Finance (No. 2) Act 1992

In paragraph 3 of that Schedule (computer records of particulars contained in tax invoices), after sub-paragraph (2) there shall be inserted the following sub-paragraph—

(2A) Without prejudice to the generality of the powers conferred by virtue of sub-paragraph (3C) of paragraph 2 above, regulations made by virtue of that sub-paragraph may provide for the preceding provisions of this paragraph to apply, subject to such exceptions and adaptations as may be prescribed, in relation to any invoice which is described in regulations made for the purposes of section 5(3B)(b) or 8B(1)(b) of this Act, as they apply in relation to tax invoices.

66

• (1) In sub-paragraph (2A) of paragraph 4 of that Schedule (power of Commissioners to assess tax due), after “Schedule 1 to this Act" there shall be inserted “ , paragraph 6(2) of Schedule 1A to this Act or paragraph 6(2) or (3) of Schedule 1B to this Act ”.

• (2) In sub-paragraph (5) of that paragraph (time limits)—

• (a) after the word “period", in the first place where it occurs, there shall be inserted “ must be made within the time limits provided for in section 22 of the Finance Act 1985 (ultimate time limits on assessments) and ”; and

• (b) for the words after paragraph (b) there shall be substituted— “ but (subject to that section) where further such evidence comes to the Commissioners’ knowledge after the making of an assessment under sub-paragraph (1), (2) or (2A) above, another assessment may be made under that sub-paragraph, in addition to any earlier assessment. ”

• (3) In sub-paragraph (6) of that paragraph (deficiency of goods)—

• (a) for the words from “acquired" to the word “him", in the first place where it occurs, there shall be substituted “ in the course or furtherance of a business carried on by him, been supplied with any goods, acquired any goods from another member State or otherwise obtained possession or control of any goods or has, in the course or furtherance of such a business, imported any goods from a place outside the member States, ”; and

• (b) for “from the United Kingdom otherwise than" there shall be substituted “ or otherwise removed from the United Kingdom without being exported or so removed ”.

67

After paragraph 4 of that Schedule there shall be inserted the following paragraph—

(4A) (1) Where a person who has, at a time when he was not a taxable person, acquired in the United Kingdom from another member State any goods subject to a duty of excise or consisting in a new means of transport and— (a) no notification of that acquisition has been given to the Commissioners by the person who is required to give one by regulations under paragraph 2(2B) above; (b) the Commissioners are not satisfied that the particulars relating to the acquisition in any notification given to them are accurate and complete; or (c) there has been a failure to supply the Commissioners with the information necessary to verify the particulars contained in any such notification, they may assess the amount of tax due on the acquisition to the best of their judgment and notify their assessment to that person. (2) An assessment under this paragraph must be made within the time limits provided for in section 22 of the Finance Act 1985 (ultimate time limits on assessments) and shall not be made after whichever is the later of the following— (a) two years after the time when a notification of the acquisition of the goods in question is given to the Commissioners by the person who is required to give one by regulations under paragraph 2(2B) above; (b) one year after evidence of the facts, sufficient in the opinion of the Commissioners to justify the making of the assessment, comes to their knowledge, but (subject to that section) where further such evidence comes to the Commissioners’ knowledge after the making of an assessment under this paragraph, another assessment may be made under this paragraph, in addition to any earlier assessment. (3) Where an amount has been assessed and notified to any person under this paragraph, it shall, subject to the provisions of this Act as to appeals, be deemed to be an amount of tax due from him and may be recovered accordingly, unless, or except to the extent that, the assessment has subsequently been withdrawn or reduced. (4) For the purposes of this paragraph notification to a personal representative, trustee in bankruptcy, receiver, liquidator or person otherwise acting in a representative capacity in relation to the person who made the acquisition in question shall be treated as notification to the person in relation to whom he so acts.

68

In paragraph 5(2) of that Schedule (requirement of security), at the beginning there shall be inserted “ Without prejudice to their power under section 32A(7) of this Act, ”.

69

In paragraph 6 of that Schedule (enforcement and recovery of tax), after sub-paragraph (9) there shall be inserted the following sub-paragraph—

(10) The preceding provisions of this paragraph shall have effect as if any sum required by way of security under section 32A(7) of this Act were recoverable as if it were tax due from the person who is required to provide it.

70

In paragraph 7(1) of that Schedule (duty to keep records), at the end there shall be inserted “ and every person who, at a time when he is not a taxable person, acquires in the United Kingdom from another member State any goods which are subject to a duty of excise or consist in a new means of transport shall keep such records with respect to the acquisition (if it is a taxable acquisition and is not in pursuance of a taxable supply) as the Commissioners may so require. ”

71

• (1) In sub-paragraph (2) of paragraph 8 of that Schedule (furnishing of information and production of documents)—

• (a) after the word “made", in the first place where it occurs, there shall be inserted “ every person who is concerned (in whatever capacity) in the acquisition of goods from another member State ”;

• (b) after the word “goods", in the second place where it occurs, there shall be inserted “ from a place outside the member States ”;

• (c) in paragraph (a) and in the words after paragraph (b), after the word “supply", in each place, there shall be inserted “ acquisition ”.

• (2) In sub-paragraph (4) of that paragraph, for the words from “or the importation of goods" onwards there shall be substituted “ to the acquisition of goods from another member State or to the importation of goods from a place outside the member States shall be taken to include any profit and loss account and balance sheet relating to the business in the course of which the goods or services are supplied or the goods are imported or (in the case of an acquisition from another member State) relating to any business or other activities of the person by whom the goods are acquired. ”

72

In paragraph 9(1) of that Schedule (power to take samples), after “supplies goods" there shall be inserted “ or acquires goods from another member State ”.

73

In paragraph 10(2) of that Schedule (power of entry to premises used in connection with taxable supplies)—

• (a) after “supplies" there shall be inserted “ or with the acquisition of goods under taxable acquisitions from other member States ”; and

• (b) after “supplied" there shall be inserted “ or acquired ”.

74

In paragraph 11(1) of that Schedule (evidence by certificate), after paragraph (b) there shall be inserted the following paragraph—

(ba) that any statement or notification required to be submitted or given to the Commissioners in accordance with any regulations under paragraph 2(2A) or (2B) above has not been submitted or given or had not been submitted or given at any date; or

.

Transitional provisions

75

In paragraph 6 of Schedule 10 (relief for vehicles in respect of which purchase tax was remitted), for the words from “as imported" to the end of the paragraph there shall be substituted “ for the purposes of value added tax in respect of goods acquired from another member State or, as the case may be, value added tax in respect of goods imported from places outside the member States, as so acquired or imported ”.

Part II

Introduction

76

Chapter II of Part I of the Finance Act 1985 (enforcement provisions in relation to value added tax) shall be amended in accordance with the following provisions of this Part of this Schedule.

Civil penalties

77

• (1) In subsection (2) of section 13 (tax evasion)—

• (a) in paragraph (b) (evasion by obtaining refund), after “under" there shall be inserted “ section 20A, ”; and

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

(ba) a refund under any regulations made by virtue of section 8C(5) of that Act;

.

• (2) In subsection (3)(b) of that section, after “paragraphs (b)" there shall be inserted “ (ba) ”.

78

In section 14(5B)(b) (references to input tax for purposes of application of section in relation to certain public bodies), after “supplies" there shall be inserted “ acquisitions ”.

79

After section 14A there shall be inserted the following section—

(14B) (1) Where— (a) an EC sales statement containing a material inaccuracy has been submitted by any person to the Commissioners; (b) the Commissioners have, within six months of discovering the inaccuracy, issued that person with a written warning identifying that statement and stating that future inaccuracies might result in the service of a notice for the purposes of this section; (c) another EC sales statement containing a material inaccuracy (“the second inaccurate statement”) has been submitted by that person to the Commissioners; (d) the submission date for the second inaccurate statement fell within the period of two years beginning with the day after the warning was issued; (e) the Commissioners have, within six months of discovering the inaccuracy in the second inaccurate statement, served that person with a notice identifying that statement and stating that future inaccuracies will attract a penalty under this section; (f) yet another EC sales statement containing a material inaccuracy is submitted by that person to the Commissioners; and (g) the submission date for the statement falling within paragraph (f) above is not more than two years after the service of the notice or the date on which any previous statement attracting a penalty was submitted by that person to the Commissioners, that person shall be liable to a penalty of £100 in respect of the statement so falling. (2) Subject to subsections (3) and (4) below, an EC sales statement shall be regarded for the purposes of this section as containing a material inaccuracy if, having regard to the matters required to be included in the statement, the inclusion or omission of any information from the statement is misleading in any material respect. (3) An inaccuracy contained in an EC sales statement shall not be regarded as material for the purposes of this section if— (a) the person who submitted the statement satisfies the Commissioners or, on appeal, a value added tax tribunal that there is a reasonable excuse for the inaccuracy; or (b) at a time when he had no reason to believe that enquiries were being made by the Commissioners into his affairs, that person furnished the Commissioners with full information with respect to the inaccuracy. (4) Where, by reason of the submission of a statement containing a material inaccuracy by any person, that person is convicted of an offence (whether under the principal Act or otherwise), the inaccuracy to which the conviction relates shall be regarded for the purposes of this section as not being material. (5) Where the only statement identified in a warning or notice served for the purposes of subsection (1)(b) or (e) above is one which (whether by virtue of either or both of subsections (3) and (4) above or otherwise) is regarded as containing no material inaccuracies, that warning or notice shall be deemed not to have been issued or served for those purposes. (6) In this section— - “EC sales statement” means any statement which is required to be submitted to the Commissioners in accordance with regulations under paragraph 2(2A) of Schedule 7 to the principal Act; and - “submission date”, in relation to such a statement, means whichever is the earlier of the last day for the submission of the statement to the Commissioners in accordance with those regulations and the day on which it was in fact submitted to the Commissioners.

80

• (1) In subsection (1) of section 15 (penalties for breach of regulatory provisions)—

• (a) in paragraph (a), after “principal Act" there shall be inserted “ with paragraph 3 of Schedule 1A to that Act or with paragraph 3 or 8(2) of Schedule 1B to that Act ”;

• (b) after paragraph (a) there shall be inserted the following paragraph—

(aa) a person fails to comply with a requirement of regulations under paragraph 2(2B) of Schedule 7 to the principal Act (notification of acquisition of excise duty goods or new means of transport), or

.

• (2) In subsection (3) of that section (meaning of “relevant tax")—

• (a) after “means" there shall be inserted “ (subject to subsections (3B) and (3C) below) ”;

• (b) in paragraph (a), after “principal Act" there shall be inserted “ with paragraph 3 of Schedule 1A to that Act or with paragraph 3 of Schedule 1B to that Act ”;

• (c) in paragraph (b), after “principal Act" there shall be inserted “ or with sub-paragraph (2) of paragraph 8 of Schedule 1B to that Act ”;

• (d) after paragraph (b) there shall be inserted the following paragraph—

(ba) in relation to a person’s failure to comply with a requirement of regulations under paragraph 2(2B) of Schedule 7 to the principal Act, the tax on the acquisition to which the failure relates; and

.

• (3) In subsection (3A) of that section (the specified percentage)—

• (a) in paragraph (a), after “nine months" there shall be inserted “ or where the relevant tax is given by paragraph (ba) of that subsection and the failure in question did not continue for more than three months ”; and

• (b) in paragraph (b), for “so given" there shall be substituted “ given by paragraph (a) or (b) of subsection (3) above ” and after “eighteen months" there shall be inserted “ or where that tax is given by paragraph (ba) of that subsection and the failure in question continued for more than three months but did not continue for more than six months ”.

• (4) After subsection (3A) of that section there shall be inserted the following subsections—

(3B) Where— (a) the amount of tax which (apart from this subsection) would be treated for the purposes of subsection (1) above as the relevant tax in relation to a failure mentioned in subsection (3)(a) above includes tax on an acquisition of goods from another member State; and (b) the Commissioners are satisfied that value added tax has been paid under the law of another member State on the supply in pursuance of which those goods were acquired, then, in the determination of the amount of the relevant tax in relation to that failure, an allowance shall be made for the value added tax paid under the law of that member State; and the amount of the allowance shall not exceed the amount of tax due on the acquisition but shall otherwise be equal to the amount of value added tax which the Commissioners are satisfied has been paid on that supply under the law of that member State. (3C) Where— (a) the amount of tax which (apart from this subsection) would be treated for the purposes of subsection (1) above as the relevant tax in relation to a failure mentioned in subsection (3)(a) above includes tax chargeable by virtue of section 6(2B) of the principal Act on any supply; and (b) the Commissioners are satisfied that value added tax has been paid under the law of another member State on that supply, then, in the determination of the amount of the relevant tax in relation to that failure, an allowance shall be made for the tax paid under the law of the other member State; and the amount of the allowance shall not exceed the amount of tax chargeable by virtue of section 6(2B) on that supply but shall otherwise be equal to the amount of tax which the Commissioners are satisfied has been paid on that supply under the law of that other member State.

81

In section 17(1) (penalties for breach of regulatory provisions)—

• (a) in paragraph (a), after “principal Act" there shall be inserted “ paragraph 5 of Schedule 1A to that Act or paragraph 5 of Schedule 1B to that Act ”;

• (b) after paragraph (a) there shall be inserted the following paragraph—

(aa) any regulations made under section 32A of the principal Act requiring a tax representative, for the purposes of registration, to notify the Commissioners that his appointment has taken effect or has ceased to have effect, or

.

82

After section 17 there shall be inserted the following section—

(17A) (1) If by the last day on which a person is required in accordance with regulations under the principal Act to submit an EC sales statement for any prescribed period to the Commissioners, the Commissioners have not received that statement, that person shall be regarded for the purposes of this section as being in default in relation to that statement until it is submitted. (2) Where any person is in default in respect of any EC sales statement the Commissioners may serve notice on him stating— (a) that he is in default in relation to the statement specified in the notice; (b) that (subject to the liability mentioned in paragraph (d) below) no action will be taken if he remedies the default before the end of the period of fourteen days beginning with the day after the service of the notice; (c) that if the default is not so remedied, that person will become liable in respect of his default to penalties calculated on a daily basis from the end of that period in accordance with the following provisions of this section; and (d) that that person will become liable, without any further notices being served under this section, to penalties under this section if he commits any more defaults before a period of twelve months has elapsed without his being in default. (3) Where a person has been served with a notice under subsection (2) above, he shall become liable under this section— (a) if the statement to which the notice relates is not submitted before the end of the period of fourteen days beginning with the day after the service of the notice, to a penalty in respect of that statement; and (b) whether or not that statement is so submitted, to a penalty in respect of any EC sales statement the last day for the submission of which is after the service and before the expiry of the notice and in relation to which he is in default. (4) For the purposes of this section a notice served on any person under subsection (2) above shall continue in force— (a) except in a case falling within paragraph (b) below, until the end of the period of twelve months beginning with the day after the service of the notice; and (b) where at any time in that period of twelve months that person is in default in relation to any EC sales statement other than one in relation to which he was in default when the notice was served, until a period of twelve months has elapsed without that person becoming liable to a penalty under this section in respect of any EC sales statement. (5) The amount of any penalty to which a person who has been served with a notice under subsection (2) above is liable under this section shall be whichever is the greater of £50 and— (a) in the case of a liability in respect of the statement to which the notice relates, a penalty of £5 for every day for which the default continues after the end of the period of fourteen days mentioned in subsection (3)(a) above, up to a maximum of one hundred days; and (b) in the case of a liability in respect of any other statement, a penalty of the relevant amount for every day for which the default continues, up to a maximum of one hundred days. (6) In subsection (5)(b) above “the relevant amount”, in relation to a person served with a notice under subsection (2) above, means— (a) £5, where (that person not having been liable to a penalty under this section in respect of the statement to which the notice relates) the statement in question is the first statement in respect of which that person has become liable to a penalty while the notice has been in force; (b) £10, where the statement in question is the second statement in respect of which he has become so liable while the notice has been in force (counting the statement to which the notice relates where he has become liable in respect of that statement); and (c) £15, in any other case. (7) If a person who, apart from this subsection, would be liable to a penalty under this section satisfies the Commissioners or, on appeal a value added tax tribunal, that— (a) an EC sales statement has been submitted at such a time and in such a manner that it was reasonable to expect that it would be received by the Commissioners within the appropriate time limit; or (b) there is a reasonable excuse for such a statement not having been dispatched, he shall be treated for the purposes of this Act as not having been in default in relation to that statement and, accordingly, he shall not be liable to any penalty under this section in respect of that statement and any notice served under subsection (2) above exclusively in relation to the failure to submit that statement shall have no effect for the purposes of this section. (8) If it appears to the Treasury that there has been a change in the value of money since the coming into force of this section or, as the case may be, the last occasion when the sums specified in subsections (5) and (6) above were varied, they may by order substitute for the sums for the time being specified in those subsections such other sums as appear to them to be justified by the change; but an order under this section shall not apply to any default in relation to a statement the last day for the submission of which was before the order comes into force. (9) A statutory instrument containing an order under subsection (8) above shall be subject to annulment in pursuance of a resolution of the House of Commons. (10) In this section “EC sales statement” means any statement which is required to be submitted to the Commissioners in accordance with regulations under paragraph 2(2A) of Schedule 7 to the principal Act.

Interest on tax

83

In section 18(1)(c) (interest recovered or recoverable on assessment), after “principal Act" there shall be inserted “ or under paragraph 8 of Schedule 1B to that Act ”.

Assessments

84

• (1) In subsection (1) of section 21 (assessment to penalty), for “17", in each place where it occurs, there shall be substituted “ 17A ”.

• (2) After subsection (4) of that section there shall be inserted the following subsection—

(4A) An assessment to a penalty under section 15 above by virtue of subsection (1)(aa) of that section may be combined with an assessment under paragraph 4A of Schedule 7 to the principal Act and the two assessments notified together but the amount of the penalty shall be separately identified in the notice.

• (3) In subsection (5) of that section (notice of assessment while penalty period continuing), after “section 17" there shall be inserted “ or section 17A ”.

• (4) In subsection (6) of that section (remedying of failure etc. after assessment)—

• (a) after the words “section 17", in the first place where they occur, there shall be inserted “ or section 17A ”;

• (b) in paragraph (a), for “falling within section 17(1) above" there shall be substituted “ or default falling within section 17(1) or section 17A(1) above ”; and

• (c) in the words after paragraph (b), after “section 17" there shall be inserted “ section 17A ”.

85

• (1) In subsection (1) of section 22 (time limits for assessments)—

• (a) in paragraph (a), after “paragraph 4" there shall be inserted “ or paragraph 4A ”; and

• (b) after “importation" there shall be inserted “ or acquisition ”.

• (2) In subsection (2) of that section, after “beginning" there shall be inserted—

(a) in the case of a penalty under section 14B or section 17A above, with the time when facts sufficient in the opinion of the Commissioners to indicate, as the case may be— (i) that the statement in question contained a material inaccuracy; or (ii) that there had been a default within the meaning of section 17A(1) above, came to the Commissioners knowledge; and (b) in any other case, with the time

.

• (3) In subsection (7) of that section, after “paragraph 4" there shall be inserted “ or sub-paragraph (2)(b) of paragraph 4A ”.

86

In section 33(5)(a) (interpretation and construction of Chapter II), for “17" there shall be substituted “ 17A ”.

Part III — Consequential amendments of other enactments

The Diplomatic Privileges Act 1964 (c. 81)

87

In section 2(5A) of the Diplomatic Privileges Act 1964 (construction of references to certain duties), at the end there shall be inserted “ and to value added tax charged in accordance with section 2A or 2B of the Value Added Tax Act 1983 (acquisitions from other member States and importations from outside the European Union) ”.

The Commonwealth Secretariat Act 1966 (c. 10)

88

In paragraph 10 of the Schedule to the Commonwealth Secretariat Act 1966 (immunities and privileges), after sub-paragraph (1) there shall be inserted the following sub-paragraph—

(1A) References in this Schedule to importation, in relation to value added tax, shall include references to anything charged with tax in accordance with section 2A or 2B of the Value Added Tax Act 1983 (acquisitions from other member States and importations from outside the European Union), and, in this Schedule, “imported” shall be construed accordingly.

The Consular Relations Act 1968 (c. 18)

89

• (1) In section 1(8A) of the Consular Relations Act 1968 (references to customs duties), at the end there shall be inserted “ and to value added tax charged in accordance with section 2A or 2B of the Value Added Tax Act 1983 (acquisitions from other member States and importations from outside the European Union) ”.

• (2) In section 8(1) of that Act (refund of duty on hydrocarbon oils), after “importation" there shall be inserted “ or acquisition from another member State ”.

The International Organisations Act 1968 (c. 48)

90

In Schedule 1 to the International Organisations Act 1968 (privileges and immunities), in paragraph 19 (interpretation), after paragraph (b) there shall be inserted the following paragraph—

(c) references to importation, in relation to value added tax, shall include references to anything charged with tax in accordance with section 2A or 2B of the Value Added Tax Act 1983 (acquisitions from other member States and importations from outside the European Union), and “imported” shall be construed accordingly.

The Vehicles (Excise) Act 1971 (c. 10)

91

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Diplomatic and other Privileges Act 1971 (c. 64)

92

In section 1 of the Diplomatic and other Privileges Act 1971 (refunds in respect of hydrocarbon oil), after subsection (4) there shall be inserted the following subsection—

(5) In this section references to importation, in relation to value added tax, shall include references to anything charged with tax in accordance with section 2A or 2B of the Value Added Tax Act 1983 (acquisitions from other member States and importations from outside the European Union), and, in this section, “imported” shall be construed accordingly.

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

93

In section 13(4) of the Customs and Excise Duties (General Reliefs) Act 1979 (personal reliefs), in the definition of “value added tax", after “on the importation of goods" there shall be inserted “ from places outside the member States or on the acquisition of goods from member States other than the United Kingdom ”.

The Finance Act 1986 (c. 41)

94

In section 9 of the Finance Act 1986 (fuel for private use)—

• (a) in subsection (3), after paragraph (a) there shall be inserted the following paragraph—

(aa) any reference to fuel supplied to a taxable person shall include a reference to fuel acquired by a taxable person from another member State and any reference to fuel imported by a taxable person shall be confined to a reference to fuel imported by that person from a place outside the member States;

• (b) in subsection (5), after “supply" there shall be inserted “ acquisition ”.

The Income and Corporation Taxes Act 1988 (c. 1)

95

In section 827(1)(a) of the Income and Corporation Taxes Act 1988 (deduction of VAT penalties under sections 13 to 17 of the Finance Act 1985), for “17" there shall be substituted “ 17A ”.

SCHEDULE 4

1

The Car Tax Act 1983 shall be amended in accordance with the following provisions of this Schedule.

2

• (1) In subsection (1) of section 1 (vehicles charged to tax), for the words from “all" to the end of the subsection there shall be substituted—

(a) every chargeable vehicle made in the United Kingdom; (b) every chargeable vehicle imported into the United Kingdom from outside European Union; (c) every chargeable vehicle acquired in the United Kingdom from another member State; and (d) every chargeable vehicle not charged with tax under any of the preceding paragraphs which— (i) is registered, or (ii) without being registered becomes registrable after having been brought into the United Kingdom from another member State by a person who is not registered under this Act.

• (2) For subsection (3) of that section there shall be substituted the following subsection—

(3) For the purposes of this section— (a) a vehicle is imported into the United Kingdom from a place outside European Union if it is brought into the United Kingdom otherwise than from another member State; (b) a vehicle is acquired in the United Kingdom from another member State if it is treated as acquired from another member State for the purposes of the Value Added Tax Act 1983 and the acquisition falls, by virtue of section 8C(2) of that Act, to be treated for those purposes as taking place in the United Kingdom; (c) a vehicle is registered if it is registered under the Vehicles (Excise) Act 1971; and (d) a vehicle which has been brought into the United Kingdom becomes registrable where it becomes chargeable, for the first time after its arrival in the United Kingdom, with a duty of excise under that Act of 1971.

3

In section 4 (registration of makers and importers of chargeable vehicles)—

• (a) in subsection (1), for “imports" there shall be substituted “ brings into the United Kingdom ”; and

• (b) in subsection (3), for “import" there shall be substituted “ bring into the United Kingdom ”.

4

• (1) In subsection (1) of section 5 (person by whom car tax payable)—

• (a) in paragraph (a), for “imported" there shall be substituted “ brought into the United Kingdom ”;

• (b) in paragraph (b), after “imported" there shall be inserted “ into the United Kingdom from outside European Union”; and

• (c) after paragraph (b) there shall be inserted the following paragraphs—

(ba) if (in a case not falling within paragraph (a) above) the vehicle is acquired in the United Kingdom from another member State in pursuance of a taxable supply, the person who makes that supply; (bb) if (in a case not falling within paragraph (a) above) the vehicle is acquired in the United Kingdom from another member State otherwise than in pursuance of such a supply, the person by whom it is so acquired; and

.

• (2) After subsection (5) of that section there shall be inserted the following subsections—

(5A) Subject to section 6(2) below, where tax is charged otherwise than by virtue of section 1(1)(b) above and the person by whom it is payable is not registered under this Act— (a) it shall become due at the same time as the vehicle in question is charged with the tax; but (b) it shall not become payable until the time provided for by regulations under this Act. (5B) The time when a chargeable vehicle is to be treated for the purposes of this section as acquired from another member State shall— (a) where the acquisition is in pursuance of a taxable supply, be the time when that supply is treated for the purposes of the Value Added Tax Act 1983 as taking place; and (b) in any other case, be determined in accordance with the provisions of section 8B(1) and (2) of that Act (time of acquisition). (5C) Subsection (3) of section 1 above shall apply for the purposes of this section as it applies for the purposes of that section and, in this section, “taxable supply” has the same meaning as in the Value Added Tax Act 1983.

5

• (1) In section 7 (remission of tax on certain vehicles), for the word “exported", in each place where it occurs, there shall be substituted “ removed from the United Kingdom ”.

• (2) In subsection (1) of that section—

• (a) for “exportation" there shall be substituted “ its removal from the United Kingdom ”;

• (b) for the word “imported", in the first place where it occurs, there shall be substituted “ brought into the United Kingdom ”; and

• (c) for “and not previously imported" there shall be substituted “ in respect of which tax has not previously been paid. ”

• (3) In subsection (2) of that section, for “acquires" there shall be substituted “ obtains ”.

• (4) In subsection (3) of that section, for “acquired" there shall be substituted “ obtained ”.

• (5) In subsection (4)(a) of that section, for “imported" there shall be substituted “ brought into the United Kingdom ”.

• (6) In subsection (4B) of that section—

• (a) in paragraph (b), for “imports" there shall be substituted “ brings ”; and

• (b) in paragraph (c) and in the words after that paragraph, for the word “acquires", in each place where it occurs, there shall be substituted “ obtains ”.

6

In section 9 (interpretation), after “in this Act-" there shall be inserted the following definition—

“another member State” means any member State other than the United Kingdom;

.

7

• (1) In Schedule 1 (administration and collection), after paragraph 1 there shall be inserted the following paragraph—

(1A) (1) The Commissioners may by regulations make provision in relation to persons who are not registered for requiring any such person from whom tax has become due to furnish to them such a document notifying them of his liability, at such time after the liability arose and in such form and manner, as may be specified in or determined under the regulations. (2) Regulations under this paragraph may— (a) require the document which is to be furnished to the Commissioners to contain such particulars relating to the circumstances in which the tax has become due as may be described in the regulations; (b) provide, in prescribed cases, for the obligation to furnish that document to the Commissioners to fall on the personal representative, trustee in bankruptcy, receiver, liquidator or person otherwise acting in a representative capacity in relation to the person from whom the tax has become due; and (c) make different provision for different cases.

• (2) In paragraph 2(2)(a) of that Schedule (time limits for assessments), for the words “the time when the amount became payable" there shall be substituted

the following time, that is to say— (i) where the person by whom that amount is payable is required by regulations under paragraph 1A above to notify the Commissioners of his liability, the time when notification of the liability in question was given to the Commissioners by that person; and (ii) in any other case, the time when that amount became payable

.

• (3) In paragraph 6(1) of that Schedule—

• (a) in sub-paragraph (1), after “ chargeable vehicles ” there shall be inserted “ or with the movement of such vehicles between member States ”; and

• (b) in sub-paragraph (2), after “who" there shall be inserted “ in a case in relation to which he is not required to furnish to the Commissioners any document in accordance with regulations under paragraph 1A above, ”.

• (4) In paragraph 7 of that Schedule—

• (a) in sub-paragraph (1), after “chargeable vehicles" there shall be inserted “ or with the movement of such vehicles between member States ”; and

• (b) in sub-paragraph (2), after paragraph (a) there shall be inserted the following paragraph—

(aa) the movement of chargeable vehicles between member States; or

.

• (5) In paragraph 9 of that Schedule (forfeiture), after “vehicle" there shall be inserted “ which for the purposes of section 1 of this Act is treated as having been imported into the United Kingdom from outside European Union”.

• (6) In paragraph 10(1) of that Schedule (matters that may be proved by certificate), after paragraph (b) there shall be inserted the following paragraph—

(ba) that a document has not been furnished to the Commissioners in accordance with regulations under paragraph 1A above or had not been so furnished at any date; or

.

• (7) In paragraph 12(c) and (d) of that Schedule (regulation-making power), for “acquiring", in each place where it occurs, there shall be substituted “ obtaining ”.

8

In paragraph 6 of Schedule 2 (transitional provisions for vehicles exported before 1st April 1981), for “on the importation of any vehicle" there shall be substituted “ in respect of any vehicle by virtue of section 1(1)(b) or (c) of this Act ”.

SCHEDULE 5

1

The Taxes Act 1988 shall be amended in accordance with paragraphs 2 to 8 below.

2

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3

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4

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8

• (1) Section 265 (blind person’s allowance) shall be amended as follows.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) In subsection (4), the words from “(and" onwards shall be omitted.

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9

• (1) The Taxes Management Act 1970 shall be amended as follows.

• (2) In section 36 (fraudulent or negligent conduct) the following subsection shall be inserted after subsection (3)—

(3A) In subsection (3) above, “claim or application” does not include an election under section 257BA of the principal Act (elections as to transfer of married couple’s allowance).

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) In section 43A (further assessments: claims etc.) after subsection (2) there shall be inserted—

(2A) In subsection (2) above, “claim, election, application or notice” does not include an election under section 257BA of the principal Act (elections as to transfer of married couple’s allowance).

10

This Schedule shall apply in relation to tax for the year 1993-94 and subsequent years of assessment.

SCHEDULE 6

Main amendments

1

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other amendments

3

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

In section 272 of the Income and Corporation Taxes Act 1970 (groups of companies: definitions) in subsection (1F) (application of Schedule 18 but without paragraph 5(3) etc.) after “5(3)" there shall be inserted “ and 5B to 5E ”.

5

In section 170 of the Taxation of Chargeable Gains Act 1992 (interpretation of sections 171 to 181) in subsection (8) (application of Schedule 18 but without paragraph 5(3) etc.) after “5(3)" there shall be inserted “ and 5B to 5E ”.

Application of amendments

6

• (1) Sub-paragraph (2) below shall apply where either of the following events occurs on or after 15th November 1991—

• (a) any shares or securities of the relevant company are issued in circumstances where they carry both rights referred to in paragraph 4(1) of Schedule 18 and rights referred to in paragraph 5(1) of Schedule 18;

• (b) any shares or securities of the relevant company issued before 15th November 1991 begin to carry both rights referred to in paragraph 4(1) of Schedule 18 and rights referred to in paragraph 5(1) of Schedule 18 (whether or not they previously carried rights referred to in one of those paragraphs).

• (2) In such a case paragraph 1 above shall apply in relation to the accounting period in which the event occurs and subsequent accounting periods.

• (3) In this paragraph—

• (a) references to the relevant company are to the second company referred to in paragraphs 2(1) and 3(1) of Schedule 18;

• (b) references to accounting periods are to accounting periods of that company.

7

Paragraph 2 above shall apply where the option arrangements are made on or after 15th November 1991.

8

Paragraph 3 above shall apply in accordance with paragraphs 6 and 7 above.

9

Subject to the repeals made by the Taxation of Chargeable Gains Act 1992, paragraph 4 above shall apply in accordance with paragraph 7 above.

10

The Taxation of Chargeable Gains Act 1992 shall have effect, and be deemed always to have had effect, with the amendment made by paragraph 5 above.

SCHEDULE 7

1

Schedule 11 to the Finance Act 1989 (deep gain securities) shall be amended as follows.

2

In paragraph 1 (definition of deep gain securities) for sub-paragraph (3A) there shall be substituted—

(3A) In the case of a security issued before 13th November 1991, for the purposes of sub-paragraph (2) above “redemption” does not include any redemption which may be made before maturity otherwise than in pursuance of the exercise by the person who holds the security for the time being of an option exercisable only on the effluxion of time or the happening of an event which (judged at the time of the security’s issue) is certain or likely to occur. (3B) In the case of a security issued on or after 13th November 1991, for the purposes of sub-paragraph (2) above “redemption” does not include any redemption which may be made before maturity otherwise than at the option of the person who holds the security for the time being and as regards which the following conditions are fulfilled (judged at the time of the security’s issue)— (a) the event occasioning redemption is such that, if it occurred and there was no provision for redemption, the interests of the person holding the security at the time of the occurrence might be adversely affected, (b) the event occasioning redemption is neither certain nor likely to occur, (c) the event occasioning redemption is not one of a number of events occasioning or allowing redemption before maturity at least one of which is certain or likely to occur, and (d) the obtaining of a tax advantage by any person is not the main benefit, or one of the main benefits, that might be expected to accrue from the provision for redemption. (3C) The condition set out in sub-paragraph (3B)(a) above is fulfilled if it is fulfilled by reference to any one potential holder, whether or not it is fulfilled by reference to other potential holders. (3D) In a case where— (a) the security is one which under the terms of issue can be converted into or exchanged for a security of a different kind, and (b) it falls to be decided whether the condition set out in paragraph (b) or (c) of sub-paragraph (3B) above is fulfilled, the condition concerned shall not be treated as fulfilled unless it is fulfilled having regard only to circumstances in which (judged at the time of the security’s issue) the right to convert or exchange cannot be or is unlikely to be exercised. (3E) In the case of a security issued on or after 13th November 1991, for the purposes of sub-paragraph (2) above “redemption” does not include any redemption which may be made before maturity at the option of the person who holds the security for the time being and as regards which the following conditions are fulfilled (judged at the time of the security’s issue)— (a) the event allowing the option to be exercised is such that, if it occurred and there was no provision for redemption, the interests of the person holding the security at the time of the occurrence might be adversely affected, (b) the event allowing the option to be exercised is neither certain nor likely to occur, (c) the event allowing the option to be exercised is not one of a number of events occasioning or allowing redemption before maturity at least one of which is certain or likely to occur, and (d) the obtaining of a tax advantage by any person is not the main benefit, or one of the main benefits, that might be expected to accrue from the provision for redemption. (3F) The condition set out in sub-paragraph (3E)(a) above is fulfilled if it is fulfilled by reference to any one potential holder, whether or not it is fulfilled by reference to other potential holders. (3G) In a case where— (a) the security is one which under the terms of issue can be converted into or exchanged for a security of a different kind, and (b) it falls to be decided whether the condition set out in paragraph (b) or (c) of sub-paragraph (3E) above is fulfilled, the condition concerned shall not be treated as fulfilled unless it is fulfilled having regard only to circumstances in which (judged at the time of the security’s issue) the right to convert or exchange cannot be or is unlikely to be exercised.

3

In paragraph 2 (definition of qualifying indexed securities) in sub-paragraph (13) for paragraphs (c) and (d) there shall be substituted—

(c) in the case of a security issued before 13th November 1991, any circumstances except circumstances in which the person who holds the security for the time being exercises an option exercisable only on the effluxion of time or the happening of an event which (judged at the time of the security’s issue) is certain or likely to occur; (d) in the case of a security issued on or after 13th November 1991, any circumstances for redemption which may be made before maturity otherwise than at the option of the person who holds the security for the time being and as regards which the conditions set out in paragraph 1(3B) above are fulfilled (judged at the time of the security’s issue and read subject to paragraph 1(3C) and (3D) above); (e) in the case of a security issued on or after 13th November 1991, any circumstances for redemption which may be made before maturity at the option of the person who holds the security for the time being and as regards which the conditions set out in paragraph 1(3E) above are fulfilled (judged at the time of the security’s issue and read subject to paragraph 1(3F) and (3G) above).

4

The following shall be inserted after paragraph 19—

(19A) (1) Sub-paragraph (2) below applies where— (a) a security is issued on or after 13th November 1991, (b) it would be a deep gain security apart from paragraph 1(3B) or (3E) above, (c) it is redeemed before maturity, and (d) immediately before redemption it was held by a person connected with the person who issued it. (2) As regards the redemption, paragraphs 5 to 19 above shall have effect as if— (a) the security were a deep gain security, and (b) it had been acquired as such (whatever the time it was acquired). (3) Sub-paragraph (4) below applies where— (a) the conditions set out in sub-paragraph (1)(a) to (c) above are fulfilled, (b) the security was transferred in the period ending with redemption and beginning with the day falling one year before the day of redemption, and (c) the transfer was by a person connected with the person who issued the security. (4) As regards the transfer, paragraphs 5 to 19 above shall have effect as if— (a) the security were a deep gain security, and (b) it had been acquired as such (whatever the time it was acquired). (5) Section 839 of the Taxes Act 1988 (connected persons) shall apply for the purposes of this paragraph.

5

• (1) In paragraph 21 (non-gilts: special rules) in sub-paragraph (3) after “(1) above" there shall be inserted “ , and subject to paragraph 21A below, ”.

• (2) The following paragraph shall be inserted after paragraph 21—

(21A) (1) A security which (apart from this paragraph) would be a new would-be deep gain security for the purposes of paragraph 21(1) above is not such a security if the following three conditions are fulfilled. (2) The first condition is that all the securities issued on the occasion of the original issue were issued before 13th November 1991. (3) The second condition is that the security is issued on or after 13th November 1991. (4) The third condition is that, even if paragraph 1(7) above did not prevent the security being a deep gain security, it would nevertheless not be a deep gain security if for the purposes of paragraph 1(2) above “redemption” did not include any redemption which may be made before maturity otherwise than in pursuance of the exercise by the person who holds the security for the time being of an option exercisable only on the effluxion of time or the happening of an event which (judged at the time of the security’s issue) is certain or likely to occur.

6

The following shall be inserted after paragraph 22B—

(22C) (1) This paragraph applies to a security whose terms contain no particular date by which it is to be redeemed. (2) In the case of such a security the following expressions, wherever they appear in this Schedule, shall be construed as if the words “before maturity" were omitted— (a) the expression “redemption which may be made before maturity"; (b) the expression “redemption before maturity"; (c) the expression “redeemed before maturity".

7

The amendments made by this Schedule shall be deemed always to have had effect.

8

Any such adjustment as is appropriate in consequence of this Schedule may be made (whether by way of discharge or repayment of tax, the making of an assessment or otherwise).

SCHEDULE 8

Disposal or exercise of rights

1

The following section shall be inserted after section 56 of the Taxes Act 1988 (transactions in deposits etc.)—

(56A) (1) This section applies where there is an arrangement under which— (a) there is a right to receive an amount (with or without interest) in pursuance of a deposit of money, (b) when the right comes into existence there is no certificate of deposit in respect of the right, and (c) the person for the time being entitled to the right is entitled to call for the issue of a certificate of deposit in respect of the right. (2) In such a case— (a) the right shall be treated as not falling within section 56(1)(b), and (b) if there is a disposal or exercise of the right before such time (if any) as a certificate of deposit is issued in respect of it, section 56(2) shall apply to it by virtue of this paragraph. (3) In the application of section 56 by virtue of this section— (a) subsection (2) shall have effect as if the words from “(whether" to “person)" read “(whether by the person originally entitled to the right or by some other person)", and (b) subsection (3) shall have effect as if the words “stated in a certificate of deposit" read “under an arrangement". (4) In this section “certificate of deposit” has the meaning given by section 56(5).

Building societies

2

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3

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Deposit-takers

4

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Accrued income scheme

5

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

General

6

This Schedule shall apply in relation to arrangements made after the day on which this Act is passed.

SCHEDULE 9

Amendments of the Taxes Act 1988

1

The Taxes Act 1988 shall be amended in accordance with paragraphs 2 to 19 below.

2

• (1) Section 266 (personal reliefs: life assurance premiums) shall be amended as follows.

• (2) In subsections (2)(a)(iii) ..., for “registered friendly society" there shall be substituted “ friendly society ”.

• (3) The following subsection shall be added at the end—

(13) In this section and Schedule 14, “friendly society” means the same as in the Friendly Societies Act 1992 (and includes any society that by virtue of section 96(2) of that Act is to be treated as a registered friendly society within the meaning of that Act).

3

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

In section 459 (exemption from tax for unregistered friendly societies whose income does not exceed £160 a year) after “unregistered friendly society" there shall be inserted “ (that is, a friendly society which is neither an incorporated friendly society nor a registered friendly society) ”.

5

• (1) Section 460 (exemption from tax for registered friendly societies in respect of life or endowment business) shall be amended as follows.

• (2) In subsection (1), for “registered friendly society" there shall be substituted “ friendly society ”.

• (3) In subsection (2)—

• (a) in paragraph (a), for “friendly society" there shall be substituted “ registered friendly society ”, and

• (b) the following paragraph shall be inserted after paragraph (a)—

(aa) shall not, subject to section 462, exempt an incorporated friendly society which, before its incorporation, was a registered friendly society such as is mentioned in paragraph (a) above;

.

• (4) In subsections (5) to (10), for “registered friendly society" (in each place) there shall be substituted “ friendly society ”.

• (5) In subsection (11)—

• (a) for “registered friendly society" there shall be substituted “ friendly society ”,

• (b) for “section 72 of the Friendly Societies Act (Northern Ireland) 1970" there shall be substituted “ section 91 of the Friendly Societies Act 1992 ”, and

• (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6

In section 461 (taxation of registered friendly societies in respect of other business) in subsection (4)(a)—

• (a) for “section 72 of the Friendly Societies Act (Northern Ireland) 1970" there shall be substituted “ section 91 of the Friendly Societies Act 1992 ”, and

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7

The following sections shall be inserted after section 461—

(461A) (1) For the purposes of sections 461B and 461C, a “qualifying society” is an incorporated friendly society which— (a) immediately before its incorporation, was a registered friendly society to which section 461(2) did not apply, (b) was formed otherwise than by the incorporation of a registered friendly society or the amalgamation of two or more friendly societies and satisfies subsection (2) below, or (c) was formed by the amalgamation of two or more friendly societies and satisfies subsection (3) below, and in respect of which no direction under section 461C(5) is in force. (2) A society satisfies this subsection if its business is limited to the provision, in accordance with the rules of the society, of benefits for or in respect of employees of a particular employer or such other group of persons as is for the time being approved for the purposes of this section by the Friendly Societies Commission. (3) If at the time of the amalgamation referred to in subsection (1)(c) above— (a) section 461(2) applied to none of the registered friendly societies being amalgamated (if any), and (b) all of the incorporated friendly societies being amalgamated (if any) were qualifying societies, the society formed by the amalgamation satisfies this subsection. (461B) (1) Subject to the following provisions of this section, a qualifying society shall, on making a claim, be entitled to exemption from income tax and corporation tax (whether on income or chargeable gains) on its profits other than those arising from life or endowment business. (2) Subsection (1) above shall not apply to any profits arising or accruing to the society from, or by reason of its interest in, a body corporate which is a subsidiary (within the meaning of the Friendly Societies Act 1992) of the society or of which the society has joint control (within the meaning of that Act). (3) If an incorporated friendly society which is not a qualifying society makes a payment to a member in respect of his interest in the society and the payment is made otherwise than in the course of life or endowment business and exceeds the aggregate of any sums paid by him to the society by way of contributions or deposits, after deducting from that aggregate the amount of— (a) any previous payment so made to him by the society, and (b) any earlier repayment of such sums paid by him, the excess shall be treated for the purposes of corporation tax and income tax as a qualifying distribution. (4) In relation to an incorporated friendly society which, immediately before its incorporation, was a registered friendly society to which section 461(2) applied— (a) the references in subsection (3) above to sums paid to the society shall include sums paid to the registered friendly society, (b) the reference in subsection (3)(a) above to any payment made by the society shall include any payment made by the registered friendly society after 26 March 1974 or such later date as was specified in any direction under section 461(8) relating to it, and (c) the reference in subsection (3)(b) above to any repayment shall include any repayment made by the registered friendly society. (5) Where a qualifying society at any time ceases by virtue of section 91 of the Friendly Societies Act 1992 (conversion into company) to be registered under that Act, the company into which the society is converted shall be exempt from income tax or corporation tax on its profits arising from any part of its business, other than life or endowment business, which relates to contracts made before that time. (6) Subsection (5) above shall apply so long as there is no increase in the scale of benefits which the company undertakes to provide in the course of carrying on the relevant part of its business. (7) Any part of a company’s business to which an exemption under subsection (5) above relates shall be treated for the purposes of the Corporation Tax Acts as a separate business from any other business carried on by the company. (461C) (1) Subject to subsection (2) below, subsections (3) to (5) below apply where a qualifying society— (a) begins to carry on business other than life or endowment business, or (b) in the opinion of the Friendly Societies Commission, begins to carry on business other than life or endowment business on an enlarged scale or of a new character. (2) Subsections (3) to (5) below do not apply if— (a) the society’s business is limited to the provision, in accordance with the rules of the society, of benefits for or in respect of employees of a particular employer or such other group of persons as is for the time being approved for the purposes of section 461 or 461A by the Friendly Societies Commission, or (b) the society’s rules limit the aggregate amount which may be paid by a member by way of contributions and deposits to not more than £1 per month or such greater amount as is authorised for the purposes of section 461. (3) If it appears to the Commission, having regard to the restrictions imposed by section 461 on registered friendly societies registered after 31st May 1973, that for the protection of the revenue it is expedient to do so, the Commission may serve a notice on the society— (a) referring to the provisions of this section, and (b) stating that the Commission is considering the question whether, for the protection of the revenue, it is expedient to give a direction that the society shall cease to be a qualifying society as from the date of the notice. (4) The Commission shall consider any representations or undertakings made or offered to the Commission by the society within the period of one month from service of the notice and, if the society so requests, shall afford it an opportunity of being heard by the Commission not later than three weeks after the end of that period. (5) If, after consideration of any such representations or undertakings, the Commission remains of the opinion that it is expedient to do so, the Commission shall direct that the society shall cease to be a qualifying society as from the date of the notice, but subject to any further direction given by the Commission cancelling that direction. (6) A friendly society may, within one month from the giving of a direction under subsection (5) above, appeal against it to a tribunal constituted in accordance with section 59(2) of the Friendly Societies Act 1992. (7) The Treasury may by regulations provide for sections 58 to 61 of that Act to have effect in relation to appeals under subsection (6) above subject to such modifications as may be prescribed by the regulations.

8

• (1) Section 462 (conditions for tax exempt business) shall be amended as follows.

• (2) In subsection (2), for “Section 460(2)(a)" there shall be substituted “ Section 460(2)(a) or (aa) ”.

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10

In section 463 (life or endowment business: application of the Corporation Tax Acts) in subsection (1) for “registered friendly societies" there shall be substituted “ friendly societies ”.

11

• (1) Section 464 (maximum benefits payable to members) shall be amended as follows.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) In subsection (5)(d)(ii), for “society which is not" there shall be substituted “ friendly society other than ”.

• (4) In subsection (7)—

• (a) for “registered friendly society or branch" there shall be substituted “ friendly society or registered branch ”, and

• (b) for “registered friendly societies or branches" there shall be substituted “ friendly societies or registered branches ”.

12

In section 465 (old societies) the following subsection shall be added at the end—

(6) If a registered friendly society in respect of which a direction is in force under subsection (4) above becomes an incorporated friendly society, the direction shall continue to have effect, so that the incorporated friendly society shall be treated for the purposes of this Act as a new society.

13

The following section shall be inserted after section 465—

(465A) (1) This section applies where any assets of a branch of a registered friendly society have been identified in a scheme under section 6(5) of the Friendly Societies Act 1992 (property, rights etc. excluded from transfer to the society on its incorporation). (2) In relation to any time after the incorporation of the society, the assets shall be treated for the purposes of the Tax Acts as assets of the society (and, accordingly, any tax liability arising in respect of them shall be a liability of the society rather than of the branch). (3) Where, by virtue of this section, tax in respect of any of the assets becomes chargeable on and is paid by the society, the society may recover from the trustees in whom those assets are vested the amount of the tax paid.

14

• (1) Section 466 (interpretation of sections 459 to 465) shall be amended as follows.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) Subsection (2) shall be amended as mentioned in sub-paragraphs (4) to (7) below.

• (4) The following definitions shall be inserted before the definition of “life assurance business"—

“friendly society”, without qualification, means (except in section 459) an incorporated friendly society or a registered friendly society; “incorporated friendly society” means a society incorporated under the Friendly Societies Act 1992;

.

• (5) The following definition shall be substituted for the definition of “new society"—

“new society” means— (a) a registered friendly society which was registered after 3rd May 1966 or which was registered in the period of three months ending on that date but which at no time earlier than that date carried on any life or endowment business, or (b) an incorporated friendly society other than one which, before its incorporation, was a registered friendly society not within paragraph (a) above;

.

• (6) The following definitions shall be inserted after the definition of “policy"—

“registered branch” means the same as in the Friendly Societies Act 1992 (and includes any branch that by virtue of section 96(3) of that Act is to be treated as a registered branch); “registered friendly society” means the same as in the Friendly Societies Act 1992 (and includes any society that by virtue of section 96(2) of that Act is to be treated as a registered friendly society);

.

• (7) For the words from “include" to the end of the subsection there shall be substituted “ include, in the case of a registered friendly society, references to any branch of that society ”.

• (8) In subsection (3) for the words “registered friendly society" there shall be substituted “ friendly society ”.

• (9) The following subsection shall be added at the end—

(5) An incorporated friendly society formed on the amalgamation of two or more friendly societies shall, for the purposes of this Chapter, be treated as a society which, before its incorporation, was a registered friendly society registered not later than 3rd May 1966 if at the time of the amalgamation— (a) all the friendly societies amalgamated were registered friendly societies eligible for the exemption conferred by section 460(1); and (b) at least one of them was not a new society.

15

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16

In section 599 (charge to tax: commutation of entire pension in special circumstances) for subsection (8)(b) there shall be substituted—

(b) a friendly society within the meaning of the Friendly Societies Act 1992 (including any society that by virtue of section 96(2) of that Act is to be treated as a registered friendly society within the meaning of that Act).

17

In section 630 (personal pension schemes: interpretation) for paragraph (b) of the definition of “authorised insurance company" there shall be substituted—

(b) a friendly society within the meaning of the Friendly Societies Act 1992 (including any society that by virtue of section 96(2) of that Act is to be treated as a registered friendly society within the meaning of that Act);

.

18

• (1) Schedule 14 (provisions ancillary to section 266) shall be amended as follows.

• (2) In paragraphs 2(1)(b) and 3(1), for “registered friendly society" there shall be substituted “ friendly society ”.

• (3) In paragraph 3(3)(a), for “registered friendly societies" there shall be substituted “ friendly societies ”.

19

• (1) Schedule 15 (qualifying policies) shall be amended as follows.

• (2) In paragraph 3(1), for “registered friendly society" there shall be substituted “ friendly society ”.

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) In paragraph 3(4)(c), after “the same friendly society" there shall be inserted “ (or any predecessor of it) ”.

• (5) In paragraph 3, the following sub-paragraph shall be inserted after sub-paragraph (4)—

(4A) For the purposes of sub-paragraphs (2) and (4) above— (a) a friendly society formed on the amalgamation of two or more friendly societies is the successor of each of those societies (and each of those societies was a predecessor of the society so formed), and (b) an incorporated friendly society that was a registered friendly society before its incorporation is the successor of the registered friendly society (and the registered friendly society was the predecessor of the incorporated friendly society).

• (6) For paragraph 4(3)(b)(i) there shall be substituted—

(i) it was effected in the course of business within class VI of Head A or class I of Head B of Schedule 2 to the Friendly Societies Act 1992,

.

• (7) In paragraph 6(1)—

• (a) for “any friendly society" there shall be substituted “ any registered friendly society (as defined in section 466) ”, and

• (b) for “a friendly society" there shall be substituted “ such a society ”.

Amendments of enactments relating to chargeable gains

20

• (1) Subject to the repeals made by the Taxation of Chargeable Gains Act 1992, after section 143 of the Capital Gains Tax Act 1979 there shall be inserted—

(143A) (1) This section applies where a registered friendly society is incorporated under the Friendly Societies Act 1992 (“the 1992 Act"). (2) In this section— (a) “the registered society” means the society before the incorporation, and (b) “the incorporated society” means the society after the incorporation. (3) For the purposes of corporation tax on chargeable gains— (a) any asset of the registered society that by virtue of section 6(2) or (3) of the 1992 Act is transferred to the incorporated society, (b) any asset of a branch of the registered society that by virtue of section 6(4) of the 1992 Act is transferred to the incorporated society, and (c) any asset of a branch of the registered society that is identified in a scheme under section 6(5) of the 1992 Act, shall be taken to be disposed of by the registered society or branch and acquired by the incorporated society on the incorporation for a consideration of such amount as to secure that on the disposal neither a gain nor a loss accrues to the registered society or branch. (143B) (1) Where any asset acquired on a disposal to which section 143A(3) above applies is subsequently disposed of by the incorporated society, section 34 above shall apply as if any capital allowance made to the registered society in respect of the asset had been made to the incorporated society. (2) If the disposal by the incorporated society is in relevant circumstances for the purposes of section 275(1) of the Income and Corporation Taxes Act 1970, the disposal to which section 143A(3) above applies shall for those purposes be taken to have been a previous transfer of the asset in relevant circumstances.

• (2) Subject to the repeals made by the Taxation of Chargeable Gains Act 1992—

• (a) in section 68 of the Finance Act 1985 (modification of indexation allowance) in subsection (7A)(a) after “123A," there shall be inserted “ 143A, ”, and

• (b) in Schedule 8 to the Finance Act 1988 (assets held on 31st March 1982) in paragraph 1(3)(a) after “123A," there shall be inserted “ 143A, ”.

12

The Taxation of Chargeable Gains Act 1992 shall be amended as follows.

• (2) In section 35 (disposal of assets held on 31st March 1982) in subsection (3)(d)(i) after “216,” there shall be inserted “217A,”.

• (3) After section 217 there shall be inserted—

(217A) (1) This section and section 217B apply where a registered friendly society is incorporated under the Friendly Societies Act 1992 (“the 1992 Act”). (2) In this section and section 217B— (a) “the registered society” means the society before the incorporation, and (b) “the incorporated society” means the society after the incorporation. (3) For the purposes of corporation tax on chargeable gains— (a) any asset of the registered society that by virtue of section 6(2) or (3) of the 1992 Act is transferred to the incorporated society, (b) any asset of a branch of the registered society that by virtue of section 6(4) of the 1992 Act is transferred to the incorporated society, and (c) any asset of a branch of the registered society that is identified in a scheme under section 6(5) of the 1992 Act, shall be taken to be disposed of by the registered society or branch and acquired by the incorporated society on the incorporation for a consideration of such amount as to secure that on the disposal neither a gain nor a loss accrues to the registered society or branch. (217B) (1) In this section, “change of membership” means a change effected by Schedule 4 to the 1992 Act whereby a member of the registered society or of a branch of the registered society becomes a member of the incorporated society or of a branch of the incorporated society. (2) For the purposes of this Act, a change of membership shall not be taken to involve any disposal or acquisition of an asset by the member concerned, but all the interests and rights in the incorporated society or a branch of the incorporated society that he has immediately after the change, taken together, shall be treated as a single asset which— (a) was acquired by the first relevant acquisition, and (b) was added to by any subsequent relevant acquisitions. (3) In subsection (2) above, “relevant acquisition” means an acquisition by which the member acquired any interest or right in the registered society or a branch of the registered society that he had immediately before the change of membership. (217C) (1) Where any asset acquired on a disposal to which section 217A(3) applies is subsequently disposed of by the incorporated society, section 41 shall apply as if any capital allowance made to the registered society in respect of the asset had been made to the incorporated society. (2) If the disposal by the incorporated society is in relevant circumstances for the purposes of section 174(1), the disposal to which section 217A(3) applies shall for those purposes be taken to have been a previous transfer of the asset in relevant circumstances.

Commencement

22

• (1) This Schedule shall come into force on such day as the Treasury may by order made by statutory instrument appoint, and different days may be appointed for different provisions or different purposes.

• (2) An order under this paragraph may contain such transitional provisions and savings (whether or not involving the modification of any statutory provision) as appear to the Treasury necessary or expedient in connection with the provisions brought into force.

SCHEDULE 10

Introduction

1

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

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3

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4

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5

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6

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7

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8

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Exemption etc.

9

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Adjusted profits etc.

11

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Application of Schedule

13

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE 11

1

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2

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3

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4

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5

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6

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SCHEDULE 12

Introductory

1

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2

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Taxation of certain receipts

3

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Relief from tax

4

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Application of charge etc. where rights to payments transferred

5

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Election for carry-back

6

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Commencement

7

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE 13

Introduction

1

Part I of the Capital Allowances Act 1990 (capital allowances for buildings and structures) shall be amended as follows.

Buildings and structures purchased before use

2

After section 10 (purchases of buildings and structures) there shall be inserted the following section—

(10A) (1) This section shall apply where— (a) expenditure is incurred on the construction of a building or structure (actual expenditure); (b) some or all of that expenditure is incurred, or is incurred under a contract entered into, at a time when the site of the building or structure is in an enterprise zone, being a time not more than 10 years after the site was first included in the zone; and (c) before the building or structure is used, the relevant interest in it is sold. (2) Where this section applies— (a) the actual expenditure shall be left out of account for the purposes of sections 1 to 8, but (b) subject to subsection (8) below, the person who buys the relevant interest shall be deemed for those purposes to have incurred, on the date when the purchase price becomes payable, expenditure on the construction of the building or structure (deemed expenditure) equal to the actual expenditure or to the net price paid by him for that interest, whichever is the less. (3) The deemed expenditure shall be regarded as comprising an enterprise zone element and a non-enterprise zone element. (4) The enterprise zone element of the deemed expenditure shall be calculated in accordance with the formula— $AxBC$ (5) In subsection (4) above— - A is the deemed expenditure; - B is the expenditure falling within subsection (1)(b) above; and - C is the actual expenditure. (6) The non-enterprise zone element of the deemed expenditure shall be so much (if any) of the deemed expenditure as does not comprise the enterprise zone element. (7) Notwithstanding the provisions of subsection (2)(b) above— (a) the enterprise zone element of the deemed expenditure shall be treated for the purpose only of determining entitlement to allowances as incurred at a time when the site of the building or structure is in an enterprise zone, being a time not more than 10 years after the site was first included in the zone; and (b) the non-enterprise zone element of the deemed expenditure shall be treated for that purpose as not incurred, and not incurred under a contract entered into, at such a time. (8) Where the relevant interest in the building or structure is sold more than once before the building or structure is used, subsection (2)(b) above shall have effect only in relation to the last of those sales. (9) Where the actual expenditure was incurred by a person carrying on a trade which consists, in whole or in part, in the construction of buildings or structures with a view to their sale and, before the building or structure is used, he sells the relevant interest in it in the course of that trade or, as the case may be, of that part of that trade, then— (a) if that sale is the only sale of the relevant interest before the building or structure is used, paragraph (b) of subsection (2) above shall have effect as if the words “the actual expenditure or to" and “whichever is the less" were omitted; and (b) in any other case, that paragraph shall have effect as if the reference to the actual expenditure were a reference to the price paid on that sale. (10) This section shall have effect subject to section 17A.

3

In section 1 (buildings and structures in enterprise zones) in subsection (10) the words from “and, except for that purpose" to the end of the subsection shall cease to have effect.

4

In section 6 (buildings and structures in enterprise zones) subsection (5) shall cease to have effect.

5

In section 10, at the beginning of subsection (1) there shall be inserted “ Subject to subsection (3A) below, ”.

6

After that subsection there shall be inserted the following subsection—

(1A) Notwithstanding the provisions of paragraph (b) of subsection (1) above, in the case of a building or structure the site of which is or has been in an enterprise zone, any expenditure which a person is deemed to have incurred by virtue of that paragraph shall be treated for the purpose only of determining entitlement to allowances as not incurred, and not incurred under a contract entered into, at a time when the site of the building or structure is in an enterprise zone.

7

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

(3A) Subsections (1) to (3) above shall not apply in any case where section 10A applies.

Buildings and structures purchased within two years of use

8

After section 10A there shall be inserted the following section—

(10B) (1) Without prejudice to section 10A, this section shall apply where— (a) expenditure is incurred on the construction of a building or structure (actual expenditure); (b) some or all of that expenditure is incurred, or is incurred under a contract entered into, at a time when the site of the building or structure is in an enterprise zone, being a time not more than 10 years after the site was first included in the zone; (c) whether or not there were any sales of the relevant interest in the building or structure before it was used, that interest is sold after the building or structure has been used but before the expiry of the period of two years beginning with the date on which the building or structure was first used; and (d) that sale is the first such sale in that period. (2) Where this section applies— (a) any balancing allowance or charge which falls to be made on the occasion of the sale shall be so made; (b) the residue of expenditure immediately after the sale (if any) shall be left out of account for the purposes of this Part; (c) the person who buys the relevant interest (the purchaser) shall be deemed for the purposes of sections 1 to 8 to have incurred, on the date when the purchase price becomes payable, expenditure on the construction of the building or structure (deemed expenditure) of an amount determined in accordance with the following provisions of this section; and (d) in relation to the deemed expenditure, the building or structure shall be treated for the purposes of sections 1 to 8 as not having been used before the date of the sale. (3) The deemed expenditure shall be regarded as comprising an enterprise zone element and a non-enterprise zone element and the amount of the deemed expenditure shall accordingly be the sum of the enterprise zone element and the non-enterprise zone element. (4) The enterprise zone element of the deemed expenditure shall be calculated in accordance with the formula— $AxBC$ (5) In subsection (4) above— - A is the actual expenditure or the net price paid by the purchaser for the relevant interest, whichever is the less; - B is the expenditure falling within subsection (1)(b) above; and - C is the actual expenditure. (6) The non-enterprise zone element of the deemed expenditure shall be calculated in accordance with the formula— $A-(AxBC)$ (7) In subsection (6) above— - A is the actual expenditure or the net price paid by the purchaser for the relevant interest, whichever is the less; - B is the expenditure falling within subsection (1)(b) above; and - C is the actual expenditure. (8) Where the actual expenditure was incurred by a person carrying on a trade which consists, in whole or in part, in the construction of buildings or structures with a view to their sale and he sells the relevant interest in the building or structure in the course of that trade or, as the case may be, of that part of that trade, then— (a) if that sale is the sale falling within subsection (1)(c) above— (i) section 10(4) and (5) shall not apply; and (ii) subsection (5) above shall have effect as if for the definition of A there were substituted— (") A is the net price paid by the purchaser for the relevant interest;"; (b) if that sale is a sale which occurs before the sale falling within subsection (1)(c) above, subsections (5) and (7) above shall have effect as if the reference in the definition of A in each of those subsections to the actual expenditure were a reference to the price paid on that sale. (9) Notwithstanding the provisions of subsection (2)(c) above— (a) the enterprise zone element of the deemed expenditure shall be treated for the purpose only of determining entitlement to allowances as incurred at a time when the site of the building or structure is in an enterprise zone, being a time not more than 10 years after the site was first included in the zone; and (b) the non-enterprise zone element of the deemed expenditure shall be treated for that purpose as not incurred, and not incurred under a contract entered into, at such a time. (10) This section shall have effect subject to section 17A.

9

At the beginning of section 10(4) there shall be inserted “ Subject to section 10B ”.

Exclusion of expenditure

10

After section 17 there shall be inserted the following section—

(17A) References in sections 1(1)(b), 6(1), 10A(1)(b) and 10B(1)(b) to expenditure incurred under a contract entered into at a time when the site of a building or structure is in an enterprise zone do not include any expenditure incurred under the contract if the expenditure is incurred more than 20 years after the site in question was first included in the enterprise zone.

11

After section 1(10) there shall be inserted the following subsection—

(11) This section shall have effect subject to section 17A.

12

After section 6(4) there shall be inserted the following subsection—

(4A) This section shall have effect subject to section 17A.

Miscellaneous

13

In section 4(9) (balancing allowances and charges) in paragraph (a) of the definition of “the capital expenditure" after the words “section 10(1)" there shall be inserted “ 10A or 10B ”.

Commencement

14

Paragraphs 2 to 7 above shall have effect in any case where the purchase price payable on the sale of the relevant interest in a building or structure before it is used (or if there is more than one such sale before the building or structure is used, the purchase price payable on the last of those sales) becomes payable on or after 16th December 1991.

15

Paragraphs 8 and 9 above shall have effect in relation to buildings or structures first used on or after 16th December 1991.

16

Paragraph 10 above shall apply in relation to contracts whenever made.

17

Paragraph 13 above shall have effect in accordance with paragraphs 14 and 15 above.

SCHEDULE 14

Business property

1

In section 104 of the Inheritance Tax Act 1984 (relief for relevant business property)—

• (a) in subsection (1)(a), for “50 per cent" there shall be substituted “ 100 per cent ”;

• (b) in subsection (1)(b), for “30 per cent" there shall be substituted “ 50 per cent ”.

2

• (1) Section 105 of that Act (relevant business property) shall be amended as follows.

• (2) In subsection (1)(b), after “which" there shall be inserted “ are unquoted and which ”.

• (3) In subsection (1), the following paragraph shall be inserted after paragraph (c)—

(cc) shares in or securities of a company which are quoted and which (either by themselves or together with other such shares or securities owned by the transferor) gave the transferor control of the company immediately before the transfer;

.

• (4) The following subsection shall be inserted after subsection (1)—

(1ZA) In subsection (1) above “quoted”, in relation to any shares or securities, means quoted on a recognised stock exchange and “unquoted”, in relation to any shares or securities, means not so quoted.

• (5) In subsection (2) after “subsection (1)(b)" there shall be inserted “ or (cc) ”.

3

In section 113A of that Act (transfers of relevant business property within seven years before death of transferor) the following subsection shall be inserted after subsection (3A)—

(3B) In subsection (3A) above “quoted”, in relation to any shares or securities, means quoted on a recognised stock exchange and “unquoted”, in relation to any shares or securities, means not so quoted.

Agricultural property

4

In section 116 of that Act (relief for agricultural property) in subsections (2) and (4)—

• (a) for “50 per cent" (in each place) there shall be substituted “ 100 per cent ”;

• (b) for “30 per cent" (in each place) there shall be substituted “ 50 per cent ”.

Payment by instalments

5

In section 227 of that Act (payment by instalments - land, shares and businesses) the following subsection shall be inserted after subsection (1A)—

(1AA) In subsection (1A) above “unquoted”, in relation to any shares or securities, means not quoted on a recognised stock exchange.

6

In section 228 of that Act (shares or securities within section 227) the following subsection shall be added at the end—

(5) In this section “unquoted”, in relation to any shares or securities, means not quoted on a recognised stock exchange.

Gifts with reservation

7