Office of Public Sector Information
PART II continued CHAPTER I continued
(1) In sections 742(8) and 745(4) of the Taxes Act 1988, after the words “incorporated outside the United Kingdom” there shall be inserted the words “, or regarded for the purposes of any double taxation arrangements having effect by virtue of section 788 as resident in a territory outside the United Kingdom,”.
(2) Subject to subsection (3) below, this section shall apply in relation to transfers of assets and associated operations on or after 20th March 1990.
(3) In so far as the amendment of subsection (4) of section 745 relates to subsections (3)(b) and (5) of that section, it shall come into force on that date.
(1) In section 749 of the Taxes Act 1988, after subsection (4) there shall be inserted—
“(4A) For the purposes of this Chapter, any company which, though resident in the United Kingdom, is regarded for the purposes of any double taxation arrangements having effect by virtue of section 788 as resident in a territory outside the United Kingdom shall be treated as if it were resident outside the United Kingdom (and not resident in the United Kingdom).”
(2) In section 751(2) of that Act, after paragraph (b) there shall be inserted—
“(bb) the company becomes, or ceases to be, a company in relation to which section 749(4A) has effect; or”.
(3) In Schedule 25 to that Act—
(a) paragraphs 2(1)(c) and 4(1)(c) shall be omitted,
(b) after paragraph 2(1) there shall be inserted—
“(1A) A payment of dividend to a company shall not fall within sub-paragraph (1)(d) above unless it is taken into account in computing the company’s income for corporation tax.”, and
(c) after paragraph 4(1) there shall be inserted—
“(1A) A payment to a company shall not be a subsequent dividend within the meaning of sub-paragraph (1)(b) above unless it is taken into account in computing the company’s income for corporation tax.”
(4) Subsections (1) and (2) above shall apply on and after 20th March 1990 and subsection (3) above shall apply to dividends paid on or after that date.
(1) In section 765 of the Taxes Act 1988 (certain transactions unlawful unless carried out with Treasury consent), in subsection (1), after the words “Subject to the provisions of this section” there shall be inserted the words “and section 765A”.
(2) After that section there shall be inserted—
(1) Section 765(1) shall not apply to a transaction which is a movement of capital to which Article 1 of the [O.J. No. L178/5.] Directive of the Council of the European Communities dated 24th June 1988 No. 88/361/EEC applies.
(2) Where if that Article did not apply to it a transaction would be unlawful under section 765(1), the body corporate in question (that is to say, the body corporate resident in the United Kingdom) shall—
(a) give to the Board within six months of the carrying out of the transaction such information relating to the transaction, or to persons connected with the transaction, as regulations made by the Board may require, and
(b) where notice is given to the body corporate by the Board, give to the Board within such period as is prescribed by regulations made by the Board (or such longer period as the Board may in the case allow) such further particulars relating to the transaction, to related transactions, or to persons connected with the transaction or related transactions, as the Board may require.”
(3) In section 98 of the [1970 c. 9.] Taxes Management Act 1970 (penalties for failure to furnish information and for false information)—
(a) in subsection (1), after the words “Subject to” there shall be inserted the words “the provisions of this section and”;
(b) after subsection (4) there shall be inserted—
“(5) In the case of a failure to comply with section 765A(2)(a) or (b) of the principal Act, subsection (1) above shall have effect as if for “£300” there were substituted “£3,000” and as if for “£60” there were substituted “£600”.”;
(c) in the first column of the Table, after “section 755” there shall be inserted “section 765A(2)(b);”; and
(d) in the second column of the Table, after “section 639” there shall be inserted “section 765A(2)(a);”.
(4) This section shall apply to transactions carried out on or after 1st July 1990.
Schedule 11 to this Act (which makes provision about the taxation of income and gains in the case of European Economic Interest Groupings) shall have effect.
(1) After section 273 of the Taxes Act 1970 there shall be inserted—
(1) Subject to subsections (3) and (4) below, subsection (2) below applies for the purposes of corporation tax on chargeable gains where—
(a) there is a scheme for the transfer by a company (“company A”)—
(i) which is not resident in the United Kingdom, but
(ii) which carries on a trade in the United Kingdom through a branch or agency,
of the whole or part of the trade to a company resident in the United Kingdom (“company B”),
(b) company A disposes of an asset to company B in accordance with the scheme at a time when the two companies are members of the same group, and
(c) a claim in relation to the asset is made by the two companies within two years after the end of the accounting period of company B during which the disposal is made.
(2) Where this subsection applies—
(a) company A and company B shall be treated as if the asset were acquired by company B for a consideration of such amount as would secure that neither a gain nor a loss would accrue to company A on the disposal, and
(b) section 127(3) of the [1989 c. 26.] Finance Act 1989 shall not apply to the asset by reason of the transfer.
(3) Subsection (2) above does not apply where—
(a) company B, though resident in the United Kingdom,—
(i) is regarded for the purposes of any double taxation arrangements having effect by virtue of section 788 of the Taxes Act 1988 as resident in a territory outside the United Kingdom, and
(ii) by virtue of the arrangements would not be liable in the United Kingdom to tax on a gain arising on a disposal of the asset occurring immediately after its acquisition, or
(b) company B is—
(i) a dual resident investing company, within the meaning of section 404 of the Taxes Act 1988, or
(ii) an investment trust, within the meaning of section 842 of that Act.
(4) Subsection (2) above shall not apply unless any gain accruing to company A—
(a) on the disposal of the asset in accordance with the scheme, or
(b) where that disposal occurs after the transfer has taken place, on a disposal of the asset immediately before the transfer,
would be a chargeable gain and would, by virtue of section 11(2)(b) of the Taxes Act 1988, form part of its profits for corporation tax purposes.
(5) In this section “company” and “group” have the meanings which would be given by section 272 above if subsections (1)(a) and (2) of that section were omitted.”
(2) In section 272(1) of the Taxes Act 1970—
(a) for the word “For” there shall be substituted the words “Except as otherwise provided, for”, and
(b) the words “, subject to section 280(7) below,” shall be omitted.
(3) In section 275 of that Act for subsection (1) there shall be substituted—
“(1) Where there is a disposal of an asset acquired in relevant circumstances, section 34 of the [1979 c. 14.] Capital Gains Tax Act 1979 (restriction of losses by reference to capital allowances) shall apply in relation to capital allowances made to the person from which it was acquired (so far as not taken into account in relation to a disposal of the asset by that person), and so on as respects previous transfers of the asset in relevant circumstances.
(1A) In subsection (1) above “relevant circumstances” means circumstances in which section 273 or 273A above applied or in which section 273 above would have applied but for subsection (2) of that section.
(1B) Subsection (1) above shall not be taken as affecting the consideration for which an asset is deemed under section 273 or 273A to be acquired.”
(4) In section 281(2) of that Act, after the words “section 273” there shall be inserted the words “or 273A”.
(5) In section 126C(4) of the [1979 c. 14.] Capital Gains Tax Act 1979—
(a) after the words “section 273” there shall be inserted the words “or 273A”,
(b) for the words “that section applies” there shall be substituted the words “either of those sections applies”, and
(c) for the words “that section does not apply” there shall be substituted the words “neither of those sections applies”.
(6) In paragraph 10(2)(c) of Schedule 13 to the [1984 c. 43.] Finance Act 1984, after the words “section 273(1)” there shall be inserted the words “or 273A”.
(7) In—
(a) section 68(7A)(b) of the [1985 c. 54.] Finance Act 1985, and
(b) paragraph 1(3)(b) of Schedule 8 to the [1988 c. 39.] Finance Act 1988,
after “273,” there shall be inserted “273A,”.
(8) In paragraph 5 of Schedule 11 to the Finance Act 1988—
(a) for the words “of the Taxes Act 1970 (which treats” there shall be substituted the words “or 273A of the Taxes Act 1970 (which treat”, and
(b) for the words “section 273(1)”, in the second place where they occur, there shall be substituted the words “either of those sections”.
(9) This section shall apply to disposals on or after 20th March 1990.
For the year 1990-91 the qualifying maximum defined in section 367(5) of the Taxes Act 1988 (limit on relief for interest on certain loans) shall be £30,000.
For the year 1990-91 section 5 of the Capital Gains Tax Act 1979 (annual exempt amount) shall have effect as if the amount specified in subsection (1A) were £5,000; and accordingly subsection (1B) of that section (indexation) shall not apply for that year.
(1) In Schedule 4 to the [1988 c. 39.] Finance Act 1988 (business expansion scheme: private rented housing), in paragraph 13 (exclusion of expensive dwelling-houses)—
(a) in sub-paragraph (2) (assumptions to be made in arriving at value at the relevant date), for paragraph (a) there shall be substituted—
“(a) on the assumption that the dwelling-house was in the same state as at the valuation date;”; and
(b) sub-paragraph (3) (which includes the assumption that the locality was in the same state as at the valuation date) shall be omitted.
(2) This section shall apply where the valuation date is on or after 20th March 1990.
After section 88 of the Taxes Act 1988 there shall be inserted—
(1) For any period of account of a company ending on or after 20th March 1990, section 88B shall have effect for the purpose of restricting the extent to which a debt to which subsection (2) below applies may be estimated to be bad for the purposes of section 74(j); and—
(a) any deduction which may fall to be made in computing the company’s profits or gains for the period, and
(b) any addition which may fall to be so made (for example because the relevant percentage of the debt for the period is smaller than the amount estimated to be bad for an earlier period),
shall be determined accordingly.
(2) Subject to subsection (3) below, this subsection applies to any debt—
(a) which is owed by an overseas State authority, or
(b) payment of which is guaranteed by an overseas State authority, or
(c) which is estimated to be bad for the purposes of section 74(j) wholly or mainly because due payment is or may be prevented, restricted or subjected to conditions—
(i) by virtue of any law of a State or other territory outside the United Kingdom or any act of an overseas State authority, or
(ii) under any agreement entered into in consequence or anticipation of such a law or act.
(3) Subsection (2) above does not apply to interest on a debt or to a debt which represents the consideration for the provision of goods or services.
(4) In this section “overseas State authority” means—
(a) a State or other territory outside the United Kingdom,
(b) the government of such a State or territory,
(c) the central bank or other monetary authority of such a State or territory,
(d) a public or local authority in such a State or territory, or
(e) a body controlled by such a State, territory, government, bank or authority;
and for this purpose “controlled” shall be construed in accordance with section 840.
(1) Where this section has effect in relation to a debt, no more than the relevant percentage of the debt shall be estimated to be bad for the purposes of section 74(j).
(2) The relevant percentage of a debt for any period of account of the company is such percentage (which may be zero) as may be determined in accordance with regulations by reference to the position at the end of that period.
(3) Subsection (2) above has effect subject to the following provisions of this section, and in those provisions—
(a) “the base period” means the last period of account of the company ending before 20th March 1990, and
(b) “the base percentage”, in relation to a debt, means such percentage (which may be zero) as may be determined in accordance with regulations by reference to the position at the end of the base period.
(4) If for any period of account of the company which ends less than two years after the base period the percentage provided for in subsection (2) above in relation to a debt is greater than the base percentage, the base percentage shall be the relevant percentage for the first-mentioned period.
(5) If for any later period of account of the company the percentage provided for in subsection (2) above in relation to a debt is greater than the base percentage increased by five percentage points for each complete year (except the first) that has elapsed between—
(a) the end of the base period, and
(b) the end of the later period in question,
then the base percentage as so increased shall be the relevant percentage for the later period.
(6) In relation to a company which had no periods of account ending before 20th March 1990, the relevant percentage in relation to a debt shall be the same as it would have been on the assumption that the company had had such periods of account (and that any notional periods of account before its first actual period of account had been of one year each).
(7) In this section “regulations” means regulations made by the Treasury; but the Treasury shall not make any regulations under this section unless a draft of them has been laid before and approved by a resolution of the House of Commons.
(1) Where—
(a) on or after 20th March 1990 a company incurs in respect of a debt a loss which would be allowed as a deduction in computing the amount of the company’s profits or gains under Case I or Case II of Schedule D,
(b) section 88A(2) applies to the debt,
(c) either—
(i) a deduction is made in respect of the debt in accordance with section 74(j) for any period of account of the company before that in which the loss is incurred, or
(ii) the debt was acquired by the company on or after 20th March 1990 for a consideration greater than the price which it might reasonably have been expected to fetch on a sale in the open market at the time of acquisition, and
(d) the amount of the loss is greater than 5 per cent. of the debt,
then, subject to subsection (3) below, only such part of the loss as equals 5 per cent. of the debt shall be allowed as a deduction for the period of account in which the loss is incurred; but further parts calculated in accordance with subsection (2) below may be allowed for subsequent periods until the loss is exhausted.
(2) The part of the loss allowed as a deduction for any period of account after that in which the loss is incurred shall not exceed such amount as, together with any parts allowed under this section for earlier periods, is equal to 5 per cent. of the debt for each complete year that has elapsed between—
(a) the beginning of the period in which the loss was incurred, and
(b) the end of the period in question.
(3) Subsections (1) and (2) above shall not apply to a loss incurred on a disposal of the debt to an overseas State authority if the State or territory by reference to which it is an overseas State authority is the same as that by reference to which section 88A(2) applies to the debt.
(4) References in subsections (1) and (2) above to the incurring of a loss in respect of a debt include references to the making of a deduction, otherwise than in accordance with section 74(j), in respect of a reduction in the value of a debt; and for the purposes of those subsections such a deduction shall be treated as made immediately before the end of the period of account for which it is made.”
In section 79(11) of the Taxes Act 1988 (contributions to local enterprise agencies made before 1st April 1992 to be deductible as expenses), for “1992” there shall be substituted “1995”.
After section 79 of the Taxes Act 1988 there shall be inserted—
(1) Notwithstanding anything in section 74, but subject to the provisions of this section, where a person carrying on a trade, profession or vocation makes any contribution (whether in cash or in kind) to a training and enterprise council or a local enterprise company, any expenditure incurred by him in making the contribution may be deducted as an expense in computing the profits or gains of the trade, profession or vocation for the purposes of tax if it would not otherwise be so deductible.
(2) Where any such contribution is made by an investment company any expenditure allowable as a deduction under subsection (1) above shall for the purposes of section 75 be treated as expenses of management.
(3) Subsection (1) above does not apply in relation to a contribution made by any person if either he or any person connected with him receives or is entitled to receive a benefit of any kind whatsoever for or in connection with the making of that contribution, whether from the council or company concerned or from any other person.
(4) In any case where—
(a) relief has been given under subsection (1) above in respect of a contribution, and
(b) any benefit received in any chargeable period by the contributor or any person connected with him is in any way attributable to that contribution,
the contributor shall in respect of that chargeable period be charged to tax under Case I or Case II of Schedule D, or if he is not chargeable to tax under either of those Cases for that period under Case VI of Schedule D, on an amount equal to the value of that benefit.
(5) In this section—
(a) “training and enterprise council” means a body with which the Secretary of State has made an agreement (not being one which has terminated) under which it is agreed that the body shall carry out the functions of a training and enterprise council, and
(b) “local enterprise company” means a company with which an agreement (not being one which has terminated) under which it is agreed that the company shall carry out the functions of a local enterprise company has been made by the Scottish Development Agency, the Highlands and Islands Development Board, Scottish Enterprise or Highlands and Islands Enterprise.
(6) Section 839 applies for the purposes of subsections (3) and (4) above.
(7) This section applies to contributions made on or after 1st April 1990 and before 1st April 1995.”
The following section shall be inserted after section 201 of the Taxes Act 1988—
(1) Where emoluments of an employment to which this section applies fall to be charged to tax for a year of assessment for which this section applies, there may be deducted from the emoluments of the employment to be charged to tax for the year—
(a) fees falling within subsection (2) below, and
(b) any additional amount paid by the employee in respect of value added tax charged by reference to those fees.
(2) Fees fall within this subsection if—
(a) they are paid by the employee to another person,
(b) they are paid under a contract made between the employee and the other person, who agrees under the contract to act as an agent of the employee in connection with the employment,
(c) at each time any of the fees are paid the other person carries on an employment agency with a view to profit and holds a current licence for the agency,
(d) they are calculated as a percentage of the emoluments of the employment or as a percentage of part of those emoluments, and
(e) they are defrayed out of the emoluments of the employment falling to be charged to tax for the year concerned.
(3) For the purposes of subsection (2) above—
(a) “employment agency” means an employment agency within the meaning given by section 13(2) of the [1973 c. 35.] Employment Agencies Act 1973, and
(b) a person holds a current licence for an employment agency if he holds a current licence under that Act authorising him to carry on the agency.
(4) The amount which may be deducted by virtue of this section shall not exceed 17.5 per cent. of the emoluments of the employment falling to be charged to tax for the year concerned.
(5) This section applies to employment as an actor, singer, musician, dancer or theatrical artist.
(6) This section applies for the year 1990–91 and subsequent years of assessment.”
The following sections shall be inserted after section 91 of the Taxes Act 1988—
(1) This section applies where on or after 6th April 1989 a person makes a site restoration payment in the course of carrying on a trade.
(2) Subject to subsection (3) below, for the purposes of income tax or corporation tax the payment shall be allowed as a deduction in computing the profits or gains of the trade for the period of account in which the payment is made.
(3) Subsection (2) above shall not apply to so much of the payment as—
(a) represents expenditure which has been allowed as a deduction in computing the profits or gains of the trade for any period of account preceding the period of account in which the payment is made, or
(b) represents capital expenditure in respect of which an allowance has been, or may be, made under the enactments relating to capital allowances.
(4) For the purposes of this section a site restoration payment is a payment made—
(a) in connection with the restoration of a site or part of a site, and
(b) in order to comply with any condition of a relevant licence, or any condition imposed on the grant of planning permission to use the site for the carrying out of waste disposal activities, or any term of a relevant agreement.
(5) For the purposes of this section waste disposal activities are the collection, treatment, conversion and final depositing of waste materials, or any of those activities.
(6) For the purposes of this section a relevant licence is—
(a) a disposal licence under Part I of the [1974 c. 40.] Control of Pollution Act 1974 or Part II of the [S.I. 1978/1049 (N.I. 19).] Pollution Control and Local Government (Northern Ireland) Order 1978, or
(b) a waste management licence under Part II of the Environmental Protection Act 1990 or any corresponding provision for the time being in force in Northern Ireland.
(7) For the purposes of this section a relevant agreement is an agreement made under section 52 of the [1971 c. 78.] Town and Country Planning Act 1971, section 50 of the [1972 c. 52.] Town and Country Planning (Scotland) Act 1972 or section 106 of the [1990 c. 8.] Town and Country Planning Act 1990 (all of which relate to agreements regulating the development or use of land) or under any provision corresponding to section 106 of the Town and Country Planning Act 1990 and for the time being in force in Northern Ireland.
(8) For the purposes of this section a period of account is a period for which an account is made up.
(1) This section applies where a person—
(a) incurs, in the course of carrying on a trade, site preparation expenditure in relation to a waste disposal site (the site in question),
(b) holds, at the time the person first deposits waste materials on the site in question, a relevant licence which is then in force,
(c) makes a claim for relief under this section in such form as the Board may direct, and
(d) submits such plans and other documents (if any) as the Board may require;
and it is immaterial whether the expenditure is incurred before or after the coming into force of this section.
(2) In computing the profits or gains of the trade for a period of account ending after 5th April 1989, the allowable amount shall be allowed as a deduction for the purposes of income tax or corporation tax.
(3) In relation to a period of account (the period in question) the allowable amount shall be determined in accordance with the formula—
A is the site preparation expenditure incurred by the person at any time before the beginning of, or during, the period in question—
(a) in relation to the site in question, and
(b) in the course of carrying on the trade;
but this subsection is subject to subsections (5) and (9) below.
(5) A does not include any expenditure—
(a) which has been allowed as a deduction in computing the profits or gains of the trade for any period of account preceding the period in question, or
(b) which constitutes capital expenditure in respect of which an allowance has been, or may be, made under the enactments relating to capital allowances.
(6) B is an amount equal to any amount allowed as a deduction under this section, if allowed—
(a) in computing the profits or gains of the trade for any period of account preceding the period in question, and
(b) as regards expenditure incurred in relation to the site in question;
and if different amounts have been so allowed as regards different periods, B is the aggregate of them.
(7) C is the volume of waste materials deposited on the site in question during the period in question; but if the period is one beginning before 6th April 1989 C shall be reduced by the volume of any waste materials deposited on the site during the period but before that date.
(8) D is the capacity of the site in question not used up for the deposit of waste materials, looking at the state of affairs at the end of the period in question.
(9) Where any of the expenditure which would be included in A (apart from this subsection) was incurred before 6th April 1989, A shall be reduced by an amount determined in accordance with the formula—
Finance Act 1990