Office of Public Sector Information
PART III continued I continued
(1) After section 736 of the Taxes Act 1988 there shall be inserted—
Schedule 23A to this Act shall have effect in relation to certain cases where under a contract or other arrangements for the transfer of shares or other securities a person is required to pay to the other party an amount representative of a dividend or payment of interest on the securities.”
(2) The enactments mentioned in Schedule 13 to this Act shall have effect with the amendments there specified.
(3) This section shall have effect in relation to payments made on or after such day as the Treasury may specify for this purpose by regulations made by statutory instrument and different days may be so appointed for different provisions or different purposes.
(1) The [1990 c. 1.] Capital Allowances Act 1990 shall have effect with the amendments specified in Schedule 14 to this Act.
(2) The amendments made by that Schedule shall have effect in relation to any chargeable period or its basis period ending on or after 6th April 1990.
(1) The Capital Allowances Act 1990 shall be amended as follows.
(2) Part I (industrial buildings and structures) shall be amended as mentioned in subsections (3) to (6) below.
(3) In section 3 (writing-down allowances) there shall be inserted at the end—
“(5) For the purposes of this section, a person entitled to charge tolls in respect of a road shall be treated as having an interest in the road.”
(4) In section 18 (definition of “industrial structure”) in subsection (1), after paragraph (d) there shall be inserted—
“(da) for the purposes of a toll road undertaking; or”.
(5) In section 20 (meaning of “relevant interest”) after subsection (4) there shall be inserted—
“(5) For the purposes of subsections (1) and (2) above, in their application to expenditure incurred on the construction of a toll road, the right to charge tolls in respect of the road shall not be treated as an interest in the road.
(6) Where, in the case of expenditure incurred on the construction of a toll road, the person who incurred the expenditure—
(a) was not for the purposes of subsections (1) and (2) above entitled to an interest in the road when he incurred the expenditure, but
(b) was at that time entitled to charge tolls in respect of the road,
“the relevant interest” means, in relation to that expenditure, the right to charge tolls in respect of the road.”
(6) In section 21 (interpretation) after subsection (5) there shall be inserted—
“(5A) For the purposes of this Part, the carrying on of a toll road undertaking shall be treated as the carrying on of an undertaking by way of trade; and accordingly, references in this Part (except sections 17 and 18) to a trade shall be treated as including references to an undertaking treated by virtue of this subsection as carried on by way of trade.
(5B) For the purposes of this Part, a person carrying on a toll road undertaking shall be treated as occupying for the purposes of the undertaking any toll road comprised in it.”
(7) Part VIII (supplementary provisions) shall be amended as mentioned in subsections (8) and (9) below.
(8) In section 140 (income tax allowances and charges in taxing a trade etc.) at the end there shall be inserted—
“(11) In the application of this section to allowances and charges which fall to be made under the provisions of Part I, references to a trade shall be treated as including references to an undertaking treated by virtue of section 21(5A) as carried on by way of trade.”
(9) In section 144 (corporation tax allowances and charges in taxing a trade) at the end there shall be inserted—
“(4) In the application of subsection (2) above to allowances and charges which fall to be made under the provisions of Part I, references to a trade shall be treated as including references to an undertaking treated by virtue of section 21(5A) as carried on by way of trade.”
(10) This section shall have effect in relation to any chargeable period or its basis period ending on or after 6th April 1991.
(1) Section 35 of the [1990 c. 1.] Capital Allowances Act 1990 (motor cars) shall be amended as mentioned in subsections (2) and (3) below.
(2) In subsection (2) (reduction of allowance for hiring cars whose retail price when new exceeds £8,000) at the end there shall be inserted the words “; but this subsection shall have effect subject to subsection (3) below.”
(3) The following subsections shall be inserted after subsection (2)—
“(3) Subsection (2) above shall not apply where the hiring is under a hire-purchase agreement under which there is an option to purchase exercisable on the payment of a sum equal to not more than 1 per cent. of the retail price of the motor car when new.
(4) In subsection (3) above “hire-purchase agreement” has the meaning given by section 784(6) of the principal Act.”
(4) This section shall have effect in relation to any chargeable period or its basis period ending on or after the day on which this Act is passed.
(1) To the extent that, by virtue of paragraph (hh) of subsection (1) of section 3 of the [1975 c. 22.] Oil Taxation Act 1975 (as set out in section 103(2) of this Act), expenditure incurred on or after 19th March 1991 by a participator in an oil field is allowable for the purposes of petroleum revenue tax under the said section 3, that expenditure shall be allowed as a deduction in computing the participator’s ring fence income.
(2) Expressions used in subsection (1) above and the following provisions of this section have the same meaning as in Chapter V of Part XII of the Taxes Act 1988 (petroleum extraction activities).
(3) If, under an abandonment guarantee, a payment is made by the guarantor on or after 19th March 1991, then, to the extent that any expenditure for which the relevant participator is liable is met, directly or indirectly, out of the payment, that expenditure shall not be regarded for any purposes of tax as having been incurred by the relevant participator or any other participator in the oil field concerned.
(4) In any case where—
(a) a payment made by the guarantor under the abandonment guarantee is not immediately applied in meeting any expenditure, and
(b) the payment is for any period invested (either specifically or together with payments made by persons other than the guarantor) so as to be represented by, or by part of, the assets of a fund or account, and
(c) at a subsequent time, any expenditure for which the relevant participator is liable is met out of the assets of the fund or account,
any reference in subsection (3) above or section 63 below to expenditure which is met, directly or indirectly, out of the payment shall be construed as a reference to so much of the expenditure for which the relevant participator is liable as is met out of those assets of the fund or account which, at the subsequent time referred to in paragraph (c) above, it is just and reasonable to attribute to the payment.
(5) In subsections (3) and (4) above—
(a) “abandonment guarantee” has the same meaning as, by virtue of section 104 of this Act, it has for the purposes of section 105 of this Act; and
(b) “the guarantor” and “the relevant participator” have the same meaning as in subsection (1) of section 104 of this Act.
(1) This section applies in any case where—
(a) on or after 19th March 1991 a payment (in this section referred to as “the guarantee payment”) is made by the guarantor under an abandonment guarantee; and
(b) by virtue of the making of the guarantee payment, the relevant participator becomes liable under the terms of the abandonment guarantee to pay any sum or sums to the guarantor; and
(c) expenditure is incurred, or consideration in money’s worth is given, by the relevant participator in or towards meeting that liability.
(2) In any case where the whole of the guarantee payment or, as the case may require, of the assets which, under section 62(4) above, are attributed to the guarantee payment is not applied in meeting liabilities of the relevant participator which fall within paragraphs (a) and (b) of subsection (1) of section 104 of this Act and a sum representing the unapplied part of the guarantee payment or of those assets is repaid, directly or indirectly, to the guarantor,—
(a) any liability of the relevant participator to repay that sum shall be excluded in determining the total liability of the relevant participator which falls within subsection (1)(b) above; and
(b) the repayment to the guarantor of that sum shall not be regarded as expenditure incurred by the relevant participator as mentioned in subsection (1)(c) above.
(3) In the following provisions of this section “reimbursement expenditure” means expenditure incurred as mentioned in subsection (1)(c) above or consideration (or, as the case may require, the value of consideration) given as so mentioned; and any reference to the incurring of reimbursement expenditure shall be construed accordingly.
(4) So much of any reimbursement expenditure as, in accordance with subsection (5) below, is qualifying expenditure shall, by virtue of this section, be allowed as a deduction in computing the relevant participator’s ring fence income; and no part of the expenditure which is so allowed shall be otherwise deductible or allowable by way of relief for any purposes of tax.
(5) Subject to subsection (6) below, of the reimbursement expenditure incurred in any accounting period by the relevant participator, the amount which constitutes qualifying expenditure shall be determined by the formula—
where—
“A” is the reimbursement expenditure incurred in the accounting period;
“B” is so much of the expenditure represented by the guarantee payment as, if it had been incurred by the relevant participator, would have been taken into account (by way of capital allowance or a deduction) in computing his ring fence income; and
“C” is the total of the sums which, at or before the end of the accounting period, the relevant participator is or has become liable to pay to the guarantor as mentioned in subsection (1)(b) above.
(6) In relation to the guarantee payment, the total of the reimbursement expenditure (whenever incurred) which constitutes qualifying expenditure shall not exceed whichever is the less of “B” and “C” in the formula in subsection (5) above; and any limitation on qualifying expenditure arising by virtue of this subsection shall be applied to the expenditure of a later in preference to an earlier accounting period.
(7) For the purposes of this section, the expenditure represented by the guarantee payment is any expenditure—
(a) for which the relevant participator is liable; and
(b) which is met, directly or indirectly, out of the guarantee payment (and which, accordingly, by virtue of section 62(3) above is not to be regarded as expenditure incurred by the relevant participator).
(8) In this section—
(a) “abandonment guarantee” has the same meaning as, by virtue of section 104 of this Act, it has for the purposes of section 3 of the 1975 Act;
(b) “the guarantor” and “the relevant participator” have the same meaning as in subsection (1) of section 104 of this Act; and
(c) other expressions have the same meaning as in Chapter V of Part XII of the Taxes Act 1988 (petroleum extraction activities).
(1) This section applies in any case where—
(a) paragraph 2A of Schedule 5 to the 1975 Act (as set out in section 107 of this Act) applies or would apply if a claim were made as mentioned in sub-paragraph (1)(a) of that paragraph; and
(b) under sub-paragraph (4) of that paragraph the default payment falls, in whole or in part, to be attributed to the qualifying participator (as an addition to his share of the abandonment expenditure).
(2) In this section “default payment”, “the defaulter” and “qualifying participator” have the same meaning as in paragraph 2A of Schedule 5 to the 1975 Act and other expressions have the same meaning as in Chapter V of Part XII of the Taxes Act 1988 (petroleum extraction activities).
(3) In this section, the amount which is attributed to the qualifying participator as mentioned in subsection (1)(b) above (whether representing the whole or only a part of the default payment) is referred to as the additional abandonment expenditure.
(4) Relief by way of capital allowance or, as the case may be, a deduction in computing ring fence income shall be available to the qualifying participator by virtue of this section in respect of the additional abandonment expenditure in any case where any such relief or deduction would have been available to the defaulter if—
(a) the defaulter had incurred the additional abandonment expenditure; and
(b) at the time that that expenditure was incurred the defaulter continued to carry on a ring fence trade.
(5) The basis of qualification for or entitlement to any relief or deduction which is available to the qualifying participator by virtue of this section shall be determined on the assumption that the conditions in paragraphs (a) and (b) of subsection (4) above are fulfilled but, subject to that, any such relief or deduction shall be available in like manner as if the additional abandonment expenditure had been incurred by the qualifying participator for the purposes of the ring fence trade carried on by him.
(1) This section applies in any case where—
(a) paragraph 2A of Schedule 5 to the 1975 Act (as set out in section 107 of this Act) applies or would apply if a claim were made as mentioned in sub-paragraph (1)(a) of that paragraph; and
(b) under sub-paragraph (4) of that paragraph the default payment falls, in whole or in part, to be attributed to the qualifying participator (as an addition to his share of the abandonment expenditure); and
(c) expenditure is incurred, or consideration in money’s worth is given, by the defaulter in reimbursing the qualifying participator in respect of, or otherwise making good to him, the whole or any part of the default payment;
and in this section “default payment”, “the defaulter” and “qualifying participator” have the same meaning as in the said paragraph 2A and other expressions have the same meaning as in Chapter V of Part XII of the Taxes Act 1988 (petroleum extraction activities).
(2) In the following provisions of this section “reimbursement expenditure” means expenditure incurred as mentioned in subsection (1)(c) above or consideration (or, as the case may require, the value of consideration) given as so mentioned; and any reference to the incurring of reimbursement expenditure shall be construed accordingly.
(3) Subject to subsection (7) below, reimbursement expenditure shall be allowed as a deduction in computing the defaulter’s ring fence income.
(4) Subject to subsection (7) below, reimbursement expenditure received by the qualifying participator shall be treated as a receipt (in the nature of income) of his ring fence trade for the relevant accounting period.
(5) For the purposes of subsection (4) above, the relevant accounting period is the accounting period in which the reimbursement expenditure is received by the qualifying participator or, if the qualifying participator’s ring fence trade is permanently discontinued before the receipt of the reimbursement expenditure, the last accounting period of that trade.
(6) Any additional assessment to corporation tax required in order to take account of the receipt of reimbursement expenditure by the qualifying participator may be made at any time not later than six years after the end of the calendar year in which the reimbursement expenditure is so received.
(7) In relation to a particular default payment, reimbursement expenditure incurred at any time—
(a) shall be allowed as mentioned in subsection (3) above, and
(b) shall be taken into account in computing the qualifying participator’s ring fence income by virtue of subsection (4) above,
only to the extent that, when aggregated with any reimbursement expenditure previously incurred in respect of that default payment, it does not exceed so much of the default payment as falls to be attributed to the qualifying participator as mentioned in subsection (1)(b) above.
(8) The incurring of reimbursement expenditure shall not be regarded, by virtue of section 153 of the [1990 c. 1.] Capital Allowances Act 1990 (subsidies, contributions etc.), as the meeting of the expenditure of the qualifying participator in making the default payment.
(1) In section 497 of the Taxes Act 1988 (restriction on setting ACT against liability to corporation tax on profits from oil extraction activities etc.), in subsection (2) after the words “resident in the United Kingdom” there shall be inserted the words “or in respect of any distribution which, in accordance with subsections (2A) and (2B) below, is made pursuant to a substitution scheme”.
(2) After subsection (2) of that section there shall be inserted the following subsections—
“(2A) For the purposes of subsection (2) above, a distribution (“the relevant distribution”) is made pursuant to a substitution scheme if—
(a) it is made on or after 2nd May 1991 in respect of shares or securities issued or transferred pursuant to or otherwise for the purposes of a scheme or arrangements; and
(b) by virtue of the scheme or arrangements a person’s entitlement to, or to any rights in, the relevant distribution arises, directly or indirectly, by way of substitution for or addition to any entitlement of his to, or any prospect of his of, a distribution in respect of shares in or securities of another company; and
(c) at the time of the relevant distribution that other company is associated with the distributing company and is resident in the United Kingdom.
(2B) Where a distribution is made in respect of shares the issue or transfer of which constituted or formed part of an exempt distribution, within the meaning of section 213 (demergers), the distribution in respect of the shares shall not be regarded for the purposes of subsection (2) above as made pursuant to a substitution scheme by reason only that the transfer or issue of the shares was carried out as part of a transaction falling within subsection (1) of that section.”
(1) In section 64(6)(c) of the [1988 c. 39.] Finance Act 1988 (definition of the expression “the appropriate legislation relating to capital allowances” for the purposes of section 62 of that Act, which relates to disposals of oil licences) for “Part IV of the Capital Allowances Act 1990” there shall be substituted “Parts IV and VII of the Capital Allowances Act 1990”.
(2) This section shall have effect in relation to disposals on or after the day on which this Act is passed.
(1) For section 84 of the Taxes Act 1988 (payments for technical education) there shall be substituted the following—
(1) This section applies where a person carrying on a trade, profession or vocation (“the donor”) makes a gift for the purposes of a designated educational establishment of—
(a) an article manufactured, or of a class or description sold, by the donor in the course of his trade which qualifies as machinery or plant in the hands of the educational establishment; or
(b) an article used by the donor in the course of his trade, profession or vocation—
(i) which, for the purposes of Part II of the 1990 Act (capital allowances for machinery and plant), constitutes machinery or plant used by him wholly or partly in the course of that trade, profession or vocation; and
(ii) in respect of which he has claimed an allowance under that Part of that Act.
(2) For the purposes of this section, an article “qualifies as machinery or plant in the hands of an educational establishment” if, and only if, it is an article such that—
(a) were the activities carried on by the educational establishment regarded as a trade carried on by a body of persons, and
(b) had that body, at the time of the gift, incurred capital expenditure wholly and exclusively on the provision of an identical article for the purposes of those activities, and
(c) had the identical article belonged to that body in consequence of the incurring of that expenditure,
the identical article would be regarded for the purposes of Part II of the 1990 Act as machinery or plant provided by the body for the purposes of that trade.
(3) Where this section applies—
(a) if the gift is of an article falling within paragraph (a) of subsection (1) above, then, for the purposes of the Tax Acts, no amount shall be required to be brought into account as a trading receipt of the donor in consequence of his disposal of that article from trading stock; and
(b) if the gift is of an article falling within paragraph (b) of that subsection, subsection (6) of section 24 of the 1990 Act shall not require the donor to bring into account any disposal value in respect of the article for the purposes of that section;
but this subsection shall not apply unless, within two years of making the gift, the donor makes a claim for relief under this subsection, specifying the article given and the name of the educational establishment in question.
(4) In any case where—
(a) relief is given under subsection (3) above in respect of the gift of an article, and
(b) any benefit received in any chargeable period by the donor or any person connected with him is in any way attributable to the making of that gift,
the donor 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 “designated educational establishment” means any educational establishment designated, or of a category designated,—
(a) as respects Great Britain, in regulations made by the Secretary of State; or
(b) as respects Northern Ireland, in regulations made by the Department of Education for Northern Ireland;
and any such regulations may make different provision for different areas.
(6) If any question arises as to whether a particular establishment falls within a category designated in regulations under subsection (5) above, the Board shall refer the question for decision—
(a) in the case of an establishment in Great Britain, to the Secretary of State, or
(b) in the case of an establishment in Northern Ireland, to the Department of Education for Northern Ireland.
(7) The power of the Secretary of State to make regulations under subsection (5) above shall be exercisable by statutory instrument; and a statutory instrument containing any such regulations shall be subject to annulment in pursuance of a resolution of the House of Commons.
(8) Regulations made under subsection (5) above for Northern Ireland—
(a) shall be a statutory rule for the purposes of the [S.I. 1979/1573 (N.I. 12).] Statutory Rules (Northern Ireland) Order 1979; and
(b) shall be subject to negative resolution within the meaning of section 41(6) of the [1954 c. 33 (N.I.).] Interpretation Act (Northern Ireland) 1954.
(9) Section 839 applies for the purposes of subsection (4) above.”
(2) The amendment made by subsection (1) above shall have effect with respect to gifts made on or after 19th March 1991.
(1) Section 201A of the Taxes Act 1988 (deduction of fees paid by entertainer to employment agency) shall be amended as follows.
(2) In subsection (1)(a) after “subsection (2)” there shall be inserted “or (2A)”.
(3) The following subsection shall be inserted after subsection (2)—
“(2A) Fees fall within this subsection if—
(a) they are paid by the employee in pursuance of an arrangement under which a bona fide co-operative society agrees, or the members of such a society agree, to act as agent of the employee in connection with the employment,
(b) they are calculated as a percentage of the emoluments of the employment or as a percentage of part of those emoluments, and
(c) they are defrayed out of the emoluments of the employment falling to be charged to tax for the year concerned.”
(4) The following subsection shall be inserted after subsection (3)—
“(3A) Subsection (3) of section 1 of the [1965 c. 12.] Industrial and Provident Societies Act 1965 (co-operative society does not include profit-making society) shall apply for the purposes of subsection (2A)(a) above as it applies for the purposes of that section.”
(5) The following subsection shall be inserted after subsection (4)—
“(4A) Subject to subsection (4) above, a deduction by virtue of this section as regards a particular employment and a particular year of assessment may be based on fees falling within subsection (2) above or fees falling within subsection (2A) above, or both.”
(6) The amendments made by this section shall apply for the year 1990–91 and subsequent years of assessment.
(7) Any such adjustment (whether by way of discharge or repayment of tax, the making of an assessment or otherwise) as is appropriate in consequence of this section may be made.
In section 333 of the Taxes Act 1988 (personal equity plans) in subsection (3) (regulations) the following paragraphs shall be inserted after paragraph (f)—
“(g) provide for plans to be treated as being of different kinds, according to criteria set out in the regulations;
(h) provide that the Board may register a plan as being of a particular kind;
(i) make different provision as to different kinds of plan;
(j) provide for investment by an individual under more than one plan in the same year of assessment.”
(1) Section 339A of the Taxes Act 1988 (maximum qualifying donations in the case of companies) shall cease to have effect.
(2) In consequence of subsection (1) above, in section 338(2) of that Act, for “to sections 339 and 339A” there shall be substituted “to section 339”.
(3) Subsections (1) and (2) above shall apply in relation to accounting periods beginning on or after 19th March 1991.
(4) In its application to accounting periods beginning before 19th March 1991 and ending on or after that date, section 339A of the Taxes Act 1988 shall have effect as if—
(a) in subsections (1) and (2), after the words “in that period”, in the first place where they occur, there were inserted “and before 19th March 1991”; and
(b) in subsection (3)(b), after “that section” there were inserted “in respect of payments made before 19th March 1991”.
(5) In section 25 of the [1990 c. 29.] Finance Act 1990 (donations to charity by individuals) subsection (2)(h) (maximum qualifying donations) shall cease to have effect.
(6) Subsection (5) above shall apply in relation to gifts made on or after 19th March 1991.
(1) Where under section 380 of the Taxes Act 1988 (set-off of trading losses against general income) a person makes a claim for relief for a year of assessment in respect of an amount (“the trading loss”) which is available for relief under that section, he may in the notice by which the claim is made make a claim under this subsection for the relevant amount for the year to be determined.
(2) The relevant amount for the year is so much of the trading loss as—
(a) cannot be set off against the claimant’s income for the year, and
(b) has not already been taken into account for the purpose of giving relief (under section 380 or this section or otherwise) for any other year.
(3) Where the claim under subsection (1) above is finally determined, the relevant amount for the year shall be treated for the purposes of capital gains tax as an allowable loss accruing to the claimant in the year; but the preceding provisions of this subsection shall not apply to so much of the relevant amount as exceeds the maximum amount.
(4) The maximum amount is the amount on which the claimant would be chargeable to capital gains tax for the year, disregarding section 5(1) of the [1979 c. 14.] Capital Gains Tax Act 1979 and the effect of this section.
(5) In ascertaining the maximum amount, no account shall be taken of any event—
(a) occurring after the date on which the claim under subsection (1) above is finally determined, and
(b) in consequence of which the amount referred to in subsection (4) above is reduced by virtue of any enactment relating to capital gains tax.
(6) An amount treated as an allowable loss by virtue of this section shall not be allowed as a deduction from chargeable gains accruing to a person in any year of assessment beginning after he has ceased to carry on the trade, profession, vocation or employment in which the relevant trading loss was sustained.
(7) For the purposes of this section, the claim under subsection (1) above shall not be deemed to be finally determined until the relevant amount for the year can no longer be varied, whether by the Commissioners on appeal or on the order of any court.
(8) References in sections 382(3), 383(6), (7) and (8) and 385(1) of the Taxes Act 1988 to relief under section 380 of that Act shall be construed as including references to relief under this section.
(9) This section shall apply in relation to losses sustained in the year 1991-92 and subsequent years of assessment.
(1) After section 393 of the Taxes Act 1988 (losses other than terminal losses) there shall be inserted—
(1) Subject to section 492(3), where in any accounting period ending on or after 1st April 1991 a company carrying on a trade incurs a loss in the trade, then, subject to subsection (3) below, the company may make a claim requiring that the loss be set off for the purposes of corporation tax against profits (of whatever description)—
(a) of that accounting period, and
(b) if the company was then carrying on the trade and the claim so requires, of preceding accounting periods falling wholly or partly within the period specified in subsection (2) below;
and, subject to that subsection and to any relief for an earlier loss, the profits of any of those accounting periods shall then be treated as reduced by the amount of the loss, or by so much of that amount as cannot be relieved under this subsection against profits of a later accounting period.
Finance Act 1991