Office of Public Sector Information
PART III continued CHAPTER IV continued
Milk quotas (that is, rights to sell dairy produce without being liable to pay milk levy or to deliver dairy produce without being liable to pay a contribution to milk levy) and potato quotas (that is, rights to produce potatoes without being liable to pay more than the ordinary contribution to the Potato Marketing Board’s fund).”
(2) Subsection (1)(a) above shall apply where the disposal of the old assets (or an interest in them) or the acquisition of the new assets (or an interest in them) takes place on or after 28th July 1987; and subsection (1)(b) above shall apply where the disposal of the old assets (or an interest in them) or the acquisition of the new assets (or an interest in them) takes place on or after 30th October 1987.
(1) The provisions specified in subsection (2) below (which provide for an indexation allowance on the disposal of assets) shall not apply in the case of—
(a) shares in a building society within the meaning of the [1986 c. 53.] Building Societies Act 1986, or
(b) shares in a registered industrial and provident society as defined in section 486 of the Taxes Act 1988.
(2) The provisions referred to in subsection (1) above are—
(a) in the [1982 c. 39.] Finance Act 1982, sections 86(4) and 87 and, in Schedule 13, paragraphs 1 to 7, 8(2)(c) and 10(3); and
(b) in the [1985 c. 54.] Finance Act 1985, section 68(4) to (8) and, in Schedule 19, paragraphs 1(3), 2, 5, 7(3), 8(1)(b) and (c), 11 to 15, 18, 22 and 23.
(3) This section shall apply to disposals on or after 4th July 1987.
Schedule 11 to this Act (which makes provision removing or restricting indexation allowance in the case of certain disposals by companies of debts or shares) shall have effect.
(1) In section 273 of the Taxes Act 1970 (which treats certain intra-group transactions as producing neither a gain nor a loss) after subsection (2) there shall be inserted—
“(2A) Subsection (1) above shall not apply to a transaction treated by virtue of sections 78 and 85 of the [1979 c. 14.] Capital Gains Tax Act 1979 as not involving a disposal by the company first mentioned in that subsection.”
(2) This section shall apply to transactions on or after 15th March 1988.
The following subsection shall be inserted after subsection (2) of section 149D of the Capital Gains Tax Act 1979—
“(2A) Regulations under this section may include provision securing that losses are disregarded for the purposes of capital gains tax where they accrue on the disposal of investments on or after 18th January 1988.”
(1) In section 842 of the Taxes Act 1988 (definition of “investment trust”)—
(a) before paragraph (a) of subsection (1) there shall be inserted—
“(aa) that the company is resident in the United Kingdom; and”;
(b) for paragraph (c) of that subsection there shall be substituted—
“(c) that the shares making up the company’s ordinary share capital (or, if there are such shares of more than one class, those of each class) are quoted on the Stock Exchange; and”; and
(c) after that subsection there shall be inserted—
“(1A) For the purposes of paragraph (b) of subsection (1) above and the other provisions of this section having effect in relation to that paragraph—
(a) holdings in companies which are members of a group (whether or not including the investing company) and are not excluded from that paragraph shall be treated as holdings in a single company; and
(b) where the investing company is a member of a group, money owed to it by another member of the group shall be treated as a security of the latter held by the investing company and accordingly as, or as part of, the holding of the investing company in the company owing the money;
and for the purposes of this subsection “group” means a company and all companies which are its 51 per cent. subsidiaries.”
(2) The repeal by the [1987 c. 51.] Finance (No. 2) Act 1987 of section 93 of the [1972 c. 41.] Finance Act 1972 shall be treated as not having extended to subsection (6) of that section (amendment of definition of “investment trust” in section 359 of the Taxes Act 1970).
(3) For section 266(4) of the [1985 c. 6.] Companies Act 1985 there shall be substituted—
“(4) Subsections (1A) to (3) of section 842 of the [1988 c. 1.] Income and Corporation Taxes Act 1988 apply for the purposes of subsection (2)(b) above as for those of subsection (1)(b) of that section.”;
and for Article 274(4) of the [S.I. 1986/1032 (N.I. 6).] Companies (Northern Ireland) Order 1986 there shall be substituted—
“(4) Subsections (1A) to (3) of section 842 of the Income and Corporation Taxes Act 1988 apply for the purposes of paragraph (2)(b) as for those of subsection (1)(b) of that section.”
(4) Subsections (1) and (3) above shall have effect for companies' accounting periods ending after 5th April 1988 and subsection (2) above shall have effect for companies' accounting periods ending on or before that date.
(1) In relation to disposals on or after 6th April 1988 section 68 of the [1985 c. 54.] Finance Act 1985 (indexation allowance) shall have effect subject to the following amendments.
(2) The following subsection shall be inserted after subsection (5)—
“(5A) If under subsection (4) above it is to be assumed that any asset was on 31st March 1982 sold by the person making the disposal and immediately re-acquired by him, sections 34 and 39 of the [1979 c. 14.] Capital Gains Tax Act 1979 shall apply in relation to any capital allowance or renewals allowance made in respect of the expenditure actually incurred by him in providing the asset as if it were made in respect of expenditure which, on that assumption, was incurred by him in re-acquiring the asset on 31st March 1982.”
(3) In subsection (7) for the words from “section 267” to “1983” there shall be substituted “any of the enactments specified in subsection (7A) below”.
(4) The following subsection shall be inserted after that subsection—
“(7A) The enactments mentioned in subsection (7) above are—
(a) sections 44, 56, 123A, 146(3), 147(4), 148 and 149A of the Capital Gains Tax Act 1979;
(b) sections 267, 273, 340(7), 342, 342A, 342B, 343(5) and 352(7) of the [1970 c. 10.] Income and Corporation Taxes Act 1970;
(c) section 148 of the [1982 c. 39.] Finance Act 1982;
(d) section 7 of the [1983 c. 49.] Finance (No.2) Act 1983;
(e) paragraph 2 of Schedule 2 to the [1985 c. 58.] Trustee Savings Banks Act 1985;
(f) section 486(8) of the Taxes Act; and
(g) paragraph 4 of Schedule 12 to the Finance Act 1988.”
(1) Section 29 of the [1970 c. 9.] Taxes Management Act 1970 (assessment procedure) shall have effect subject to the following amendments.
(2) In subsection (1), after paragraph (b) there shall be added—
“(c) where income tax is charged for a year of assessment in respect of income arising in that year, the inspector may make an assessment during that year to the best of his judgment, by reference to actual income or estimated income (whether from any particular source or generally) or partly by reference to one and partly by reference to the other.”
(3) After subsection (1) there shall be inserted—
“(1A) Where an assessment is made by virtue of subsection (1)(c) above, any necessary adjustments shall be made after the end of the year (whether by way of assessment, repayment of tax or otherwise) to secure that tax is charged in respect of income actually arising in the year.”
(1) For section 7 of the Taxes Management Act 1970 there shall be substituted—
(1) Every person who is chargeable to income tax for any year of assessment and has neither—
(a) delivered a return of his profits or gains or his total income for that year, nor
(b) received a notice under section 8 of this Act requiring such a return,
shall, subject to subsections (2) to (5) below, within twelve months from the end of that year, give notice to the inspector that he is so chargeable, specifying each separate source of income.
(2) A source of income is excluded for the purposes of subsection (1) above in relation to any year of assessment if—
(a) all payments of, or on account of, income from it during that year, and
(b) all income from it for that year which does not consist of payments,
have or has been taken into account in the making of deductions or repayments of tax under section 203 of the principal Act.
(3) A source of income is excluded for the purposes of subsection (1) above in relation to any person and any year of assessment if all income from it for that year has been assessed or has been taken into account—
(a) in determining that person’s liability to tax, or
(b) in the making of deductions or repayments of tax under section 203 of the principal Act.
(4) A source of income is excluded for the purposes of subsection (1) above in relation to any person and any year of assessment if all income from it for that year is—
(a) income from which income tax has been deducted;
(b) income from or on which income tax is treated as having been deducted or paid (not being income consisting of a payment to which section 559 of the principal Act applies); or
(c) income chargeable under Schedule F,
and that person is not for that year liable to tax at a rate other than basic rate.
(5) A person shall not be required to give notice under subsection (1) above in respect of a year of assessment if and to the extent that his total income for that year consists of income from sources—
(a) which are excluded under subsections (2) to (4) above, or
(b) in respect of income from which he could not become liable to tax under assessments made more than twelve months after the end of that year.
(6) If any person, for any year of assessment, fails to comply with subsection (1) above as respects any source of income, he shall be liable to a penalty not exceeding the amount of the tax for which he is liable, in respect of income from that source for that year, under assessments made more than twelve months after the end of that year.
(7) In the case of a partner, the reference in subsection (6) above to the tax for which he is liable in respect of income from any source does not include a reference to tax assessable in the name of the partnership on so much of the income from that source as falls to be included in the total income of any other person.”
(2) This section has effect with respect to notices required to be given for the year 1988-89 or any subsequent year of assessment.
(1) For section 10 of the [1970 c. 9.] Taxes Management Act 1970 there shall be substituted—
(1) Every company which is chargeable to corporation tax for any accounting period and has neither—
(a) made a return of its profits for that period, nor
(b) received a notice under section 11 of this Act requiring such a return,
shall, within twelve months from the end of that period, give notice to the inspector that it is so chargeable.
(2) If any company, for any accounting period ending on or before the appointed day, fails to comply with subsection (1) above, it shall be liable to a penalty not exceeding the amount of the corporation tax for which it is liable, in respect of its profits for that period, under assessments made more than twelve months after the end of that period.
(3) If any company, for any accounting period ending after the appointed day, fails to comply with subsection (1) above, it shall be liable to a penalty not exceeding the amount by which so much of the corporation tax chargeable on its profits for that period as remains unpaid twelve months after the end of that period exceeds any income tax borne by deduction from payments included in those profits.
(4) In determining—
(a) for the purposes of subsection (2) above, for how much corporation tax a company is liable, in respect of its profits for an accounting period, under assessments made more than twelve months after the end of that period; or
(b) for the purposes of subsection (3) above, how much of the corporation tax chargeable on the profits of a company for an accounting period remained unpaid at the time of any failure to comply with subsection (1) above,
no account shall be taken of the discharge of any liability for that tax which, pursuant to a claim under subsection (3) of section 239 of the principal Act, is attributable to an amount of surplus advance corporation tax, as defined in that subsection.
(5) In this section “the appointed day” means the day appointed for the purposes of section 8(3) of the principal Act.”
(2) This section has effect with respect to notices required to be given in respect of accounting periods ending after 31st March 1989.
(1) Immediately before section 12 of the [1970 c. 9.] Taxes Management Act 1970 there shall be inserted—
(1) Every person who is chargeable to capital gains tax for any year of assessment and has neither—
(a) delivered a return of his chargeable gains for that year, nor
(b) received a notice under section 8 of this Act requiring such a return,
shall, within twelve months from the end of that year, give notice to the inspector that he is so chargeable; but a person all of whose chargeable gains for a year of assessment have been assessed shall not be required to give notice under this subsection in respect of that year.
(2) If any person, for any year of assessment, fails to comply with subsection (1) above, he shall be liable to a penalty not exceeding the amount of the tax for which he is liable, in respect of his chargeable gains for that year, under assessments made more than twelve months after the end of that year.
(3) In this section references to a person’s chargeable gains for a year of assessment include, if section 45(1) of the [1979 c. 14.] Capital Gains Tax Act 1979 applies in relation to him and his wife in that year, her chargeable gains for that year.”
(2) For subsection (1) of section 12 of that Act (information about chargeable gains) there shall be substituted—
“(1) Section 8 of this Act shall apply in relation to capital gains tax as it applies in relation to income tax, and subject to any necessary modifications.”
(3) This section has effect with respect to notices required to be given for the year 1988-89 or any subsequent year of assessment.
(1) At the end of section 13 of the [1970 c. 9.] Taxes Management Act 1970 (returns by persons in receipt of taxable income belonging to others) there shall be added—
“(3) A notice under this section shall not require information as to any money, value, profits or gains received in a year of assessment ending more than three years before the date of the giving of the notice.”
(2) In section 17(1) of that Act (interest paid or credited by banks etc. without deduction of income tax) after the words “during a year” there shall be inserted the words “of assessment”.
(3) In section 18 of that Act (particulars of interest paid without deduction of income tax) after subsection (3) there shall be inserted—
“(3A) A notice under this section shall not require information with respect to interest paid in a year of assessment ending more than three years before the date of the giving of the notice.”
(4) At the end of section 19 of that Act (information for the purposes of Schedule A etc.) there shall be added—
“(4) A notice under this section shall not require information with respect to—
(a) the terms applying to the lease, occupation or use of the land, or
(b) consideration given, or
(c) payments arising,
in a year of assessment ending more than three years before the date of the giving of the notice.”
(5) This section has effect with respect to notices given after the passing of this Act.
(1) At the end of section 16 of the [1970 c. 9.] Taxes Management Act 1970 (fees, commissions etc.) there shall be added—
“(8) In subsection (2) above references to a body of persons include references to any department of the Crown, any public or local authority and any other public body.”
(2) This section has effect with respect to payments made in the year 1988-89 or any subsequent year of assessment.
After section 18 of the Taxes Management Act 1970 there shall be inserted—
(1) Any person by whom any payment out of public funds is made by way of grant or subsidy shall, on being so required by a notice given to him by an inspector, furnish to the inspector, within the time limited by the notice—
(a) the name and address of the person to whom the payment has been made or on whose behalf the payment has been received, and
(b) the amount of the payment so made or received,
and any person who receives any such payment on behalf of another person shall on being so required furnish to the inspector the name and address of the person on whose behalf the payment has been received, and its amount.
(2) Any person by whom licences or approvals are issued or a register is maintained shall, on being so required by a notice given to him by an inspector, furnish to the inspector, within the time limited by the notice—
(a) the name and address of any person who is or has been the holder of a licence or approval issued by the first-mentioned person, or to whom an entry in that register relates or related; and
(b) particulars of the licence or entry.
(3) The persons to whom this section applies include any department of the Crown, any public or local authority and any other public body.
(4) A notice is not to be given under this section unless (in the inspector’s reasonable opinion) the information required is or may be relevant to any tax liability to which a person is or may be subject, or the amount of any such liability.
(5) A notice under this section shall not require information with respect to a payment which was made, or to a licence, approval or entry which ceased to subsist—
(a) before 6th April 1988; or
(b) in a year of assessment ending more than three years before the date of the giving of the notice.
(6) For the purposes of this section a payment is a payment out of public funds if it is provided directly or indirectly by the Crown, by any Government, public or local authority whether in the United Kingdom or elsewhere or by any Community institution.”
(1) In subsection (4)(b) of section 20 of the [1970 c. 9.] Taxes Management Act 1970 (persons who may be required to produce documents relating to liability of taxpayer arising from business), for the words from “and any company” onwards there shall be substituted the words “any company, whether carrying on a business or not, and the Director of Savings”.
(2) In subsection (7) of that section, for the words “this section”, in the first place where they occur, there shall be substituted the words “subsection (1) or (3) above”.
(3) After subsection (8) of that section there shall be inserted—
“(8A) If, on an application made by an inspector and authorised by order of the Board, a Special Commissioner gives his consent, the inspector may give such a notice as is mentioned in subsection (3) above but without naming the taxpayer to whom the notice relates; but such a consent shall not be given unless the Special Commissioner is satisfied—
(a) that the notice relates to a taxpayer whose identity is not known to the inspector or to a class of taxpayers whose individual identities are not so known;
(b) that there are reasonable grounds for believing that the taxpayer or any of the class of taxpayers to whom the notice relates may have failed or may fail to comply with any provision of the Taxes Acts;
(c) that any such failure is likely to have led or to lead to serious prejudice to the proper assessment or collection of tax; and
(d) that the information which is likely to be contained in the documents to which the notice relates is not readily available from another source.
(8B) A person to whom there is given a notice under subsection (8A) above may, by notice in writing given to the inspector within thirty days after the date of the notice under that subsection, object to that notice on the ground that it would be onerous for him to comply with it; and if the matter is not resolved by agreement, it shall be referred to the Special Commissioners, who may confirm, vary or cancel that notice.”
(4) In section 20B of that Act—
(a) in subsection (1), for the words “section 20(1) or (3)” there shall be substituted the words “section 20(1), (3) or (8A)” and for the words “section 20(7)” there shall be substituted the words “section 20(7) or (8A)”; and
(b) in subsections (2), (4), (8) and (9), after the words “section 20(3)”, in each place where they occur, there shall be inserted the words “or (8A)”.
(5) In consequence of the amendment made by subsection (1) above, at the end of section 12(3) of the [1971 c. 29.] National Savings Bank Act 1971 (provisions which override prohibition on disclosure of information) there shall be added the words “and of section 20(4)(b) of that Act (persons who may be required to produce documents relating to liability of taxpayer arising from business)”.
(6) The amendments made by this section have effect with respect to notices given after the passing of this Act.
(1) Any provision made by or under the Taxes Acts which requires a person—
(a) to produce, furnish or deliver any document or cause any document to be produced, furnished or delivered; or
(b) to permit the Board, or an inspector or other officer of the Board—
(i) to inspect any document, or
(ii) to make or take extracts from or copies of or remove any document,
shall have effect as if any reference in that provision to a document were a reference to a document within the meaning of Part I of the [1968 c. 64.] Civil Evidence Act 1968; and, accordingly, any reference in such a provision to a copy of a document shall be construed in accordance with section 10(2) of that Act.
(2) In connection with tax, a person authorised by the Board to exercise the powers conferred by this subsection—
(a) shall be entitled at any reasonable time to have access to, and inspect and check the operation of, any computer and any associated apparatus or material which is or has been in use in connection with any document to which this subsection applies; and
(b) may require—
(i) the person by whom or on whose behalf the computer is or has been so used, or
(ii) any person having charge of, or otherwise concerned with the operation of, the computer, apparatus, or material,
to afford him such reasonable assistance as he may require for the purposes of paragraph (a) above.
(3) Subsection (2) above applies to any document, within the meaning of Part I of the Civil Evidence Act 1968, which a person is or may be required by or under any provision of the Taxes Acts—
(a) to produce, furnish or deliver, or cause to be produced, furnished or delivered; or
(b) to permit the Board, or an inspector or other officer of the Board, to inspect, make or take extracts from or copies of or remove.
(4) Any person who—
(a) obstructs a person authorised under subsection (2) above in the exercise of his powers under paragraph (a) of that subsection, or
(b) fails to comply within a reasonable time with a requirement under paragraph (b) of that subsection,
shall be liable to a penalty not exceeding £500.
(5) In the application of this section to Scotland and Northern Ireland, references in this section to Part I of the [1968 c. 64.] Civil Evidence Act 1968 and section 10(2) of that Act shall be construed—
(a) in the case of Scotland, as references to Part III of the [1968 c. 70.] Law Reform (Miscellaneous Provisions) (Scotland) Act 1968 and section 17(4) of that Act respectively; and
(b) in the case of Northern Ireland, as references to Part I of the [1971 c. 36 (N.I.).] Civil Evidence Act (Northern Ireland) 1971 and section 6(2) of that Act respectively.
(6) This section shall be construed as if it were contained in the [1970 c. 9.] Taxes Management Act 1970.
(1) In subsection (2) of section 203 of the Taxes Act 1988 (pay as you earn), for paragraph (d) there shall be substituted—
“(d) for requiring the payment of interest on sums due to the Board which are not paid by the due date, for determining the date (being not less than 14 days after the end of the year of assessment in respect of which the sums are due) from which such interest is to be calculated and for enabling the repayment or remission of such interest;
(dd) for requiring the payment of interest on sums due from the Board and for determining the date (being not less than one year after the end of the year of assessment in respect of which the sums are due) from which such interest is to be calculated;”.
(2) At the end of that section there shall be added—
“(9) Interest required to be paid by regulations under subsection (2) above shall be paid without any deduction of income tax and shall not be taken into account in computing any income, profits or losses for any tax purposes.”
(1) After section 97 of the Taxes Management Act 1970 there shall be inserted—
Where two or more penalties—
(a) are incurred by any person and fall to be determined by reference to any income tax or capital gains tax with which he is chargeable for a year of assessment; or
(b) are incurred by any company and fall to be determined by reference to any corporation tax with which it is chargeable for an accounting period,
each penalty after the first shall be so reduced that the aggregate amount of the penalties, so far as determined by reference to any particular part of the tax, does not exceed whichever is or, but for this section, would be the greater or greatest of them, so far as so determined.”
(2) Section 97A(a) of that Act has effect with respect to the year 1988-89 or any subsequent year of assessment; and section 97A(b) has effect with respect to accounting periods ending after 31st March 1989.
(1) The requirements of subsections (2) and (3) below must be satisfied before a company ceases to be resident in the United Kingdom otherwise than in pursuance of a Treasury consent.
(2) The requirements of this subsection are satisfied if the company gives to the Board—
(a) notice of its intention to cease to be resident in the United Kingdom, specifying the time (“the relevant time”) when it intends so to cease;
(b) a statement of the amount which, in its opinion, is the amount of the tax which is or will be payable by it in respect of periods beginning before that time; and
(c) particulars of the arrangements which it proposes to make for securing the payment of that tax.
Finance Act 1988