) in subsection (1) (fees prescribed by regulations under certain provisions to be of amount approved by Treasury) for “or 14(4)(b)” substitute “ , 14(4)(b) or 19C(2) ”.
(4) This section has effect in relation to licences issued on or after such day as the Secretary of State may by order made by statutory instrument appoint.
(1) Schedule 2 (which relates to the disclosure of schemes for the avoidance of value added tax) has effect.
(2) Subsection (1) and that Schedule—
(a) come into force on the passing of this Act, so far as is necessary for enabling the making of any orders or regulations by virtue of that Schedule, and
(b) otherwise, come into force on such day as the Treasury may by order made by statutory instrument appoint.
(1) After section 43A of the Value Added Tax Act 1994 (c. 23) (groups: eligibility) insert—
Power to alter eligibility for grouping
43AA (1) The Treasury may by order provide for section 43A to have effect with specified modifications in relation to a specified class of person.
(2) An order under subsection (1) may, in particular—
(a) make provision by reference to generally accepted accounting practice;
(b) define generally accepted accounting practice for that purpose by reference to a specified document or instrument (and may provide for the reference to be read as including a reference to any later document or instrument that amends or replaces the first);
(c) adopt any statutory or other definition of generally accepted accounting practice (with or without modification);
(d) make provision by reference to what would be required or permitted by generally accepted accounting practice if accounts, or accounts of a specified kind, were prepared for a person.
(3) An order under subsection (1) may also, in particular, make provision by reference to—
(a) the nature of a person;
(b) past or intended future activities of a person;
(c) the relationship between a number of persons;
(d) the effect of including a person within a group or of excluding a person from a group.
(4) An order under subsection (1) may—
(a) make provision which applies generally or only in specified circumstances;
(b) make different provision for different circumstances;
(c) include supplementary, incidental, consequential or transitional provision.
(2) After section 43C of that Act insert—
Groups: duplication
43D (1) A body corporate may not be treated as a member of more than one group at a time.
(2) A body which is a member of one group is not eligible by virtue of section 43A to be treated as a member of another group.
(3) If—
(a) an application under section 43B(1) would have effect from a time in accordance with section 43B(4), but
(b) at that time one or more of the bodies specified in the application is a member of a group (other than that to which the application relates),
the application shall have effect from that time, but with the exclusion of the body or bodies mentioned in paragraph (b).
(4) If—
(a) an application under section 43B(2)(a) would have effect from a time in accordance with section 43B(4), but
(b) at that time the body specified in the application is a member of a group (other than that to which the application relates),
the application shall have no effect.
(5) Where a body is a subject of two or more applications under section 43B(1) or (2)(a) that have not been granted or refused, the applications shall have no effect.
(3) In section 43(1) of that Act (effect of treatment as group) for “sections 43A to 43C” substitute “ sections 43A to 43D ”.
(4) In section 43B(1), (2)(a), (5)(a) and (5)(b) and section 43C(3)(b) of that Act (groups: applications for membership and termination of membership) for “under section 43A(1)” substitute “ by virtue of section 43A ”.
(5) In section 97(4) of that Act (orders, &c.: affirmative resolution) after paragraph (c) insert—
(ca) an order under section 43AA(1) if as a result of the order any bodies would cease to be eligible to be treated as members of a group;
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21 Reverse charge on gas and electricity supplied by persons outside UK
(1) After section 9 of the Value Added Tax Act 1994 (c. 23) insert—
Reverse charge on gas and electricity supplied by persons outside the United Kingdom
9A (1) This section applies if relevant goods are supplied—
(a) by a person who is outside the United Kingdom,
(b) to a person who is registered under this Act,
for the purposes of any business carried on by the recipient.
(2) The same consequences follow under this Act (and particularly so much as charges VAT on a supply and entitles a taxable person to credit for input tax) as if—
(a) the recipient had himself supplied the relevant goods in the course or furtherance of his business, and
(b) that supply were a taxable supply.
(3) But supplies which are treated as made by the recipient under subsection (2) are not to be taken into account as supplies made by him when determining any allowance of input tax in his case under section 26(1).
(4) In applying subsection (2) the supply of relevant goods treated as made by the recipient shall be assumed to have been made at a time to be determined in accordance with regulations prescribing rules for attributing a time of supply in cases to which this section applies.
(5) “Relevant goods” means gas supplied through the natural gas distribution network, and electricity.
(6) Whether a person is outside the United Kingdom is to be determined in accordance with an order made by the Treasury.
(2) This section has effect in relation to supplies made on or after 1st January 2005.
22 Use of stock in trade cars for consideration less than market value
(1) The Value Added Tax Act 1994 (c. 23) is amended as follows.
(2) In Schedule 6 (valuation: special cases) after paragraph 1 (supply to connected person at less than market value etc) insert—
1A (1) Where—
(a) the value of a supply made by a taxable person for a consideration is (apart from this sub-paragraph) less than its open market value,
(b) the taxable person is a motor manufacturer or motor dealer,
(c) the person to whom the supply is made is—
(i) an employee of the taxable person,
(ii) a person who, under the terms of his employment, provides services to the taxable person, or
(iii) a relative of a person falling within sub-paragraph (i) or (ii) above,
(d) the supply is a supply of services by virtue of sub-paragraph (4) of paragraph 5 of Schedule 4 (business goods put to private use etc),
(e) the goods mentioned in that sub-paragraph consist of a motor car (whether or not any particular motor car) that forms part of the stock in trade of the taxable person, and
(f) the supply is not one to which paragraph 1 above applies,
the Commissioners may direct that the value of the supply shall be taken to be its open market value.
(2) A direction under this paragraph shall be given by notice in writing to the person making the supply, but no direction may be given more than 3 years after the time of the supply.
(3) A direction given to a person under this paragraph in respect of a supply made by him may include a direction that the value of any supply—
(a) which is made by him after the giving of the notice, or after such later date as may be specified in the notice, and
(b) as to which the conditions in paragraphs (a) to (f) of sub-paragraph (1) above are satisfied,
shall be taken to be its open market value.
(4) In this paragraph—
“motor car” means any motor vehicle of a kind normally used on public roads which has three or more wheels and either—
is constructed or adapted solely or mainly for the carriage of passengers, or
has to the rear of the driver’s seat roofed accommodation which is fitted with side windows or which is constructed or adapted for the fitting of side windows,
but does not include any vehicle excluded by sub-paragraph (5) below;
“motor dealer” means a person whose business consists in whole or in part of obtaining supplies of, or acquiring from another member State or importing, new or second-hand motor cars for resale with a view to making an overall profit on the sale of them (whether or not a profit is made on each sale);
“motor manufacturer” means a person whose business consists in whole or in part of producing motor cars including producing motor cars by conversion of a vehicle (whether a motor car or not);
“relative” means husband, wife, brother, sister, ancestor or lineal descendant;
“stock in trade” means new or second-hand motor cars (other than second-hand motor cars which are not qualifying motor cars within sub-paragraph (6) below) which are—
produced by a motor manufacturer or, as the case may require, supplied to or acquired from another member State or imported by a motor dealer, for the purpose of resale, and
intended to be sold—
by a motor manufacturer within 12 months of their production, or
by a motor dealer within 12 months of their supply, acquisition from another member State or importation, as the case may require,
and such motor cars shall not cease to be stock in trade where they are temporarily put to a use in the motor manufacturer’s or, as the case may be, the motor dealer’s business which involves making them available for private use.
(5) The vehicles excluded by this sub-paragraph are—
(a) vehicles capable of accommodating only one person;
(b) vehicles which meet the requirements of Schedule 6 to the Road Vehicles (Construction and Use) Regulations 1986 and are capable of carrying twelve or more seated persons;
(c) vehicles of not less than three tonnes unladen weight (as defined in the Table to regulation 3(2) of the Road Vehicles (Construction and Use) Regulations 1986);
(d) vehicles constructed to carry a payload (the difference between—
(i) a vehicle’s kerb weight (as defined in the Table to regulation 3(2) of the Road Vehicles (Construction and Use) Regulations 1986), and
(ii) its maximum gross weight (as defined in that Table)),
of one tonne or more;
(e) caravans, ambulances and prison vans;
(f) vehicles constructed for a special purpose other than the carriage of persons and having no other accommodation for carrying persons than such as is incidental to that purpose.
(6) For the purposes of this paragraph a motor car is a “qualifying motor car”if—
(a) it has never been supplied, acquired from another member State, or imported in circumstances in which the VAT on that supply, acquisition or importation was wholly excluded from credit as input tax by virtue of an order under section 25(7) (as at 17th March 2004 see article 7 of the Value Added Tax (Input Tax) Order 1992); or
(b) a taxable person has elected under such an order for it to be treated as such.
(7) The Treasury may by order amend any of the definitions in this paragraph.
.
(3) In section 83(v) (appeal to tribunal with respect to any direction under paragraph 1 or 2 of Schedule 6 etc) after “paragraph 1” insert “ , 1A ”.
(4) In section 97 (orders, rules and regulations) in subsection (4) (orders to which the House of Commons affirmative procedure in subsection (3) applies) after paragraph (e) insert—
(f) an order under paragraph 1A(7) of Schedule 6;
.
(5) The amendment made by subsection (2) applies in relation to any use or availability for use on or after the appointed day (whatever the date of the directions mentioned in paragraph 5(4) of Schedule 4 to the Value Added Tax Act 1994 (c. 23)).
(6) In subsection (5) “the appointed day” means such day as the Treasury may by order made by statutory instrument appoint.
27 Corporation tax starting rate and fraction for financial year 2004
For the financial year 2004—
(a) the corporation tax starting rate shall be 0%, and
(b) the fraction mentioned in section 13AA of the Taxes Act 1988 (marginal relief for small companies) shall be 19/400ths.
33 Provision not at arm’s length: temporary relaxation of liability to penalty
(1) This section has effect in relation to—
(a) the years of assessment 2004-05 and 2005-06, and
(b) accounting periods beginning on or after 1st January 2004 and ending on or before 31st March 2006,
and in the following provisions of this section “relevant period” means any of those years of assessment or accounting periods.
(2) In this section “records relating to an arm’s length provision” means such records as might have been requisite for the purpose of making and delivering a correct and complete return, so far as relating to the determination of the provision asserted to be the arm’s length provision for the purposes of Schedule 28AA to the Taxes Act 1988 in a case where that Schedule applies.
(3) In relation to any relevant period, the following provisions (which provide for penalties for failure to keep and preserve records for purposes of returns)—
(a) section 12B(5) of the Taxes Management Act 1970 (c. 9), and
(b) paragraph 23 of Schedule 18 to the Finance Act 1998 (c. 36),
do not apply if the records which the person in question fails to keep or preserve are records relating to an arm’s length provision.
(4) In the application of subsection (2) in relation to paragraph 23 of Schedule 18 to the Finance Act 1998—
(a) for “requisite” substitute “ needed ”, and
(b) for “making and delivering” substitute “ delivering ”.
(5) Where a person delivers an incorrect return for any relevant period, he shall not be regarded as doing so negligently for the purposes of—
(a) section 95 of the Taxes Management Act 1970, or
(b) paragraph 20 of Schedule 18 to the Finance Act 1998,
by reason only of his failure, or the failure of any other person, to keep or preserve records relating to an arm’s length provision.
(6) For the purposes of section 95A of the Taxes Management Act 1970, where a partner delivers an incorrect partnership return for any relevant period—
(a) he shall not be regarded as doing so negligently, and
(b) his doing so shall not be regarded as attributable to negligent conduct on the part of any relevant partner,
by reason only of his failure, or the failure of any other person, to keep or preserve records relating to an arm’s length provision.
(7) For the purposes of section 99 of the Taxes Management Act 1970 (penalty for assisting in preparation of incorrect documents) a person shall not be taken to know that a return is incorrect by reason only of his failure, or the failure of any other person, to keep or preserve records relating to an arm’s length provision.
(1) In this section “the amending provisions” means—
(a) sections 30 to 32 (transfer pricing);
(b) sections 34 to 36 (thin capitalisation);
(c) Schedule 5 (provision not at arm’s length: related amendments).
(2) The amendments made by those provisions have effect in relation to chargeable periods beginning on or after 1st April 2004 (whenever the actual provision, within the meaning of Schedule 28AA to the Taxes Act 1988, is or was made or imposed).
(3) Where an accounting period of a company begins before, and ends on or after, 1st April 2004, it shall be assumed for the purposes of the amending provisions, the amendments which they make and subsection (2) that that accounting period (“the straddling period”) consists of two separate accounting periods—
(a) the first beginning with the straddling period and ending with 31st March 2004, and
(b) the second beginning with 1st April 2004 and ending with the straddling period,
and the company’s profits and losses shall be computed accordingly for tax purposes.
(4) Where a period of account of any person within the charge to income tax begins before, and ends on or after, 6th April 2004, it shall be assumed for the purposes of the amending provisions, the amendments which they make and subsection (2) that that period (“the straddling period of account”) consists of two separate periods of account—
(a) the first beginning with the straddling period of account and ending with 5th April 2004, and
(b) the second beginning with 6th April 2004 and ending with the straddling period of account,
and the person’s profits and losses shall be computed accordingly for the purposes of income tax.
(1) The amendments made by sections 38 to 41 and Schedule 6 have effect for accounting periods beginning on or after 1st April 2004.
(2) This is subject to the transitional provisions in sections 43 and 44 and that Schedule.