Office of Public Sector Information
PART III continued I continued
(2) The period referred to in paragraph (b) of subsection (1) above is the period of three years immediately preceding the accounting period in which the loss is incurred; but the amount of the reduction that may be made under that subsection in the profits of an accounting period falling partly before the beginning of that period shall not exceed a part of those profits proportionate to the part of the accounting period falling within that period.
(3) Subsection (1) above shall not apply to trades falling within Case V of Schedule D; and a loss incurred in a trade in any accounting period shall not be relieved under that subsection unless—
(a) the trade is one carried on in the exercise of functions conferred by or under any enactment (including an enactment contained in a local or private Act), or
(b) it is shown that for that accounting period the trade was being carried on on a commercial basis and with a view to the realisation of gain in the trade or in any larger undertaking of which the trade formed part;
but this subsection is without prejudice to section 397.
(4) For the purposes of subsection (3) above—
(a) the fact that a trade was being carried on at any time so as to afford a reasonable expectation of gain shall be conclusive evidence that it was then being carried on with a view to the realisation of gain; and
(b) where in an accounting period there is a change in the manner in which a trade is being carried on, it shall be treated as having throughout the accounting period been carried on in the way in which it was being carried on by the end of that period.
(5) A claim under subsection (1) above may require that capital allowances in respect of the trade, being allowances that fall—
(a) to be made to the company by way of discharge or repayment of tax, and
(b) to be so made for an accounting period ending on or after 1st April 1991,
shall (so far as they cannot be otherwise taken into account so as to reduce or relieve any charge to corporation tax in respect of that, or any earlier, accounting period) be added to the loss incurred by the company in that accounting period or, if the company has not incurred a loss in the period, shall be treated as a loss so incurred.
(6) For the purposes of subsection (5) above, the allowances for any period shall not be treated as including amounts carried forward from an earlier period.
(7) Where a company ceases to carry on a trade, subsection (9) of section 393 shall apply in computing for the purposes of this section a loss in the trade in the accounting period in which the cessation occurs as it applies in computing a loss in an accounting period for the purposes of subsection (1) of that section.
(8) Relief shall not be given by virtue of subsection (1)(b) above in respect of a loss incurred in a trade so as to interfere with any relief under section 338 in respect of payments made wholly and exclusively for the purposes of that trade.
(9) For the purposes of this section—
(a) the amount of a loss incurred in a trade in an accounting period shall be computed in the same way as trading income from the trade in that period would have been computed;
(b) “trading income” means, in relation to any trade, the income which falls or would fall to be included in respect of the trade in the total profits of the company; and
(c) references to a company carrying on a trade refer to the company carrying it on so as to be within the charge to corporation tax in respect of it.
(10) A claim under subsection (1) above may only be made within the period of two years immediately following the accounting period in which the loss is incurred or within such further period as the Board may allow.
(11) In any case where—
(a) by virtue of section 62B of the 1990 Act (post-cessation abandonment expenditure related to offshore machinery or plant) the qualifying expenditure of the company for the chargeable period related to the cessation of its ring fence trade is treated as increased by any amount, or
(b) by virtue of section 109 of that Act (restoration expenditure incurred after cessation of trade of mineral extraction) any expenditure is treated as qualifying expenditure incurred by the company on the last day on which it carried on the trade,
then, in relation to any claim under subsection (1) above to the extent that it relates to an increase falling within paragraph (a) above or to expenditure falling within paragraph (b) above, subsection (10) above shall have effect with the substitution of “five years” for “two years”.”
(2) Sections 393(2) to (6) and 394 of the Taxes Act 1988 (which are superseded by this section) shall cease to have effect.
(3) Schedule 15 to this Act shall have effect.
(4) This section shall have effect only in relation to losses incurred in accounting periods ending on or after 1st April 1991.
(5) Any enactment amended by this section or that Schedule shall, in its application in relation to losses so incurred, be deemed to have had effect at all times with that amendment; and where any such enactment is the re-enactment of a repealed enactment, the repealed enactment shall, in its application in relation to losses so incurred, be deemed to have had effect at all times with a corresponding amendment.
(1) Section 467 of the Taxes Act 1988 (trade unions and employers' associations) shall be amended as follows.
(2) In subsection (1) (exemption for certain income and gains of a trade union precluded by Act or rules from assuring to any person a sum exceeding £3,000 by way of gross sum or £625 by way of annuity)—
(a) for “£3,000” there shall be substituted “£4,000”, and
(b) for “£625” there shall be substituted “£825”.
(3) In subsection (3) (matters to be disregarded in applying subsection (1)) for “£625” there shall be substituted “£825”.
(4) After subsection (3) there shall be inserted—
“(3A) The Treasury may by order substitute for any figure for the time being specified in this section such greater figure as may be specified in the order; and any amendment made in exercise of the power conferred by this subsection shall have effect in relation to such income or gains as may be specified in the order.”
(5) In subsection (4) (definition of “trade union”)—
(a) in paragraphs (a) and (b), for “Registrar of Friendly Societies” there shall be substituted “Certification Officer”; and
(b) for “and” at the end of paragraph (b) there shall be substituted—
“(ba) any trade union within the meaning of the [1871 c. 31.] Trade Union Act 1871 registered in Northern Ireland under section 6 of that Act; and”.
(6) Subsections (2) and (3) above shall have effect in relation to income or gains which are applicable and applied as mentioned in section 467 of the Taxes Act 1988 on or after 1st April 1991.
(7) Subsection (5) above shall be deemed always to have had effect.
The following section shall be inserted after section 482 of the Taxes Act 1988—
(1) The Board may make regulations with respect to the exclusion, in relation to investments of persons who are not ordinarily resident in the United Kingdom, of powers conferred by regulations made by virtue of section 477A(2)(a) or 482(11)(aa) (“audit powers”).
(2) Regulations under subsection (1) above may in particular—
(a) make provision for the exclusion of audit powers in the case of any building society or deposit-taker to be dependent on whether the society or deposit-taker is approved by the Board for the purposes of the regulations and on the scope of that approval;
(b) make provision with respect to the approval of building societies and deposit-takers by the Board for the purposes of the regulations;
(c) make provision with respect to, and with respect to alteration of, the scope of approval by the Board for the purposes of the regulations;
(d) make provision with respect to the termination of approval by the Board for the purposes of the regulations; and
(e) make provision with respect to appeals against decisions of the Board with respect to approval for the purposes of the regulations, including decisions with respect to the scope of such approval.
(3) Regulations under subsection (1) above may—
(a) make different provision for different cases; and
(b) contain such supplementary, incidental, consequential or transitional provision as appears to the Board to be appropriate.
(4) In this section “deposit-taker” has the meaning given by section 481(2).”
(1) Section 656 of the Taxes Act 1988 (purchased life annuities other than retirement annuities) shall have effect, and be deemed always to have had effect, with the addition of the following subsections—
“(7) In using the prescribed tables of mortality to determine—
(a) the expected term of an annuity for the purposes of subsection (2)(a) above, or
(b) the actuarial value of any annuity payments for the purposes of subsection (4)(c) above,
the age, as at the date when the first of the annuity payments begins to accrue, of a person during whose life the annuity is payable shall be taken to be the number of years of his age at his last birthday preceding that date.
(8) In any case where it is not possible to determine the expected term of an annuity for the purposes of subsection (2)(a) above by reference to the prescribed tables of mortality, that term shall for those purposes be such period as may be certified by the Government Actuary or the Deputy Government Actuary.
(9) In any case where it is not possible to determine the actuarial value of any annuity payments for the purposes of subsection (4)(c) above by reference to the prescribed tables of mortality, that value shall for those purposes be such amount as may be certified by the Government Actuary or the Deputy Government Actuary.”
(2) Section 230 of the [1970 c. 10.] Income and Corporation Taxes Act 1970 (from which section 656 of the Taxes Act 1988 is derived) shall be deemed always to have had effect as if the subsections (7) to (9) set out in subsection (1) above had been contained in that section as subsections (8) to (10) respectively, but with the substitution for “(2)(a)” and “(4)(c)”, in each place where they occur, of “(2A)(a)” and “(3)(c)” respectively.
(3) Section 27 of the [1956 c. 54.] Finance Act 1956 (from which section 230 of the Income and Corporation Taxes Act 1970 was derived) shall be deemed always to have had effect as if the subsections (7) and (9) set out in subsection (1) above had been contained in that section as subsections (8A) and (8B) respectively, but with the omission in subsection (7) of paragraph (a) and with the substitution of “(3)(c)” for “(4)(c)” in both places where it occurs.
(1) In paragraph 1 of Schedule 18 to the Taxes Act 1988 (under which a person who is a loan creditor of a company in respect of a non-commercial loan is an equity holder of the company) after sub-paragraph (5D) there shall be inserted—
“(5E) For the purposes of sub-paragraph (5)(b) above, the amount to which the loan creditor is entitled by way of interest—
(a) shall not be treated as depending to any extent on the results of the company’s business or any part of it by reason only of the fact that the terms of the loan provide for the rate of interest to be reduced in the event of the results of the company’s business or any part of it improving, and
(b) shall not be treated as depending to any extent on the value of any of the company’s assets by reason only of the fact that the terms of the loan provide for the rate of interest to be reduced in the event of the value of any of the company’s assets increasing.
(5F) Sub-paragraph (5H) below applies where—
(a) a person makes a loan to a company on the basis mentioned in sub-paragraph (5G) below for the purpose of facilitating the acquisition of land, and
(b) none of the land which the loan is used to acquire is acquired with a view to resale at a profit.
(5G) The basis referred to above is that—
(a) the whole of the loan is to be applied in the acquisition of land by the company or in meeting the incidental costs of obtaining the loan,
(b) the payment of any amount due in connection with the loan to the person making it is to be secured on the land which the loan is to be used to acquire, and
(c) no other security is to be required for the payment of any such amount.
(5H) For the purposes of sub-paragraph (5)(b) above, the amount to which the loan creditor is entitled by way of interest shall not be treated as depending to any extent on the value of any of the company’s assets by reason only of the fact that the terms of the loan are such that the only way the loan creditor can enforce payment of an amount due is by exercising rights granted by way of security over the land which the loan is used to acquire.
(5I) In sub-paragraph (5G)(a) above the reference to the incidental costs of obtaining the loan is to any expenditure on fees, commissions, advertising, printing or other incidental matters wholly and exclusively incurred for the purpose of obtaining the loan or of providing security for it.”
(2) In relation to the application of paragraph 1(5) of that Schedule (definition of “normal commercial loan”) for the purposes of section 64(2) of the [1984 c. 43.] Finance Act 1984 (definition of “corporate bond”), this section shall have effect—
(a) so far as concerns the application of section 64(2) for the purposes of section 136A of the [1979 c. 14.] Capital Gains Tax Act 1979, in relation to claims on or after 1st April 1991, and
(b) so far as concerns any other application of section 64(2), in relation to disposals on or after that date (and, in relation to such disposals, shall be regarded as always having had effect).
(3) Except as provided by subsection (2) above, this section shall be deemed to have come into force on 1st April 1991.
(1) This section applies to any agreement relating to the sharing of transmission facilities—
(a) to which the parties are national broadcasting companies,
(b) which is entered into on or after the day on which this Act is passed and before 1st January 1992 or such later date as may be specified for the purposes of this paragraph by the Secretary of State, and
(c) in relation to which the Secretary of State has certified that it is expedient that this section should apply.
(2) Where under an agreement to which this section applies one party to the agreement disposes of an asset to another party to the agreement, both parties shall be treated for the purposes of corporation tax on chargeable gains as if the asset acquired by the party to whom the disposal is made were acquired for a consideration of such amount as would secure that on the other’s disposal neither a gain nor a loss would accrue to that other.
(3) Where under an agreement to which this section applies one party to the agreement disposes of an asset to another party to the agreement and the asset is one which the party making the disposal acquired on a part disposal by the party to whom the disposal under the agreement is made, then in applying subsection (2) above—
(a) section 35 of the [1979 c. 14.] Capital Gains Tax Act 1979 shall be deemed to have had effect in relation to the part disposal with the omission of subsection (4),
(b) the amount or value of the consideration for the part disposal shall be taken to have been nil, and
(c) if the disposal under the agreement is one to which section 96(2) of the [1988 c. 39.] Finance Act 1988 applies, the market value of the asset on 31st March 1982 shall be taken to have been nil.
(4) Where under an agreement to which this section applies one party to the agreement disposes of machinery or plant to another party to the agreement, the [1990 c. 1.] Capital Allowances Act 1990 shall apply—
(a) in the case of the party making the disposal, as if the disposal value of the machinery or plant for the purposes of section 24 of that Act were equal to the capital expenditure incurred by that party on its provision, and
(b) in the case of the party to whom the disposal is made, as if the amount expended by that party in acquiring the machinery or plant were equal to the capital expenditure so incurred.
(5) In subsection (4) above, references to machinery or plant include a share in machinery or plant.
(6) In section 68 of the [1985 c. 54.] Finance Act 1985 (modification of indexation allowance) in subsection (7A) (list of no gain/no loss provisions) the word “and” at the end of paragraph (f) shall be omitted and after paragraph (g) there shall be inserted—
“(h) section 78(2) of the Finance Act 1991.”
(7) In Schedule 8 to the [1988 c. 39.] Finance Act 1988 (rebasing to 1982) in paragraph 1(3) (list of no gain/no loss provisions) the word “and” at the end of paragraph (g) shall be omitted and after paragraph (h) there shall be inserted “and
(i) section 78(2) of the Finance Act 1991.”
(8) In this section, “national broadcasting company” means a body corporate engaged in the broadcasting for general reception by means of wireless telegraphy of radio or television services or both on a national basis.
(1) In Schedule 12 to the Finance Act 1988 (building societies: change of status) in paragraph 6(1)(b) for “section 476” there shall be substituted “section 477A”.
(2) This section shall apply where qualifying benefits are conferred on or after 6th April 1991.
Paragraph 8(2) of Schedule 11 to the [1989 c. 29.] Electricity Act 1989 (treatment of certain debentures for the purposes of the Corporation Tax Acts) shall have effect, and be deemed always to have had effect, with the addition after paragraph (b) of the words— “and if any such debenture includes provision for the payment of a sum expressed as interest in respect of a period which falls wholly or partly before the issue of the debenture, any payment made in pursuance of that provision in respect of that period shall be treated for the purposes of the Corporation Tax Acts as if the debenture had been issued at the commencement of that period and, accordingly, as interest on the principal sum payable under the debenture.”
(1) Section 78 of the [1970 c. 9.] Taxes Management Act 1970 (method of charging non-residents) shall be amended as mentioned in subsections (2) to (4) below.
(2) In subsection (3) (meaning of investment transactions) the following paragraph shall be substituted for paragraph (a)—
“(a) transactions in shares, stock, futures contracts, options contracts or securities of any description not mentioned in this paragraph, but excluding futures contracts or options contracts relating to land,”.
(3) The following subsection shall be inserted after subsection (3)—
“(3A) For the purposes of subsection (3) above a contract is not prevented from being a futures contract or an options contract by the fact that any party is or may be entitled to receive or liable to make, or entitled to receive and liable to make, only a payment of a sum (as opposed to a transfer of assets other than money) in full settlement of all obligations.”
(4) Subsection (4) (provision about investment transactions does not apply to profits or gains which constitute income of an offshore fund) shall be omitted.
(5) This section shall apply—
(a) for the year 1991-92 and subsequent years of assessment, in the case of profits or gains chargeable to income tax, and
(b) for accounting periods ending on or after 1st April 1991, in the case of profits or gains chargeable to corporation tax.
(1) In the [1970 c. 9.] Taxes Management Act 1970, the following section shall be inserted after section 99—
If a person who gives a certificate of non-liability to income tax in pursuance of regulations under section 477A of the principal Act (building societies) or section 480B of that Act (deposit-takers)—
(a) gives the certificate fraudulently or negligently, or
(b) fails to comply with any undertaking contained in the certificate in pursuance of the regulations,
he shall be liable to a penalty not exceeding £3,000.”
(2) So far as relating to the giving of a certificate, this section shall apply in relation to certificates given on or after the day on which this Act is passed.
(3) So far as relating to failure to comply with an undertaking contained in a certificate, this section shall apply in relation to certificates whenever given, but not so as to impose liability for a failure occurring before the day on which this Act is passed.
(1) This section applies if the trustees of a settlement become at any time (the relevant time) neither resident nor ordinarily resident in the United Kingdom.
(2) The trustees shall be deemed for all purposes of the [1979 c. 14.] Capital Gains Tax Act 1979—
(a) to have disposed of the defined assets immediately before the relevant time, and
(b) immediately to have reacquired them,
at their market value at that time.
(3) Subject to subsections (4) and (5) below, the defined assets are all assets constituting settled property of the settlement immediately before the relevant time.
(4) If immediately after the relevant time—
(a) the trustees carry on a trade in the United Kingdom through a branch or agency, and
(b) any assets are situated in the United Kingdom and either used in or for the purposes of the trade or used or held for the purposes of the branch or agency,
the assets falling within paragraph (b) above shall not be defined assets.
(5) Assets shall not be defined assets if—
(a) they are of a description specified in any double taxation relief arrangements, and
(b) were the trustees to dispose of them immediately before the relevant time, the trustees would fall to be regarded for the purposes of the arrangements as not liable in the United Kingdom to tax on gains accruing to them on the disposal.
(6) Section 115 of the [1979 c. 14.] Capital Gains Tax Act 1979 (roll-over relief) shall not apply where the trustees—
(a) have disposed of the old assets, or their interest in them, before the relevant time, and
(b) acquire the new assets, or their interest in them, after that time,
unless the new assets are excepted from this subsection by subsection (7) below.
(7) If at the time when the new assets are acquired—
(a) the trustees carry on a trade in the United Kingdom through a branch or agency, and
(b) any new assets are situated in the United Kingdom and either used in or for the purposes of the trade or used or held for the purposes of the branch or agency,
the assets falling within paragraph (b) above shall be excepted from subsection (6) above.
(8) In this section—
“double taxation relief arrangements” means arrangements having effect by virtue of section 788 of the Taxes Act 1988 (as extended to capital gains tax by section 10 of the Capital Gains Tax Act 1979);
“the old assets” and “the new assets” have the same meanings as in section 115 of the Capital Gains Tax Act 1979.
(9) This section applies where the relevant time falls on or after 19th March 1991.
(1) Subsection (2) below applies where—
(a) section 83 above applies as a result of the death of a trustee of the settlement, and
(b) within the period of six months beginning with the death, the trustees of the settlement become resident and ordinarily resident in the United Kingdom.
(2) That section shall apply as if the defined assets were restricted to such assets (if any) as—
(a) would be defined assets apart from this section, and
(b) fall within subsection (3) or (4) below.
(3) Assets fall within this subsection if they were disposed of by the trustees in the period which—
(a) begins with the death, and
(b) ends when the trustees become resident and ordinarily resident in the United Kingdom.
(4) Assets fall within this subsection if—
(a) they are of a description specified in any double taxation relief arrangements,
(b) they constitute settled property of the settlement at the time immediately after the trustees become resident and ordinarily resident in the United Kingdom, and
(c) were the trustees to dispose of them at that time, the trustees would fall to be regarded for the purposes of the arrangements as not liable in the United Kingdom to tax on gains accruing to them on the disposal.
(5) Subsection (6) below applies where—
(a) at any time (whether occurring before or on or after 19th March 1991) the trustees of a settlement become resident and ordinarily resident in the United Kingdom as a result of the death of a trustee of the settlement, and
(b) section 83 above applies as regards the trustees of the settlement in circumstances where the relevant time (within the meaning of that section) falls within the period of six months beginning with the death.
(6) That section shall apply as if the defined assets were restricted to such assets (if any) as—
(a) would be defined assets apart from this section, and
(b) fall within subsection (7) below.
(7) Assets fall within this subsection if—
(a) the trustees acquired them in the period beginning with the death and ending with the relevant time, and
(b) they acquired them as a result of a disposal in respect of which relief is given under section 126 of the [1979 c. 14.] Capital Gains Tax Act 1979 or in relation to which section 147A(3) of that Act applies.
(8) In this section “double taxation relief arrangements” means arrangements having effect by virtue of section 788 of the Taxes Act 1988 (as extended to capital gains tax by section 10 of the Capital Gains Tax Act 1979).
(1) This section applies where—
(a) section 83 above applies as regards the trustees of a settlement (the migrating trustees), and
(b) any capital gains tax which is payable by the migrating trustees by virtue of section 83(2) above is not paid within six months from the time when it became payable.
(2) The Board may, at any time before the end of the period of three years beginning with the time when the amount of the tax is finally determined, serve on any person to whom subsection (3) below applies a notice—
(a) stating particulars of the tax payable, the amount remaining unpaid and the date when it became payable;
(b) stating particulars of any interest payable on the tax, any amount remaining unpaid and the date when it became payable;
(c) requiring that person to pay the amount of the unpaid tax, or the aggregate amount of the unpaid tax and the unpaid interest, within thirty days of the service of the notice.
(3) This subsection applies to any person who, at any time within the relevant period, was a trustee of the settlement, except that it does not apply to any such person if—
(a) he ceased to be a trustee of the settlement before the end of the relevant period, and
(b) he shows that, when he ceased to be a trustee of the settlement, there was no proposal that the trustees might become neither resident nor ordinarily resident in the United Kingdom.
(4) Any amount which a person is required to pay by a notice under this section may be recovered from him as if it were tax due and duly demanded of him; and he may recover any such amount paid by him from the migrating trustees.
(5) A payment in pursuance of a notice under this section shall not be allowed as a deduction in computing any income, profits or losses for any tax purposes.
(6) For the purposes of this section—
(a) where the relevant time (within the meaning of section 83 above) falls within the period of twelve months beginning with 19th March 1991, the relevant period is the period beginning with that date and ending with that time;
(b) in any other case, the relevant period is the period of twelve months ending with the relevant time.
(1) This section applies if the trustees of a settlement, while continuing to be resident and ordinarily resident in the United Kingdom, become at any time (the time concerned) trustees who fall to be regarded for the purposes of any double taxation relief arrangements—
(a) as resident in a territory outside the United Kingdom, and
(b) as not liable in the United Kingdom to tax on gains accruing on disposals of assets (relevant assets) which constitute settled property of the settlement and fall within descriptions specified in the arrangements.
(2) The trustees shall be deemed for all purposes of the [1979 c. 14.] Capital Gains Tax Act 1979—
(a) to have disposed of their relevant assets immediately before the time concerned, and
(b) immediately to have reacquired them,
at their market value at that time.
(3) In this section “double taxation relief arrangements” means arrangements having effect by virtue of section 788 of the Taxes Act 1988 (as extended to capital gains tax by section 10 of the Capital Gains Tax Act 1979).
(4) This section applies where the time concerned falls on or after 19th March 1991.
(1) Section 115 of the Capital Gains Tax Act 1979 (roll-over relief) shall not apply where—
(a) the new assets are, or the interest in them is, acquired by the trustees of a settlement,
(b) at the time of the acquisition the trustees are resident and ordinarily resident in the United Kingdom and fall to be regarded for the purposes of any double taxation relief arrangements as resident in a territory outside the United Kingdom,
(c) the assets are of a description specified in the arrangements, and
(d) were the trustees to dispose of the assets immediately after the acquisition, the trustees would fall to be regarded for the purposes of the arrangements as not liable in the United Kingdom to tax on gains accruing to them on the disposal.
(2) In this section—
“double taxation relief arrangements” means arrangements having effect by virtue of section 788 of the Taxes Act 1988 (as extended to capital gains tax by section 10 of the [1979 c. 14.] Capital Gains Tax Act 1979);
“the new assets” has the same meaning as in section 115 of the Capital Gains Tax Act 1979.
(3) This section applies where the new assets are, or the interest in them is, acquired on or after 19th March 1991.
Finance Act 1991