Part I Customs and Excise, Value Added Tax and Car Tax

Chapter I Customs and Excise

Abolition of fiscal frontiers etc.

1 Powers to fix excise duty point

(1) Subject to the following provisions of this section, the Commissioners may by regulations make provision, in relation to any duties of excise on goods, for fixing the time when the requirement to pay any duty with which goods become chargeable is to take effect (“the excise duty point”).

(2) Where regulations under this section fix an excise duty point for any goods, the rate of duty for the time being in force at that point shall be the rate used for determining the amount of duty to be paid in pursuance of the requirement that takes effect at that point.

(3) Regulations under this section may provide for the excise duty point for any goods to be such of the following times as may be prescribed in relation to the circumstances of the case, that is to say—

(a) the time when the goods become chargeable with the duty in question;

(b) the time when there is a contravention of any prescribed requirements relating to any suspension arrangements applying to the goods;

(c) the time when the duty on the goods ceases, in the prescribed manner, to be suspended in accordance with any such arrangements;

(d) the time when there is a contravention of any prescribed condition subject to which any relief has been conferred in relation to the goods;

(e) such time after the time which, in accordance with regulations made by virtue of any of the preceding paragraphs, would otherwise be the excise duty point for those goods as may be prescribed;

and regulations made by virtue of any of paragraphs (b) to (e) above may define a time by reference to whether or not at that time the Commissioners have been satisfied as to any matter.

(4) Where regulations under this section prescribe an excise duty point for any goods, such regulations may also make provision—

(a) specifying the person or persons on whom the liability to pay duty on the goods is to fall at the excise duty point (being the person or persons having the prescribed connection with the goods at that point or at such other time, falling no earlier than when the goods become chargeable with the duty, as may be prescribed); and

(b) where more than one person is to be liable to pay the duty, specifying whether the liability is to be both joint and several.

(5) Schedule 1 to this Act (which contains minor and consequential amendments and savings for purposes connected with the other provision made by this section) shall have effect.

(6) The power of the Commissioners to make regulations under this section shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament and shall include power—

(a) to make different provision for different cases, including different provision for different duties and different goods; and

(b) to make such incidental, supplemental, consequential and transitional provision as the Commissioners think necessary or expedient.

(7) In this section—

• “the Commissioners” means the Commissioners of Customs and Excise;

• “contravention” includes a failure to comply;

• “customs and excise Acts” and “goods” have the same meanings as in the [1979 c. 2.] Customs and Excise Management Act 1979; and

• “prescribed” means prescribed by regulations under this section;

and references in this section to suspension arrangements are references to any provision made by or under the customs and excise Acts for enabling goods to be held or moved without payment of duty or any provision made by or under those Acts in connection with any provision enabling goods to be so held or moved.

(8) This section and Schedule 1 to this Act shall come into force on such day as the Commissioners may by order made by statutory instrument appoint, and different days may be appointed under this subsection for different provisions and for different purposes.

2 Power to provide for drawback of excise duty

(1) Subject to the following provisions of this section, the Commissioners may, in relation to any duties of excise, by regulations make provision conferring an entitlement to drawback of duty in prescribed cases where the Commissioners are satisfied that goods chargeable with duty have not been, and will not be, consumed in the United Kingdom.

(2) The power of the Commissioners to make regulations under this section shall include power—

(a) to provide for, or for the imposition of, the conditions to which an entitlement to drawback under the regulations is to be subject;

(b) to provide for the determination of the person on whom any such entitlement is conferred;

(c) to make different provision for different cases, including different provision for different duties and different goods; and

(d) to make such incidental, supplemental, consequential and transitional provision as the Commissioners think necessary or expedient.

(3) Without prejudice to the generality of subsection (2)(d) above, the power of the Commissioners to make regulations under this section shall include power, in relation to any drawback of duty to which any person is entitled by virtue of regulations under this section, to provide—

(a) for entitlement to the drawback to be cancelled at any time after it has been conferred if there is a contravention of any conditions to which it is subject or in such other circumstances as may be prescribed; and

(b) for such persons as may be prescribed to be liable to the Commissioners for sums paid or credited to any person in respect of any drawback that has been cancelled in accordance with any such regulations.

(4) The power of the Commissioners to make regulations under this section shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

(5) In this section—

• “the Commissioners” means the Commissioners of Customs and Excise;

• “contravention” includes a failure to comply;

• “goods” has the same meaning as in the [1979 c. 2.] Customs and Excise Management Act 1979; and

• “prescribed” means prescribed by regulations under this section.

(6) This section shall come into force on such day as the Commissioners may by order made by statutory instrument appoint, and different days may be appointed under this subsection for different provisions and for different purposes.

3 Protection of revenues derived from excise duties

(1) Schedule 2 to this Act (which makes additional provision for purposes connected with the protection of the revenues derived from excise duties) shall have effect.

(2) This section and Schedule 2 to this Act shall come into force on such day as the Commissioners of Customs and Excise may by order made by statutory instrument appoint, and different days may be appointed under this subsection for different provisions and for different purposes.

4 Enforcement powers

(1) Except in a case falling within subsection (2) below, the powers to which this section applies shall not be exercisable in relation to any person or thing entering or leaving the United Kingdom so as to prevent, restrict or delay the movement of that person or thing between different member States.

(2) The cases in which a power to which this section applies may be exercised as mentioned in subsection (1) above are those where it appears to the person on whom the power is conferred that there are reasonable grounds for believing that the movement in question is not in fact between different member States or that it is necessary to exercise the power for purposes connected with—

(a) securing the collection of any Community customs duty or giving effect to any Community legislation relating to any such duty;

(b) the enforcement of any prohibition or restriction for the time being in force by virtue of any Community legislation with respect to the movement of goods into or out of the member States; or

(c) the enforcement of any prohibition or restriction for the time being in force by virtue of any enactment with respect to the importation or exportation of goods into or out of the United Kingdom.

(3) Subject to subsection (4) below, this section applies to any power which is conferred on the Commissioners of Customs and Excise or any officer or constable under any of the following provisions of the [1979 c. 2.] Customs and Excise Management Act 1979, that is to say—

(a) section 21 (control of movement of aircraft into and out of the United Kingdom);

(b) section 26 (power to regulate movement by land into and out of Northern Ireland);

(c) section 27 (officers' powers of boarding);

(d) section 28 (officers' powers of access);

(e) section 29 (officers' powers to detain ships);

(f) section 34 (power to prevent flight of aircraft);

(g) section 78 (questions as to baggage of person entering or leaving the United Kingdom);

(h) section 164 (powers of search).

(4) The Treasury may by order made by statutory instrument add any power conferred by any enactment contained in the customs and excise Acts to the powers to which this section applies; and a statutory instrument containing an order under this subsection shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(5) In this section—

• “Community customs duty” includes any agricultural levy of the Economic Community; and

• “the customs and excise Acts” and “goods” have the same meanings as in the [1979 c. 2.] Customs and Excise Management Act 1979;

and for the purposes of this section a power shall be taken to be exercised otherwise than in relation to a person or thing entering or leaving the United Kingdom in any case where the power is exercisable irrespective of whether the person or thing in question is entering or leaving the United Kingdom.

(6) This section shall come into force on 1st January 1993.

5 Controls of persons entering the United Kingdom

(1) In section 78 of the Customs and Excise Management Act 1979 (controls of persons entering or leaving the United Kingdom), after subsection (2) there shall be inserted the following subsection —

“(2A) Subject to subsection (1A) above, where the journey of a person arriving by air in the United Kingdom is continued or resumed by air to a destination in the United Kingdom which is not the place where he is regarded for the purposes of this section as entering the United Kingdom, subsections (1) and (2) above shall apply in relation to that person on his arrival at that destination as they apply in relation to a person entering the United Kingdom.”

(2) This section shall come into force on 1st January 1993.

Other provisions

6 Abolition of duties on matches and mechanical lighters

(1) The [1979 c. 6.] Matches and Mechanical Lighters Duties Act 1979 shall cease to have effect.

(2) This section shall come into force on 1st January 1993.

7 Bingo duty: increased exemption etc

(1) Schedule 3 to the [1981 c. 63.] Betting and Gaming Duties Act 1981 shall be amended as follows.

(2) In paragraph 2 the following shall be substituted for sub-paragraph (1)(a) (exemption from bingo duty for clubs etc. where prizes do not exceed certain limits)—

“(a) a person’s eligibility to participate in that bingo depends upon his being a member of a particular society or his being a guest of such a member or of the society;”.

(3) In paragraph 12(1) (promoter of bingo other than bingo exempt from duty by virtue of paragraph 1, 5 or 6 to keep accounts etc.) for “paragraph 1, 5 or 6 above” there shall be substituted “Part I of this Schedule”.

(4) This section shall apply as regards bingo played in any week beginning on or after 3rd August 1992.

8 Tobacco products duty: retail price of cigarettes

In section 5 of the [1979 c. 7.] Tobacco Products Duty Act 1979—

(a) in paragraph (b) of subsection (1) (determination of retail price of cigarettes by reference to price recommended by a manufacturer or importer), for “price recommended by the importer or manufacturer” and “price so recommended” there shall be substituted “recommended price”; and

(b) after that subsection there shall be inserted the following subsection—

“(1A) In subsection (1) above “recommended price”—

(a) in relation to a case in which cigarettes of the applicable description are manufactured by a manufacturer in a member State, means any price recommended by that manufacturer; and

(b) in relation to a case which does not fall within paragraph (a) above, means any price recommended by an importer of cigarettes of the applicable description.”

9 Amendments relating to new beer duty regime

(1) Schedule 2 to the [1991 c. 31.] Finance Act 1991 (amendments relating to beer duty) shall be amended as follows.

(2) Immediately before paragraph 22 there shall be inserted—

“21A In section 386(1) of the [1986 c. 45.] Insolvency Act 1986 (categories of preferential debts) after “betting and gaming duties” there shall be inserted “, beer duty”.”

(3) Immediately before paragraph 23 there shall be inserted—

“22A In Article 346(1) of the [S.I. 1989/2405 (N.I.19).] Insolvency (Northern Ireland) Order 1989 (categories of preferential debts) after “betting and gaming duties” there shall be inserted “, beer duty”.”

10 Search of aircraft

(1) The [1979 c. 2.] Customs and Excise Management Act 1979 shall be amended as follows.

(2) In section 27(1) (officers' powers of boarding and searching aircraft at a customs and excise airport, etc.) for the words “a customs and excise airport” there shall be substituted “an aerodrome”.

(3) In section 28(1) (officers' powers of access to aircraft at customs and excise airport, etc.) for the words “customs and excise airport” there shall be substituted “aerodrome”.

(4) In section 163 (power to stop and search vehicles or vessels) the following subsection shall be inserted at the end—

“(3) This section shall apply in relation to aircraft as it applies in relation to vehicles or vessels but the power to stop and search in subsection (1) above shall not be available in respect of aircraft which are airborne.”

11 Vehicles excise duty: goods vehicles

(1) Schedule 4 to the [1971 c. 10] Vehicles (Excise) Act 1971 (annual rates of duty on goods vehicles) shall be amended as mentioned in subsections (2) to (9) below.

(2) In Part I of the Schedule in sub-paragraph (3)(a) of paragraph 5 (special types) for “30,000” there shall be substituted “31,000” and for “30,490” there shall be substituted “32,000”.

(3) In that Part the following paragraph shall be substituted for paragraph 14A—

“14A (1) This paragraph applies in any case where—

(a) a vehicle licence has been taken out for a tractor unit having two axles which is to be used only with semi-trailers with not less than three axles; and

(b) the rate of duty paid on taking out the licence is equal to or exceeds the rate of duty applicable to a tractor unit having two axles—

(i) which has a plated train weight of 33,000 kilograms, and

(ii) which is to be used with semi-trailers with not less than two axles.

(2) If, in a case to which this paragraph applies, the tractor unit is used with a semi-trailer with two axles and, when so used, the laden weight of the tractor unit and semi-trailer taken together does not exceed 33,000 kilograms, the tractor unit shall, when so used, be taken to be licensed in accordance with the requirements of this Act.”

(4) In Table A set out in Part II of the Schedule (rigid goods vehicles exceeding 12,000 kilograms plated gross weight: general rates) for the last three entries there shall be substituted—

(5) In Table A(1) set out in that Part (rigid goods vehicles exceeding 12,000 kilograms plated gross weight: farmers' vehicles) for the last three entries there shall be substituted—

(6) In Table A(2) set out in that Part (rigid goods vehicles exceeding 12,000 kilograms plated gross weight: showmen’s vehicles) for the last three entries there shall be substituted—

(7) In Table C set out in that Part (tractor units exceeding 12,000 kilograms plated train weight and having only two axles: general rates) for the last three entries there shall be substituted—

(8) In Table C(1) set out in that Part (tractor units exceeding 12,000 kilograms plated train weight and having only two axles: farmers' vehicles) for the last three entries there shall be substituted—

(9) In Table C(2) set out in that Part (tractor units exceeding 12,000 kilograms plated train weight and having only two axles: showmen’s vehicles) for the last three entries there shall be substituted—

(10) In Case B of section 18A(3) of the [1971 c. 10.] Vehicles (Excise) Act 1971, in paragraph (c) the words from “in circumstances in which” to the end of the paragraph shall be omitted.

(11) This section shall apply in relation to licences taken out on or after 1st January 1993.

12 Vehicles excise duty: disabled persons

(1) The following provisions shall cease to have effect—

(a) section 7 of the [1971 c. 68.] Finance Act 1971 (exemption from vehicles excise duty for disabled passengers), and

(b) section 7(2C) and (2D) of the [1971 c. 10.] Vehicles (Excise) Act 1971 (corresponding Northern Ireland provision).

(2) This section and Part IV of Schedule 18 to this Act shall come into force on such day as the Secretary of State may by order made by statutory instrument appoint; and such an order may contain such transitional provisions and savings as appear to the Secretary of State necessary or expedient in connection with the provisions brought into force by the order.

13 Vehicles excise duty: registration marks

(1) In section 11 of the [1989 c. 26.] Finance Act 1989 (power to make provision for retention of registration marks)—

(a) for paragraph (f) of subsection (2) (extension of period of right of retention) there shall be substituted the following paragraph—

“(f) for enabling or requiring the Secretary of State, on the payment to him of a specified fee, to extend or (on one or more occasions) further extend the period referred to in subsection (1) above where the specified conditions are fulfilled and he thinks fit to do so in the circumstances of the case;”

(b) in subsection (3) (power to make different provision for different cases), at the end there shall be inserted “and may, in particular, exempt extensions or assignments of any specified class or description from any fee or charge payable by virtue of subsection (2)(f) or (j) above”;

(c) after that subsection there shall be inserted the following subsection—

“(3A) Where regulations under this section provide in any case for there to be no charge in connection with the assignment of a registration mark in pursuance of a right of retention—

(a) the fee specified by virtue of paragraph (b) of subsection (2) above in relation to an application for that right may include an amount representing the charge for which provision could have been made by virtue of paragraph (j) of that subsection; and

(b) regulations under this section may provide for the part of any such fee which represents a charge for which provision could have been so made to be retained, except where the specified conditions are fulfilled, whether or not there is an assignment.”; and

(d) in subsection (6), for paragraphs (a) and (b) of the definition of “the principal section” there shall be substituted “section 19 of the [1971 c. 10.] Vehicles (Excise) Act 1971;”.

(2) In section 12 of the Finance Act 1989 (provision for sale of registration marks)—

(a) in paragraph (a) of subsection (3) (provision for acquisition of right on payment of sum in respect of acquisition), at the end there shall be inserted “and, where no charge is to be made by virtue of paragraph (j) below in connection with an assignment in pursuance of the right, in respect of such an assignment;”

(b) for paragraph (f) of that subsection (extension of period of relevant right) there shall be substituted the following paragraph—

“(f) for enabling or requiring the Secretary of State, on the payment to him of a specified fee, to extend or (on one or more occasions) further extend any such period where the specified conditions are fulfilled and he thinks fit to do so in the circumstances of the case;”

(c) after paragraph (j) of that subsection there shall be inserted the following paragraph—

“(ja) for so much of any sum paid by virtue of paragraph (a) above in respect of the assignment of a registration mark to be retained, except where the specified conditions are fulfilled, whether or not there is such an assignment.”;

(d) in subsection (5) (power to make different provision for different cases), for the words from “assignments” onwards there shall be substituted “extensions or assignments of any specified class or description from any fee or charge payable by virtue of subsection (3)(f) or (j) above.”

(3) Section 128 of the [1990 c. 29.] Finance Act 1990 (power to provide repayment of fees and charges) shall apply to any power by virtue of this section to make provision under section 11 or 12 of the [1989 c. 26.] Finance Act 1989 for the payment of any sum as it applies to powers conferred before that Act of 1990 was passed.

(4) Any sums received by the Secretary of State in respect of the extension or further extension of the period of any right granted to or acquired by any person by virtue of regulations under section 11 or 12 of the Finance Act 1989 shall be paid into the Consolidated Fund.

Chapter II Value Added Tax

14 Abolition of fiscal frontiers etc

(1) Value added tax—

(a) shall cease to be charged on importations of goods into the United Kingdom from member States; and

(b) shall, instead, be charged, in accordance with the [1983 c. 55.] Value Added Tax Act 1983, on acquisitions in the United Kingdom from other member States of any goods.

(2) Schedule 3 to this Act shall have effect for the purposes—

(a) of amending the [1983 c. 55.] Value Added Tax Act 1983, Chapter II of Part I of the [1985 c. 54.] Finance Act 1985 and certain other enactments in connection with the provision made by subsection (1) above; and

(b) of giving effect, in relation to—

(i) value added tax charged on the supply of goods and services; and

(ii) value added tax charged on the importation of goods from places outside the member States,

to requirements of the directive of the Council of the European Communities dated 17th May 1977 No. 77/388/EEC and the amendments of that directive by the directive of that Council dated 16th December 1991 No. 91/680/EEC (amendments with a view to the abolition of fiscal frontiers).

(3) This section and Schedule 3 to this Act shall come into force on such day as the Commissioners of Customs and Excise may by order made by statutory instrument appoint; and different days may be appointed under this subsection for different provisions and for different purposes.

(4) Subject to subsection (5) below, an order under subsection (3) above may include such transitional provision as the Commissioners think fit in connection with the bringing into force of any provision or with the arrangements made in any other member State for giving effect to the directives mentioned in subsection (2)(b) above.

(5) Subsection (4) above shall not authorise the making of any provision so as to put a person into a position with respect to value added tax charged in the member States which is worse than that in which he would have been apart from the power conferred by that subsection.

(6) Subsections (4) and (5) above are without prejudice to the Commissioners' powers under subsection (3) above to bring different provisions of this section and Schedule 3 to this Act into force on different days for different purposes.

15 Time for raising and answering inquiries

(1) In section 20 of the [1985 c. 54.] Finance Act 1985 (repayment supplement in respect of certain delayed payments or refunds) after subsection (3) there shall be inserted—

“(3A) In determining for the purposes of regulations under subsection (3) above whether any period is referable to the raising and answering of such an inquiry as is mentioned in that subsection, there shall be taken to be so referable any period which—

(a) begins with the date on which the Commissioners first consider it necessary to make such an inquiry, and

(b) ends with the date on which the Commissioners—

(i) satisfy themselves that they have received a complete answer to the inquiry, or

(ii) determine not to make the inquiry or, if they have made it, not to pursue it further,

but excluding so much of that period as may be prescribed; and it is immaterial whether any inquiry is in fact made or whether it is or might have been made of the person or body making the requisite return or claim or of an authorised person or of some other person.”

(2) In section 38A of the [1983 c. 55.] Value Added Tax Act 1983 (interest in certain cases of official error) after subsection (8) there shall be inserted—

“(8A) In determining for the purposes of subsection (8) above whether any period is referable to the raising and answering of such an inquiry as is there mentioned, there shall be taken to be so referable any period which—

(a) begins with the date on which the Commissioners first consider it necessary to make such an inquiry, and

(b) ends with the date on which the Commissioners—

(i) satisfy themselves that they have received a complete answer to the inquiry, or

(ii) determine not to make the inquiry or, if they have made it, not to pursue it further,

but excluding so much of that period as may be prescribed; and it is immaterial whether any inquiry is in fact made or whether it is or might have been made of the person referred to in subsection (1) above or of an authorised person or of some other person.”

(3) Subsection (1) above shall apply where the requisite return or claim is received after the day on which this Act is passed.

(4) Subsection (2) above shall apply where the claim is received after the day on which this Act is passed.

16 Special treatment for persons involved in farming etc

(1) After section 37A of the [1983 c. 55.] Value Added Tax Act 1983, there shall be inserted the following section—

“37B Special treatment for persons involved in farming etc

(1) The Commissioners may, in accordance with such provision as may be contained in regulations made by them, certify for the purposes of this section any person who satisfies them—

(a) that he is carrying on a business involving one or more designated activities;

(b) that he is of such a description and has complied with such requirements as may be prescribed; and

(c) where an earlier certification of that person has been cancelled, that more than the prescribed period has elapsed since the cancellation or that such other conditions as may be prescribed are satisfied.

(2) Where a person is for the time being certified under this section, then (whether or not that person is a taxable person) so much of any supply by him of any goods or services as, in accordance with provision contained in regulations, is allocated to the relevant part of his business shall be disregarded for the purpose of determining whether he is, has become or has ceased to be liable or entitled to be registered under Schedule 1 to this Act.

(3) The Commissioners may by regulations provide for an amount included in the consideration for any taxable supply which is made—

(a) in the course or furtherance of the relevant part of his business by a person who is for the time being certified under this section;

(b) at a time when that person is not a taxable person; and

(c) to a taxable person,

to be treated, for the purpose of determining the entitlement of the person supplied to credit under sections 14 and 15 above, as tax on a supply to that person.

(4) The amount which, for the purposes of any provision made under subsection (3) above, may be included in the consideration for any supply shall be an amount equal to such percentage as the Treasury may by order specify of the sum which, with the addition of that amount, is equal to the consideration for the supply.

(5) The Commissioners' power by regulations under section 23 above to provide for the repayment to persons to whom that section applies of tax which would be input tax of theirs if they were taxable persons in the United Kingdom includes power to provide for the payment to persons to whom that section applies of sums equal to the amounts which, if they were taxable persons in the United Kingdom, would be input tax of theirs by virtue of regulations under this section; and references in that section, or in any other enactment, to a repayment of tax shall be construed accordingly.

(6) Regulations under this section may provide—

(a) for the form and manner in which an application for certification under this section, or for the cancellation of any such certification, is to be made; and

(b) for the cases and manner in which the Commissioners may cancel a person’s certification;

(c) for entitlement to a credit such as is mentioned in subsection (3) above to depend on the issue of an invoice containing such particulars as may be prescribed, or as may be notified by the Commissioners in accordance with provision contained in regulations; and

(d) for the imposition on certified persons of obligations with respect to the keeping, preservation and production of such records as may be prescribed and of obligations to comply with such requirements with respect to any of those matters as may be so notified;

and regulations made by virtue of paragraph (b) above may confer on the Commissioners power, if they think fit, to refuse to cancel a person’s certification, and to refuse to give effect to any entitlement of that person to be registered, until the end of such period after the grant of certification as may be prescribed.

(7) In this section references, in relation to any person, to the relevant part of his business are references—

(a) where the whole of his business relates to the carrying on of one or more designated activities, to that business; and

(b) in any other case, to so much of his business as does so relate.

(8) In this section “designated activities” means such activities, being activities carried on by a person who, by virtue of carrying them on, falls to be treated as a farmer for the purposes of Article 25 of the directive of the Council of the European Communities dated 17th May 1977 No. 77/388/EEC (common flat-rate scheme for farmers), as the Treasury may by order designate.”

(2) In section 40(1) of that Act (appeals) after paragraph (h) there shall be inserted the following paragraph—

“(hza) any refusal or cancellation of certification under section 37B above or any refusal to cancel such certification;”.

(3) In section 45(4) of that Act (orders subject to affirmative procedure), after paragraph (d) there shall be inserted the following paragraph—

“(e) an order under section 37B(4) or (8) above.”

(4) In paragraph 7 of Schedule 2 to that Act (charge where person ceases to be taxable person), after sub-paragraph (2) there shall be inserted the following sub-paragraph—

“(2A) This paragraph does not apply where a person ceases to be a taxable person in consequence of having been certified under section 37B of this Act.”

(5) In section 15 of the [1985 c. 54.] Finance Act 1985 (penalties for failures to notify and unauthorised issue of invoices), before subsection (4) there shall be inserted the following subsection—

“(3D) This section shall have effect in relation to any invoice which—

(a) for the purposes of any provision made under subsection (3) of section 37B of the principal Act shows an amount as included in the consideration for any supply; and

(b) either—

(i) fails to comply with the requirements of any regulations under that section; or

(ii) is issued by a person who is not for the time being authorised to do so for the purposes of that section,

as if the person issuing the invoice were an unauthorised person and that amount were shown on the invoice as an amount attributable to tax.”

(6) This section shall come into force on such day as the Commissioners of Customs and Excise may by order made by statutory instrument appoint; and different days may be appointed under this subsection for different provisions and for different purposes.

17 Fuel and power

(1) In Schedule 5 to the [1983 c. 55.] Value Added Tax Act 1983 (zero-rating) in Note (8) to Group 7 (fuel and power) the words from “upon which” to “be charged” shall be omitted.

(2) This section shall apply in relation to matches upon which, by virtue of the repeal of the [1979 c. 6.] Matches and Mechanical Lighters Duties Act 1979 by section 6 above, no duty of excise has been or is to be charged.

Chapter III Car Tax

18 Abolition of fiscal frontiers

(1) The [1983 c. 53.] Car Tax Act 1983 shall be amended in accordance with Schedule 4 to this Act (amendments in connection with the abolition of fiscal frontiers between the member States).

(2) This section and Schedule 4 to this Act shall come into force on such day as the Commissioners of Customs and Excise may by order made by statutory instrument appoint; and different days may be appointed under this subsection for different provisions and for different purposes.

Part III Income Tax, Corporation Tax and Capital Gains Tax

Chapter I General

Lower rate

19 Lower rate: further provisions

(1) In section 7(4) of the [1970 c. 9.] Taxes Management Act 1970 for “basic rate” there shall be substituted “the basic rate or the lower rate”.

(2) In each of the provisions to which this subsection applies, after “basic rate” there shall be inserted “or the lower rate”; and this subsection applies to section 91(3)(c) of the Taxes Management Act 1970 and to sections 550(3) and 599A(7) of the Taxes Act 1988.

(3) In each of the provisions to which this subsection applies, after “all income tax” there shall be inserted “not chargeable at the lower rate”; and this subsection applies to sections 167(2A), 233(2), 353(5), 369(3B), 549(2), 683(2), 684(2), 689(2), 699(2) and 819(2) of the Taxes Act 1988 and to the definition of “excess liability” in paragraph 19(1) of Schedule 7 to that Act.

(4) In each of the provisions to which this subsection applies, after “shall be treated” there shall be inserted “as income which is not chargeable at the lower rate and”; and this subsection applies to sections 233(1)(c), 249(4)(c) and 547(5)(c) of the Taxes Act 1988.

(5) In section 369 of the Taxes Act 1988 at the beginning of subsection (3) there shall be inserted “Subject to subsection (5A) below”, and after subsection (5) there shall be inserted—

“(5A) In any case where—

(a) payments of relevant loan interest to which this section applies become due in any year, and

(b) the notional lower rate income of the borrower for that year exceeds the actual lower rate income of the borrower for that year,

the borrower shall be charged with tax at the lower rate (rather than the basic rate) for that year on so much of the income on which he is chargeable to tax by virtue of subsection (3) above as is equal to the excess.

(5B) For the purposes of subsection (5A) above—

(a) the notional lower rate income of a borrower for a year is the amount of his total income for the year which would be chargeable at the lower rate if the relevant deduction were not made;

(b) the actual lower rate income of a borrower for a year is the amount of his total income for the year which is actually chargeable at the lower rate;

and the relevant deduction is the deduction which, in computing the borrower’s total income otherwise than for the purposes of excess liability, falls to be made on account of the payments referred to in subsection (5A)(a) above.”

(6) In section 421(1)(c) of the Taxes Act 1988 for “shall, notwithstanding that paragraph, be treated” there shall be substituted “shall be treated as income which is not chargeable at the lower rate and, notwithstanding that paragraph, shall be treated”.

(7) This section shall apply for the year 1992-93 and subsequent years of assessment.

Married couple’s allowance etc.

20 Married couple’s allowance etc

Schedule 5 to this Act (which makes provision in relation to the married couple’s allowance) shall have effect.

Corporation tax charge and rate

21 Charge and rate of corporation tax for 1992

Corporation tax shall be charged for the financial year 1992 at the rate of 33 per cent.

22 Small companies

For the financial year 1992—

(a) the small companies' rate shall be 25 per cent., and

(b) the fraction mentioned in section 13(2) of the Taxes Act 1988 (marginal relief for small companies) shall be one fiftieth.

Capital gains tax

23 Capital gains tax: rates

(1) In section 4 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (rates of capital gains tax) the following subsections shall be inserted after subsection (1)—

“(1A) If (after allowing for any deductions in accordance with the Income Tax Acts) an individual has no income for a year of assessment or his total income for the year is less than the lower rate limit, then—

(a) if the amount on which he is chargeable to capital gains tax does not exceed the relevant amount, the rate of capital gains tax in respect of gains accruing to him in the year shall be equivalent to the lower rate;

(b) if the amount on which he is chargeable to capital gains tax exceeds the relevant amount, the rate of capital gains tax in respect of such gains accruing to him in the year as correspond to the relevant amount shall be equivalent to the lower rate.

(1B) For the purposes of subsection (1A) above the relevant amount is—

(a) an amount equal to the lower rate limit, where the individual has no income;

(b) an amount equal to the difference between his total income and that limit, in any other case.”

(2) In section 6(1) of that Act—

(a) after “all income tax” there shall be inserted “not chargeable at the lower rate”;

(b) after “otherwise than at the basic rate” in both places where the words occur there shall be inserted “or the lower rate”;

(c) for “section 4(4)” in both places where the words occur there shall be substituted “section 4(1A), (1B) and (4)”.

(3) This section shall apply for the year 1992-93 and subsequent years of assessment.

Groups etc.

24 Amendments relating to group relief etc

Schedule 6 to this Act (which contains amendments relating to group relief etc.) shall have effect.

25 Companies ceasing to be members of groups

(1) Sections 178 and 179 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (deemed sale etc. where company ceases to be member of a group) shall have effect, and be deemed always to have had effect, with the substitution in subsection (1) of each of those sections of the words “in consequence of another member of the group ceasing to exist” for the words from “by being wound up” to the end of the subsection.

(2) Subject to the repeals made by the [1992 c. 12.] Taxation of Chargeable Gains Act 1992, in relation to a company which ceases to be a member of a group of companies on or after 15th November 1991 section 278 of the [1970 c. 10.] Income and Corporation Taxes Act 1970 (deemed sale etc. where company ceases to be member of a group) shall have effect, and be deemed to have had effect, with the substitution in subsection (1) of the words “in consequence of another member of the group ceasing to exist” for the words from “by being wound up” to the end of the subsection.

Charities etc.

26 Donations to charity: minimum limits

(1) In section 339 of the Taxes Act 1988 (charges on income: donations to charity) in subsection (3A) (payment by close company not a qualifying donation if less than £600 after deducting income tax) for “£600” there shall be substituted “£400”.

(2) In section 25 of the [1990 c. 29.] Finance Act 1990 (donations to charity by individuals) in subsection (2)(g) (gift must be not less than £600 to be a qualifying donation) for “£600” there shall be substituted “£400”.

(3) Subsection (1) above shall apply in relation to payments made on or after 7th May 1992.

(4) Subsection (2) above shall apply in relation to gifts made on or after 7th May 1992.

27 Covenanted payments to charity

(1) In section 671 of the Taxes Act 1988 (revocable settlements allowing release of obligation) in subsection (2) (exceptions to sums payable under such settlements being income of settlor) after “shall not apply” there shall be inserted “in the case of a covenanted payment to charity so long as that power has not been exercised, and in any other case”.

(2) This section shall apply in relation to—

(a) any covenant made on or after 7th May 1992;

(b) any covenant made before that day and in the case of which the power to revoke cannot be exercised before that day.

28 Powers of inspection

(1) Subsection (2) below applies if—

(a) an exempt body has made a claim for exemption from tax under section 505(1), 507 or 508 of the Taxes Act 1988, and

(b) the exemption results in, or (where it has yet to be granted or allowed) would if granted or allowed result in, the repayment of income tax or the payment of a tax credit.

(2) The Board may require the body to produce for inspection by an officer of the Board all such books, documents and other records in the possession, or under the control, of the body as contain information relating to the claim.

(3) For the purposes of subsection (1) above each of the following is an exempt body—

(a) any body of persons or trust established for charitable purposes only;

(b) each of the bodies mentioned in section 507 of the Taxes Act 1988 (heritage bodies);

(c) any Association of a description specified in section 508 of that Act (scientific research organisations).

(4) In the Table in section 98 of the [1970 c. 9.] Taxes Management Act 1970 (penalties for failure to produce documents etc.) at the end of the second column there shall be inserted—

(5) Section 94 of the [1990 c. 29.] Finance Act 1990 (donations to charity: inspection powers) shall cease to have effect.

(6) This section shall apply in relation to claims made after the day on which this Act is passed.

Interest, dividends and distributions

29 Returns of interest

(1) In section 17 of the [1970 c. 9.] Taxes Management Act 1970 (returns of interest) in subsection (4) (interest not required to be included in return if declaration that person beneficially entitled to interest not ordinarily resident in UK) the words from “and if a person” to the end of the subsection shall cease to have effect and after that subsection there shall be inserted the following subsections—

“(4A) If a person to whom any interest is paid or credited in respect of any money received or retained in the United Kingdom by notice in writing served on the person paying or crediting the interest—

(a) has declared that the person beneficially entitled to the interest is a company not resident in the United Kingdom, and

(b) has requested that the interest shall not be included in any return under this section,

the person paying or crediting the interest shall not be required to include the interest in any such return.

(4B) Subsection (4C) below shall apply where—

(a) as a result of a declaration made under section 481(5)(k) of the principal Act and the operation of section 482(5) of that Act in relation to that declaration, there is no obligation under section 480A(1) of that Act to deduct a sum representing income tax out of any interest paid or credited in respect of any money received or retained in the United Kingdom, and

(b) the person who makes the declaration referred to in paragraph (a) above, by notice in writing served on the person paying or crediting the interest, requests that the interest shall not be included in any return under this section.

(4C) Where this subsection applies, the person paying or crediting the interest shall not be required to include the interest in any return under this section.”

(2) This section shall apply to interest paid or credited after the day on which this Act is passed.

30 Foreign dividends

In section 123 of the Taxes Act 1988 (foreign dividends) the following subsections shall be inserted after subsection (6)—

“(7) In a case where—

(a) relevant foreign dividends referred to in subsection (2) above are dividends (as opposed to interest or other annual payments),

(b) they are entrusted by a company which at the time they are entrusted (the relevant time) is not resident in the United Kingdom,

(c) they are entrusted for payment to a company which at the relevant time is resident in the United Kingdom,

(d) at the relevant time the company mentioned in paragraph (c) above directly or indirectly controls not less than 10 per cent. of the voting power in the company mentioned in paragraph (b) above, and

(e) the relevant time falls on or after 1st January 1992,

subsection (2) above shall not apply.

(8) In a case where—

(a) foreign dividends referred to in subsection (3)(a) above are dividends (as opposed to interest or other annual payments),

(b) they are paid by a company which at the time of the payment (the relevant time) is not resident in the United Kingdom,

(c) payment is obtained on behalf of a company which at the relevant time is resident in the United Kingdom,

(d) at the relevant time the company mentioned in paragraph (c) above directly or indirectly controls not less than 10 per cent. of the voting power in the company mentioned in paragraph (b) above, and

(e) the relevant time falls on or after 1st January 1992,

subsection (3) above shall not apply.”

31 Equity notes

(1) In section 209 of the Taxes Act 1988 (meaning of “distribution” for purposes of Corporation Tax Acts) in subsection (2)(e) after sub-paragraph (vi) there shall be inserted “or

(vii) equity notes issued by the company (“the issuing company”) and held by a company which is associated with the issuing company or is a funded company;”.

(2) In that section the following subsections shall be inserted after subsection (8)—

“(9) For the purposes of subsection (2)(e)(vii) above a security is an equity note if as regards the whole of the principal or as regards any part of it—

(a) the security’s terms contain no particular date by which it is to be redeemed,

(b) under the security’s terms the date for redemption, or the latest date for redemption, falls after the expiry of the permitted period,

(c) under the security’s terms redemption is to occur after the expiry of the permitted period if a particular event occurs and the event is one which (judged at the time of the security’s issue) is certain or likely to occur, or

(d) the issuing company can secure that there is no particular date by which the security is to be redeemed or that the date for redemption falls after the expiry of the permitted period;

and the permitted period is the period of 50 years beginning with the date of the security’s issue.

(10) For the purposes of subsection (2)(e)(vii) above and subsection (11) below a company is associated with the issuing company if—

(a) the issuing company is a 75 per cent. subsidiary of the other company,

(b) the other company is a 75 per cent. subsidiary of the issuing company, or

(c) both are 75 per cent. subsidiaries of a third company.

(11) For the purposes of subsection (2)(e)(vii) above a company is a funded company if there are arrangements involving the company being put in funds (directly or indirectly) by the issuing company or a company associated with the issuing company.”

(3) In section 212 of the Taxes Act 1988 (exclusions from “distribution”) in subsection (1)(b) after “(vi)” there shall be inserted “and (vii)”.

(4) This section shall apply where the interest or other distribution is paid after 14th May 1992.

32 Information relating to distributions

(1) The following section shall be inserted after section 234 of the Taxes Act 1988—

“234A Information relating to distributions: further provisions

(1) This section applies where dividend or interest is distributed by a company which is—

(a) a company within the meaning of the [1985 c. 6.] Companies Act 1985 or the [S.I. 1986/1032 (N.I. 6).] Companies (Northern Ireland) Order 1986, or

(b) a company created by letters patent or by or in pursuance of an Act.

(2) If the company makes a payment of dividend or interest to any person, and subsection (3) below does not apply, within a reasonable period the company shall send an appropriate statement to that person.

(3) If the company makes a payment of dividend or interest into a bank or building society account held by any person, within a reasonable period the company shall send an appropriate statement to either—

(a) the bank or building society concerned, or

(b) the person holding the account.

(4) In a case where—

(a) a statement is received by a person under subsection (2) or (3)(b) above,

(b) the whole or part of the sum concerned is paid to or on behalf of the person as nominee for another person, and

(c) the nominee makes a payment of the sum or part to the other person and subsection (5) below does not apply,

within a reasonable period the nominee shall send an appropriate statement to that person.

(5) In a case where—

(a) a statement is received by a person under subsection (2) or (3)(b) above,

(b) the whole or part of the sum concerned is paid to or on behalf of the person as nominee for another person, and

(c) the nominee makes a payment of the sum or part into a bank or building society account held by the other person,

within a reasonable period the nominee shall send an appropriate statement to either the bank or building society concerned or the other person.

(6) In the case of a payment of interest which is not a qualifying distribution or part of a qualifying distribution, references in this section to an appropriate statement are to a written statement showing—

(a) the gross amount which, after deduction of the income tax appropriate to the interest, corresponds to the net amount actually paid,

(b) the rate and the amount of income tax appropriate to such gross amount,

(c) the net amount actually paid, and

(d) the date of the payment.

(7) In the case of a payment of dividend or interest which is a qualifying distribution or part of a qualifying distribution, references in this section to an appropriate statement are to a written statement showing—

(a) the amount of the dividend or interest paid,

(b) the date of the payment, and

(c) the amount of the tax credit to which a person is entitled in respect of the dividend or interest, or to which a person would be so entitled if he had a right to a tax credit in respect of the dividend or interest.

(8) In this section “send” means send by post.

(9) If a person fails to comply with subsection (2), (3), (4) or (5) above, the person shall incur a penalty of £60 in respect of each offence, except that the aggregate amount of any penalties imposed under this subsection on a person in respect of offences connected with any one distribution of dividends or interest shall not exceed £600.

(10) The Board may by regulations provide that where a person is under a duty to comply with subsection (2), (3), (4) or (5) above, the person shall be taken to comply with the subsection if the person either—

(a) acts in accordance with the subsection concerned, or

(b) acts in accordance with rules contained in the regulations;

and subsection (9) above shall be construed accordingly.

(11) Regulations under subsection (10) above may make different provision for different circumstances.”

(2) In section 234 of that Act—

(a) in subsection (1) for “subsections (3) and (4) below” there shall be substituted “section 234A”;

(b) subsections (3) and (4) shall be omitted.

(3) In section 468(3) of that Act for “234(3) and (4)” there shall be substituted “234A”.

(4) This section shall apply in relation to distributions begun after the day on which this Act is passed.

Securities and deposits

33 Deep gain securities

Schedule 7 to this Act (which contains provisions about deep gain securities) shall have effect.

34 Rights in pursuance of deposits

Schedule 8 to this Act (which contains provisions about arrangements relating to rights in pursuance of deposits) shall have effect.

35 Exchange of securities

(1) Section 135 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (exchange of securities for those in another company) shall have effect, and be deemed always to have had effect, with the insertion after subsection (1)(b) of “or

(c) company A holds, or in consequence of the exchange will hold, the greater part of the voting power in company B”.

(2) Subject to the repeals made by the Taxation of Chargeable Gains Act 1992, in relation to exchanges made on or after 1st January 1992 section 85 of the [1979 c. 14.] Capital Gains Tax Act 1979 (exchange of securities for those in another company) shall have effect, and be deemed to have had effect, with the insertion after subsection (1)(b) of “or

(c) company A holds, or in consequence of the exchange will hold, the greater part of the voting power in company B”.

Employee shares

36 Employee share ownership trusts

(1) In section 69 of the [1989 c. 26.] Finance Act 1989 (chargeable events as regards employee share ownership trusts) the following shall be inserted after subsection (3)—

“(3A) For the purposes of subsection (1)(a) above a transfer is also a qualifying transfer if it is made by way of exchange in circumstances mentioned in section 85(1) of the Capital Gains Tax Act 1979 or section 135(1) of the Taxation of Chargeable Gains Act 1992.”

(2) This section applies in relation to exchanges made on or after 1st January 1992.

37 Employee share schemes: special benefits

(1) Section 80 of the [1988 c. 39.] Finance Act 1988 (unapproved employee share schemes: charge on special benefits) shall be amended as follows.

(2) The following subsections shall be substituted for subsection (2)—

“(1A) If when a benefit is received the company is a dependent subsidiary and its shares are of a single class, the benefit is a special benefit for the purposes of subsection (1) above.

(2) A benefit which does not fall within subsection (1A) above is a special benefit for the purposes of subsection (1) above unless—

(a) when it becomes available it is available to at least ninety per cent. of the persons who then hold shares of the same class as those which, or an interest in which, the person acquired, and

(b) any of the conditions in subsection (3) below is satisfied.”

(3) In subsection (3) (other conditions) in paragraph (a) for “of the class concerned” there shall be substituted “in respect of which the benefit is received”.

(4) In paragraph (c) of subsection (3) for “its shares are of a single class” there shall be substituted “the majority of its shares in respect of which the benefit is received are held otherwise than by or for the benefit of—

(i) directors or employees of the company,

(ii) a company which is an associated company of the company but is not its parent company, or

(iii) directors or employees of a company which is an associated company of the company”.

(5) The following subsection shall be inserted after subsection (3)—

“(3A) For the purposes of subsection (3)(c)(ii) above a company is another company’s parent company if the second company is a subsidiary of the first.”

(6) This section shall apply in relation to benefits received on or after 12th November 1991.

Business expansion scheme

38 No relief for shares issued after 1993

In section 289 of the Taxes Act 1988 (relief under the business expansion scheme) the words “and before the end of 1993” shall be inserted—

(a) in subsection (1)(a), after “5 April 1983”,

(b) in subsection (1)(b), after “18th March 1986”, and

(c) in subsection (1)(d), after “(25th July 1986)”.

39 Extension of relief for private rented housing: property managing companies

Part I of Schedule 4 to the [1988 c. 39.] Finance Act 1988 (extension of business expansion scheme to private rented housing: modifications of the Taxes Act 1988) shall have effect, and be taken always to have had effect, with the substitution of the following paragraph for paragraph 11—

“11 (1) For subsection (1) of section 308 (application to subsidiaries) there shall be substituted—

“(1) A qualifying company may, in the relevant period, have one or more subsidiaries if the subsidiary or, as the case may be, each subsidiary is a subsidiary to which subsection (1A) or (1B) below applies.

(1A) This subsection applies to a subsidiary if—

(a) it is a dormant subsidiary or exists wholly, or substantially wholly, for the purpose of carrying on activities which do not include, to any substantial extent, activities which are not qualifying activities, and

(b) the conditions mentioned in subsection (2) below are satisfied in respect of it and, except as provided by subsection (3) below, continue to be satisfied in respect of it until the end of the relevant period.

(1B) This subsection applies to a subsidiary if—

(a) it is a property managing subsidiary, and

(b) reading each reference in subsection (2) below to 90 per cent. as a reference to 51 per cent., the conditions in that subsection are satisfied in respect of it and, except as provided by subsection (3) below, continue to be satisfied in respect of it until the end of the relevant period.”

(2) In subsection (5) of that section, for paragraph (a) there shall be substituted—

“(a) a subsidiary is a property managing subsidiary if it exists wholly, or substantially wholly, for the purpose of holding or managing (or holding and managing) a single block of flats and more than half of those flats are let by the qualifying company or any of its subsidiaries in the course of qualifying activities;”.”

40 Extension of relief for private rented housing: lettings to former owner-occupiers

(1) In Part II of Schedule 4 to the [1988 c. 39.] Finance Act 1988 (extension of business expansion scheme to private rented housing: exclusion of certain dwelling-houses) paragraph 15 shall be amended as follows.

(2) In sub-paragraph (1), for “Section 50” there shall be substituted “Subject to sub-paragraphs (1A) to (1C) below, section 50”.

(3) The following sub-paragraphs shall be inserted after sub-paragraph (1)—

“(1A) Section 50 of this Act is not precluded from applying to a dwelling-house by sub-paragraph (1)(a) above if the arrangements there mentioned were for letting to a person who was an owner-occupier of the dwelling-house before the relevant date.

(1B) Section 50 of this Act is not precluded from applying to a dwelling-house by sub-paragraph (1)(b) above if the letting there mentioned was to a person—

(a) who was an owner-occupier of the dwelling-house before the date of the letting, and

(b) to whom the dwelling-house or part is let on a qualifying tenancy by the company or any of its subsidiaries after the relevant date.

(1C) Section 50 of this Act is not precluded from applying to a dwelling-house by sub-paragraph (1)(c) above if the letting there mentioned was to a person—

(a) who was an owner-occupier of the dwelling-house before the relevant date, and

(b) to whom the dwelling-house or part is let on a qualifying tenancy by the company or any of its subsidiaries after the letting mentioned in sub-paragraph (1)(c).”

(4) The following sub-paragraphs shall be added after sub-paragraph (2)—

“(3) For the purposes of this paragraph, a person shall be taken to have been an owner-occupier of a dwelling-house before the relevant date or, as the case may be, the date mentioned in sub-paragraph (1B)(a) above if—

(a) at any time before that date, he occupied the dwelling-house as his only or principal home and had a freehold interest in it, or

(b) for a period of at least two years ending on that date, he occupied the dwelling-house as his only or principal home and had an interest in it under a lease for a term of years certain not less than twenty-one of which remained unexpired at that date.

(4) In the application of sub-paragraph (3) above to a dwelling-house in Scotland—

(a) for paragraph (a) there shall be substituted—

“(a) at any time before that date he occupied the dwelling-house and—

(i) was the absolute owner of it, or

(ii) was the owner of the dominium utile in it,”; and

(b) in paragraph (b) the word “certain” shall be omitted.

(5) In the application of sub-paragraph (3) above to a dwelling-house in Northern Ireland, any conveyance or assignment of an interest in it by way of mortgage shall be disregarded.”

(5) This section shall have effect where shares are issued on or after 10th March 1992.

Films

41 Relief for preliminary expenditure

(1) Subject to the following provisions of this section and any other provisions of the Tax Acts, in computing for tax purposes the profits or gains accruing to a person in a relevant period from a trade or business which consists of or includes the exploitation of films, that person shall (on making a claim) be entitled to deduct the amount of any expenditure of a revenue nature payable by him in that or an earlier relevant period—

(a) which is expenditure to which this section applies,

(b) in respect of which no deduction has previously been made (whether under this section or otherwise) in computing for tax purposes the profits or gains accruing from the trade or business, and

(c) in respect of which no election has been made under section 68(9) of the 1990 Act.

(2) This section applies to any expenditure that—

(a) can reasonably be said to have been incurred with a view to enabling a decision to be taken as to whether or not to make a film,

(b) is payable before the first day of principal photography (where the decision that is taken is to make the film), and

(c) is not payable under any contract or other arrangement whereby it may fall to be repaid if the film is not made.

(3) A deduction shall not be made in respect of a film that has been completed unless the master negative of the film or any master tape or master disc of the film is a qualifying film, tape or disc.

(4) A deduction shall not be made in respect of a film that has not been completed unless it is reasonably likely that if the film were completed the master negative of the film or any master tape or master disc of the film would be a qualifying film, tape or disc.

(5) The total amount deducted under this section in respect of a film shall not exceed 20 per cent. of the budgeted total expenditure on the film, as calculated at the first day of principal photography.

(6) A claim under this section shall be made not later than two years after the end of the relevant period in which the expenditure to which it relates becomes payable.

(7) To the extent that a deduction has been made in respect of any expenditure under this section, no further deduction shall be made in respect of it in computing for tax purposes the profits or gains of the trade or business concerned.

(8) This section shall have effect in relation to expenditure payable on or after 10th March 1992.

42 Relief for production or acquisition expenditure

(1) Subject to the following provisions of this section and any other provisions of the Tax Acts, in computing for tax purposes the profits or gains accruing to a person in a relevant period from a trade or business which consists of or includes the exploitation of films, that person shall (on making a claim) be entitled to deduct an amount in respect of any expenditure—

(a) which is expenditure to which subsection (2) or (3) below applies, and

(b) in respect of which no deduction has been made by virtue of subsections (3) to (6) of section 68 of the 1990 Act and no election has been made under subsection (9) of that section.

(2) This subsection applies to any expenditure of a revenue nature incurred by the claimant on the production of a film—

(a) which was completed in the relevant period to which the claim relates or an earlier relevant period, and

(b) the master negative of which or any master tape or master disc of which is a qualifying film, tape or disc.

(3) This subsection applies to any expenditure of a revenue nature incurred by the claimant on the acquisition of the master negative of a film or any master tape or master disc of a film where—

(a) the film was completed in the relevant period to which the claim relates or an earlier relevant period, and

(b) the master negative, tape or disc is a qualifying film, tape or disc.

(4) Any amount deducted for a relevant period under subsection (1) above shall not exceed—

(a) one third of the total expenditure incurred by the claimant on the production of the film concerned or the acquisition of the master negative or any master tape or master disc of it,

(b) one third of the sum obtained by deducting from the amount of that total expenditure the amount of so much of that total expenditure as has already been deducted by virtue of section 41 above, or

(c) so much of that total expenditure as has not already been deducted by virtue of section 68(3) to (6) of the 1990 Act, section 41 above or this section,

whichever is less.

(5) In relation to a relevant period of less than twelve months, the references to one third in subsection (4) above shall be read as references to a proportionately smaller fraction.

(6) A claim under this section shall be made not later than two years after the end of the relevant period to which the claim relates and shall be irrevocable.

(7) Where any expenditure is deducted by virtue of section 68(3) to (6) of the 1990 Act in computing the profits or gains of a trade or business for a relevant period, no deduction shall be made under this section for that relevant period in respect of expenditure incurred on the production or acquisition of the film concerned.

(8) This section does not apply to the profits or gains of a trade in which the film concerned constitutes trading stock, as defined in section 100(2) of the Taxes Act 1988.

(9) This section shall have effect in relation to expenditure incurred on films completed on or after 10th March 1992.

43 Interpretation of sections 41 and 42

(1) In sections 41 and 42 above and this section—

• “expenditure of a revenue nature” has the meaning given in section 68(10) of the 1990 Act,

• “master disc”, in relation to a film, means the original master film disc or the original master audio disc of the film,

• “master negative”, in relation to a film, means the original master negative of the film and its soundtrack (if any),

• “master tape”, in relation to a film, means the original master film tape or the original master audio tape of the film,

• “qualifying disc” means a master disc of a film certified by the Secretary of State under Schedule 1 to the [1985 c. 21.] Films Act 1985 as a qualifying disc for the purposes of section 68 of the 1990 Act,

• “qualifying film” means a master negative of a film certified by the Secretary of State under Schedule 1 to the [1985 c. 21.] Films Act 1985 as a qualifying film for the purposes of section 68 of the 1990 Act,

• “qualifying tape” means a master tape of a film certified by the Secretary of State under Schedule 1 to the [1985 c. 21.] Films Act 1985 as a qualifying tape for the purposes of section 68 of the 1990 Act,

• “relevant period” has the meaning given in section 68(3) of the 1990 Act, and

• “the 1990 Act” means the [1990 c. 1.] Capital Allowances Act 1990.

(2) In sections 41 and 42 above and this section—

(a) any reference to a film shall be construed in accordance with paragraph 1 of Schedule 1 to the Films Act 1985, and

(b) any reference to the acquisition of a master negative, master tape or master disc of a film includes a reference to the acquisition of any description of rights in it.

(3) For the purposes of sections 41 and 42 above a film is completed—

(a) at the time when it is first in a form in which it can reasonably be regarded as ready for copies of it to be made and distributed for presentation to the general public, or

(b) in a case within section 42 where the expenditure in question was incurred on the acquisition of the master negative of the film or any master tape or master disc of the film and it was acquired after the time mentioned in paragraph (a) above, at the time it was acquired.

Transfers of trade

44 Transfer of a UK trade: amendment of 1992 Act

The [1992 c. 12.] Taxation of Chargeable Gains Act 1992 shall have effect, and be deemed always to have had effect, with the insertion of the following after section 140—

“Transfers concerning companies of different member States

140A Transfer of a UK trade

(1) This section applies where—

(a) a qualifying company resident in one member State (company A)

transfers the whole or part of a trade carried on by it in the United Kingdom to a qualifying company resident in another member State (company B),

(b) the transfer is wholly in exchange for securities issued by company B to company A,

(c) a claim is made under this section by company A and company B,

(d) section 140B does not prevent this section applying, and

(e) the appropriate condition is met in relation to company B immediately after the time of the transfer.

(2) Where immediately after the time of the transfer company B is not resident in the United Kingdom, the appropriate condition is that were it to dispose of the assets included in the transfer any chargeable gains accruing to it on the disposal would form part of its chargeable profits for corporation tax purposes by virtue of section 10(3).

(3) Where immediately after the time of the transfer company B is resident in the United Kingdom, the appropriate condition is that none of the assets included in the transfer is one in respect of which, by virtue of the asset being of a description specified in double taxation relief arrangements, the company falls to be regarded for the purposes of the arrangements as not liable in the United Kingdom to tax on gains accruing to it on a disposal.

(4) Where this section applies—

(a) the two companies shall be treated, so far as relates to corporation tax on chargeable gains, as if any assets included in the transfer were acquired by company B from company A for a consideration of such amount as would secure that on the disposal by way of transfer neither a gain nor a loss would accrue to company A;

(b) section 25(3) shall not apply to any such assets by reason of the transfer (if it would apply apart from this paragraph).

(5) For the purposes of subsection (1)(a) above, a company shall be regarded as resident in a member State if it is within a charge to tax under the law of the State because it is regarded as resident for the purposes of the charge.

(6) For the purposes of subsection (5) above, a company shall be treated as not within a charge to tax under the law of a member State if it falls to be regarded for the purposes of any double taxation relief arrangements to which the State is a party as resident in a territory which is not within any of the member States.

(7) In this section—

• “qualifying company” means a body incorporated under the law of a member State;

• “securities” includes shares.

140B Section 140A: anti-avoidance

(1) Section 140A shall not apply unless the transfer of the trade or part is effected for bona fide commercial reasons and does not form part of a scheme or arrangements of which the main purpose, or one of the main purposes, is avoidance of liability to income tax, corporation tax or capital gains tax.

(2) Subsection (1) above shall not apply where, before the transfer, the Board have on the application of company A and company B notified those companies that the Board are satisfied that the transfer will be effected for bona fide commercial reasons and will not form part of any such scheme or arrangements as are mentioned in that subsection.

(3) Subsections (2) to (5) of section 138 shall have effect in relation to subsection (2) above as they have effect in relation to subsection (1) of that section.”

45 Transfer of a non-UK trade: amendment of 1992 Act

The [1992 c. 12.] Taxation of Chargeable Gains Act 1992 shall have effect, and be deemed always to have had effect, with the insertion of the following sections after section 140B—

“140C Transfer of a non-UK trade

(1) This section applies where—

(a) a qualifying company resident in the United Kingdom (company A)

transfers to a qualifying company resident in another member State (company B) the whole or part of a trade which, immediately before the time of the transfer, company A carried on in a member State other than the United Kingdom through a branch or agency,

(b) the transfer includes the whole of the assets of company A used for the purposes of the trade or part (or the whole of those assets other than cash),

(c) the transfer is wholly or partly in exchange for securities issued by company B to company A,

(d) the aggregate of the chargeable gains accruing to company A on the transfer exceeds the aggregate of the allowable losses so accruing,

(e) a claim is made under this section by company A, and

(f) section 140D does not prevent this section applying.

(2) In a case where this section applies, this Act shall have effect in accordance with subsection (3) below.

(3) The allowable losses accruing to company A on the transfer shall be set off against the chargeable gains so accruing and the transfer shall be treated as giving rise to a single chargeable gain equal to the aggregate of those gains after deducting the aggregate of those losses.

(4) No claim may be made under this section as regards a transfer in relation to which a claim is made under section 140.

(5) In a case where this section applies, section 815A of the Taxes Act shall also apply.

(6) For the purposes of subsection (1)(a) above—

(a) a company shall not be regarded as resident in the United Kingdom if it falls to be regarded for the purposes of any double taxation relief arrangements to which the United Kingdom is a party as resident in a territory which is not within any of the member States;

(b) a company shall be regarded as resident in another member State if it is within a charge to tax under the law of the State because it is regarded as resident for the purposes of the charge.

(7) For the purposes of subsection (6)(b) above, a company shall be treated as not within a charge to tax under the law of a member State if it falls to be regarded for the purposes of any double taxation relief arrangements to which the State is a party as resident in a territory which is not within any of the member States.

(8) Section 442(3) of the Taxes Act (overseas business of UK insurance companies) shall be ignored in arriving at the chargeable gains accruing to company A on the transfer, and the allowable losses so accruing, for the purposes of subsections (1)(d) and (3) above.

(9) In this section—

• “qualifying company” means a body incorporated under the law of a member State;

• “securities” includes shares.

140D Section 140C: anti-avoidance

(1) Section 140C shall not apply unless the transfer of the trade or part is effected for bona fide commercial reasons and does not form part of a scheme or arrangements of which the main purpose, or one of the main purposes, is avoidance of liability to income tax, corporation tax or capital gains tax.

(2) Subsection (1) above shall not apply where, before the transfer, the Board have on the application of company A notified that company that the Board are satisfied that the transfer will be effected for bona fide commercial reasons and will not form part of any such scheme or arrangements as are mentioned in that subsection.

(3) Subsections (2) to (5) of section 138 shall have effect in relation to subsection (2) above as they have effect in relation to subsection (1) of that section.”

46 Transfer of a trade: supplementary (1)

(1) The [1992 c. 12.] Taxation of Chargeable Gains Act 1992 shall have effect, and be deemed always to have had effect, with the following amendments.

(2) In section 35(3)(d)(i) (re-basing) after “139,” there shall be inserted “140A,”.

(3) In section 116(11) (qualifying corporate bonds) after “139,” there shall be inserted “140A,”.

(4) In section 140 (transfer of assets to non-resident company) the following subsection shall be inserted after subsection (6)—

“(6A) No claim may be made under this section as regards a transfer in relation to which a claim is made under section 140C.”

(5) In section 174 (disposal or acquisition outside a group)—

(a) in subsection (2) after the word “section” (in the first place where it occurs) there shall be inserted “140A,”;

(b) in subsection (3) after “section” there shall be inserted “140A,”.

(6) In section 177(2) (dividend stripping) after “which section” there shall be inserted “140A,”.

(7) In section 184(2) (indexation)—

(a) after the word “section” (in the first place where it occurs) there shall be inserted “140A,”;

(b) for “either” there shall be substituted “one”.

47 Transfer of a UK trade: amendment of 1970 Act

Subject to the repeals made by the [1992 c. 12.] Taxation of Chargeable Gains Act 1992, in relation to transfers taking effect on or after 1st January 1992 the [1970 c. 10.] Income and Corporation Taxes Act 1970 shall have effect, and be deemed to have had effect, with the insertion of the following after section 269—

“Transfers concerning companies of different member States

269A Transfer of a UK trade

(1) This section applies where—

(a) a qualifying company resident in one member State (company A)

transfers the whole or part of a trade carried on by it in the United Kingdom to a qualifying company resident in another member State (company B),

(b) the transfer is wholly in exchange for securities issued by company B to company A,

(c) a claim is made under this section by company A and company B,

(d) section 269B below does not prevent this section applying, and

(e) the appropriate condition is met in relation to company B immediately after the time of the transfer.

(2) Where immediately after the time of the transfer company B is not resident in the United Kingdom, the appropriate condition is that were it to dispose of the assets included in the transfer any chargeable gains accruing to it on the disposal would form part of its chargeable profits for corporation tax purposes by virtue of section 11(2)(b) of the Taxes Act 1988.

(3) Where immediately after the time of the transfer company B is resident in the United Kingdom, the appropriate condition is that none of the assets included in the transfer is one in respect of which, by virtue of the asset being of a description specified in double taxation relief arrangements, the company falls to be regarded for the purposes of the arrangements as not liable in the United Kingdom to tax on gains accruing to it on a disposal.

(4) Where this section applies—

(a) the two companies shall be treated, so far as relates to corporation tax on chargeable gains, as if any assets included in the transfer were acquired by company B from company A for a consideration of such amount as would secure that on the disposal by way of transfer neither a gain nor a loss would accrue to company A;

(b) section 127(3) of the [1989 c. 26.] Finance Act 1989 (deemed disposal at market value) shall not apply to any such assets by reason of the transfer (if it would apply apart from this paragraph).

(5) For the purposes of subsection (1)(a) above, a company shall be regarded as resident in a member State if it is within a charge to tax under the law of the State because it is regarded as resident for the purposes of the charge.

(6) For the purposes of subsection (5) above, a company shall be treated as not within a charge to tax under the law of a member State if it falls to be regarded for the purposes of any double taxation relief arrangements to which the State is a party as resident in a territory which is not within any of the member States.

(7) In this section—

• “qualifying company” means a body incorporated under the law of a member State;

• “securities” includes shares.

269B Section 269A: anti-avoidance

(1) Section 269A above shall not apply unless the transfer of the trade or part is effected for bona fide commercial reasons and does not form part of a scheme or arrangements of which the main purpose, or one of the main purposes, is avoidance of liability to income tax, corporation tax or capital gains tax.

(2) Subsection (1) above shall not apply where, before the transfer, the Board have on the application of company A and company B notified those companies that the Board are satisfied that the transfer will be effected for bona fide commercial reasons and will not form part of any such scheme or arrangements as are mentioned in that subsection.

(3) Subsections (2) to (5) of section 88 of the [1979 c. 14.] Capital Gains Tax Act 1979 shall have effect in relation to subsection (2) above as they have effect in relation to subsection (1) of that section.”

48 Transfer of a non-UK trade: amendment of 1970 Act

Subject to the repeals made by the [1992 c. 12.] Taxation [1970 c. 10.] of Chargeable Gains Act 1992, in relation to transfers taking effect on or after 1st January 1992 the Income and Corporation Taxes Act 1970 shall have effect, and be deemed to have had effect, with the insertion of the following sections after section 269B—

“269C Transfer of a non-UK trade

(1) This section applies where—

(a) a qualifying company resident in the United Kingdom (company A)

transfers to a qualifying company resident in another member State (company B) the whole or part of a trade which, immediately before the time of the transfer, company A carried on in a member State other than the United Kingdom through a branch or agency,

(b) the transfer includes the whole of the assets of company A used for the purposes of the trade or part (or the whole of those assets other than cash),

(c) the transfer is wholly or partly in exchange for securities issued by company B to company A,

(d) the aggregate of the chargeable gains accruing to company A on the transfer exceeds the aggregate of the allowable losses so accruing,

(e) a claim is made under this section by company A, and

(f) section 269D below does not prevent this section applying.

(2) The [1979 c. 14.] Capital Gains Tax Act 1979 shall have effect in accordance with subsection (3) below.

(3) The allowable losses accruing to company A on the transfer shall be set off against the chargeable gains so accruing and the transfer shall be treated as giving rise to a single chargeable gain equal to the aggregate of those gains after deducting the aggregate of those losses.

(4) No claim may be made under this section as regards a transfer in relation to which a claim is made under section 268A above.

(5) In a case where this section applies, section 815A of the Taxes Act 1988 shall also apply.

(6) For the purposes of subsection (1)(a) above—

(a) a company shall not be regarded as resident in the United Kingdom if it falls to be regarded for the purposes of any double taxation relief arrangements to which the United Kingdom is a party as resident in a territory which is not within any of the member States;

(b) a company shall be regarded as resident in another member State if it is within a charge to tax under the law of the State because it is regarded as resident for the purposes of the charge.

(7) For the purposes of subsection (6)(b) above, a company shall be treated as not within a charge to tax under the law of a member State if it falls to be regarded for the purposes of any double taxation relief arrangements to which the State is a party as resident in a territory which is not within any of the member States.

(8) Section 442(3) of the Taxes Act 1988 (overseas business of UK insurance companies) shall be ignored in arriving at the chargeable gains accruing to company A on the transfer, and the allowable losses so accruing, for the purposes of subsections (1)(d) and (3) above.

(9) In this section—

• “qualifying company” means a body incorporated under the law of a member State;

• “securities” includes shares.

269D Section 269C: anti-avoidance

(1) Section 269C above shall not apply unless the transfer of the trade or part is effected for bona fide commercial reasons and does not form part of a scheme or arrangements of which the main purpose, or one of the main purposes, is avoidance of liability to income tax, corporation tax or capital gains tax.

(2) Subsection (1) above shall not apply where, before the transfer, the Board have on the application of company A notified that company that the Board are satisfied that the transfer will be effected for bona fide commercial reasons and will not form part of any such scheme or arrangements as are mentioned in that subsection.

(3) Subsections (2) to (5) of section 88 of the [1979 c. 14.] Capital Gains Tax Act 1979 shall have effect in relation to subsection (2) above as they have effect in relation to subsection (1) of that section.”

49 Transfer of a trade: supplementary (2)

(1) Subject to the repeals made by the [1992 c. 12.] Taxation of Chargeable Gains Act 1992, the enactments mentioned in this section shall be amended as there mentioned.

(2) In section 268A of the [1970 c. 10.] Income and Corporation Taxes Act 1970 (transfer of assets to non-resident company) the following subsection shall be inserted after subsection (6)—

“(6A) No claim may be made under this section as regards a transfer in relation to which a claim is made under section 269C below.”

(3) In section 275 of that Act (disposal or acquisition outside a group)—

(a) in subsection (1A) after the word “section” (in the first place where it occurs) there shall be inserted “269A,”;

(b) in subsection (1B) after “section” there shall be inserted “269A,”.

(4) In section 281(2) of that Act (dividend stripping) after “which section” there shall be inserted “269A,”.

(5) In paragraph 10(2) of Schedule 13 to the [1984 c. 43.] Finance Act 1984 (qualifying corporate bonds) after paragraph (bb) there shall be inserted—

“(bc) section 269A of the Taxes Act (transfer of United Kingdom trade between companies of different member States); or”.

(6) In section 68(7A)(b) of the [1985 c. 54.] Finance Act 1985 (indexation) after “267,” there shall be inserted “269A,”.

(7) In paragraph 1(3)(b) of Schedule 8 to the [1988 c. 39.] Finance Act 1988 (re-basing) after “267,” there shall be inserted “269A,”.

(8) In paragraph 5 of Schedule 11 to that Act (indexation)—

(a) after “section” there shall be inserted “269A,”;

(b) the word “intra-group” shall be omitted;

(c) for “either” there shall be substituted “one”.

(9) Subsections (3) and (4) above apply where the transfer referred to in section 269A takes effect on or after 1st January 1992.

(10) Subsections (5) to (7) above apply to any disposal by way of transfer where the transfer takes effect on or after 1st January 1992.

(11) Subsection (8) above applies where any disposal to which section 269A applies is by way of a transfer taking effect on or after 1st January 1992.

Double taxation relief

50 Transfer of a non-UK trade

The following section shall be inserted after section 815 of the Taxes Act 1988—

“815A Transfer of a non-UK trade

(1) This section applies where section 269C of the 1970 Act or section 140C of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 applies; and references in this section to company A, the transfer and the trade shall be construed accordingly.

(2) Where company A produces to the inspector an appropriate certificate given by the tax authorities of the relevant member State, this Part, including any arrangements having effect by virtue of section 788, shall apply as if the amount stated in the certificate in accordance with subsection (4)(b) below were tax payable under the law of the relevant member State.

(3) In any case where—

(a) company A is unable to obtain an appropriate certificate from the tax authorities of the relevant member State,

(b) the Board is satisfied that this is the case, and

(c) company A makes a claim to the Board under this subsection and provides the Board with such information and documents in connection with the claim as the Board may require,

the Board shall determine the amount which in their opinion is the amount of tax computed on the required basis which would have been payable under the law of the relevant member State in respect of the gains accruing to company A on the transfer but for the Mergers Directive; and this Part, including any arrangements having effect by virtue of section 788, shall apply as if the amount so determined were tax payable under the law of the relevant member State.

(4) For the purposes of this section, an appropriate certificate is one containing—

(a) a statement to the effect that gains accruing to company A on the transfer would have been chargeable to tax under the law of the relevant member State but for the Mergers Directive;

(b) a statement of the amount of tax which would have been payable under that law in respect of the gains so accruing but for that Directive; and

(c) a statement to the effect that that amount has been computed on the required basis.

(5) For the purposes of this section, the required basis is that—

(a) so far as permitted under the law of the relevant member State, any losses arising on the transfer are set against any gains so arising, and

(b) any relief available to company A under that law has been duly claimed.

(6) In this section—

• “the Mergers Directive” means the [O.J. No. L225/1.] Directive of the Council of the European Communities dated 23rd July 1990 on the common system of taxation applicable to mergers, divisions, transfers of assets and exchanges of shares concerning companies of different member States (no. 90/434/EEC);

• “relevant member State” means the member State in which, immediately before the time of the transfer, company A carried on the trade through a branch or agency.”

51 The Arbitration Convention

(1) The following section shall be inserted after section 815A of the Taxes Act 1988—

“815B The Arbitration Convention

(1) Subsection (2) below applies if the Arbitration Convention requires the Board to give effect to—

(a) an agreement or decision, made under the Convention by the Board (or their authorised representative) and any other competent authority, on the elimination of double taxation, or

(b) an opinion, delivered by an advisory commission set up under the Convention, on the elimination of double taxation.

(2) The Board shall give effect to the agreement, decision or opinion notwithstanding anything in any enactment; and any such adjustment as is appropriate in consequence may be made (whether by way of discharge or repayment of tax, the making of an assessment or otherwise).

(3) Any enactment which limits the time within which claims for relief under any provision of the Tax Acts may be made shall not apply to a claim made in pursuance of an agreement, decision or opinion falling within subsection (1)(a) or (b) above.

(4) In this section “the Arbitration Convention” means the Convention on the elimination of double taxation in connection with the adjustment of profits of associated enterprises, concluded on 23rd July 1990 by the parties to the treaty establishing the European Economic Community (90/436/EEC).”

(2) In section 816 of the Taxes Act 1988 (disclosure of information) the following subsection shall be inserted after subsection (2)—

“(2A) The obligation as to secrecy imposed by any enactment shall not prevent the Board, or any authorised officer of the Board, from disclosing information required to be disclosed under the Arbitration Convention in pursuance of a request made by an advisory commission set up under that Convention; and “the Arbitration Convention” here has the meaning given by section 815B(4).”

(3) The following section shall be inserted after section 182 of the [1989 c. 26.] Finance Act 1989 (disclosure of information)—

“182A Double taxation: disclosure of information

(1) A person who discloses any information acquired by him in the exercise of his functions as a member of an advisory commission set up under the Arbitration Convention is guilty of an offence.

(2) Subsection (1) above does not apply to any disclosure of information—

(a) with the consent of the person who supplied the information to the commission, or

(b) which has been lawfully made available to the public before the disclosure is made.

(3) It is a defence for a person charged with an offence under this section to prove that at the time of the alleged offence he believed that the information in question had been lawfully made available to the public before the disclosure was made and had no reasonable cause to believe otherwise.

(4) A person guilty of an offence under this section is liable—

(a) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine or both;

(b) on summary conviction, to imprisonment for a term not exceeding six months or a fine not exceeding the statutory maximum or both.

(5) No prosecution for an offence under this section shall be instituted in England and Wales or in Northern Ireland except—

(a) by the Board, or

(b) by or with the consent of the Director of Public Prosecutions or, in Northern Ireland, the Director of Public Prosecutions for Northern Ireland.

(6) In this section—

• “the Arbitration Convention” has the meaning given by section 815B(4) of the Taxes Act 1988;

• “the Board” means the Commissioners of Inland Revenue.”

52 Interest

(1) In the Taxes Act 1988 the following section shall be inserted after section 808—

“808A Interest: special relationship

(1) Subsection (2) below applies where any arrangements having effect by virtue of section 788—

(a) make provision, whether for relief or otherwise, in relation to interest (as defined in the arrangements), and

(b) make provision (the special relationship provision) that where owing to a special relationship the amount of the interest paid exceeds the amount which would have been paid in the absence of the relationship, the provision mentioned in paragraph (a) above shall apply only to the last-mentioned amount.

(2) The special relationship provision shall be construed as requiring account to be taken of all factors, including—

(a) the question whether the loan would have been made at all in the absence of the relationship,

(b) the amount which the loan would have been in the absence of the relationship, and

(c) the rate of interest and other terms which would have been agreed in the absence of the relationship.

(3) The special relationship provision shall be construed as requiring the taxpayer to show that there is no special relationship or (as the case may be) to show the amount of interest which would have been paid in the absence of the special relationship.

(4) In a case where—

(a) a company makes a loan to another company with which it has a special relationship, and

(b) it is not part of the first company’s business to make loans generally,

the fact that it is not part of the first company’s business to make loans generally shall be disregarded in construing subsection (2) above.

(5) Subsection (2) above does not apply where the special relationship provision expressly requires regard to be had to the debt on which the interest is paid in determining the excess interest (and accordingly expressly limits the factors to be taken into account).”

(2) This section shall apply in relation to interest (as defined in the arrangements) paid after 14th May 1992.

Miscellaneous

53 Car fuel: cash equivalents

(1) Section 158 of the Taxes Act 1988 (car fuel) shall be amended as follows.

(2) For subsection (2) (cash equivalents) there shall be substituted—

“(2) Subject to the provisions of this section, the cash equivalent of that benefit shall be ascertained from—

(a) Table A below where the car has an internal combustion engine with one or more reciprocating pistons and is not a diesel car;

(b) Table AB below where the car has an internal combustion engine with one or more reciprocating pistons and is a diesel car;

(c) Table B below where the car does not have an internal combustion engine with one or more reciprocating pistons.

(2A) For the purposes of subsection (2) above a diesel car is a car which uses heavy oil as fuel; and “heavy oil” here means heavy oil as defined by section 1(4) of the [1979 c. 5.] Hydrocarbon Oil Duties Act 1979.

(2B) For the purposes of Tables A and AB in subsection (2) above a car’s cylinder capacity is the capacity of its engine calculated as for the purposes of the [1971 c. 10.] Vehicles (Excise) Act 1971.”

(3) In subsection (4) (Treasury orders) for “either” there shall be substituted “any”.

(4) This section shall have effect for the year 1992-93 and subsequent years of assessment.

54 Foreign earnings

(1) In Schedule 12 to the Taxes Act 1988 (foreign earnings: provisions supplemental to section 193(1)) after paragraph 1 there shall be inserted—

“Amount of emoluments

1A For the purposes of section 193(1) and this Schedule the amount of the emoluments for a year of assessment from any employment shall be taken to be the amount remaining after any capital allowance and after any deductions under section 192(3), 193(4), 194(1), 195(7), 198, 199, 201, 332, 592 or 594.”

(2) This section shall have effect for the year 1992-93 and subsequent years of assessment.

55 Oil extraction activities: extended transportation

(1) In section 502 of the Taxes Act 1988 (defined expressions for Chapter V of Part XII of that Act - petroleum extraction activities), in subsection (1), in the definition of “oil extraction activities”, in paragraph (c)—

(a) the words “as far as dry land in the United Kingdom” shall be omitted; and

(b) after the words “so held” there shall be inserted “where the transportation is—

(i) to the place where the oil is first landed in the United Kingdom, or

(ii) to the place in the United Kingdom or, in the case of oil first landed in another country, the place in that or any other country (other than the United Kingdom) at which the seller in a sale at arm’s length could reasonably be expected to deliver it or, if there is more than one such place, the one nearest to the place of extraction”.

(2) Subsection (1) above has effect with respect to chargeable periods ending after 27th November 1991.

(3) In so far as the amendments made by paragraph 3 of Schedule 15 to this Act amend the definitions of “initial storage” and “initial treatment” as they have effect, by virtue of section 502(2) of the Taxes Act 1988, for the purposes of Chapter V of Part XII of that Act, those amendments have effect with respect to chargeable periods ending after 27th November 1991.

56 Friendly societies

Schedule 9 to this Act (which makes provision in relation to friendly societies) shall have effect.

57 Rents or receipts between connected persons

(1) In the Taxes Act 1988, the following shall be inserted after section 33—

“Connected persons

33A Rents or receipts payable by a connected person

(1) Subsection (2) below applies where—

(a) any rents or receipts in respect of which a person is chargeable to tax under Schedule A accrue in a chargeable period of his earlier than the one in which they are payable,

(b) the person by whom they are payable is entitled to a deduction in respect of them in computing his profits or gains for tax purposes, and

(c) the two persons are connected with one another when the rents or receipts accrue, or were connected with one another at any time before they accrue and after both 9th March 1992 and the making of the lease or other agreement under which they accrue.

(2) The chargeable person shall be regarded for the purposes of Schedule A as becoming entitled to the rents or receipts in the chargeable period in which they accrue (rather than in the chargeable period in which they become payable).

(3) For the purposes of this section, any rents or receipts shall be taken to accrue at the times at which, and in the amounts in which, they are taken to accrue for the purposes of calculating the deduction mentioned in subsection (1)(b) above.

(4) Section 839 (connected persons) shall apply for the purposes of this section.

33B Rents or receipts relating to land in respect of which a connected person makes payments to a third party

(1) Subsection (2) below applies where—

(a) any rents or receipts in respect of which a person is chargeable to tax under Schedule A accrue in a chargeable period of his earlier than the one in which they are payable,

(b) the land to which the rents or receipts relate is land in respect of which another person becomes entitled to a relevant tax deduction at any time before the rents or receipts become payable,

(c) the two persons are connected with one another when the rents or receipts accrue, or were connected with one another at any time before they accrue and after both 9th March 1992 and the making of the lease or other agreement referred to in subsection (4) below, and

(d) section 33A(2) does not apply.

(2) The chargeable person shall be regarded for the purposes of Schedule A as becoming entitled to the rents or receipts in the chargeable period in which they accrue (rather than in the chargeable period in which they become payable).

(3) For the purposes of this section, any rents or receipts payable to the chargeable person shall be taken to accrue at the times at which, and in the amounts in which, they would be taken to accrue for the purposes of calculating a deduction in respect of them in computing his profits or gains for tax purposes if—

(a) they were payable by him instead of to him, and

(b) he were assessable to tax under Case I of Schedule D in respect of his profits or gains.

(4) In this section, “relevant tax deduction”, in relation to a person and any land, means a deduction (in computing the person’s profits or gains for tax purposes) in respect of any rents or other sums payable after they accrue under a lease or other agreement relating to the land or any part of it.

(5) For the purposes of this section—

(a) a person shall be regarded as becoming entitled to a relevant tax deduction when the rents or other sums to which the deduction relates accrue, and

(b) any rents or other sums to which a relevant tax deduction relates shall be taken to accrue at the times at which, and in the amounts in which, they are taken to accrue for the purposes of calculating the deduction.

(6) Section 839 (connected persons) shall apply for the purposes of this section.”

(2) This section shall have effect in relation to rents or receipts accruing on or after 10th March 1992.

58 Rent etc. chargeable under Case VI

(1) In section 15(1) of the Taxes Act 1988 (Schedule A) the following paragraph shall be substituted for paragraph 4—

in a case where—

(a) a sum (whether rent or otherwise) is payable in respect of the use of premises (whether under a lease or otherwise),

(b) the tenant or other person entitled to the use of the premises is entitled to the use of furniture, and

(c) tax in respect of the payment for the use of the furniture is chargeable under Case VI of Schedule D,

tax in respect of the sum mentioned in sub-paragraph (a) above shall be charged under that Case instead of under this Schedule unless the person entitled to that sum elects that this paragraph shall not apply.”

(2) This section shall apply in relation to chargeable periods beginning on or after 6th April 1992.

59 Furnished accommodation

Schedule 10 to this Act (which makes provision about furnished accommodation) shall have effect.

60 Deduction on account of certain payments

(1) In section 347A(5) of the [1988 c. 26.] Taxes Act 1988 and in section 38(9) of the Finance Act 1988 (no deduction on account of certain payments) after “section 65(1)(b)” there shall be inserted “, 68(1)(b) or 192(3)”.

(2) This section shall have effect for the year 1992-93 and subsequent years of assessment.

61 Qualifying maintenance payments: extension to member States

(1) In section 347B(1)(a) of the Taxes Act 1988 (payments under certain court orders or written agreements)—

(a) for “in the United Kingdom” there shall be substituted “in a member State”;

(b) for “a part of the United Kingdom” there shall be substituted “a member State or of a part of a member State”.

(2) This section shall have effect for the year 1992-93 and subsequent years of assessment.

62 Qualifying maintenance payments: maintenance assessments etc

(1) In section 347B of the Taxes Act 1988 (qualifying maintenance payments), the following subsections shall be added at the end—

“(8) In subsections (1)(a) and (5)(a) above, the reference to an order made by a court in the United Kingdom includes a reference to a maintenance assessment.

(9) Where—

(a) any periodical payment is made under a maintenance assessment by one of the parties to a marriage (including a marriage which has been dissolved or annulled),

(b) the other party to the marriage is, for the purposes of the [1991 c. 48.] Child Support Act 1991 or (as the case may be) the [S.I. 1991/2628 (N.I.23).] Child Support (Northern Ireland) Order 1991, a parent of the child or children with respect to whom the assessment has effect,

(c) the assessment was not made under section 7 of the Child Support Act 1991 (right of child in Scotland to apply for maintenance assessment), and

(d) any of the conditions mentioned in subsection (10) below is satisfied,

this section shall have effect as if the payment had been made to the other party for the maintenance by that other party of that child or (as the case may be) those children.

(10) The conditions are that—

(a) the payment is made to the Secretary of State in accordance with regulations made under section 29 of the [1991 c. 48.] Child Support Act 1991, by virtue of subsection (3)(a)(ii) of that section;

(b) the payment is made to the Department of Health and Social Services for Northern Ireland in accordance with regulations made under Article 29 of the [S.I. 1991/2628 (N.I.23).] Child Support (Northern Ireland) Order 1991, by virtue of paragraph (3)(a)(ii) of that Article;

(c) the payment is retained by the Secretary of State in accordance with regulations made under section 41 of that Act;

(d) the payment is retained by the Department of Health and Social Services for Northern Ireland in accordance with regulations made under Article 38 of that Order.

(11) In this section “maintenance assessment” means a maintenance assessment made under the Child Support Act 1991 or the Child Support (Northern Ireland) Order 1991.

(12) Where any periodical payment is made to the Secretary of State or to the Department of Health and Social Services for Northern Ireland—

(a) by one of the parties to a marriage (including a marriage which has been dissolved or annulled), and

(b) under an order made under section 106 of the [1992 c. 5.] Social Security Administration Act 1992 or section 101 of the [1992 c. 8.] Social Security Administration (Northern Ireland) Act 1992 (recovery of expenditure on benefit from person liable for maintenance) in respect of income support claimed by the other party to the marriage,

this section shall have effect as if the payment had been made to the other party to the marriage to or for the benefit, and for the maintenance, of that other party or (as the case may be) to that other party for the maintenance of the child or children concerned.”

(2) In section 36 of the [1988 c. 39.] Finance Act 1988 (annual payments), the following subsection shall be inserted after subsection (5)—

“(5A) The reference in subsection (4)(d) above to an order made by a court, and the reference in subsection (5)(b) above to an order, in each case includes a reference to a maintenance assessment made under the Child Support Act 1991 or the Child Support (Northern Ireland) Order 1991.”

(3) In section 38 of the [1988 c. 39.] Finance Act 1988 (maintenance payments under existing obligations), the following subsection shall be inserted after subsection (8)—

“(8A) The reference in subsection (1)(a) above to an order made by a court includes a reference to a maintenance assessment made under the Child Support Act 1991 or under the Child Support (Northern Ireland) Order 1991.”

(4) This section shall come into force on such date as the Secretary of State may by order provide.

(5) The power conferred by subsection (4) above shall be exercisable by statutory instrument.

(6) The provision made by this section shall have effect, so far as it concerns orders under section 106 of the [1992 c. 5.] Social Security Administration Act 1992 or section 101 of the [1992 c. 8.] Social Security Administration (Northern Ireland) Act 1992, only in relation to payments which fall due after the coming into force of this section.

63 Paying and collecting agents etc

Schedule 11 to this Act (which makes provision in relation to the payment of income tax on foreign dividends etc.) shall have effect.

64 Reduced and composite rate

(1) For the purposes of this section each of the following is a relevant order—

(a) the [S.I. 1985/1836.] Income Tax (Reduced and Composite Rate) Order 1985 (which sets out 25.25 per cent. as the reduced rate for building societies and the composite rate for deposit-takers for the year 1986-87);

(b) the [S.I. 1986/2147.] Income Tax (Reduced and Composite Rate) Order 1986 (which sets out 24.75 per cent. as the rate for the year 1987-88);

(c) the [S.I. 1987/2075.] Income Tax (Reduced and Composite Rate) Order 1987 (which sets out 23.25 per cent. as the rate for the year 1988-89);

(d) the [S.I. 1988/2145.] Income Tax (Reduced and Composite Rate) Order 1988 (which sets out 21.75 per cent. as the rate for the year 1989-90).

(2) If apart from this section a relevant order would not be so taken, it shall be taken to be and always to have been effective to determine the rate set out in the order as the reduced rate and the composite rate for the year of assessment for which the order was made.

65 Life assurance business: I minus E basis

(1) For the purposes of this section a claim is a relevant claim if it is made under or by virtue of any of the following provisions—

(a) section 393(1) of the Taxes Act 1988 (claim for carry forward of trading losses);

(b) section 393A(1) of the Taxes Act 1988 (claim for carry sideways and backwards of trading losses);

(c) section 402(2) of the Taxes Act 1988 (surrender of relief between members of groups and consortia: group claim);

(d) section 402(3) of the Taxes Act 1988 (surrender of relief between members of groups and consortia: consortium claim);

(e) any provision reproduced in any of the provisions mentioned in paragraphs (a) to (d) above (whether directly or indirectly and whether with or without modification).

(2) For the purposes of this section the following are relevant provisions—

(a) section 434(2) of the Taxes Act 1988 (profits derived from investments of life assurance fund treated as profits of life assurance business in ascertaining loss on that business);

(b) section 715(1)(a) of the Taxes Act 1988 (special treatment of transfer of securities with or without accrued interest not to apply to transferor where transfer falls to be taken into account in computing profits or losses of trade);

(c) section 715(2)(a) of the Taxes Act 1988 (special treatment of transfer of securities with or without accrued interest not to apply to transferee where transfer falls to be taken into account in computing profits or losses of trade);

(d) section 83(1) of the [1989 c. 26.] Finance Act 1989 (investment income etc. from assets of long-term business fund taken into account as receipts of life assurance business);

(e) section 37(1) of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (exclusion from consideration for disposal of asset of any money or moneys worth taken into account in computing profits or losses etc.);

(f) any provision reproduced in any of the provisions mentioned in paragraphs (a) to (c) and (e) above (whether directly or indirectly and whether with or without modification).

(3) For the purposes of this section—

(a) the I minus E basis is the basis commonly so called (under which a company carrying on life assurance business is charged to tax in respect of that business otherwise than under Case I of Schedule D);

(b) life assurance business includes annuity business.

(4) Neither the making of a relevant claim in respect of a trading loss incurred by a company in an accounting period nor the application of any commercial or accounting principle or practice in computing that loss—

(a) shall prevent the I minus E basis being applied for that or any other accounting period in respect of the company’s life assurance business;

(b) shall affect the calculation of the income or gains of that business for that or any other accounting period in applying that basis.

(5) The application of a relevant provision as regards a company for an accounting period shall not—

(a) prevent the I minus E basis being applied for that or any other accounting period in respect of its life assurance business;

(b) affect the calculation of the income or gains of that business for that or any other accounting period in applying that basis.

(6) This section—

(a) shall apply in relation to accounting periods beginning on or after the day on which this Act is passed;

(b) shall apply and be deemed always to have applied in relation to accounting periods beginning before that day.

66 Banks etc. in compulsory liquidation

Schedule 12 to this Act (which makes provision in relation to companies that are or have been carrying on a deposit-taking business and are in compulsory liquidation) shall have effect.

Chapter II Capital allowances

67 Transfer of a UK trade

The following section shall be inserted after section 152A of the [1990 c. 1.] Capital Allowances Act 1990—

“152B Transfer of a UK trade

(1) References in this section to company A, company B and the transfer shall be construed in accordance with section 269A of the [1970 c. 10.] Income and Corporation Taxes Act 1970 or, as the case may be, section 140A of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992.

(2) This section applies where—

(a) section 269A of the Income and Corporation Taxes Act 1970 or section 140A of the Taxation of Chargeable Gains Act 1992 applies, and

(b) if immediately after the time of the transfer company B is not resident in the United Kingdom, the condition in subsection (3) below is met.

(3) The condition is that immediately after the time of the transfer company B carries on in the United Kingdom through a branch or agency a trade which consists of or includes the trade, or the part of the trade, transferred by the transfer.

(4) Where this section applies the first and second rules set out in subsections (5) and (6) below shall have effect.

(5) The first rule is that the transfer itself shall not be treated as giving rise to any allowances or charges under the Capital Allowances Acts.

(6) The second rule applies with regard to anything done after the transfer in relation to the assets included in it; and the rule is that everything done to or by company A in relation to those assets before the transfer shall for the purposes of the Capital Allowances Acts be treated as having been done to or by company B (and not company A).

(7) Where for the purposes of subsection (6) above expenditure falls to be apportioned between assets included in the transfer and other assets, the apportionment shall be made in such manner as is just and reasonable.

(8) Any question which arises as to the manner in which an apportionment referred to in subsection (7) above is to be made shall be determined, for the purposes of the tax of both company A and company B—

(a) in a case where the same body of General Commissioners have jurisdiction with respect to both the companies, by those Commissioners, unless the companies agree that it shall be determined by the Special Commissioners;

(b) in a case where different bodies of General Commissioners have jurisdiction with respect to the companies, by such of those bodies as the Board may direct, unless the companies agree that it shall be determined by the Special Commissioners;

(c) in any other case, by the Special Commissioners.

(9) The Commissioners by whom the question referred to in subsection (8) above falls to be determined shall make the determination in like manner as if it were an appeal except that company A and company B shall be entitled to appear and be heard by those Commissioners or to make representations to them in writing.

(10) In any case where this section applies, none of the following provisions shall apply—

(a) section 77;

(b) section 152A;

(c) section 157;

(d) section 158;

(e) section 343(2) of the principal Act.”

68 Computer software

(1) In Part II of the [1990 c. 1.] Capital Allowances Act 1990 (machinery and plant) after section 67 there shall be inserted the following section—

“67A Computer software

(1) If a person carrying on a trade incurs capital expenditure in acquiring for the purposes of the trade a right to use or otherwise deal with computer software, then, for the purposes of this Part—

(a) the right and the software to which it relates shall be treated as machinery or plant;

(b) that machinery or plant shall be treated as provided for the purposes of the trade; and

(c) so long as he is entitled to the right, that machinery or plant shall be treated as belonging to him.

(2) In any case where—

(a) a person carrying on a trade incurs capital expenditure on the provision of computer software for the purposes of the trade, and

(b) in consequence of his incurring that expenditure, the computer software belongs to him, but

(c) the computer software does not constitute machinery or plant,

then for the purposes of this Part the computer software shall be treated as machinery or plant.”

(2) In section 24 of that Act (writing-down allowances and balancing adjustments) in subsection (6) (disposal value) for the words “subsection (7)” there shall be substituted “subsections (6A) and (7)”.

(3) After that subsection there shall be inserted the following subsection—

“(6A) In the case of machinery or plant consisting of computer software or the right to use or otherwise deal with computer software, the disposal value to be brought into account by a person for any chargeable period by virtue of subsection (6) above shall also include the disposal value of all such machinery or plant—

(a) on the provision of which for the purposes of the trade he has incurred capital expenditure;

(b) which belongs to him at some time in the chargeable period or its basis period;

(c) in respect of which, in the chargeable period or its basis period, the following event occurs, namely, he grants to another person a right to use or otherwise deal with the whole or part of the computer software concerned in circumstances where the consideration in money for the grant constitutes (or if there were consideration in money for the grant would constitute) a capital sum; and

(d) in respect of which, whilst the machinery or plant belongs or belonged to him, no event falling within paragraph (iv) or (v) of subsection (6)(c) above has occurred before the event referred to in paragraph (c) above.”

(4) In subsection (8) of that section for the words “subsection (7)” in both places where they occur there shall be substituted “subsections (6A) and (7)”.

(5) In section 26 of that Act (disposal value) in subsection (1) after paragraph (e) there shall be inserted—

“(ea) if that event is the grant of a right to use or otherwise deal with computer software for a consideration not consisting or not wholly consisting in money, equals the consideration in money which would have been given if the right had been granted in the open market;

(eb) unless paragraph (ea)

above applies, if that event is the grant of a right to use or otherwise deal with computer software for no consideration or for a consideration in money lower than that which would have been given if the right had been granted in the open market, and otherwise than in circumstances such that—

(i) the grantee’s expenditure on the acquisition of the right can be taken into account in making allowances to him under this Part or under Part VII and the grantee is not a dual resident investing company which is connected with the grantor within the terms of section 839 of the principal Act, or

(ii) there is a charge to tax under Schedule E,

equals the consideration in money which would have been given if the right had been granted in the open market;

(ec) if that event is the grant of a right to use or otherwise deal with computer software and neither paragraph (ea) nor paragraph (eb) above applies, equals the net consideration in money received by the grantor in respect of the grant, together with any insurance moneys received by him in respect of the computer software by reason of any event affecting the consideration obtainable on the grant and, so far as it consists of capital sums, any other compensation of any description so received;”.

(6) After subsection (2) of that section there shall be inserted—

“(2AA) In deciding for the purposes of subsection (2) above whether the disposal value of machinery or plant consisting of computer software or the right to use or otherwise deal with computer software exceeds the capital expenditure incurred by a person on its provision, the disposal value shall (for the purposes of that subsection only) be taken to be increased by the amount of any disposal value which, in respect of that person and that machinery or plant, falls or has fallen to be taken into account for the purposes of section 24 by virtue of any previous event falling within subsection (6A)(c) of that section.”

(7) In section 37 of that Act (election for certain machinery or plant to be treated as short-life assets) in subsection (5) for the words “section 24(7)” there shall be substituted “section 24(6A) and (7)”.

(8) Subsection (1) above shall apply in relation to expenditure incurred on or after 10th March 1992.

(9) Subsections (2) to (6) above shall apply in relation to rights granted on or after 10th March 1992.

(10) Subsection (7) above shall be deemed to have come into force on 10th March 1992.

69 Films etc

(1) Section 68 of the [1990 c. 1.] Capital Allowances Act 1990 (which excludes certain expenditure relating to films, tapes and discs from being treated as capital expenditure for the purposes of Part II of that Act and gives relief by providing for such expenditure and other expenditure of a revenue nature to be allocated to relevant periods) shall be amended as follows.

(2) After subsection (6) there shall be inserted—

“(6A) To the extent that a deduction has been made in respect of any expenditure for a relevant period under section 42 of the Finance (No. 2) Act 1992 (relief for production or acquisition expenditure), no allocation of that expenditure shall be made under subsections (3) to (6) above.

(6B) Where subsection (6A) above applies, no expenditure incurred on the production or acquisition of the film, tape or disc concerned shall be allocated under subsections (3) to (6) above to the relevant period referred to in subsection (6A).”

(3) In subsection (9) (expenditure to which section 68 does not apply) after “expenditure” there shall be inserted “in relation to which an election is made under this subsection and”.

(4) After subsection (9) there shall be inserted—

“(9A) An election under subsection (9) above—

(a) shall relate to all expenditure incurred (or to be incurred) on the production or acquisition of the film, tape or disc in question,

(b) shall be made, by giving notice to the inspector in such form as the Board may determine, not later than two years after the end of the relevant period in which the film, tape or disc is completed, and

(c) shall be irrevocable.

(9B) For the purposes of subsection (9A)(b) above, a film, tape or disc is completed—

(a) at the time when it is first in a form in which it can reasonably be regarded as ready for copies of it to be made and distributed for presentation to the general public, or

(b) where the expenditure in question was incurred on the acquisition of the film, tape or disc and it was acquired after the time mentioned in paragraph (a) above, at the time it was acquired.

(9C) An election may not be made under subsection (9) above in relation to expenditure on a film, tape or disc if a claim has been made in respect of any of that expenditure under section 41 (relief for preliminary expenditure) or section 42 (relief for production or acquisition expenditure) of the Finance (No. 2) Act 1992.”

(5) Subsections (3) and (4) above shall have effect in relation to films, tapes and discs completed on or after 10th March 1992.

70 Enterprise zones

Schedule 13 to this Act (which makes provision in relation to capital allowances in respect of buildings and structures in enterprise zones) shall have effect.

71 Expensive motor cars

(1) The [1990 c. 1.] Capital Allowances Act 1990 shall be amended as follows.

(2) In section 34 (writing-down allowances etc.) in subsection (1) for “£8,000” there shall be substituted “£12,000”.

(3) In subsection (3) of that section for “£2,000” in each place where it occurs there shall be substituted “£3,000”.

(4) In section 35 (contributions to expenditure and hiring of cars) in subsection (1) for “£8,000” and “£2,000” there shall be substituted “£12,000” and “£3,000” respectively.

(5) In subsection (2) of that section for “£8,000” in both places where it occurs there shall be substituted “£12,000”.

(6) Subsections (2) and (3) above shall apply in relation to expenditure incurred or treated as incurred after 10th March 1992 unless the expenditure is incurred under a contract entered into on or before 10th March 1992.

(7) Subsection (4) above shall apply in relation to expenditure incurred after 10th March 1992 unless the expenditure is incurred under a contract entered into on or before 10th March 1992.

(8) Subsection (5) above shall apply in relation to expenditure on the hiring of a motor car under a contract entered into after 10th March 1992.

Part IIIII Miscellaneous and General

Inheritance tax

72 Increase of rate bands

(1) For the Table in Schedule 1 to the [1984 c. 51.] Inheritance Tax Act 1984 there shall be substituted—

(2) Subsection (1) above shall apply to any chargeable transfer made on or after 10th March 1992, and section 8(1) of the Inheritance Tax Act 1984 (indexation of rate bands) shall not apply to chargeable transfers made in the year beginning 6th April 1992.

73 Business and agricultural property relief

Schedule 14 to this Act (which makes provision in relation to relief in respect of business property and agricultural property) shall have effect.

Petroleum revenue tax

74 Oil exported direct from United Kingdom off-shore fields

(1) The enactments specified in Schedule 15 to this Act (being enactments relating to oil taxation) shall have effect subject to the amendments in that Schedule, being amendments—

(a) which take account, for the purpose of determining assessable profits and allowable losses, of certain cases where oil which is won from an off-shore oil field is, or could reasonably be expected to be, first landed in a country other than the United Kingdom; or

(b) which are consequential upon, or incidental to, the amendments referred to in paragraph (a) above.

(2) For the purposes of subsection (1)(a) above an oil field is an off-shore oil field if the whole of it is situated outside the geographical area of the United Kingdom (as determined under section 108 of the [1986 c. 41.] Finance Act 1986 - the on-shore/off-shore boundary).

(3) In the amendments in Schedule 15 to this Act, any reference to a country other than the United Kingdom shall be treated as a reference to the geographical area of that country exclusive of any land (or waters) to the seaward side of the high-water line along the coast of that country, including the coast of all islands comprised in that country.

(4) For the purpose of subsection (3) above, section 108(5) of the [1986 c. 41.] Finance Act 1986 (which provides a means of determining the high-water line at any place in the United Kingdom) shall, with any necessary modifications, apply to determine the high-water line at any place in a country other than the United Kingdom.

(5) Except in so far as they have effect in relation to corporation tax or income tax, the amendments in Schedule 15 to this Act take effect as follows—

(a) in so far as they relate to expenditure incurred, they take effect for claim periods ending after 27th November 1991; and

(b) in so far as they relate to any other matter, they take effect for chargeable periods ending after 30th June 1992.

(6) This section shall be construed as one with Part I of the [1975 c. 22.] Oil Taxation Act 1975.

General and Special Commissioners

75 Change of name

(1) The Lord Chancellor may, with the consent of the Lord Advocate, make regulations providing for—

(a) Commissioners for the general purposes of the income tax to hold office by a different name (and to be referred to otherwise than as “General Commissioners”), and

(b) Commissioners for the special purposes of the Income Tax Acts to hold office by a different name (and to be referred to otherwise than as “Special Commissioners”).

(2) The regulations may make such consequential amendments of any Act or instrument made under any Act as the Lord Chancellor thinks appropriate.

(3) Regulations under this section shall be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

76 Miscellaneous

Schedule 16 to this Act (which makes provision in relation to the remuneration, jurisdiction, practice and procedure of the General and Special Commissioners etc.) shall have effect.

Miscellaneous

77 Northern Ireland Electricity

Schedule 17 to this Act (which makes provision in relation to the transfer of the undertaking of Northern Ireland Electricity) shall have effect.

78 Gas levy: restriction of liability

In section 123 of the [1990 c. 29.] Finance Act 1990 (gas levy), in subsection (3) (rights to gas of British Gas Corporation treated as continuing, for purposes of levy on producer, in certain circumstances) at the end of paragraph (b) (termination of rights disregarded unless occurring before 5th March 1990) there shall be added “or by effluxion of time, pursuant to a term in the contract or document, being a term in existence on 27th November 1991.”

79 Treasury bills

(1) In section 8 of the [1877 c. 2.] Treasury Bills Act 1877 (bills to be issued under Treasury warrant countersigned by Comptroller and Auditor General) the words “countersigned by the Comptroller and Auditor General” shall be omitted.

(2) This section shall apply where the warrant concerned is issued on or after the day on which this Act is passed.

80 Publication of rates of interest

(1) Section 5(8) of the [1968 c. 13.] National Loans Act 1968 (which requires the Treasury to publish certain rates of interest in the London and Edinburgh Gazettes) shall cease to have effect.

(2) This section shall have effect in relation to rates of interest determined after the day on which this Act is passed.

General

81 Interpretation

In this Act “the Taxes Act 1988” means the [1988 c. 1.] Income and Corporation Taxes Act 1988.

82 Repeals

The enactments specified in Schedule 18 to this Act (which include provisions which are already spent) are hereby repealed to the extent specified in the third column of that Schedule, but subject to any provision of that Schedule.

83 Short title

This Act may be cited as the Finance (No. 2) Act 1992.

SCHEDULES

Section 1.

SCHEDULE 1 Amendments relating to excise duties etc.

The Customs and Excise Management Act 1979 (c. 2)

1 In section 1(1) of the Customs and Excise Management Act 1979 (interpretation), after the definition of “examination station” there shall be inserted the following definition—

““excise duty point” has the meaning given by section 1 of the Finance (No. 2) Act 1992;”.

2 In section 43 of that Act (duty on imported goods)—

(a) in subsection (2), for “and (2C)” there shall be substituted “(2C) and (2D)”; and

(b) after subsection (2C) there shall be inserted the following subsection—

“(2D) Nothing in the provisions of subsections (1) and (2) above or of subsection (6) below or in any exception to any of those provisions made by or under any of sections 44 to 48 below shall have effect for the purposes of any duty of excise chargeable on any goods for which—

(a) the excise duty point is fixed by regulations under section 1 of the Finance (No. 2) Act 1992; and

(b) the applicable rate of duty is determined in accordance with subsection (2) of that section.”

3 In section 94 of that Act (deficiency in warehoused goods), after subsection (5) there shall be inserted the following subsection—

“(6) The preceding provisions of this section so far as they have effect for-

(a) fixing the excise duty point for any goods chargeable with a duty of excise; or

(b) determining the person on whom any liability to pay any such duty is to fall,

shall have effect subject to the provisions of any regulations under section 1 of the Finance (No. 2) Act 1992; and accordingly, the power to make regulations under that section shall include power, for the purposes of, or in connection with, the making of any provision falling within paragraph (a) or (b) above, to modify any of the preceding provisions of this section and the provisions of section 95 below.”

4 In section 95(1) of that Act (application of section 94 to deficiencies in goods removed from warehouses), after “subsection (2) below” there shall be inserted “and to any such regulations as are mentioned in subsection (6) of that section”.

5 In section 96 of that Act (deficiency in certain goods moved by pipeline), after subsection (5) there shall be inserted the following subsection—

“(6) The preceding provisions of this section so far as they have effect for—

(a) fixing the excise duty point for any goods chargeable with a duty of excise; or

(b) determining the person on whom any liability to pay any such duty is to fall,

shall have effect subject to the provisions of any regulations under section 1 of the Finance (No. 2) Act 1992; and, accordingly, the power to make regulations under that section shall include power, for the purposes of, or in connection with, the making of any provision falling within paragraph (a) or (b) above, to modify any of the preceding provisions of this section.”

6 (1) Subject to sub-paragraph (2) below, section 100H(1) of that Act (liability to duty under REDS regulations) shall have effect—

(a) with the omission of paragraph (f);

(b) with the substitution in paragraph (g) for the words from “for the payment” to “liable” of the words “on goods which have been or may be the subject of a transaction involving a registered excise dealer and shipper”; and

(c) with the substitution of the following paragraph for paragraph (h), that is to say—

“(h) for determining, in relation to goods which are the subject of a transaction involving a registered excise dealer and shipper, the duties of excise chargeable on those goods and the rates of those duties and, in that connection, the method of charging the duties;”.

(2) Where apart from this sub-paragraph any provisions contained in regulations made by virtue of paragraph (f) or (h) of section 100H(1) of that Act would cease to have effect by virtue of sub-paragraph (1) above, those provisions shall continue in force, notwithstanding that sub-paragraph, as if contained in regulations made under section 1 of this Act and, accordingly, may be revoked, amended or re-enacted by regulations under that section.

7 In section 127A(1) of that Act (power to provide for deferred payment of excise duty), after “payment” there shall be inserted “(in accordance, where any requirement to pay the duty takes effect, with that requirement)”.

The Customs and Excise Duties (General Reliefs) Act 1979 (c. 3)

8 (1) In subsection (3) of section 13 of the Customs and Excise Duties (General Reliefs) Act 1979 (power to provide for reliefs in respect of duty and VAT subject to conditions)—

(a) in paragraph (a), after “applies” there shall be inserted “and conditions with respect to the conduct in relation to the goods of persons other than the person on whom the relief is conferred and of persons whose identity cannot be ascertained at the time of importation”; and

(b) in paragraph (b), after “including” there shall be inserted “provisions requiring any person to whom a condition of the relief at any time relates to notify the Commissioners of any non-compliance with the condition and”.

(2) After that subsection there shall be inserted the following subsections—

“(3A) An order under this section may provide, in relation to any relief which under such an order is made subject to a condition, for there to be a presumption that, in such cases as may be described in the order by reference—

(a) to the quantity of goods in question; or

(b) to any other factor which the Commissioners consider appropriate,

the condition is to be treated, unless the Commissioners are satisfied to the contrary, as not being complied with.

(3B) An order under this section may provide, in relation to any requirement of such an order for the Commissioners to be notified of non-compliance with a condition to which any relief from payment of any duty of excise is made subject, for goods to be exempt from forfeiture under section 124 of the Customs and Excise Management Act 1979 (forfeiture for breach of certain conditions) in respect of non-compliance with that condition if—

(a) the non-compliance is notified to the Commissioners in accordance with that requirement;

(b) any duty which becomes payable on those goods by virtue of the non-compliance is paid; and

(c) the circumstances are otherwise such as may be described in the order.

(3C) If any person fails to comply with any requirement of an order under this section to notify the Commissioners of any non-compliance with a condition to which any relief is made subject-

(a) he shall be liable, on summary conviction, to a penalty of an amount not exceeding level 5 on the standard scale; and

(b) the goods in respect of which the offence was committed shall be liable to forfeiture.”

(3) In subsection (4) of that section (definitions), after the definition of “Community relief” there shall be inserted the following definition—

““conduct”, in relation to any person who has or may acquire possession or control of any goods, includes that person’s intentions at any time in relation to those goods;”.

The Alcoholic Liquor Duties Act 1979 (c. 4)

9 In section 36(2) of the Alcoholic Liquor Duties Act 1979 (charge of duty on beer), at the end there shall be inserted “and with any regulations under section 1 of the Finance (No. 2) Act 1992”.

10 (1) Subject to sub-paragraph (2) below, paragraph (d) of section 41A(7) of that Act (power to impose liability for beer duty on prescribed persons) shall cease to have effect.

(2) Where apart from this sub-paragraph any provisions contained in regulations made by virtue of paragraph (d) of section 41A(7) of that Act would cease to have effect by virtue of sub-paragraph (1) above, those provisions shall continue in force, notwithstanding that sub-paragraph, as if contained in regulations made under section 1 of this Act and, accordingly, may be revoked, amended or re-enacted by regulations under that section.

11 (1) Subsection (1) of section 49 of that Act (regulations as to the duty on beer) shall have effect with the substitution of the following paragraph for paragraph (e) (power to prescribe matters with respect to charge for beer duty), that is to say—

“(e) for determining the duty and the rate thereof and, in that connection, prescribing the method of charging the duty;”.

(2) Where apart from this sub-paragraph any provisions contained in regulations made by virtue of paragraph (e) of section 49(1) of that Act would cease to have effect by virtue of sub-paragraph (1) above, those provisions shall continue in force, notwithstanding that sub-paragraph, as if contained in regulations made under section 1 of this Act and, accordingly, may be revoked, amended or re-enacted by regulations under that section.

12 In section 54(1) of that Act (charge of duty on wine), at the end there shall be inserted “and with any regulations under section 1 of the Finance (No. 2) Act 1992”.

13 In section 55(1) of that Act (charge of duty on made-wine), at the end there shall be inserted “and with any regulations under section 1 of the Finance (No. 2) Act 1992”.

Section 3.

SCHEDULE 2 Protection of revenues derived from excise duties

The Customs and Excise Management Act 1979 (c. 2)

1 In section 1(1) of the Customs and Excise Management Act 1979 (interpretation)—

(a) in the definition of “occupier”, for “means the” there shall be substituted “includes any”;

(b) in the definition of “warehoused” and cognate expressions, after “that section” there shall be inserted “and any regulations made by virtue of section 93(2)(da)(i) or (ee) or (4) below”.

2 (1) In section 93 of that Act (regulation of warehouses and warehoused goods), for subsection (1) there shall be substituted the following subsection—

“(1) The Commissioners may by regulations under this section (referred to in this Act as “warehousing regulations”)—

(a) prohibit the deposit or keeping of goods in a warehouse except where the occupier of the warehouse has been approved by the Commissioners in accordance with the regulations and where such conditions as may be prescribed in relation to that occupier are satisfied;

(b) otherwise regulate the deposit, keeping, securing and treatment of goods in a warehouse;

(c) make provision with respect to goods which are required to be deposited in a warehouse;

(d) regulate the removal of goods from a warehouse and make provision with respect to goods which have lawfully been permitted to be removed from a warehouse without payment of duty; and

(e) make provision, in relation to goods which have been warehoused or are required to be deposited in a warehouse with respect to the keeping, preservation and production of records and the furnishing of information.”

(2) In subsection (2) of that section (further provision that may be made by warehousing regulations)—

(a) after paragraph (d) there shall be inserted the following paragraphs—

“(da) providing for all or any prescribed purposes of the customs and excise Acts—

(i) for goods to be treated as warehoused where in a prescribed case they are in the custody or under the control of an approved occupier of a warehouse; and

(ii) for goods to be treated, at such times before the excise duty point for those goods as may be prescribed or as may be determined under the regulations, as goods which are required to be deposited in a warehouse;

(db) providing for the revocation of the approval under regulations of any occupier of a warehouse and applying, with modifications, any of the provisions of section 98 below in relation to such a revocation or to cases where such an approval is not renewed;”

(b) in paragraph (ee), for “to be warehoused” there shall be substituted “required to be deposited in a warehouse”;

(c) after paragraph (f) there shall be inserted the following paragraphs—

“(fa) requiring goods which are required to be deposited in a warehouse or which have lawfully been permitted to be removed from a warehouse without payment of duty to be accompanied by such documents in such form and containing such particulars as may be prescribed;

(fb) imposing or providing for the imposition under the regulations of requirements on persons concerned in any prescribed respect with the carriage of such goods to keep and preserve the documents that are required to accompany the goods;

(fc) imposing or providing for the imposition under the regulations of requirements on a person so concerned to produce or cause to be produced any documents which are required to accompany any goods by virtue of paragraph (fa) above to an officer when required to do so for the purpose of allowing the officer to inspect them, to copy or take extracts from them or to remove them at a reasonable time and for a reasonable period;”

(d) in paragraph (g), after “are” there shall be inserted “required”;

(e) in the definition of “relevant business activity” after the word “are”, in the first place where it occurs, there shall be inserted “required”.

(3) In subsection (2A) of that section (compensation where removed documents are lost)—

(a) after the word “documents”, in each place where it occurs, there shall be inserted “or records”; and

(b) for “(2)(j)” there shall be substituted “(2)(fc) or (j)”.

(4) In subsection (3) of that section (power to make different provision for different warehouses and goods), after the word “for”, in the first place where it occurs, there shall be inserted “different cases, including different provision for different occupiers or descriptions of occupier, for”.

(5) After subsection (5) of that section there shall be inserted the following subsection—

“(5A) Warehousing regulations made by virtue of any of paragraphs (fa) to (fc) or (g) to (j) of subsection (2) above may also provide for the forfeiture of the goods in question in the event of any contravention of, or non-compliance with, any requirements imposed by or under the regulations with respect to any documents or records relating to prescribed goods.”

(6) In subsection (6) of that section (offence), for the words from “penalty”, in the first place where it occurs, onwards there shall be substituted the words “penalty of an amount not exceeding level 5 on the standard scale, together with a penalty of £20 for each day on which the failure continues”.

(7) In subsection (7)(b) of that section—

(a) for “to be warehoused” there shall be substituted “required to be deposited in a warehouse”;

(b) for “or which are to be warehoused on drawback” there shall be substituted “which are to be warehoused on drawback or which are otherwise to be treated by virtue of subsection (2)(da)(ii) above as goods which are required to be deposited in a warehouse”.

3 In section 100(2) of that Act (forfeiture in respect of contraventions relating to warehousing)—

(a) in paragraphs (a) and (b), after “for warehousing” there shall be inserted “or are otherwise required to be deposited in a warehouse”;

(b) for paragraph (d) there shall be substituted the following paragraph—

“(d) any goods are concealed at a time before they are warehoused when they have been entered for warehousing or are otherwise required to be deposited in a warehouse or when they are required to be in the custody or under the control of the occupier of a warehouse; or”.

4 In section 100H(1) of that Act (provision that may be contained in REDS regulations), after paragraph (m) there shall be inserted the following paragraph—

“(ma) imposing requirements with respect to, or to the production of, the documents required to accompany goods which are the subject of a transaction involving a registered excise dealer and shipper on any person concerned in any prescribed respect with the carriage of those goods, or providing for the imposition under the regulations of any such requirements;”.

5 In section 117 of that Act (execution of distress against revenue traders in respect of relevant excise duty)—

(a) the word “relevant”, in the first place where it occurs in subsection (1) and where it occurs in subsections (2)(a) and (5), shall be omitted;

(b) for the words “a relevant” in subsections (1)(a) and (3) there shall be substituted “any”; and

(c) the definition of “relevant excise duty” in subsection (8) shall be omitted.

6 In section 129 of that Act (power to remit or repay duty on denatured goods)—

(a) in paragraph (b) of subsection (1) for “warehoused” there shall be substituted “chargeable with a duty the requirement to pay which has not yet taken effect”; and

(b) after that subsection there shall be inserted the following subsection—

“(1A) The reference in subsection (1) above to goods which are chargeable with a duty the requirement to pay which has not yet taken effect shall be construed as a reference to any goods which are warehoused or, in the application of that section in relation to a duty of excise, to any goods at a time, before the excise duty point for those goods, when they are chargeable with such a duty.”

7 In section 170 of that Act (fraudulent evasion of duty), after subsection (5) there shall be inserted the following subsection—

“(6) Where any person is guilty of an offence under this section, the goods in respect of which the offence was committed shall be liable to forfeiture.”

8 After section 170 of that Act there shall be inserted the following sections—

“170A Offence of handling goods subject to unpaid excise duty

(1) Subject to subsection (2) below, if—

(a) after the excise duty point for any goods which are chargeable with a duty of excise, a person acquires possession of those goods or is concerned in carrying, removing, depositing, keeping or otherwise dealing with those goods; and

(b) at the time when he acquires possession of those goods or is so concerned, the duty on the goods has not been paid and its payment has not been deferred,

that person shall be liable, on summary conviction, to a penalty of an amount not exceeding level 5 on the standard scale.

(2) In proceedings for an offence under this section it shall be a defence to show that the person who acquired possession of the goods or was concerned in carrying, removing, depositing, keeping or otherwise dealing with them—

(a) acted in accordance with the directions of, or with the consent of, the proper officer; or

(b) was not himself the person, or one of the persons, liable to pay the unpaid duty and at the time when he acted either—

(i) had no grounds for suspecting that the goods were chargeable with a duty of excise that had not yet been paid; or

(ii) believed on reasonable grounds that the duty had been paid or its payment deferred or that the liability to pay the duty had not yet taken effect.

170B Offence of taking preparatory steps for evasion of excise duty

(1) If any person is knowingly concerned in the taking of any steps with a view to the fraudulent evasion, whether by himself or another, of any duty of excise on any goods, he shall be liable—

(a) on summary conviction, to a penalty of the prescribed sum or of three times the amount of the duty, whichever is the greater, or to imprisonment for a term not exceeding six months or to both; and

(b) on conviction on indictment, to a penalty of any amount or to imprisonment for a term not exceeding seven years or to both.

(2) Where any person is guilty of an offence under this section, the goods in respect of which the offence was committed shall be liable to forfeiture.”

9 In section 171(5) of that Act (which provides for the time at which duty is to be treated as payable where that cannot be ascertained for the purposes of any offence)—

(a) after “43 above” there shall be inserted “or the relevant excise duty point”; and

(b) at the end there shall be inserted “or, as the case may be, as if the time when the proceedings were commenced was the relevant excise duty point.”

The Customs and Excise Duties (General Reliefs) Act 1979 (c. 3)

10 In section 13C of the Customs and Excise Duties (General Reliefs) Act 1979 (offence where relieved goods used in breach of condition), after subsection (4) there shall be inserted the following subsection—

“(5) Where any person is guilty of an offence under this section, the goods in respect of which the offence was committed shall be liable to forfeiture.”

Section 14.

SCHEDULE 3 Value added tax: abolition of fiscal frontiers etc.

Part I Amendments of the Value Added Tax Act 1983 (c. 55)

Introduction

1 The Value Added Tax Act 1983 shall be amended in accordance with the following provisions of this Part of this Schedule.

Imposition and extent of tax

2 In section 1 (charge to tax), for the words from “and on” onwards there shall be substituted “on the acquisition in the United Kingdom from other member States of any goods and on the importation of goods from places outside the member States.”

3 (1) After section 2 (scope of tax) there shall be inserted the following sections—

“2A Scope of tax on acquisitions

(1) Tax shall be charged on any acquisition from another member State of any goods where—

(a) the acquisition is a taxable acquisition and takes place in the United Kingdom;

(b) the acquisition is otherwise than in pursuance of a taxable supply; and

(c) the person who makes the acquisition is a taxable person or the goods are subject to a duty of excise or consist in a new means of transport.

(2) An acquisition of goods from another member State is a taxable acquisition if—

(a) it falls within subsection (3) below or the goods consist in a new means of transport; and

(b) it is not an exempt acquisition.

(3) An acquisition of goods from another member State falls within this subsection if—

(a) the goods are acquired in the course or furtherance of—

(i) any business carried on by any person; or

(ii) any activities carried on otherwise than by way of business by any body corporate or by any club, association, organisation or other unincorporated body;

(b) it is the person who carries on that business or, as the case may be, those activities who acquires the goods; and

(c) the supplier—

(i) is taxable in another member State at the time of the transaction in pursuance of which the goods are acquired; and

(ii) in participating in that transaction, acts in the course or furtherance of a business carried on by him.

(4) Tax on any acquisition of goods from another member State is a liability of the person who acquires the goods and (subject to provisions about accounting and payment) becomes due at the time of acquisition.

2B Scope of tax on imports

(1) Tax on the importation of goods from places outside the member States shall be charged and payable as if it were a duty of customs.

(2) For the purposes of this Act goods are imported from a place outside the member States where—

(a) having been removed from a place outside the member States, they enter the territory of the Community;

(b) they enter that territory by being removed to the United Kingdom or are removed to the United Kingdom after entering that territory; and

(c) the circumstances are such that it is on their removal to the United Kingdom or subsequently while they are in the United Kingdom that any Community customs debt in respect of duty on their entry into the territory of the Community would be incurred.

(3) Accordingly—

(a) goods shall not be treated for the purposes of this Act as imported at any time before a Community customs debt in respect of duty on their entry into the territory of the Community would be incurred; and

(b) the person who is to be treated for the purposes of this Act as importing any goods from a place outside the member States is the person who would be liable to discharge any such Community customs debt.

(4) The preceding provisions of this section shall not apply, except in so far as the context otherwise requires or provision to the contrary is contained in regulations under subsection (1) of section 24 below, for construing any references to importation or to an importer in any enactment or subordinate legislation applied for the purposes of this Act by that subsection.

2C Taxable persons

(1) A person is a taxable person for the purposes of this Act while he is, or is required to be, registered under this Act.

(2) Schedules 1 to 1B to this Act shall have effect with respect to registration.

(3) Persons registered under any of those Schedules shall be registered in a single register kept by the Commissioners for the purposes of this Act; and, accordingly, references in this Act to being registered under this Act are references to being registered under any of those Schedules.

(4) The Commissioners may by regulations make provision as to the inclusion and correction of information in that register with respect to the Schedule under which any person is registered.”

Meaning of supply

4 (1) In subsection (3) of section 3 (power to provide for how transactions are to be treated for the purposes of the charge on supplies), at the end there shall be inserted “and may provide that paragraph 5A of that Schedule shall not apply, in such circumstances as may be described in the order, so as to make a removal of assets a supply of goods under that paragraph.”

(2) In subsection (5) of that section (treatment of goods as supplied to and from the same person in the course or furtherance of his business), for “acquired” there shall be substituted “taken possession of”.

Time of supply

5 In section 4(1) (time of supply), after “apply” there shall be inserted “(subject to section 35 below)”.

6 (1) After subsection (3) of section 5 (further provisions as to time of supply), there shall be inserted the following subsections—

“(3A) Where any supply of goods involves both—

(a) the removal of the goods from the United Kingdom; and

(b) their acquisition in another member State by a person who is liable for value added tax on the acquisition in accordance with provisions of the law of that member State corresponding, in relation to that member State, to the provisions of section 2A above,

section 4(2) above and subsections (1) to (3) and (5) to (7) of this section shall not apply and the supply shall be treated for the purposes of this Act as taking place on whichever is the earlier of the days specified in subsection (3B) below.

(3B) The days mentioned in subsection (3A) above are—

(a) the fifteenth day of the month following that in which the removal in question takes place; and

(b) the day of the issue, in respect of the supply, of a tax invoice or of an invoice of such other description as the Commissioners may by regulations prescribe.”

(2) In subsection (9) of that section—

(a) for “(3)” there shall be substituted “(3B)”; and

(b) in the words after paragraph (b), after “there is” there shall be inserted “a supply of goods to a person who has given such an undertaking as is mentioned in section 32B(4)(b) below or there is”.

(3) In subsection (10) of that section (meaning of “tax invoice”), for “taxable person” there shall be substituted “person to whom such an invoice should be issued.”

Place of supply

7 (1) In subsection (1) of section 6 (place of supply), after “apply” there shall be inserted “(subject to section 35 below)”.

(2) At the beginning of subsection (2) of that section there shall be inserted “Subject to the following provisions of this section”.

(3) For subsection (3) of that section (goods removed from or to the United Kingdom) there shall be substituted the following subsections—

“(2A) Goods shall be treated—

(a) as supplied in the United Kingdom where their supply involves their installation or assembly at a place in the United Kingdom to which they are removed; and

(b) as supplied outside the United Kingdom where their supply involves their installation or assembly at a place outside the United Kingdom to which they are removed.

(2B) Goods whose place of supply is not determined under any of the preceding provisions of this section shall be treated as supplied in the United Kingdom where—

(a) the supply involves the removal of the goods to the United Kingdom by or under the directions of the person who supplies them;

(b) the supply is a transaction in pursuance of which the goods are acquired in the United Kingdom from another member State by a person who is not a taxable person;

(c) the supplier—

(i) is liable to be registered under Schedule 1A to this Act; or

(ii) would be so liable if he were not already registered under this Act or liable to be registered under Schedule 1 to this Act;

and

(d) the supply is neither a supply of goods consisting in a new means of transport nor anything which is treated as a supply for the purposes of this Act by virtue only of paragraph 5(1) or 5A of Schedule 2 to this Act.

(2C) Goods whose place of supply is not determined under any of the preceding provisions of this section and which do not consist in a new means of transport shall be treated as supplied outside the United Kingdom where—

(a) the supply involves the removal of the goods, by or under the directions of the person who supplies them, to another member State;

(b) the person who makes the supply is taxable in another member State; and

(c) provisions of the law of that member State corresponding, in relation to that member State, to the provisions made by subsection (2B) above make that person liable to value added tax on the supply;

but this subsection shall not apply in relation to any supply in a case where the liability mentioned in paragraph (c) above depends on the exercise by any person of an option in the United Kingdom corresponding to such an option as is mentioned in paragraph 1(2) of Schedule 1A to this Act, unless that person has given, and has not withdrawn, a notification to the Commissioners that he wishes his supplies to be treated as taking place outside the United Kingdom where they are supplies in relation to which the other requirements of this subsection are satisfied.

(2D) Goods whose place of supply is not determined under any of the preceding provisions of this section shall be treated as supplied in the United Kingdom where—

(a) their supply involves their being imported from a place outside the member States; and

(b) the person who supplies them is the person by whom, or under whose directions, they are so imported.

(3) Goods whose place of supply is not determined under any of the preceding provisions of this section but whose supply involves their removal to or from the United Kingdom shall be treated—

(a) as supplied in the United Kingdom where their supply involves their removal from the United Kingdom without also involving their previous removal to the United Kingdom; and

(b) as supplied outside the United Kingdom in any other case.”

(4) In subsection (4) of that section (goods removed from the United Kingdom in the course of their removal from one part of the United Kingdom to another), for “subsections (2) and (3) above” there shall be substituted “the preceding provisions of this section”.

(5) After subsection (4) of that section there shall be inserted the following subsection—

“(4A) The Commissioners may by regulations provide that a notification for the purposes of subsection (2C) above is not to be given or withdrawn except in such circumstances, and in such form and manner, as may be prescribed.”

(6) In subsection (6) of that section (power to vary rules of place of supply of services), for the word “services”, in each place where it occurs, there shall be substituted “goods or services”.

8 After subsection (5) of section 7 (reverse charge on services received from abroad) there shall be inserted the following subsection—

“(6) The power of the Treasury by order to add to or vary Schedule 3 to this Act shall include power, where any services whose place of supply is determined by an order under section 6(6) above are added to that Schedule, to provide that subsection (1) above shall have effect in relation to those services as if a person belongs in the United Kingdom for the purposes of paragraph (b) of that subsection if, and only if, he is a taxable person.”

9 In section 8(1) (place where supplier or recipient belongs), after the word “apply”, in the second place where it occurs, there shall be inserted “(subject to any provision made under section 7(6) above)”.

Acquisitions of goods from other member States

10 After section 8 there shall be inserted the following sections—

“Acquisitions of goods from other member States

8A Meaning of acquisition of goods from another member State

(1) Subject to the following provisions of this section, references in this Act to the acquisition of goods from another member State shall be construed as references to any acquisition of goods in pursuance of a transaction in relation to which the following conditions are satisfied, that is to say—

(a) the transaction is a supply of goods (including anything treated for the purposes of this Act as a supply of goods); and

(b) the transaction involves the removal of the goods from another member State;

and references in this Act, in relation to such an acquisition, to the supplier shall be construed accordingly.

(2) It shall be immaterial for the purposes of subsection (1) above whether the removal of the goods from the other member State is by or under the directions of the supplier or by or under the directions of the person who acquires them or any other person.

(3) Where the person with the property in any goods does not change in consequence of anything which is treated for the purposes of this Act as a supply of goods, that supply shall be treated for the purposes of this Act as a transaction in pursuance of which there is an acquisition of goods by the person making it.

(4) The Treasury may by order provide with respect to any description of transaction that the acquisition of goods in pursuance of a transaction of that description is not to be treated for the purposes of this Act as the acquisition of goods from another member State.

8B Time of acquisition

(1) Subject to section 35 below and any regulations under subsection (3) below, where goods are acquired from another member State, the acquisition shall be treated for the purposes of this Act as taking place on whichever is the earlier of—

(a) the fifteenth day of the month following that in which the event occurs which, in relation to that acquisition, is the first relevant event for the purposes of taxing the acquisition; and

(b) the day of the issue, in respect of the transaction in pursuance of which the goods are acquired, of an invoice of such a description as the Commissioners may by regulations prescribe.

(2) For the purposes of this Act the event which, in relation to any acquisition of goods from another member State, is the first relevant event for the purposes of taxing the acquisition is the first removal of the goods which is involved in the transaction in pursuance of which they are acquired.

(3) The Commissioners may by regulations make provision with respect to the time at which an acquisition is to be treated as taking place in prescribed cases where the whole or part of any consideration comprised in the transaction in pursuance of which the goods are acquired is determined or payable periodically, or from time to time, or at the end of a period; and any such regulations may provide, in relation to any case to which they apply, for goods to be treated as separately and successively acquired at prescribed times or intervals.

8C Place of acquisition

(1) This section shall apply (subject to sections 32B(5) and 35 below) for determining for the purposes of this Act whether goods acquired from another member State are acquired in the United Kingdom.

(2) The goods shall be treated as acquired in the United Kingdom if they are acquired in pursuance of a transaction which involves their removal to the United Kingdom and does not involve their removal from the United Kingdom, and (subject to the following provisions of this section) shall otherwise be treated as acquired outside the United Kingdom.

(3) Subject to subsection (4) below, the goods shall be treated as acquired in the United Kingdom if they are acquired by a person who, for the purposes of their acquisition, makes use of a number assigned to him for the purposes of value added tax in the United Kingdom.

(4) Subsection (3) above shall not require any goods to be treated as acquired in the United Kingdom where it is established, in accordance with regulations made by the Commissioners for the purposes of this section—

(a) that value added tax has been paid in another member State on the acquisition of those goods; and

(b) that that tax fell to be paid by virtue of provisions of the law of that member State corresponding, in relation to that member State, to the provision made by subsection (2) above.

(5) The Commissioners may by regulations make provision for the purposes of this section—

(a) for the circumstances in which a person is to be treated as having been assigned a number for the purposes of value added tax in the United Kingdom;

(b) for the circumstances in which a person is to be treated as having made use of such a number for the purposes of the acquisition of any goods; and

(c) for the refund, in prescribed circumstances, of tax paid in the United Kingdom on acquisitions of goods in relation to which the conditions specified in subsection (4)(a) and (b) above are satisfied.”

Rate of tax and determination of value

11 In section 9(1) (rate of tax)—

(a) after paragraph (a) there shall be inserted the following paragraph—

“(aa) on the acquisition of goods from another member State, by reference to the value of the acquisition as determined under this Act; and”; and

(b) in paragraph (b), after the word “goods”, in the first place where it occurs, there shall be inserted “from a place outside the member States”.

12 (1) In subsection (1) of section 10 (value of supply of goods or services), for “shall be determined as follows” there shall be substituted “shall, except as otherwise provided by or under this Act, be determined in accordance with this section and Schedule 4 to this Act, and for those purposes subsections (2) to (4) below have effect subject to that Schedule”.

(2) For subsection (3) of that section (value where supply for no consideration or for consideration not or not wholly in money) there shall be substituted the following subsection—

“(3) If the supply is for a consideration not consisting or not wholly consisting of money, its value shall be taken to be such amount in money as, with the addition of the tax chargeable, is equivalent to the consideration.”

13 After section 10 there shall be inserted the following section—

“10A Valuation of acquisitions from other member States

(1) For the purposes of this Act the value of any acquisition of goods from another member State shall be taken to be the value of the transaction in pursuance of which they are acquired.

(2) Where goods are acquired from another member State otherwise than in pursuance of a taxable supply, the value of the transaction in pursuance of which they are acquired shall be determined for the purposes of subsection (1) above in accordance with this section and Schedule 4A to this Act, and for those purposes—

(a) subsections (3) to (5) below have effect subject to Schedule 4A to this Act; and

(b) section 10 above and Schedule 4 to this Act shall not apply in relation to the transaction.

(3) If the transaction is for a consideration in money, its value shall be taken to be such amount as is equal to the consideration.

(4) If the transaction is for a consideration not consisting or not wholly consisting of money, its value shall be taken to be such amount in money as is equivalent to the consideration.

(5) Where a transaction in pursuance of which goods are acquired from another member State is not the only matter to which a consideration in money relates, the transaction shall be deemed to be for such part of the consideration as is properly attributable to it.”

14 (1) In subsection (1) of section 11 (value of imported goods), for the words from “imported goods” onwards there shall be substituted “goods imported from a place outside the member States shall (subject to subsections (2) and (2A) below) be determined according to the rules applicable in the case of Community customs duties, whether or not the goods in question are subject to any such duties.”

(2) In subsection (2) of that section, for the words before paragraph (a) there shall be substituted “For the purposes of this Act the value of any goods imported from a place outside the member States shall be taken to include the following so far as they are not already included in that value in accordance with the rules mentioned in subsection (1) above, that is to say-”.

(3) After subsection (2) of that section there shall be inserted the following subsection—

“(2A) Subject to subsection (2) above, where—

(a) goods are imported from a place outside the member States for a consideration which is or includes a price in money payable as on the transfer of property;

(b) the terms on which those goods are so imported allow a discount for prompt payment of that price;

(c) those terms do not include provision for payment of that price by instalments; and

(d) payment of that price is made in accordance with those terms so that the discount falls to be allowed,

the value of the goods shall be taken for the purposes of this Act to be reduced by the amount of the discount.”

Credit for input tax against output tax

15 (1) In subsection (1) of section 14 (credit for input tax against output tax), after “him” there shall be inserted “and in respect of the acquisition by him from other member States of any goods”.

(2) In subsection (3) of that section (meaning of “input tax” and “output tax”)—

(a) after paragraph (a) there shall be inserted the following paragraph—

“(aa) tax on the acquisition by him from another member State of any goods; and”;

(b) in paragraph (b), after “goods” there shall be inserted “from a place outside the member States”;

(c) for “either” there shall be substituted “each”; and

(d) at the end there shall be inserted “or on the acquisition by him from another member State of goods (including tax which is also to be counted as input tax by virtue of paragraph (aa) above).”

(3) In subsection (3A) of that section (goods used by company for domestic purposes of a director etc.), for the words “supplied to, or imported by, a company” there shall be substituted “are supplied to a company, goods are acquired by a company from another member State or goods are imported by a company from a place outside the member States and the goods or services which are so supplied, acquired or imported”.

(4) In subsection (4) of that section (apportionment of tax to input tax)—

(a) for “or goods imported by him” there shall be substituted “goods acquired by a taxable person from another member State or goods imported by a taxable person from a place outside the member States”; and

(b) after “supplies” there shall be inserted “acquisitions”.

(5) In subsection (9) of that section (regulations as to credits for input tax)—

(a) in paragraph (a), for “or paid or payable by him on the importation of goods” there shall be substituted “tax on the acquisition of goods by a taxable person from other member States and tax paid or payable by a taxable person on the importation of goods from places outside the member States”;

(b) in paragraph (b)—

(i) for “or paid by him on the importation of goods” there shall be substituted “or on the acquisition of goods by him from another member State or paid by him on the importation of goods from places outside the member States”; and

(ii) after the word “supply”, in the second place where it occurs, there shall be inserted “acquisition”;

and

(c) in paragraph (c), for “or importation of goods acquired for it before its incorporation” there shall be substituted “acquisition or importation of goods before the company’s incorporation for appropriation to the company or its business”.

(6) In subsection (10) of that section (exclusions by Treasury order)—

(a) after “supplies” there shall be inserted “acquisitions”;

(b) in paragraph (a), after the word “goods”, in the second place where it occurs, there shall be inserted “acquired or”; and

(c) after the word “supplied”, in the second and fourth places where it occurs in that paragraph, there shall be inserted “acquired”.

16 (1) In subsection (1) of section 15 (input tax allowable as a credit), after the word “supplies”, in the first place where it occurs, there shall be inserted “acquisitions”.

(2) In subsection (2) of that section, after paragraph (b) there shall be inserted the following paragraph—

“(ba) such other supplies outside the United Kingdom and such exempt supplies as the Treasury may by order specify for the purposes of this subsection.”

Reliefs

17 (1) In subsection (3) of section 16 (no tax on zero-rated imports)—

(a) for “imported into the United Kingdom” there shall be substituted “acquired in the United Kingdom from another member State or imported from a place outside the member States”; and

(b) after “their” there shall be inserted “acquisition or”.

(2) In subsection (6)(a) of that section (zero-rating of exports and goods shipped as stores etc.), after “exported them” there shall be inserted “to a place outside the member States”.

(3) In subsection (7) of that section (regulations as to zero-rating of goods which have been or are to be exported), for the words from “where” to “and” there shall be substituted “where—

(a) the Commissioners are satisfied that the goods have been or are to be exported to a place outside the member States or that the supply in question involves both—

(i) the removal of the goods from the United Kingdom; and

(ii) their acquisition in another member State by a person who is liable for value added tax on the acquisition in accordance with provisions of the law of that member State corresponding, in relation to that member State, to the provisions of section 2A above;

and

(b)”.

(4) In subsection (8) of that section (zero-rating of services where goods let on hire and exported), for “exported” there shall be substituted “removed from the United Kingdom”.

(5) In subsection (9) of that section (cases where goods are not exported or shipped), in paragraph (a), after “shipped” there shall be inserted “or otherwise removed from the United Kingdom”.

18 In section 17(1) (exemptions), at the end there shall be inserted “and an acquisition of goods from another member State is an exempt acquisition if the goods are acquired in pursuance of an exempt supply.”

19 (1) In section 18 (relief on supply of second-hand goods), in each of paragraphs (a) and (b) of subsection (3), for “importation of goods of that description” there shall be substituted “acquisition of goods of that description from another member State or the importation of goods of that description from a place outside the member States”.

(2) In subsection (4) of that section—

(a) after the word “the”, in the second place where it occurs, there shall be inserted “acquisition or”; and

(b) after the word “supply”, in the second place where it occurs, there shall be inserted “acquisition”.

20 (1) In subsection (1) of section 19 (relief from tax on importation of goods), after “of goods” there shall be inserted “from places outside the member States”.

(2) In subsection (1A)(a) of that section, after “imported” there shall be inserted “from a place outside the member States”.

(3) In subsection (2) of that section—

(a) after “any goods” there shall be inserted “from places outside the member States”; and

(b) at the end there shall be inserted “or removed from any member State”.

(4) In subsection (3) of that section—

(a) after “any goods” there shall be inserted “from places outside the member States”; and

(b) after “re-exported” there shall be inserted “or otherwise removed from the United Kingdom”.

Refunds of tax

21 (1) In subsection (1) of section 20 (refund of tax to local authorities and similar bodies)—

(a) the words “or on the importation of goods by” shall be omitted; and

(b) for “and the supply or importation” there shall be substituted “on the acquisition of any goods by such a body from another member State or on the importation of any goods by such a body from a place outside the member States and the supply, acquisition or importation”.

(2) In subsection (2) of that section—

(a) after the words “to or”, in the first and second places where they occur, there shall be inserted “acquired or”; and

(b) after those words, in the third place where they occur, there shall be inserted “acquisition or”.

22 After section 20 there shall be inserted the following section—

“20A Refunds in relation to new means of transport supplied to other member States

(1) Subject to subsection (2) below, where a person who is not a taxable person makes such a supply of goods consisting in a new means of transport as involves the removal of the goods to another member State, the Commissioners shall, on a claim made in that behalf, refund to that person, as the case may be—

(a) the amount of any tax on the supply of that means of transport to that person; or

(b) the amount of any tax paid by that person on the acquisition of that means of transport from another member State or on its importation from a place outside the member States.

(2) The amount of tax refunded under this section shall not exceed the amount that would have been payable on the supply involving the removal if it had been a taxable supply by a taxable person and had not been zero-rated.

(3) The Commissioners shall not be entitled to entertain a claim for refund of tax under this section unless the claim—

(a) is made within such time and in such form and manner;

(b) contains such information; and

(c) is accompanied by such documents, whether by way of evidence or otherwise,

as the Commissioners may by regulations prescribe.”

23 (1) In subsection (1) of section 21 (refund of tax to persons constructing buildings)—

(a) the words “or the importation of goods by” shall be omitted; and

(b) after “business” there shall be inserted “on the acquisition of goods by such a person from another member State or on the importation of goods by such a person from a place outside the member States”.

(2) After subsection (2) of that section there shall be inserted the following subsection—

“(2A) This section shall have effect—

(a) as if the reference in subsection (1) above to the tax chargeable on the supply of any goods included a reference to value added tax chargeable on the supply in accordance with the law of another member State; and

(b) in relation to value added tax chargeable in accordance with the law of another member State, as if references to refunding tax to any person were references to paying that person an amount equal to the value added tax chargeable in accordance with the law of that member State;

and the provisions of this Act and of any other enactment or subordinate legislation (whenever passed or made) so far as they relate to a refund under this section shall be construed accordingly.”

Repayment

24 (1) In subsection (1) of section 23 (repayment of tax to those in business overseas), for “into the United Kingdom” there shall be substituted “from places outside the member States”.

(2) In subsection (2)(a) of that section, for “a member State other than the United Kingdom” there shall be substituted “another member State”.

Further provisions as to importation of goods

25 For subsections (1) to (3) of section 24 (application of customs enactments) there shall be substituted the following subsection—

“(1) Subject to such exceptions and adaptations as the Commissioners may by regulations prescribe and except where the contrary intention appears—

(a) the provision made by or under the Customs and Excise Acts 1979 and the other enactments and subordinate legislation for the time being having effect generally in relation to duties of customs and excise charged on the importation of goods into the United Kingdom; and

(b) the Community legislation for the time being having effect in relation to Community customs duties charged on goods entering the territory of the Community,

shall apply (so far as relevant) in relation to any tax chargeable on the importation of goods from places outside the member States as they apply in relation to any such duty of customs or excise or, as the case may be, Community customs duties.”

26 In section 25 (importation of goods by taxable persons)—

(a) after “imported” there shall be inserted “from a place outside the member States”; and

(b) at the end there shall be inserted “or on the acquisition of goods by him from other member States”.

27 In section 26(1) (goods imported for private purposes), after “a taxable person” there shall be inserted “from a place outside the member States”.

Special cases

28 (1) In subsection (2A) of section 27 (application to the Crown), for “or on the importation of goods by, a Government department and the supply” there shall be substituted “a Government department, on the acquisition of any goods by a Government department from another member State or on the importation of any goods by a Government department from a place outside the member States and the supply, acquisition”.

(2) In subsection (2B) of that section, after “supply” there shall be inserted “acquisition”.

29 In paragraph (c) of section 29(1) (tax on importation payable by representative member)—

(a) for “importation of any goods” there shall be substituted “acquisition of goods from another member State or on the importation of goods from a place outside the member States”; and

(b) for the words from “for the purposes” to the end of the paragraph there shall be substituted—

“(i) in the case of goods acquired from another member State, for the purposes of paragraph 4(6) of Schedule 7 to this Act; and

(ii) in the case of goods imported from a place outside the member States, for those purposes and the purposes of section 25 above,

as acquired or, as the case may be, imported by the representative member;”.

30 (1) In subsection (2) of section 29A (supplies to groups), after the word “and”, in the first place where it occurs, there shall be inserted “acquisitions and”.

(2) In subsection (3) of that section, for “acquired by” there shall be substituted “assets of”.

(3) In subsection (8) of that section, for “acquisition” there shall be substituted “supply to or acquisition or importation”.

31 (1) In subsection (1) of section 30 (partnerships)—

(a) after “partnership” there shall be inserted “or carrying on in partnership any other activities in the course or furtherance of which they acquire goods from other member States”; and

(b) after “such persons” there shall be inserted “or are acquired by such persons from another member State”.

(2) In subsection (2) of that section, at the end there shall be inserted “or on the acquisition of goods by the partnership from another member State.”

(3) In subsection (5) of that section, after the word “period”, in the second place where it occurs, there shall be inserted “or on the acquisition during that period by the firm of any goods from another member State”.

32 (1) In subsection (3) of section 31 (business carried on in divisions or by unincorporated bodies etc.), after the word “organisation”, in the third place where it occurs, there shall be inserted “or whether goods are acquired by such a club, association or organisation from another member State”.

(2) After subsection (5) of that section there shall be inserted the following subsection—

“(6) References in this section to a business include references to any other activities in the course or furtherance of which any body corporate or any club, association, organisation or other unincorporated body acquires goods from another member State.”

33 In section 32 (agents etc.), for subsection (2) there shall be substituted the following subsection—

“(2) Where—

(a) goods are acquired from another member State by a person who is not a taxable person and a taxable person acts in relation to the acquisition, and then supplies the goods, as agent for the person by whom they are so acquired; or

(b) goods are imported from a place outside the member States by a taxable person who supplies them as agent for a person who is not a taxable person,

the goods may be treated for the purposes of this Act as acquired and supplied or, as the case may be, imported and supplied by the taxable person as principal.”

34 After section 32 there shall be inserted the following sections—

“32A Tax representatives

(1) Where any person—

(a) is a taxable person for the purposes of this Act or, without being a taxable person, is a person who makes taxable supplies or who acquires goods in the United Kingdom from one or more other member States;

(b) does not have any business establishment or other fixed establishment in the United Kingdom; and

(c) in the case of an individual, does not have his usual place of residence in the United Kingdom,

the Commissioners may direct that person to appoint another person (in this Act referred to as a “tax representative”) to act on his behalf in relation to value added tax.

(2) With the agreement of the Commissioners, any person who has not been required to appoint a tax representative under subsection (1) above may do so if he is a person in relation to whom the conditions specified in paragraphs (a) to (c) of that subsection are satisfied.

(3) Where any person is appointed by virtue of this section to be the tax representative of another (in this section referred to as his “principal”), then, subject to subsections (4) to (6) below, the tax representative—

(a) shall be entitled to act on his principal’s behalf for any of the purposes of this Act, of any other enactment (whenever passed) relating to value added tax or of any subordinate legislation made under this Act or any such enactment;

(b) shall, subject to such provisions as may be made by the Commissioners by regulations, secure (where appropriate by acting on his principal’s behalf) his principal’s compliance with and discharge of the obligations and liabilities to which his principal is subject by virtue of this Act, any such other enactment or any such subordinate legislation; and

(c) shall be personally liable in respect of—

(i) any failure to secure his principal’s compliance with or discharge of any such obligation or liability; and

(ii) anything done for purposes connected with acting on his principal’s behalf,

as if the obligations and liabilities imposed on his principal were imposed jointly and severally on the tax representative and his principal.

(4) A tax representative shall not be liable by virtue of subsection (3) above himself to be registered under this Act, but regulations made by the Commissioners may—

(a) require the registration of the names of tax representatives against the names of their principals in any register kept for the purposes of this Act; and

(b) make it the duty of a tax representative, for the purposes of registration, to notify the Commissioners, within such period as may be prescribed, that his appointment has taken effect or has ceased to have effect.

(5) A tax representative shall not by virtue of subsection (3) above be guilty of any offence except in so far as—

(a) the tax representative has consented to, or connived in, the commission of the offence by his principal;

(b) the commission of the offence by his principal is attributable to any neglect on the part of the tax representative; or

(c) the offence consists in a contravention by the tax representative of an obligation which, by virtue of that subsection, is imposed both on the tax representative and on his principal.

(6) The Commissioners may by regulations make provision as to the manner and circumstances in which a person is to be appointed, or is to be treated as having ceased to be, another’s tax representative; and regulations under this subsection may include such provision as the Commissioners think fit for the purposes of subsection (4) above with respect to the making or deletion of entries in any register.

(7) Where a person fails to appoint a tax representative in accordance with any direction under subsection (1) above, the Commissioners may require him to provide such security, or further security, as they may think appropriate for the payment of any tax which is or may become due from him.

(8) For the purposes of this Act a person shall not be treated as having been directed to appoint a tax representative, or as having been required to provide security under subsection (7) above, unless the Commissioners have either—

(a) served notice of the direction or requirement on him; or

(b) taken all such other steps as appear to them to be reasonable for bringing the direction or requirement to his attention.

32B Overseas suppliers accounting through their customers

(1) Where—

(a) a person who makes or intends to make taxable supplies of goods requests the Commissioners to allow his supplies to be taxed in accordance with this section; and

(b) the Commissioners are satisfied that that person is a person to whom this section applies,

the Commissioners may, if they think fit, allow that person’s taxable supplies to be so taxed until it appears to them that the person is no longer a person to whom this section applies or that the request is withdrawn or should, for any other reason, no longer be acted upon.

(2) This section applies to a person if—

(a) he does not have any business establishment or other fixed establishment in the United Kingdom and does not have his usual place of residence in the United Kingdom;

(b) he is for the time being neither registered under this Act nor required to be registered under Schedule 1A to this Act;

(c) he does not have a tax representative and is not for the time being required under section 32A above to appoint one; and

(d) he intends that his taxable supplies should be confined to supplies of goods made to taxable persons who are willing to account for and pay the tax chargeable thereon.

(3) A person whose taxable supplies for the time being fall to be taxed in accordance with this section—

(a) shall be a taxable person for the purposes of this Act; but

(b) shall not, by virtue of any provision of this Act, be registered, or be or become liable to be registered, under Schedule 1 to this Act.

(4) Where—

(a) any person’s taxable supplies for the time being fall to be taxed in accordance with this section; and

(b) that person makes a taxable supply of goods to a taxable person who has given, and not withdrawn, an undertaking to account for and pay any tax chargeable on supplies of goods made to him by the supplier in question,

it shall be for the person supplied, on the supplier’s behalf, to account for and pay any tax on the supply of those goods, and not for the supplier.

(5) Where any person’s taxable supplies for the time being fall to be taxed in accordance with this section, any acquisition from another member State by that person of any goods the first supply of which after their acquisition is to a person who under this section is required to account for and pay the tax on that supply shall be treated for the purposes of this Act as taking place outside the United Kingdom.

(6) The Commissioners may by regulations provide—

(a) for the form and manner in which any request under subsection (1) above, or any undertaking such as is mentioned in subsection (4)(b) above, is to be made or withdrawn;

(b) for the manner in which the making or withdrawal of any such undertaking is to be notified to the Commissioners;

(c) for a person whose taxable supplies for the time being fall to be taxed in accordance with this section to be under an obligation to notify the Commissioners if he makes any taxable supply to which subsection (4) above does not apply and which is not zero-rated;

(d) for prescribed provisions of this Act and of any other enactment (whenever passed) relating to value added tax to have effect, where under this section a person supplied with any goods is required to account for and pay any tax on the supply, as if that tax were on supplies or acquisitions made by him.”

35 For section 35 (supplies of dutiable goods in warehouse) there shall be substituted the following section—

“35 Goods subject to a warehousing regime

(1) Where—

(a) any goods have been removed from a place outside the member States and have entered the territory of the Community;

(b) the material time for any acquisition of those goods from another member State or for any supply of those goods is while they are subject to a warehousing regime and before the duty point; and

(c) those goods are not mixed with any dutiable goods which were produced or manufactured in the United Kingdom or acquired from another member State,

then the acquisition or supply mentioned in paragraph (b) above shall be treated for the purposes of this Act as taking place outside the United Kingdom.

(2) Subsection (3) below applies where—

(a) any dutiable goods are acquired from another member State; or

(b) any person makes a supply of—

(i) any dutiable goods which were produced or manufactured in the United Kingdom or acquired from another member State; or

(ii) any goods comprising a mixture of goods falling within sub-paragraph (i) above and other goods.

(3) Where this subsection applies and the material time for the acquisition or supply mentioned in subsection (2) above is while the goods in question are subject to a warehousing regime and before the duty point, that acquisition or supply shall be treated for the purposes of this Act as taking place outside the United Kingdom if the material time for any subsequent supply of those goods is also while the goods are subject to the warehousing regime and before the duty point.

(4) Where the material time for any acquisition or supply of any goods in relation to which subsection (3) above applies is while the goods are subject to a warehousing regime and before the duty point but the acquisition or supply nevertheless falls, for the purposes of this Act, to be treated as taking place in the United Kingdom—

(a) that acquisition or supply shall be treated for the purposes of this Act as taking place at the earlier of the following times, that is to say, the time when the goods are removed from the warehousing regime and the duty point; and

(b) in the case of a supply, any tax payable on the supply shall be paid (subject to any regulations under subsection (5) below)—

(i) at the time when the supply is treated as taking place under paragraph (a) above; and

(ii) by the person by whom the goods are so removed or, as the case may be, together with the duty or agricultural levy, by the person who is required to pay the duty or levy.

(5) The Commissioners may by regulations make provision—

(a) for enabling goods to be removed from a warehousing regime by a taxable person without payment of tax chargeable in respect of those goods by virtue of subsection (4)(a) above; and

(b) for that tax to be accounted for together with the tax chargeable on supplies of goods and services by that person.

(6) In this section—

• “dutiable goods” means any goods which are subject—

  (a)

  to a duty of excise; or

  (b)

  in accordance with any provision for the time being having effect for transitional purposes in connection with the accession of any State to the European Communities, to any Community customs duty or agricultural levy of the Economic Community;

• “the duty point”, in relation to any goods, means—

  (a)

  in the case of goods which are subject to a duty of excise, the time when the requirement to pay the duty on those goods takes effect; and

  (b)

  in the case of goods which are not so subject, the time when any Community customs debt in respect of duty on the entry of the goods into the territory of the Community would be incurred or, as the case may be, the corresponding time in relation to any such duty or levy as is mentioned in paragraph (b) of the definition of dutiable goods;

• “material time”—

  (a)

  in relation to any acquisition or supply the time of which is determined in accordance with regulations under section 5(9) or 8B(3) above, means such time as may be prescribed for the purpose of this section by those regulations;

  (b)

  in relation to any other acquisition, means the time of the event which, in relation to the acquisition, is the first relevant event for the purposes of taxing it; and

  (c)

  in relation to any other supply, means the time when the supply would be treated as taking place in accordance with subsection (2) of section 4 above if paragraph (c) of that subsection were omitted;

• “warehouse” means any warehouse where goods may be stored in any member State without payment of any one or more of the following, that is to say—

  (a)

  Community customs duty;

  (b)

  any agricultural levy of the Economic Community;

  (c)

  value added tax on the importation of the goods into any member State;

  (d)

  any duty of excise or any duty which is equivalent in another member State to a duty of excise.

(7) References in this section to goods being subject to a warehousing regime is a reference to goods being kept in a warehouse or being transported between warehouses (whether in the same or different member States) without the payment in a member State of any duty, levy or tax; and references to the removal of goods from a warehousing regime shall be construed accordingly.”

36 (1) In subsection (1) of section 36 (capital goods), after “supply” there shall be inserted “acquisition”.

(2) In subsection (2) of that section, after “supplied” there shall be inserted “acquired”.

37 For section 37 (trading stamp schemes) there shall be substituted the following section—

“37 Trading stamp schemes

The Commissioners may by regulations modify sections 10 and 10A of this Act and Schedules 4 and 4A to this Act for the purpose of providing (in place of the provision for the time being contained in those sections and Schedules) for the manner of determining for the purposes of this Act the value of—

(a) a supply of goods, or

(b) a transaction in pursuance of which goods are acquired from another member State,

in a case where the goods are supplied or acquired under a trading stamp scheme (within the meaning of the [1964 c. 71.] Trading Stamps Act 1964 or the [1965 c. 6 (N.I.).] Trading Stamps Act (Northern Ireland) 1965) or under any scheme of an equivalent description which is in operation in another member State.”

General

38 In section 38 (which gives effect to Schedule 7), after “effect” there shall be inserted “subject to section 46A(6) below,”.

39 (1) In subsection (1A) of section 39—

(a) in paragraph (b) (evasion by obtaining refund), after “under” there shall be inserted “section 20A,”;

(b) after that paragraph there shall be inserted the following paragraph—

“(ba) a refund under any regulations made by virtue of section 8C(5) above; or”; and

(c) in sub-paragraph (ii), after “paragraph (b)” there shall be inserted “paragraph (ba)”.

(2) In subsection (2B)(a) of that section (penalties in the case of refunds)—

(a) after “under”, in the first place where it occurs, there shall be inserted “section 20A,”; and

(b) after “22 above” there shall be inserted “for a refund under any regulations made by virtue of section 8C(5) above”.

(3) In subsection (4) of that section (handling goods in respect of which there is evasion), for “or on the importation of the goods” there shall be substituted “on the acquisition of the goods from another member State or on the importation of the goods from a place outside the member States”.

40 In subsection (1) of section 40 (appeals)—

(a) in paragraph (b), for the words from “or, subject” to the end of the paragraph there shall be substituted “on the acquisition of goods from another member State or, subject to subsection (5) below, on the importation of goods from a place outside the member States”;

(b) after paragraph (d) there shall be inserted the following paragraph—

“(da) the amount of any refunds under section 20A above;”

(c) after paragraph (f) there shall be inserted the following paragraph—

“(fa) any claim for a refund under any regulations made by virtue of section 8C(5) above;”

(d) after paragraph (j) there shall be inserted the following paragraph—