Office of Public Sector Information
PART III continued
“(4) The Management Act shall apply to an assessment under subsection (3) above as it applies, by virtue of subsection (4) of section 374A, to an assessment under subsection (3) of that section.
(4A) If there is any unreasonable delay in the giving of a notice under subsection (1) above, the borrower shall be liable to a penalty not exceeding so much of the aggregate amount that he is liable to make good under subsection (3) above as is attributable to that delay.”
(4) After subsection (8) of that section there shall be inserted the following subsection—
“(8A) In any case where an amount to which a person is not entitled is paid to him by the Board in pursuance of regulations made by virtue of subsection (8) above, regulations may—
(a) provide for an officer of the Board to make such assessments as may in his judgment be required for recovering that amount from that person; and
(b) make provision corresponding to that made by subsection (4A) above and subsections (4) and (5) of section 374A.”
(5) This section applies in relation to deductions made by borrowers, and payments made by the Board, after the passing of this Act.
(1) After subsection (2) of section 16 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (computation of losses) there shall be inserted the following subsection—
“(2A) A loss accruing to a person in a year of assessment shall not be an allowable loss for the purposes of this Act unless, in relation to that year, he gives a notice to an officer of the Board quantifying the amount of that loss; and sections 42 and 43 of the Management Act shall apply in relation to such a notice as if it were a claim for relief.”
(2) Deductions under that Act in respect of allowable losses shall be given preference as follows—
(a) a deduction in respect of a loss accruing to a person in the year 1996-97 or a subsequent year of assessment shall be preferred to a deduction in respect of a loss accruing to him in an earlier year of assessment; and
(b) a deduction in respect of a loss accruing to a company in an accounting period ending on or after the appointed day for the purposes of Chapter III of Part IV of the [1994 c. 9.] Finance Act 1994 shall be preferred to a deduction in respect of a loss accruing to the company in an accounting period ending before that day.
(1) For subsection (1) of section 65 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (liability for tax of trustees and personal representatives) there shall be substituted the following subsection—
“(1) Subject to subsection (3) below, capital gains tax chargeable in respect of chargeable gains accruing to the trustees of a settlement or capital gains tax due from the personal representatives of a deceased person may be assessed and charged on and in the name of any one or more of the relevant trustees or the relevant personal representatives.”
(2) After subsection (2) of that section there shall be inserted the following subsections—
“(3) Where section 80 applies as regards the trustees of a settlement (“the migrating trustees”), nothing in subsection (1) above shall enable any person—
(a) who ceased to be a trustee of the settlement before the end of the relevant period, and
(b) who shows that, when he ceased to be a trustee of the settlement, there was no proposal that the trustees might become neither resident nor ordinarily resident in the United Kingdom,
to be assessed and charged to any capital gains tax which is payable by the migrating trustees by virtue of section 80(2).
(4) In this section—
“the relevant period” has the same meaning as in section 82;
“the relevant trustees”, in relation to any chargeable gains, means the trustees in the year of assessment in which the chargeable gains accrue and any subsequent trustees of the settlement, and “the relevant personal representatives” has a corresponding meaning.”
(1) In subsection (7) of section 7 of the Management Act (notice of liability), for the words “income from which” there shall be substituted the words “income on which”.
(2) In subsection (3) of section 9 of that Act (returns to include self-assessment), the words “the following provisions of” shall cease to have effect.
(3) Section 11A of that Act (notice of liability to capital gains tax) shall cease to have effect.
(4) In subsection (2) of section 12AA of that Act (partnership return), for the words “such accounts and statements” there shall be substituted the words “such accounts, statements and documents, relating to information contained in the return,”.
(5) In subsection (1)(c) of section 30B of that Act (amendment of partnership statement where loss of tax discovered), after the word “relief” there shall be inserted the words “or allowance”.
(6) In subsection (6) of section 59B of that Act (payment of income tax and capital gains tax), for the words “under section 29 of this Act shall” there shall be substituted the words “otherwise than under section 9 of this Act shall, unless otherwise provided,”.
(7) In subsection (1) of section 100B of that Act (appeals against penalty determinations), after the words “95A of this Act” there shall be inserted the word “and”.
(8) In section 103A of that Act (interest on penalties), for the words “Part II or VA” there shall be substituted the words “Part II, IV or VA”.
(9) Section 73 of the Taxes Act 1988 (single assessments for purposes of Cases III, IV and V of Schedule D) shall cease to have effect.
(10) In sections 536 and 537B of that Act (taxation of royalties where owner abroad)—
(a) in subsection (2) (exemption from requirement to deduct tax from royalties), the words “are shown on a claim to” shall cease to have effect; and
(b) in subsection (4) (deduction of tax where agent’s commission unknown), the words from “and in that case” to the end shall cease to have effect.
(11) In Schedule 3 to that Act (machinery for assessment, charge and payment of income tax under Schedule C and, in certain cases, Schedule D), in paragraph 6E, sub-paragraphs (1) and (3) shall cease to have effect.
(12) Section 7 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (time for payment of capital gains tax) shall cease to have effect.
(13) Subsection (3) above has effect as respects the year 1995-96 and subsequent years of assessment.
(1) The provisions of the Management Act specified in Schedule 21 to this Act shall have effect subject to the transitional provisions contained in that Schedule.
(2) Section 198 of the [1994 c. 9.] Finance Act 1994 (which is superseded by this section) shall cease to have effect.
(1) Section 215 of the [1994 c. 9.] Finance Act 1994 (treatment of partnerships) shall have effect, and shall be deemed always to have had effect, as if—
(a) for the section set out in subsection (1) of that section there were substituted the section set out in subsection (2) below;
(b) after the said subsection (1) there were inserted the subsection set out in subsection (3) below;
(c) in subsection (2) of section 215, the word “and” were inserted immediately after paragraph (a), and paragraph (c) and the word “and” immediately preceding that paragraph were omitted; and
(d) in subsection (3) of that section, in paragraph (a), for the words from “in subsection (3)” to the end there were substituted the words “subsections (3) and (4)”.
(2) Subject to subsection (4) below, the section referred to in subsection (1)(a) above is as follows—
(1) Where a trade or profession is carried on by persons in partnership, the partnership shall not, unless the contrary intention appears, be treated for the purposes of the Tax Acts as an entity which is separate and distinct from those persons.
(2) So long as a trade or profession is carried on by persons in partnership, and any of those persons is chargeable to income tax, the profits or gains or losses arising from the trade or profession (“the actual trade or profession”) shall be computed for the purposes of income tax in like manner as if—
(a) the partnership were an individual; and
(b) that individual were an individual resident in the United Kingdom.
(3) A person’s share in the profits or gains or losses arising from the actual trade or profession which for any period are computed in accordance with subsection (2) above shall be determined according to the interests of the partners during that period.
(4) Where a person’s share in any profits or gains or losses is determined in accordance with subsection (3) above, sections 60 to 63A shall apply as if—
(a) that share of the profits or gains or losses derived from a trade or profession carried on by him alone;
(b) that trade or profession (“the deemed trade or profession”) had been set up and commenced by him at the time when he became a partner or, where the actual trade or profession was previously carried on by him alone, the time when the actual trade or profession was set up and commenced;
(c) as regards each year of assessment, any accounting date or accounting change of the actual trade or profession were also an accounting date or accounting change of the deemed trade or profession;
(d) subsection (2) of section 62 applied in relation to any accounting change of the deemed trade or profession if, and only if, on the assumption that the partnership were an individual, that subsection would apply in relation to the corresponding accounting change of the actual trade or profession; and
(e) the deemed trade or profession were permanently discontinued by him at the time when he ceases to be a partner or, where the actual trade or profession is subsequently carried on by him alone, the time when the actual trade or profession is permanently discontinued.
(5) Where section 62(2) does not apply in relation to any accounting change of the deemed trade or profession which is made or treated as made in the year of assessment next following or next but one following the commencement year, sections 60(3)(a) and 61(2)(a) shall apply as if the old date in that year were the accounting date.
(6) For the purpose of determining whether, on the assumption that the partnership were an individual, section 62(2) would apply in relation to an accounting change of the actual trade or profession—
(a) a notice may be given under subsection (3) of section 62A; and
(b) an appeal may be brought under subsection (6) of that section,
by such one of the partners as may be nominated by them for the purposes of this subsection.
(7) Where—
(a) subsections (2) and (3) above apply in relation to the profits or gains or losses of a trade or profession carried on by persons in partnership; and
(b) other income or other relievable losses accrue to those persons by virtue of their being partners,
those subsections shall apply as if references to the profits or gains or losses arising from the trade or profession included references to that other income or those other relievable losses.
(8) Where a person’s share in any untaxed income from one or more sources, or in any relievable losses, is determined in accordance with subsection (3) as applied by subsection (7) above, sections 60 to 63A shall apply as if—
(a) that share of that income or of those losses were profits or gains or losses of a trade or profession carried on by that person alone;
(b) that trade or profession (“the second deemed trade or profession”) had been set up and commenced by him at the time when he became a partner;
(c) paragraphs (c) and (d) of subsection (4) and subsection (5) above applied in relation to the second deemed trade or profession as they apply in relation to the other deemed trade or profession;
(d) the second deemed trade or profession were permanently discontinued by him at the time when he ceases to be a partner; and
(e) each source of the income were treated as continuing until the second deemed trade or profession is treated as permanently discontinued.
(9) Where—
(a) the basis period for any year of assessment is given by section 62(2)(b) in the case of a person’s second deemed trade or profession, or such a trade or profession is treated as permanently discontinued in any year of assessment; and
(b) the amount falling to be deducted under subsection (1) or (3) of section 63A exceeds that person’s share, as determined in accordance with subsection (3) as applied by subsection (7) above, in any untaxed income,
the amount of the excess shall be deducted in computing that person’s income for that year.
(10) Subsections (1) to (3) above apply in relation to persons in partnership by whom a business which is not a trade or profession is carried on as they apply in relation to persons in partnership by whom a trade or profession is carried on.
(11) In subsections (2) and (3) above as applied by subsection (10) above, references to the profits or gains or losses arising from the trade or profession shall have effect as references to any income or relievable losses arising from the business.
(12) In this section—
“accounting change” and “the old date” have the meanings given by section 62(1);
“accounting date” has the meaning given by section 60(5);
“the commencement year”, in relation to the deemed trade or profession or the second deemed trade or profession, means the year of assessment in which that trade or profession is deemed to have been set up and commenced;
“income” means any income (whether or not chargeable under Schedule D);
“untaxed income” means income which is not—
income from which income tax has been deducted;
income from or on which income tax is treated as having been deducted or paid; or
income chargeable under Schedule F.
(13) In this section—
(a) any reference to sections 60 to 63A includes a reference to those sections as applied in relation to losses by section 382(3) and (4) and section 385(1); and
(b) any reference to a person becoming or ceasing to be a partner is a reference to his beginning or, as the case may be, ceasing to carry on the actual trade or profession in partnership with other persons.”
(3) The subsection referred to in subsection (1)(b) above is as follows—
“(1A) In subsection (2) of section 110 of that Act (interpretation of sections 103 to 109A), for the words from “any event” to the end there shall be substituted the following paragraphs—
“(a) any event which, under section 113 or 337(1), is to be treated as equivalent to the permanent discontinuance of a trade, profession or vocation; or
(b) in relation to a trade or profession carried on by a person in partnership with other persons, any event which, under subsection (4) of section 111, is to be treated as equivalent to the permanent discontinuance of his deemed trade or profession (within the meaning of that subsection)”.”
(4) As respects the year 1994-95, the section set out in subsection (2) above shall have effect as if, in subsection (2) of that section, paragraph (b) and the word “and” immediately preceding that paragraph were omitted.
Section 209 of the [1994 c. 9.] Finance Act 1994 (loss relief: general) shall have effect, and shall be deemed always to have had effect, as if for subsection (7) (commencement of subsections (3) to (5)) there were substituted the following subsections—
“(7) Subsections (1), (2) and (6) above—
(a) except in their application to a trade set up and commenced on or after 6th April 1994, have effect in relation to losses sustained in the year 1996-97 and subsequent years of assessment; and
(b) in their application to a trade so set up and commenced, have effect in relation to losses sustained in the year 1994-95 and subsequent years of assessment.
(8) Subsections (3) to (5) above—
(a) except in their application to a trade set up and commenced on or after 6th April 1994, have effect in relation to losses sustained in the year 1997-98 and subsequent years of assessment; and
(b) in their application to a trade so set up and commenced, have effect in relation to losses sustained in the year 1994-95 and subsequent years of assessment.
(9) Any reference in subsection (7) or (8) above to a trade includes a reference to a profession, vocation or employment.”
Section 210 of the [1994 c. 9.] Finance Act 1994 (relief for losses on unquoted shares) shall have effect, and shall be deemed always to have had effect, as if, in subsection (2) (commencement), for the words “as respects” there were substituted the words “in relation to losses incurred in”.
(1) In section 401 of the Taxes Act 1988 (relief for pre-trading expenditure)—
(a) in subsection (1), for the words from “treated” to the end there shall be substituted the words “treated as incurred on the day on which the trade, profession or vocation is first carried on by him”; and
(b) subsection (2) shall cease to have effect.
(2) This section has effect as respects trades, professions and vocations which are set up and commenced on or after 6th April 1995.
In section 72(2) of the Taxes Act 1988 (apportionments etc.
for purposes of Cases I, II and VI of Schedule D) for the words “months, or fractions of months,” there shall be substituted the word “days”.
(1) Schedule 20 to the [1994 c. 9.] Finance Act 1994 (changes for facilitating self-assessment: transitional provisions and savings) shall be amended as follows.
(2) In sub-paragraph (4) of paragraph 2 (Cases I and II of Schedule D), after the words “which arise” there shall be inserted the words “after the end of—
(a) the basis period for the year 1996-97; or
(b) in the case of a trade or profession carried on by a person in partnership with other persons, the basis period of the partnership for that year,
and (in either case)”.
(3) After that sub-paragraph there shall be inserted the following sub-paragraphs—
“(4A) In calculating the amount of the profits or gains of the basis period for the year 1997-98 which arise as mentioned in sub-paragraph (4) above, any deduction of a capital allowance and any addition of a balancing charge shall be ignored.
(4B) Sub-paragraph (4A) above does not apply in the case of a trade or profession carried on by persons who include both an individual and a company.”
(4) At the beginning of sub-paragraph (5) of paragraph 10 (double taxation relief) there shall be inserted the words “Subject to sub-paragraph (5A) below,”.
(5) After that sub-paragraph there shall be inserted the following sub-paragraph—
“(5A) Where the period on the profits or gains of which income tax is chargeable under Case IV or V of Schedule D for the year 1995-96 is that year, sub-paragraph (5) above shall have effect as if for the words from “50 per cent.” to the end there were substituted the words “the amount of foreign tax paid on income arising, or (as the case may require) received in the United Kingdom, in that year”.”
Schedule 22 to this Act shall have effect for preventing the exploitation of, and (in certain cases) penalising attempts to exploit, the transitional provisions set out in paragraphs 2(2) and (4), 4(2) and 6(2)(a) and (4) of Schedule 20 to the [1994 c. 9.] Finance Act 1994 (changes for facilitating self-assessment: transitional provisions and savings).
(1) In Chapter VI of Part IV of the Taxes Act 1988 (discontinuance and change of basis of computation), after section 110 there shall be inserted the following section—
(1) Where there is a change of residence by an individual who is carrying on any trade, profession or vocation wholly or partly outside the United Kingdom and otherwise than in partnership with others, tax shall be chargeable, and loss relief may be claimed, as if the change—
(a) constituted the permanent discontinuance of the trade, profession or vocation; and
(b) was immediately followed, in so far as the trade, profession or vocation continues to be carried on by that individual, by the setting up and commencement of a new one;
but nothing in this subsection shall prevent any portion of a loss sustained before the change from being carried forward under section 385 and set against profits or gains arising or accruing after the change.
(2) For the purposes of this section there is a change of residence by an individual if—
(a) not being resident in the United Kingdom, he becomes so resident; or
(b) being so resident, he ceases to be so resident.”
(2) This section shall have effect as respects the year 1997-98 and subsequent years of assessment and also, in relation only to a trade, profession or vocation set up and commenced on or after 6th April 1994, as respects the years 1995-96 and 1996-97.
(1) The provisions of the Taxes Act 1988 to which sections 215 and 216 of the [1994 c. 9.] Finance Act 1994 (partnerships and change of ownership of trade etc.) relate shall have effect as respects the year 1995-96 and subsequent years of assessment as if subsection (5)(b) of section 215 (amendments not to apply until the year 1997-98 to partnerships controlled abroad) were omitted; and the [1994 c. 9.] Taxes Act 1988 shall have effect—
(a) as respects the year 1997-98 and subsequent years of assessment, and
(b) in its application with the amendments made by those sections to partnerships whose trades, professions or businesses were set up and commenced on or after 6th April 1994, as respects the years 1995-96 and 1996-97,
with the further amendments specified in the following provisions of this section.
(2) For subsections (1) to (3) of section 112 (partnerships controlled abroad) there shall be substituted the following subsections—
“(1) So long as a trade, profession or business is carried on by persons in partnership and any of those persons is not resident in the United Kingdom, section 111 shall have effect for the purposes of income tax in relation to the partner who is not so resident as if—
(a) the reference in subsection (2)(b) to an individual resident in the United Kingdom were a reference to an individual who is not so resident; and
(b) in subsection (4)(a), after “carried on” there were inserted “in the United Kingdom”.
(1A) Where—
(a) any persons are carrying on a trade, profession or business in partnership,
(b) the trade, profession or business is carried on wholly or partly outside the United Kingdom,
(c) the control and management of the trade, profession or business is situated outside the United Kingdom, and
(d) any of the partners who is an individual resident in the United Kingdom satisfies the Board that he is not domiciled in the United Kingdom or that, being a Commonwealth citizen or a citizen of the Republic of Ireland, he is not ordinarily resident in the United Kingdom,
section 111 shall have effect in accordance with subsection (1) above as if that partner were not resident in the United Kingdom and, in addition (as respects that partner as an individual who is in fact resident in the United Kingdom), his interest as a partner, so far as it entitles him to a share of any profits or gains arising from the carrying on of the trade, profession or business otherwise than within the United Kingdom, shall be treated for the purposes of Case V of Schedule D as if it were a possession outside the United Kingdom.
(1B) Where any persons are carrying on a trade or profession in partnership, the trade or profession is carried on wholly or partly outside the United Kingdom and an individual who is one of the partners changes his residence (within the meaning of section 110A), it shall be assumed for income tax purposes—
(a) that that individual ceased to be a partner at the time of the change and became one again immediately afterwards; and
(b) in relation to matters arising after the change, that the time when he became a partner is the time immediately after the change;
but nothing in this subsection shall, in relation to that individual, prevent any portion of a loss sustained before the change from being carried forward under section 385 and set against profits or gains arising or accruing after the change.”
(3) In that section—
(a) in subsection (4)(a), for “or is deemed to reside outside the United Kingdom” there shall be substituted “outside the United Kingdom or which carries on any trade, profession or business the control and management of which is situated outside the United Kingdom”; and
(b) in subsection (6), for “this section” there shall be substituted “subsections (4) and (5) above”.
(4) In section 114(1) (partnerships including companies), after the word “company”, in the second place where it occurs, there shall be inserted “and, subject to section 115(4), as if that company were resident in the United Kingdom”.
(5) In section 115 (provisions supplementary to section 114), for subsections (4) and (5) there shall be substituted the following subsections—
“(4) So long as a trade, profession or business is carried on by persons in partnership and any of those persons is a company which is not resident in the United Kingdom, section 114 shall have effect in relation to that company as if—
(a) the reference in subsection (1) to a company resident in the United Kingdom were a reference to a company that is not so resident; and
(b) in subsection (2), after “carried on” there were inserted “in the United Kingdom through a branch or agency”.
(5) Where the partners in a partnership include a company, subsections (4) and (5) of section 112 shall apply for the purposes of corporation tax as well as for the purposes of income tax, and section 114 shall have effect accordingly.”
(1) Schedule 23 to this Act shall have effect for imposing obligations and liabilities in relation to income tax, corporation tax and capital gains tax on a branch or agency which, under this section, is the UK representative of a person who is not resident in the United Kingdom (“the non-resident”).
(2) Subject to the following provisions of this section and to section 127 below, a branch or agency in the United Kingdom through which the non-resident carries on (whether solely or in partnership) any trade, profession or vocation shall, for the purposes of this section and Schedule 23 to this Act, be the non-resident’s UK representative in relation to the following amounts, that is to say—
(a) the amount of any such income from the trade, profession or vocation as arises, directly or indirectly, through or from that branch or agency;
(b) the amount of any income from property or rights which are used by, or held by or for, that branch or agency;
(c) amounts which, by reference to that branch or agency, are chargeable to capital gains tax under section 10 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (non-residents) or fall under that section to be included in the chargeable profits of the non-resident; and
(d) in a case where the non-resident is an overseas life insurance company, any other amounts which by virtue of paragraph 3 of Schedule 19AC to the Taxes Act 1988 fall by reference to that branch or agency to be included in the company’s chargeable profits for the purposes of corporation tax.
(3) For the purposes of this section and Schedule 23 to this Act, the non-resident’s UK representative in relation to any amount shall continue to be the non-resident’s UK representative in relation to that amount even after ceasing to be a branch or agency through which the non-resident carries on the trade, profession or vocation in question.
(4) For the purposes of this section and Schedule 23 to this Act, the non-resident’s UK representative in relation to any amount shall be treated, where he would not otherwise be so treated, as if he were a separate and distinct person from the non-resident.
(5) Where the branch or agency through which the non-resident carries on the trade, profession or vocation is one carried on by persons in partnership, the partnership, as such, shall be deemed for the purposes of this section and Schedule 23 to this Act to be the non-resident’s UK representative in relation to the amounts mentioned in subsection (2) above.
(6) Where a trade or profession carried on by the non-resident through a branch or agency in the United Kingdom is one carried on by him in partnership, the trade or profession carried on through that branch or agency shall be deemed, for the purposes of this section and Schedule 23 to this Act, to include the deemed trade or profession from which the non-resident’s share in the partnership’s profits, gains or losses is treated for the purposes of section 111 or 114 of the Taxes Act 1988 as deriving.
(7) For the purposes of this section and Schedule 23 to this Act where—
(a) a trade or profession carried on by the non-resident in the United Kingdom is one carried on by him in partnership, and
(b) any member of that partnership is resident in the United Kingdom,
the deemed trade or profession from which the non-resident’s share in the partnership’s profits, gains or losses is treated for the purposes of section 111 or 114 of the Taxes Act 1988 as deriving shall be treated (in addition, where subsection (6) above also applies, to being treated as included in a trade or profession carried on through any such branch or agency as is mentioned in that subsection) as a trade carried on in the United Kingdom through the partnership as such.
(8) In this section “branch or agency” has the same meaning as in the Management Act.
(9) This section and Schedule 23 to this Act apply—
(a) for the purposes of income tax and capital gains tax, in relation to the year 1996-97 and subsequent years of assessment; and
(b) for the purposes of corporation tax, in relation to accounting periods beginning after 31st March 1996.
Finance Act 1995