Finance Act 1994

(33A) (1) This section applies where, in the case of a trade, profession or business carried on by two or more persons in partnership, those persons allege that the tax charged by self-assessments of theirs under section 9 or 11AA of this Act was excessive by reason of some error or mistake in a partnership statement. (2) One of those persons (the representative partner) may, not later than five years after the filing date, by notice in writing make a claim to the Board for relief. (3) On receiving the claim the Board shall inquire into the matter and shall, subject to subsection (5) below, so amend the partnership statement so as to give such relief in respect of the error or mistake as is reasonable or just. (4) Where a partnership statement is amended under subsection (3) above, the Board shall by notice to each of the relevant partners so amend their self-assessments under section 9 or 11AA of this Act as to give effect to the amendment of the partnership statement. (5) No relief shall be given under this section in respect of an error or mistake as to the basis on which the liability of the partners ought to have been computed where the partnership statement was in fact made on the basis or in accordance with the practice generally prevailing at the time when it was made. (6) In determining the claim the Board— (a) shall have regard to all the relevant circumstances of the case, and (b) in particular shall consider whether the granting of relief would result in the exclusion from charge to tax of any part of the profits of any of the partners; and for the purposes of this subsection the Board may take into consideration the liability of the partners and their self-assessments in respect of chargeable periods other than that to which the claim relates. (7) If any appeal is brought from the decision of the Board on the claim, the Special Commissioners shall hear and determine the appeal in accordance with the principles to be followed by the Board in determining claims under this section. (8) Neither the representative partner nor the Board shall be entitled to require a case to be stated under section 56 of this Act otherwise than on a point of law arising in connection with the computation of profits. (9) In this section— - “filing date” has the same meaning as in section 12AC of this Act; - “profits” has the same meaning as in section 33 of this Act; - “relevant partner” means a person who was a partner at any time during the period in respect of which the partnership statement was made. (10) Any reference in this section to the representative partner includes, unless the context otherwise requires, a reference to any successor of his.

Time limits for assessments

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• (1) In subsection (1) of section 36 of the Management Act (fraudulent or negligent conduct), for the words from “twenty years” to the end there shall be substituted the words—

(a) in the case of an assessment to income tax or capital gains tax, twenty years after the 31st January next following the year of assessment to which it relates; and (b) in the case of an assessment to corporation tax, twenty-one years after the end of the accounting period to which it relates.

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

(2) Where the person in default carried on a trade, profession or business with one or more other persons at any time in the period for which the assessment is made, an assessment in respect of the profits or gains of the trade, profession or business for the purpose mentioned in subsection (1) above may be made not only on the person in default but also on his partner or any of his partners.

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In subsections (1) and (2) of section 40 of the Management Act (assessments on personal representatives), for the words “the third year next following the year of assessment” there shall be substituted the words “ the period of three years beginning with the 31st January next following the year of assessment ”.

Claims etc.

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For section 42 of the Management Act there shall be substituted the following section—

(42) (1) Where any provision of the Taxes Acts provides for relief to be given, or any other thing to be done, on the making of a claim, this section shall, unless otherwise provided, have effect in relation to the claim. (2) Subject to subsection (3) below, where notice has been given under section 8, 8A, 11 or 12AA of this Act, a claim shall not at any time be made otherwise than by being included in a return under that section if it could, at that or any subsequent time, be made by being so included. (3) Subsection (2) above shall not apply in relation to any claim which falls to be taken into account in the making of deductions or repayments of tax under section 203 of the principal Act. (4) A claim made by a company for payment of a tax credit shall be made by being included in a return under section 11 of this Act. (5) The references in subsections (2) and (4) above to a claim being included in a return include references to a claim being so included by virtue of an amendment of the return; and the reference in subsection (4) above to a claim for payment includes a reference to a claim resulting in payment. (6) In the case of a trade, profession or business carried on by persons in partnership, a claim under any of the provisions mentioned in subsection (7) below shall be made— (a) where subsection (2) above applies, by being included in a return under section 12AA of this Act, and (b) in any other case, by such one of those persons as may be nominated by them for the purpose. (7) The provisions are— (a) sections 84, 91B, 101(2), 120(2), 401, 471, 472, 484, 504, 531, 534, 535, 537A, 538, 570, 571(4), 579(4), 723(3), 732(4), 810 of, and paragraphs 2, 6 and 11 of Schedule 5 to, the principal Act; (b) section 43(5) of the Finance Act 1989; (c) sections 1, 11, 17, 22, 23, 24, 25, 30, 31, 33, 37, 48, 49, 53, 55, 68(5), 68(9), 77, 78, 124A, 129(2), 140(3), 141 and 158 of the Capital Allowances Act 1990; and (d) sections 41 and 42 of the Finance (No. 2) Act 1992. (8) A claim may be made on behalf of an incapacitated person by his trustee, guardian, tutor or curator; and a person who under Part VIII of this Act has been charged with tax on the profits of another person may make any such claim for relief by discharge or repayment of that tax. (9) Where a claim has been made (whether by being included in a return under section 8, 8A, 11 or 12AA of this Act or otherwise) and the claimant subsequently discovers that an error or mistake has been made in the claim, the claimant may make a supplementary claim within the time allowed for making the original claim. (10) This section shall apply in relation to any elections and notices as it applies in relation to claims. (11) Schedule 1A to this Act shall apply as respects any claim, election or notice which— (a) is made otherwise than by being included in a return under section 8, 8A, 11 or 12AA of this Act, and (b) does not fall to be taken into account in the making of deductions or repayments of tax under section 203 of the principal Act. (12) Schedule 2 to this Act shall have effect as respects the Commissioners to whom an appeal lies under Schedule 1A to this Act. (13) In this section “profits”— (a) in relation to income tax, means income, (b) in relation to capital gains tax, means chargeable gains, and (c) in relation to corporation tax, means profits as computed for the purposes of that tax.

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Determination of Commissioners

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Procedure on appeal

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• (1) For subsections (6) and (7) of section 50 of the Management Act (procedure on appeal) there shall be substituted the following subsections—

(6) If, on an appeal, it appears to the majority of the Commissioners present at the hearing, by examination of the appellant on oath or affirmation, or by other . . . evidence— (a) that, by reason of an amendment under section 28A(2) or (4) of this Act, the appellant is overcharged by a self-assessment; (b) that, by reason of an amendment under section 28B(3) or 30B(1) of this Act, any amounts contained in a partnership statement are excessive; or (c) that the appellant is overcharged by an assessment other than a self-assessment, the assessment or amounts shall be reduced accordingly, but otherwise the assessment or statement shall stand good. (7) If, on an appeal, it appears to the Commissioners— (a) that the appellant is undercharged to tax by a self-assessment which has been amended under section 28A(2) or (4) of this Act; (b) that any amounts contained in a partnership statement which has been amended under section 28B(3) or 30B(1) of this Act are insufficient; or (c) that the appellant is undercharged by an assessment other than a self-assessment, the assessment or amounts shall be increased accordingly.

• (2) In subsection (8) of that section, after the words “an assessment” there shall be inserted the words “ (other than a self-assessment) ”.

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

Postponement of tax pending appeal

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• (1) For subsection (1) of section 55 of the Management Act there shall be substituted the following subsection—

(1) This section applies to an appeal to the Commissioners against— (a) an amendment made under section 28A(2) or (4) of this Act of a self-assessment, (b) an assessment to tax made under section 29 of this Act, (c) an assessment to income tax made under Schedule 16 to the principal Act (income tax on company payments) other than an assessment charging tax the time for the payment of which is given by paragraph 4(1) or 9 of that Schedule, or (d) a notice under subsection (1) or (3) of section 753 of that Act where, before the appeal is determined, the appellant is assessed to tax under section 747(4)(a) of that Act by reference to an amount of chargeable profits specified in that notice.

• (2) In the following provisions of that section, for the word “assessment”, in each place where it occurs, there shall be substituted the words “ amendment or assessment ”.

Collection and recovery

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• (1) After section 70 of the Management Act there shall be inserted the following section—

(70A) (1) For the purposes of this Act and the provisions mentioned in subsection (2) below, where— (a) any payment to an officer of the Board or the Board is made by cheque, and (b) the cheque is paid on its first presentation to the banker on whom it is drawn, the payment shall be treated as made on the day on which the cheque was received by the officer or the Board. (2) The provisions are— (a) sections 824 to 826 of the principal Act (repayment supplements and interest on tax overpaid); and (b) section 283 of the 1992 Act (repayment supplements).

• (2) This paragraph has effect as respects cheques received on or after 6th April 1996.

Interest on overdue tax or tax recovered

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In subsection (1) of section 87A of the Management Act (interest on overdue corporation tax etc.), for the words “section 10 of the principal Act” there shall be substituted the words “ section 59D of this Act ”.

Penalties

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For section 93 of the Management Act there shall be substituted the following section—

(93) (1) This section applies where— (a) any person (the taxpayer) has been required by a notice served under or for the purposes of section 8 or 8A of this Act (or either of those sections as extended by section 12 of this Act) to deliver any return, and (b) he fails to comply with the notice. (2) The taxpayer shall be liable to a penalty which shall be £100. (3) If, on an application made to them by an officer of the Board, the General or Special Commissioners so direct, the taxpayer shall be liable to a further penalty or penalties not exceeding £60 for each day on which the failure continues after the day on which he is notified of the direction (but excluding any day for which a penalty under this subsection has already been imposed). (4) If— (a) the failure by the taxpayer to comply with the notice continues after the end of the period of six months beginning with the filing date, and (b) no application is made under subsection (3) above before the end of that period, the taxpayer shall be liable to a further penalty which shall be £100. (5) Without prejudice to any penalties under subsections (2) to (4) above, if— (a) the failure by the taxpayer to comply with the notice continues after the anniversary of the filing date, and (b) there would have been a liability to tax shown in the return, the taxpayer shall be liable to a penalty of an amount not exceeding the liability to tax which would have been so shown. (6) No penalty shall be imposed under subsection (3) above in respect of a failure at any time after the failure has been remedied. (7) If the taxpayer proves that the liability to tax shown in the return would not have exceeded a particular amount, the penalty under subsection (2) above, together with any penalty under subsection (4) above, shall not exceed that amount. (8) On an appeal against the determination under section 100 of this Act of a penalty under subsection (2) or (4) above, neither section 50(6) to (8) nor section 100B(2) of this Act shall apply but the Commissioners may— (a) if it appears to them that, throughout the period of default, the taxpayer had a reasonable excuse for not delivering the return, set the determination aside; or (b) if it does not so appear to them, confirm the determination. (9) References in this section to a liability to tax which would have been shown in the return are references to an amount which, if a proper return had been delivered on the filing date, would have been payable by the taxpayer under section 59B of this Act for the year of assessment. (10) In this section— - “the filing date” means the day mentioned in section 8(1A) or, as the case may be, section 8A(1A) of this Act; - “the period of default”, in relation to any failure to deliver a return, means the period beginning with the filing date and ending with the day before that on which the return was delivered.

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After section 93 of the Management Act there shall be inserted the following section—

(93A) (1) This section applies where, in the case of a trade, profession or business carried on by two or more persons in partnership— (a) a partner (the representative partner) has been required by a notice served under or for the purposes of section 12AA(2) or (3) of this Act to deliver any return, and (b) he fails to comply with the notice. (2) Each relevant partner shall be liable to a penalty which shall be £100. (3) If, on an application made to them by an officer of the Board, the General or Special Commissioners so direct, each relevant partner shall be liable, for each day on which the failure continues after the day on which the representative partner is notified of the direction (but excluding any day for which a penalty under this subsection has already been imposed), to a further penalty or penalties not exceeding £60. (4) If— (a) the failure by the representative partner to comply with the notice continues after the end of the period of six months beginning with the filing date, and (b) no application is made under subsection (3) above before the end of that period, each relevant partner shall be liable to a further penalty which shall be £100. (5) No penalty shall be imposed under subsection (3) above in respect of a failure at any time after the failure has been remedied. (6) Where, in respect of the same failure to comply, penalties under subsection (2), (3) or (4) above are determined under section 100 of this Act as regards two or more relevant partners— (a) no appeal against the determination of any of those penalties shall be brought otherwise than by the representative partner; (b) any appeal by that partner shall be a composite appeal against the determination of each of those penalties; and (c) section 100B(3) of this Act shall apply as if that partner were the person liable to each of those penalties. (7) On an appeal against a determination under section 100 of this Act of a penalty under subsection (2) or (4) above, neither section 50(6) to (8) nor section 100B(2) of this Act shall apply but the Commissioners may— (a) if it appears to them that, throughout the period of default, the representative partner had a reasonable excuse for not delivering the return, set the determination aside; or (b) if it does not so appear to them, confirm the determination. (8) In this section— - “the filing date” means the day specified in the notice under section 12AA(2) or (3) of this Act; - “the period of default”, in relation to any failure to deliver a return, means the period beginning with the filing date and ending with the day before that on which the return was delivered; - “relevant partner” means a person who was a partner at any time during the period in respect of which the return was required.

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• (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) In subsection (3) of that section, the words from “and the references” to the end shall cease to have effect.

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• (1) For subsection (2) of section 98B of the Management Act (European Economic Interest Groupings) there shall be substituted the following subsections—

(2) Subsections (2A) to (4) below apply where a grouping or member of a grouping required by a notice given under section 12A of this Act to deliver a return or other document fails to comply with the notice. (2A) The grouping or member shall be liable to a penalty not exceeding £300 multiplied by the number of members of the grouping at the time of the failure to comply. (2B) If, on an application made to them by an officer of the Board, the General or Special Commissioners so direct, the grouping or member shall be liable, for each day on which the failure continues after the day on which the grouping or member is notified of the direction (but excluding any day for which a penalty under this subsection has already been imposed), to a further penalty or penalties not exceeding £60 multiplied by the number of members of the grouping at the end of that day.

• (2) In subsection (3) of that section, for the words “subsection (2)” there shall be substituted the words “ subsection (2A) or (2B) ”.

• (3) In subsection (4) of that section, for the words “subsection (2)” there shall be substituted the words “ subsections (2A) and (2B) ”.

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• (1) In subsection (1) of section 100B of the Management Act (appeals against penalty determinations), after the words “subject to” there shall be inserted the words “ sections 93, 93A and 95A of this Act ”.

• (2) At the beginning of subsection (2) of that section there shall be inserted the words “ Subject to sections 93(8) and 93A(7) of this Act ”.

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After section 103 of the Management Act there shall be inserted the following section—

(103A) A penalty under any of the provisions of Part II or VA or this Part of this Act shall carry interest at the rate applicable under section 178 of the Finance Act 1989 from the date on which it becomes due and payable until payment.

Interpretation

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• (1) In subsection (1) of section 118 of the Management Act (interpretation), after the definition of “the Special Commissioners Regulations” there shall be inserted the following definitions—

• “successor”, in relation to a person who has made and delivered a return under section 12AA of this Act, and “predecessor” and “successor”, in relation to the successor of such a person, shall be construed in accordance with section 12AC(6) of this Act;

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• (2) Subsection (3) of that section (effect of assessments in partnership name) shall cease to have effect.

• (3) Sub-paragraph (2) above, so far as it relates to partnerships whose trades, professions or businesses are set up and commenced before 6th April 1994, has effect as respects the year 1997-98 and subsequent years of assessment.

Claims etc. not included in returns

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After Schedule 1 to the Management Act there shall be inserted the following Schedule—

Schedule 1A (1) In this Schedule— - “claim” means a claim, election or notice as respects which this Schedule applies; - “partnership claim” means a claim made in accordance with section 42(6)(b) of this Act; - “profits” has the same meaning as in section 42 of this Act; - “relevant partner”, in relation to a partnership claim, means any person who was a partner at any time during the period in respect of which the claim is made; - “successor”, in relation to a person who— 1. has made a partnership claim, but 2. is no longer a partner or is otherwise no longer available, (2) (1) Subject to any provision in the Taxes Acts for a claim to be made to the Board, every claim shall be made to an officer of the Board. (2) No claim requiring the repayment of tax shall be made unless the claimant has documentary proof that the tax has been paid by deduction or otherwise. (3) A claim shall be made in such form as the Board may determine. (4) The form of claim shall provide for a declaration to the effect that all the particulars given in the form are correctly stated to the best of the information and belief of the person making the claim. (5) The form of claim may require— (a) a statement of the amount of tax which will be required to be discharged or repaid in order to give effect to the claim; (b) a return of profits to be made in support of the claim; and (c) any such particulars of assets acquired as may be required in a return by virtue of section 12 of this Act. (6) In the case of a claim made by or on behalf of a person who is not resident, or who claims to be not resident or not ordinarily resident or not domiciled, in the United Kingdom, an officer of the Board or the Board may require a statement or declaration in support of the claim to be made by affidavit. (3) (1) Subject to sub-paragraph (2) below— (a) at any time before the end of the period of nine months beginning with the day on which a claim is made, an officer of the Board may by notice to the claimant so amend the claim as to correct any obvious errors or mistakes in the return (whether errors of principle, arithmetical mistakes or otherwise); and (b) at any time before the end of the period of twelve months beginning with the day on which the claim is made, the claimant may amend his claim by notice to an officer of the Board. (2) No amendment of a claim may be made under sub-paragraph (1) above at any time during the period— (a) beginning with the day on which an officer of the Board gives notice of his intention to enquire into the claim, and (b) ending with the day on which the officer’s enquiries into the claim are completed. (4) (1) An officer of the Board or the Board shall, as soon as practicable after a claim other than a partnership claim is made, or such a claim is amended under paragraph 3 above, give effect to the claim or amendment by discharge or repayment of tax. (2) An officer of the Board or the Board shall, as soon as practicable after a partnership claim is made, or such a claim is amended under paragraph 3 above, give effect to the claim or amendment, as respects each of the relevant partners, by discharge or repayment of tax. (5) (1) An officer of the Board may enquire into— (a) a claim made by any person, or (b) any amendment made by any person of a claim made by him, if, before the end of the period mentioned in sub-paragraph (2) below, he gives notice in writing of his intention to do so to that person or, in the case of a partnership claim, any successor of that person. (2) The period referred to in sub-paragraph (1) above is the period ending with the quarter day next following the first anniversary of the day on which the claim or amendment was made; and the quarter days for the purposes of this subsection are 31st January, 30th April, 31st July and 31st October. (3) A claim or amendment which has been enquired into under sub-paragraph (1) above shall not be the subject of a further notice under that sub-paragraph. (6) (1) This paragraph applies where an officer of the Board gives notice under paragraph 5 above to any person (the claimant) of his intention to enquire into— (a) a claim made by the claimant, or (b) any amendment made by the claimant of such a claim. (2) For the purpose of enquiring into the claim or amendment, the officer may at the same or any subsequent time by notice in writing require the claimant, within such time (which shall not be less than 30 days) as may be specified in the notice— (a) to produce to the officer such documents as are in the claimant’s possession or power and as the officer may reasonably require for the purpose of determining whether and, if so, the extent to which the claim or amendment is incorrect, and (b) to furnish the officer with such accounts or particulars as he may reasonably require for that purpose. (3) Subsections (3) to (11) of section 19A of this Act apply for the purposes of this paragraph as they apply for the purposes of that section; and those subsections as so applied shall have effect as if any reference to subsection (2) of that section were a reference to sub-paragraph (2) above. (4) Where this paragraph applies in relation to a partnership claim, any reference in this paragraph to the claimant includes a reference to any predecessor or successor of his. (7) (1) This paragraph applies where an officer of the Board gives notice under paragraph 5(1) above to any person (the claimant) of his intention to enquire into— (a) a claim made by the claimant, or (b) any amendment made by the claimant of such a claim. (2) At any time in the period of 30 days beginning with the day on which the officer’s enquiries are completed, the claimant may so amend his claim— (a) as to eliminate or make good any excess or deficiency which, on the basis of the conclusions stated in the officer’s notice under sub-paragraph (4) below, is an excess or deficiency which could be made good or eliminated under sub-paragraph (3) below; or (b) as to give effect to any amendments to the claim which he has notified to the officer. (3) If, at any time in the period of 30 days beginning immediately after the period mentioned in sub-paragraph (2) above, the officer is of opinion that— (a) the claimant’s claim is excessive or insufficient, and (b) in a case falling within sub-paragraph (1)(b) above, the excess or deficiency is attributable (wholly or partly) to the claimant’s amendment, the officer may by notice to the claimant so amend the claim as to eliminate or make good the excess or deficiency or, where paragraph (b) above applies, so much of the excess or deficiency as is so attributable. (4) Subject to sub-paragraph (5) below, the officer’s enquiries shall be treated as completed at such time as he by notice— (a) informs the claimant that he has completed his enquiries, and (b) states his conclusions as to the amount which should be the amount of the claimant’s claim. (5) Subsections (6) and (7) of section 28A of this Act apply for the purposes of sub-paragraph (4) above as they apply for the purposes of subsection (5) of that section. (6) Where this paragraph applies in relation to a partnership claim, any reference in this paragraph to the claimant includes a reference to any predecessor or successor of his. (8) (1) An officer of the Board or the Board shall, within 30 days of a claim other than a partnership claim being amended under paragraph 7(2) or (3) above, give effect to the amendment by making such adjustment as may be necessary, whether— (a) by way of assessment on the claimant, or (b) by discharge of tax or, on proof to the satisfaction of the officer or the Board that any tax has been paid by the claimant by deduction or otherwise, by repayment of tax. (2) An officer of the Board or the Board shall, within 30 days of a partnership claim being amended under paragraph 7(2) or (3) above, give effect to the amendment, as respects each of the relevant partners, by making such adjustment as may be necessary, whether— (a) by way of assessment on the partner, or (b) by discharge of tax or, on proof to the satisfaction of the officer or the Board that any tax has been paid by the partner by deduction or otherwise, by repayment of tax. (3) An assessment made under sub-paragraph (1) or (2) above shall not be out of time if it is made within the time mentioned in that sub-paragraph. (9) (1) An appeal may be brought against an amendment made under paragraph 7(3) above by giving written notice to the officer within 30 days of the amendment being made. (2) Where, in the case of such an appeal, the issues arising include— (a) any question arising under section 278 of the principal Act (personal reliefs for non-residents); (b) any question of residence, ordinary residence or domicile; or (c) the question whether a fund is one to which section 615(3) of that Act applies (pension funds for service abroad), the time for bringing the appeal shall be three months from the making of the amendment under paragraph 7(3) above. (3) On an appeal under this paragraph, the Commissioners may vary the amendment appealed against whether or not the variation is to the advantage of the appellant. (4) Where an amendment made under paragraph 7(3) above is varied, whether by the Commissioners or by the order of any court, paragraph 8 above shall (with the necessary modifications) apply in relation to the variation as it applied in relation to the amendment.

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Part II — Amendments of Taxes Act 1988

Time limits for claims under section 96

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Interest on Schedule E tax

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Time limits for claims under sections 534 and 537A

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Repayment supplements: income tax

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• (1) For subsection (1) of section 824 of the Taxes Act 1988 (repayment supplements: individuals and others) there shall be substituted the following subsection—

(1) Subject to the following provisions of this section, a repayment made by the Board or an officer of the Board of any of the following, namely— (a) an amount paid on account of income tax under section 59A of the Management Act; (b) any income tax paid by or on behalf of an individual for a year of assessment; (c) a surcharge imposed under section 59C of that Act; and (d) a penalty incurred by an individual under any of the provisions of that Act, shall be increased under this section by an amount (a “repayment supplement”) equal to interest on the amount repaid at the rate applicable under section 178 of the Finance Act 1989 for the period (if any) between the relevant time and the date on which the order for the repayment is issued.

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

(3) For the purposes of subsection (1) above— (a) if the repayment is of an amount paid on account of income tax, the relevant time is either the date on which the amount became due and payable in accordance with section 59A of the Management Act or, if later, the date on which the amount was paid; (b) if the repayment is of income tax, the relevant time is either the 31st January next following the year of assessment for which the tax was charged or, if later, the date on which the tax was paid; and (c) if the repayment is of a penalty or surcharge, the relevant timee is either the date following the expiry of 30 days from the date on which the penalty or surcharge was incurred or imposed or, if later, the date on which the penalty or surcharge was paid.

• (3) The following shall cease to have effect, namely—

• (a) subsection (5) of that section;

• (b) in subsection (9) of that section the words “a partnership” and the words “(within the meaning of section 111 of the Finance Act 1989)”; and

• (c) subsection (10) of that section.

• (4) This paragraph, so far as it relates to partnerships whose trades, professions or businesses are set up and commenced before 6th April 1994, has effect as respects the year 1997-98 and subsequent years of assessment.

Interest on tax overpaid

42

In subsection (2) of section 826 of the Taxes Act 1988 (interest on tax overpaid), for the words “section 10” there shall be substituted the words “ section 59D of the Management Act (payment of corporation tax) ”.

Time limits for elections under Schedule 5

43

• (1) In sub-paragraph (3) of paragraph 2 of Schedule 5 to the Taxes Act 1988 (farming: election for the herd basis), for the words from “not later” to the end there shall be substituted the following paragraphs—

(a) in the case of an election by a person chargeable to income tax, not later than twelve months from the 31st January next following the qualifying year of assessment; (b) in the case of an election on behalf of persons in partnership, not later than twelve months from the 31st January next following the year of assessment in which the qualifying period of account ends; and (c) in the case of an election by a person chargeable to corporation tax, not later than two years from the end of the qualifying accounting period.

• (2) In sub-paragraph (4) of that paragraph, for paragraphs (a) and (b) there shall be substituted the following paragraphs—

(a) in a case falling within sub-paragraph (3)(a) above, for the qualifying year of assessment and all subsequent years; (b) in a case falling within sub-paragraph (3)(b) above, for the qualifying period of account and all subsequent periods of account; and (c) in a case falling within sub-paragraph (3)(c) above, for the qualifying accounting period and all subsequent accounting periods.

• (3) After that sub-paragraph there shall be inserted the following sub-paragraphs—

(5) Where, in a case falling within sub-paragraph (3)(a) above, the commencement year immediately precedes the qualifying year of assessment, sub-paragraph (4)(a) above shall have effect as if the reference to the qualifying year of assessment were a reference to the commencement year. (6) In this paragraph— - “commencement year”, in relation to a person chargeable to income tax, means the year of assessment in which his trade is set up and commenced; - “period of account”, in relation to persons in partnership, means any period for which accounts are drawn up; - “qualifying accounting period”, in relation to a person chargeable to corporation tax, means the first accounting period during the whole or part of which it kept a production herd of the class in question; - “qualifying period of account”, in relation to persons in partnership, means the first period of account during the whole or part of which those persons kept such a herd; - “qualifying year of assessment”, in relation to a person chargeable to income tax, means the first year of assessment after the commencement year for which the amount of profits or gains or losses in respect of his farming is computed for tax purposes by reference to the facts of a period during the whole or part of which he kept such a herd.

• (4) In paragraph 6 of that Schedule, for sub-paragraphs (2) to (4) there shall be substituted the following sub-paragraphs—

(2) An election for the herd basis made by virtue of sub-paragraph (1) above shall only be valid if made— (a) in the case of an election by a person chargeable to income tax, not later than twelve months from the 31st January next following the qualifying year of assessment; (b) in the case of an election on behalf of persons in partnership, not later than twelve months from the 31st January next following the year of assessment in which the qualifying period of account ends; and (c) in the case of an election by a person chargeable to corporation tax, not later than two years from the end of the qualifying accounting period. (3) An election for the herd basis made by virtue of sub-paragraph (1) above shall, notwithstanding paragraph 2(4) above, have effect— (a) in a case falling within sub-paragraph (2)(a) above, for the qualifying year of assessment and all subsequent years; (b) in a case falling within sub-paragraph (2)(b) above, for the qualifying period of account and all subsequent periods of account; and (c) in a case falling within sub-paragraph (2)(c) above, for the qualifying accounting period and all subsequent accounting periods. (4) In this paragraph— - “period of account”, in relation to persons in partnership, means any period for which accounts are drawn up; - “qualifying accounting period”, in relation to a person chargeable to corporation tax, means the first accounting period in which the compensation is relevant; - “qualifying period of account”, in relation to persons in partnership, means the first period of account in which the compensation is relevant; - “qualifying year of assessment”, in relation to a person chargeable to income tax, means the first year of assessment for which the amount of profits or gains or losses in respect of his farming falls to be computed for tax purposes by reference to the facts of a period in which the compensation is relevant.

Part III — Amendments of other enactments

Setting of rates of interest

44

In subsection (2)(f) of section 178 of the Finance Act 1989 (setting of rates of interest), for the words “sections 86, 86A, 87, 87A, and 88” there shall be substituted the words “ sections 59C, 86, 86A, 87, 87A, 88 and 103A ”.

Class 4 contributions

45

In subsection (1) of section 16 of the Social Security Contributions and Benefits Act 1992 (application of Income Tax Acts to class 4 contributions), for paragraph (b) there shall be substituted the following paragraph—

(b) the provisions of Part VA (payment of tax) and Part X (penalties) of the Taxes Management Act 1970,

.

Repayment supplements: capital gains tax

46

• (1) In subsection (1) of section 283 of the Taxation of Chargeable Gains Act 1992 (repayment supplements)—

• (a) for the words from “for which” to “that year of assessment” there shall be substituted the words “ a repayment of that ta is made by the Board or an officer of the Board ”, and

• (b) for the words “the end of the tax month in which” there shall be substituted the words “ the date on which ”.

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

(2) For the purposes of subsection (1) above, the relevant time is either the 31st January next following the year of assessment for which the tax was payable or, if later, the date on which the tax was paid.

• (3) In subsection (4) of that section, for the words from “partnership” to “section 701(9) of that Act)” there shall be substituted the words “ trust or ”.

• (4) Subsection (5) of that section shall cease to have effect.

SCHEDULE 20

Assessment under Cases I and II of Schedule D

1

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

2

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

3

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

Assessment under Case III of Schedule D

4

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

5

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

Assessment under Cases IV and V of Schedule D

6

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

7

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

Loss relief

8

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

Capital allowances

9

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

Double taxation relief

10

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

11

• (1) ... this paragraph applies in the case of—

• (a) a trade, profession or vocation set up and commenced before 6th April 1994 and continuing after 5th April 1998; or

• (b) income from a source arising before the former date and continuing after the latter date.

• (2) Sub-paragraph (3) below applies where—

• (a) credit against income tax for the year 1995-96 or any earlier year of assessment is or has been allowed by virtue of subsection (1) of section 804 of the Taxes Act 1988 in respect of any income (“the original income”), and

• (b) the source of that income ceases in a subsequent year of assessment (“the subsequent year”).

• (3) The following shall be set off one against the other, namely—

• (a) the amount of the credit which, under Part XVIII of the Taxes Act 1988 (including section 804), has been allowed against income tax in respect of the original income, and

• (b) the aggregate of—

• (i) the amount of the credit which, apart from that section, would have been so allowed, and

• (ii) the difference between the amount of the credit which, on the assumptions mentioned in sub-paragraph (4) below, would have been allowable under Part XVIII of that Act for the year 1996-97 and the amount of credit which has been so allowed;

and if the amount given by paragraph (a) exceeds that given by paragraph (b) above, the person chargeable in respect of income (if any) arising in the subsequent year from the same source as the original income shall be chargeable for that year to an amount of income tax equal to the excess . , and the person shall be liable for any tax so chargeable

• (4) The assumptions are—

• (a) that the words “the appropriate percentage of” were omitted from paragraph 2(2) above;

• (b) that the words “50 per cent. of” were omitted from paragraphs (a), (b) and (c) of paragraph 6(2) above; and

• (c) that paragraph 10 above had not been enacted.

• (5) Where the period on the income of which income tax is chargeable for the year 1996-97 is that year, sub-paragraph (3) above shall have effect as if for paragraph (b) there were substituted the following paragraph—

(b) the amount of the credit which, apart from that section, would have been so allowed;

.

• (6) Any reference in sub-paragraph (2) or (3) above to section 804 or Part XVIII of the Taxes Act 1988 includes a reference to the corresponding provisions of any earlier enactments.

• (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12

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

13

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

Supplemental

14

• (1) In this Schedule—

• (a) any reference to a source of income arising before any date (“the earlier date”) and continuing after or ceasing before some other date (“the later date”) is a reference to a source of income arising to any person before the earlier date and continuing to be possessed by that person after, or (as the case may be) ceasing to be possessed by that person before, the later date; and

• (b) any reference to a source of income includes a reference to a part of such a source.

• (2) Where, as respects income from any source, income tax is to be charged under Case IV or V of Schedule D by reference to the amounts of income received in the United Kingdom, the source shall be treated for the purposes of this Schedule as arising on the date on which the first amount of income is so received.

SCHEDULE 21

Year of assessment in which profits or losses arise

1

• (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) Subsection (3) of that section shall cease to have effect.

• (3) In this paragraph—

• (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (b) sub-paragraph (2) has effect for the year 1996-97 and subsequent years of assessment.

2

• (1) In subsection (1) of section 172 of the 1993 Act (year of assessment in which profits or losses arise), for paragraphs (a) and (b) there shall be substituted the following paragraphs—

(a) in the case of profits or losses arising directly from his membership of one or more syndicates, those of any previous year or years which are declared in the corresponding underwriting year; (b) in the case of profits or losses arising from assets forming part of a premiums trust fund, those allocated under the rules or practice of Lloyd’s to any previous year or years the profits or losses of which are declared in the corresponding underwriting year; and

.

• (2) Sub-paragraph (1) above does not have effect for the years 1994-95, 1995-96 and 1996-97, but in relation to those years that section shall have effect as if paragraphs (a) and (b) of subsection (1) were omitted.

Premiums trust funds

3

For subsection (1) of section 174 of the 1993 Act (premiums trust funds) there shall be substituted the following subsection—

(1) For the purposes of the Income Tax Acts and the Gains Tax Acts— (a) a member shall be treated as absolutely entitled as against the trustees to the assets forming part of a premiums trust fund of his; and (b) where a deposit required by a regulatory authority in a country or territory outside the United Kingdom is paid out of such a fund, the money so paid shall be treated as still forming part of that fund.

Reinsurance to close

4

• (1) After subsection (4) of section 177 of the 1993 Act (reinsurance to close) there shall be inserted the following subsection—

(5) This section also applies in any case where the member to whom the premium is payable is a corporate member within the meaning of Chapter V of Part IV of the Finance Act 1994.

• (2) This paragraph has effect for the underwriting year 1993 and subsequent underwriting years.

Stop-loss and quota share insurance

5

• (1) In subsection (2) of section 178 of the 1993 Act (stop-loss and quota share insurance)—

• (a) for the word “him” there shall be substituted the words “ a member ”; and

• (b) for the word “arose” there shall be substituted the words “ was declared ”.

• (2) This paragraph has effect as respects insurance money and other amounts payable in respect of losses declared in the underwriting year 1997 or subsequent underwriting years.

Cessation etc.

6

• (1) In section 179 of the 1993 Act (cessation: final year of assessment), subsection (3) and, in subsection (2), the words “to subsection (3) below and” shall cease to have effect.

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

(179A) (1) This section applies where a member ceases to carry on his underwriting business by reason of death. (2) For the purposes of assessing the profits of the member’s underwriting business, the member shall be treated as having died at the end of the year of assessment which corresponds to the underwriting year immediately preceding that in which he actually died. (3) For the purposes of the Income Tax Acts— (a) the carrying on of the member’s underwriting business by his personal representatives shall not be treated as a change in the persons engaged in the carrying on of that business; and (b) subject to the provisions of any regulations made by the Board, the business shall be treated as continuing until the member’s deposit at Lloyd’s is paid over to his personal representatives.

• (3) This paragraph has effect in any case where the member dies after the end of the year 1993-94.

Regulations

7

• (1) In section 182 of the 1993 Act (regulations), subsections (2) to (4) shall cease to have effect.

• (2) This paragraph has effect for the year 1997-98 and subsequent years of assessment.

Interpretation

8

• (1) In subsection (1) of section 184 of the 1993 Act (interpretation and commencement)—

• (a) in the definition of “ancillary trust fund”, the words “or the managing agent of a syndicate of which he is a member” shall cease to have effect; and

• (b) in the definition of “member”, for the words “a member of Lloyd’s who” there shall be substituted the words “ an individual who is a member of Lloyd’s and ”.

• (2) In subsection (2)(c) of that section, for the word “agent”, in both places where it occurs, there shall be substituted the words “ managing agent ”.

Assessment and collection of tax

9

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

10

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

11

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

Special reserve funds

12

• (1) In Schedule 20 to the 1993 Act (special reserve funds), in paragraph 1(1) (preliminary), after the definition of “overall premium limit” there shall be inserted the following definition—

“payment”, unless the contrary intention appears, means a payment in money;

.

• (2) In paragraph 7(2) of that Schedule (payments out of fund on cessation), for the words “money’s worth” there shall be substituted the words “ in assets forming part of the fund ”.

• (3) This paragraph has effect for the year 1992-93 and subsequent years of assessment.

13

• (1) For paragraph 8 of that Schedule (entitlement of member for tax purposes) there shall be substituted the following paragraph—

(8) (1) Subject to sub-paragraph (2) below, a member shall be treated for the purposes of the Income Tax Acts and the Gains Tax Acts as absolutely entitled as against the trustees to the assets forming part of his special reserve fund. (2) Where an asset is disposed of by a member to the trustees of his special reserve fund, nothing in sub-paragraph (1) above shall affect the operation of the Gains Tax Acts in relation to that disposal.

• (2) This paragraph has effect for the year 1994-95 and subsequent years of assessment.

14

• (1) In sub-paragraphs (1) to (4) of paragraph 10 of that Schedule (tax consequences of payments into and out of fund), for the word “corresponding”, in each place where it occurs, there shall be substituted the word “ relevant ”.

• (2) After sub-paragraph (4) of that paragraph there shall be inserted the following sub-paragraph—

(5) In this paragraph “the relevant underwriting year”, in relation to a year of assessment, means the underwriting year next but two before its corresponding underwriting year.

• (3) Sub-paragraphs (1) and (2) above do not have effect for the years 1994-95, 1995-96 and 1996-97, but in relation to those years that Schedule shall have effect as if paragraph 10 were omitted.

15

• (1) In sub-paragraph (2) of paragraph 11 of that Schedule (tax consequences of cessation), for the words “the final year of assessment” there shall be substituted the words “ the relevant year of assessment ” and for the words “the relevant year” there shall be substituted the words “ the relevant underwriting year ”.

• (2) In sub-paragraphs (3) and (4) of that paragraph, for the words “the relevant year” there shall be substituted the words “ the penultimate underwriting year ”.

• (3) For sub-paragraph (5) of that paragraph there shall be substituted the following sub-paragraph—

(5) In this paragraph, subject to the provisions of any regulations made by the Board— - “the penultimate underwriting year” means the underwriting year immediately preceding that in which the member’s deposit at Lloyd’s is paid over to him or his personal representatives or assigns; - “the relevant underwriting year” means— 1. in the case of a member who dies before his deposit at Lloyd’s is paid over to him or his assigns, the underwriting year immediately preceding that corresponding to the relevant year of assessment; and 2. in any other case, the underwriting year immediately preceding that in which his deposit at Lloyd’s is paid over to him or his assigns; - “the relevant year of assessment” means— 1. in the case of a member who dies before his deposit at Lloyd’s is paid over to him or his assigns, the year of assessment at the end of which he is treated, by virtue of section 179A(2) of this Act, as having died; and 2. in any other case, his final year of assessment.

16

• (1) In sub-paragraph (1) of paragraph 13 of that Schedule (winding up of old-style funds), the words from “and a transfer” to the end shall cease to have effect.

• (2) After sub-paragraph (5) of that paragraph there shall be inserted the following sub-paragraph—

(6) A transfer or payment under this paragraph of an amount of capital shall be in money or in assets forming part of the fund or both, as the member may direct.

• (3) This paragraph has effect for the year 1992-93 and subsequent years of assessment.

SCHEDULE 22

Part I — Procedure for and in connection with an election

The election

1

• (1) An election shall be made by serving it on the Board, shall be in such form as may be prescribed by the Board and shall contain such information as the Board may reasonably require with respect to—

• (a) the oil field to which the election is to apply, the pipe-line by reference to which the election is being made and whether the election is to be limited in accordance with subsection (6) of section 231 of this Act;

• (b) all other assets which, if the election were to be accepted, would at the date of the election be assets to which the election applies;

• (c) the electing participator’s interest in those assets;

• (d) the sums to which, if the election is accepted, it is reasonable to expect that section 233 of this Act will apply and the sources, quantities and descriptions of oil which will give rise to those sums;

• (e) any other oil field (whether taxable or non-taxable) in connection with which any of the assets referred to in paragraph (b) above is or is expected to be used or in respect of which services or other business facilities in connection with that use are or are expected to be provided; and

• (f) the initial usage fraction and the amounts which make up the numerator and the denominator of that fraction.

• (2) The reference in sub-paragraph (1)(e) above to an oil field includes a reference to any area which the electing participator expects might be determined as an oil field under Schedule 1 to the principal Act.

• (3) An election shall include a declaration that it is correct and complete to the best of the knowledge and belief of the electing participator.

• (4) An election shall be irrevocable.

Conditions for acceptance of an election

2

• (1) The Board shall reject an election if they are not satisfied—

• (a) that the conditions relating to the pipe-line in paragraphs (a) to (d) of subsection (1) or in subsection (3) of section 231 of this Act are fulfilled; or

• (b) that the conditions relating to the oil field or the participator in subsection (2) of that section are fulfilled; or

• (c) that, if the election were to be accepted, the assets to which the election would apply (having regard to any limitation under subsection (6) of that section) have the capacity and characteristics, and are otherwise suitable, to handle the quantities and descriptions of oil specified in accordance with paragraph 1(1)(d) above.

• (2) Subject to sub-paragraph (3) below, the Board shall also reject an election if it appears to them—

• (a) that any of the information required to be contained in the election by virtue of paragraph 1(1) above is incorrect; or

• (b) that, after receiving notice in writing from the Board, the electing participator has failed to furnish to the Board on or before the specified date any information which the Board have reasonably required either with respect to the matters specified in paragraph 1(1) above or for the purpose of satisfying themselves as to the matters referred to in sub-paragraph (1) above.

• (3) Before rejecting an election under sub-paragraph (2)(a) above the Board may, if they think fit, by notice in writing give the electing participator an opportunity to correct any error in the information and, if he does so, the information shall then be treated as having been provided in the correct form.

• (4) In sub-paragraph (2)(b) above “the specified date” means such date as may be specified in the notice concerned, being a date not earlier than one month after the date on which the notice was given.

• (5) A notice under sub-paragraph (2)(b) above shall be given within the period of three months beginning on the date on which the election was received by the Board.

Notice of acceptance or rejection

3

• (1) Notice of the acceptance or rejection of an election shall be served on the electing participator before the expiry of the period of three months beginning on whichever of the following dates is the later or latest—

• (a) the date on which the election was received by the Board;

• (b) if a notice was given under paragraph 2(2)(b) above relating to the election, the date or, as the case may be, the last date which is the specified date, as defined in paragraph 2(4) above, in relation to such a notice;

• (c) if a notice was given under paragraph 2(3) above relating to the election, the date on which that notice was given.

• (2) If no such notice of acceptance or rejection is so served, the Board shall be deemed to have accepted the election and to have served notice of their acceptance on the last day of the period referred to in sub-paragraph (1) above.

Appeals

4

• (1) Where the Board serve notice on an electing participator under paragraph 3 above rejecting an election, he may appeal ... against the notice.

• (2) An appeal under sub-paragraph (1) above shall be made by notice of appeal served on the Board within thirty days beginning on the date of the notice in respect of which the appeal is brought.

• (3) Where, at any time after the service of notice of appeal under this paragraph and before the determination of the appeal by the tribunal , the Board and the appellant agree that the notice in respect of which the appeal is brought should stand or that the election to which it related should be accepted with or without modification, the same consequences shall ensue as if the tribunal had determined the appeal to that effect.

• (4) On the hearing of an appeal under this paragraph, the tribunal shall either dismiss the appeal or allow it; and if the tribunal allows the appeal, the tribunal shall direct either—

• (a) that the election shall be accepted; or

• (b) that the election shall have effect subject to such modifications as may be specified in the direction and shall be accepted in its modified form.

• (5) In an appeal under sub-paragraph (1)—

• (a) paragraphs 14(2), (8) and (11) and 14A to 14I of Schedule 2 to the principal Act shall apply as they apply in relation to an appeal against an assessment or determination made under that Act subject to any necessary modifications including the following;

• (b) any reference in those paragraphs to an agreement under paragraph 14(9) shall be construed as a reference to an agreement under sub-paragraph (3) above.

• (6) Any reference in this Chapter to an election accepted by the Board shall be construed as including a reference to an election accepted in pursuance of an appeal under this paragraph.

Information to the responsible person

5

• (1) Within thirty days of the relevant date, the electing participator shall furnish to the responsible person for the field to which the election applies (or would apply if the election were accepted) a copy of—

• (a) any election made by him; and

• (b) any notice under paragraph 3 above accepting or rejecting the election.

• (2) For the purposes of sub-paragraph (1) above, the relevant date is—

• (a) in the case of an election made by the electing participator, the date on which it was served on the Board; and

• (b) in the case of a notice under paragraph 3 above, the date on which the electing participator received it.

• (3) In a case where paragraph 9 below applies (or would apply if an election were accepted) sub-paragraphs (1) and (2) above shall require the electing participator additionally to furnish copies of the same documents to the responsible person for any non-chargeable field mentioned in sub-paragraph (3) of that paragraph.

• (4) In a case where paragraph 11 below applies (or would apply if an election were accepted) sub-paragraphs (1) and (2) above shall require the electing participator additionally to furnish copies of the same documents to the old participator referred to in that paragraph.

Penalties for incorrect information

6

Where a participator fraudulently or negligently furnishes any incorrect information or makes any incorrect declaration in or in connection with an election he shall be liable to a penalty not exceeding—

• (a) in the case of negligence, £50,000, and

• (b) in the case of fraud, £100,000.

Re-opening election decisions on grounds of incorrect information

7

• (1) Without prejudice to paragraph 6 above, this paragraph applies if, at any time after notice of the acceptance of an election has been served by the Board, it appears to the Board that, as a result of an error in the information furnished to the Board, the election should not have been accepted.

• (2) If, in a case where this paragraph applies, either—

• (a) the error was attributable, in whole or in part, to the fraudulent or negligent conduct of the electing participator or a person acting on his behalf, or

• (b) on the error coming to the notice of the electing participator, or a person acting on his behalf, the error was not remedied without unreasonable delay,

the Board may serve on the electing participator and on the responsible person for the field to which the election applies a notice rescinding the acceptance and stating what appears to the Board to be the correct position.

• (3) When a notice under sub-paragraph (2) above becomes effective, the election shall be treated as having been rejected in accordance with paragraph 3 above.

• (4) If, in a case where this paragraph applies,—

• (a) neither of the conditions in sub-paragraph (2) above is fulfilled, and

• (b) the Board are of the opinion that, if the correct information had been furnished, the election could have been accepted,

the election shall be treated as having been made and accepted subject to such modifications (being modifications to correct the effect of the error) as the Board may direct, by notice served on the electing participator and on the responsible person for the field to which the election applies.

• (5) A notice served under sub-paragraph (2) or sub-paragraph (4) above shall become effective either—

• (a) on the expiry of the period during which notice of appeal against the notice may be served on the Board under paragraph 8 below without such notice of appeal being served; or

• (b) where such notice of appeal is served, when the notice can no longer be varied or quashed by the tribunal or by the order of any court.

Appeals against re-opening notices

8

• (1) This paragraph applies where the Board serve notice under sub-paragraph (2) or sub-paragraph (4) of paragraph 7 above; and in the following provisions of this paragraph such a notice is referred to as a “re-opening notice”.

• (2) The electing participator may, by notice of appeal served on the Board within thirty days beginning on the date of the re-opening notice, appeal ... against the re-opening notice.

• (3) A notice of appeal under sub-paragraph (2) above shall state the grounds on which the appeal is brought.

• (4) An appeal under this paragraph may at any time before it is notified to the tribunal be abandoned by notice served on the Board by the electing participator.

• (5) A re-opening notice may be withdrawn at any time before it becomes effective.

• (6) In any case where—

• (a) the electing participator serves notice of appeal against a re-opening notice served under sub-paragraph (4) of paragraph 7 above, and

• (b) before the appeal is determined by the tribunal , the Board and the electing participator agree as to the modifications necessary to correct the effect of the error concerned,

the re-opening notice shall take effect subject to such modifications as may be necessary to give effect to that agreement; and thereupon the appeal shall be treated as having been abandoned.

• (7) Subject to sub-paragraph (8) below, on an appeal against a re-opening notice the tribunal may vary the notice, quash the notice or dismiss the appeal; and the notice may be varied whether or not the variation is to the advantage of the electing participator.

• (8) The provisions relating to the variation of a re-opening notice referred to in sub-paragraph (7) above shall not apply in respect of any such notice served under sub-paragraph (2) of paragraph 7 above.

• (9) In an appeal under sub-paragraph (2)—

• (a) paragraphs 14A to 14I of Schedule 2 to the principal Act shall apply as they apply in relation to an appeal against an assessment or determination made under that Act subject to any necessary modifications including the following;

• (b) any reference in those paragraphs to an agreement under paragraph 14(9) shall be construed as a reference to an agreement under sub-paragraph (6) above.

Part II — Supplementary provisions

Assets used in connection with more than one taxable field

9

• (1) The provisions of this paragraph apply where—

• (a) an election is in operation; and

• (b) any of the assets to which the election applies is used or expected to be used in connection with two or more taxable fields.

• (2) Any reference in this paragraph to allowable expenditure has the same meaning as in Part II of Schedule 1 to the 1983 Act and is a reference to expenditure incurred on an asset to which the election applies.

• (3) Sub-paragraph (4) below applies if, by virtue of paragraph 5 of Schedule 1 to the 1983 Act (which, in a case falling within this paragraph, provides for the apportionment of allowable expenditure between two or more fields), any part of the allowable expenditure is apportioned to a taxable field (a “non-chargeable field”) other than the field to which the election applies.

• (4) Where this sub-paragraph applies, then, so far as concerns the electing participator (as a participator in a non-chargeable field), section 232 of this Act shall apply in relation to that part of the allowable expenditure which is apportioned to the non-chargeable field as it applies in relation to the part apportioned to the field to which the election applies.

Transfer of interests

10

• (1) If, while an election is in operation, the electing participator (or a person who is treated as an electing participator by virtue of this paragraph) transfers the whole or part of his interest in the field to which the election applies, then, so far as concerns that interest or part, the new participator shall thereafter be treated as the electing participator for the purposes of this Chapter, other than paragraph 11 below, and, in particular,—

• (a) any restriction on the amount of expenditure allowed or allowable by virtue of section 232 of this Act shall continue to apply to any expenditure relief transferred to the new participator under paragraph 6 of Schedule 17 to the Finance Act 1980; and

• (b) any relief from tax under section 233 of this Act shall apply in relation to the new participator as it applied in relation to the old participator.

• (2) If, in a case where paragraph 9 above applies, the electing participator, as a participator in the non-chargeable field (within the meaning of that paragraph) transfers the whole or part of his interest in that field, sub-paragraph (1) above (except paragraph (b)) shall apply in relation to that transfer as if—

• (a) any reference to the field to which the election applies were a reference to the non-chargeable field; and

• (b) any reference to the electing participator were a reference to him in his capacity as a participator in the non-chargeable field.

• (3) In sub-paragraph (1) above the expressions “the old participator” and “the new participator” have the same meaning as in Schedule 17 to the Finance Act 1980.

11

• (1) This paragraph applies in any case where—

• (a) the electing participator acquired the whole or any part of his interest in the field to which the election applies as a result of a transfer to which Part I of Schedule 17 to the Finance Act 1980 applies (so that the electing participator is the new participator); and

• (b) some or all of the relief in respect of any expenditure incurred (before the transfer) on any asset to which the election applies did not fall to be transferred to the electing participator (whether by virtue of paragraph 6 or paragraph 7 of that Schedule).

• (2) With regard to so much of the expenditure referred to in sub-paragraph (1)(b) above as falls to be taken into account under paragraph (b)(i) or paragraph (c)(i) of subsection (9) of section 2 of the principal Act in computing, for any chargeable period ending before the transfer period, the assessable profit or allowable loss accruing to the old participator or any predecessor of his, section 232 of this Act shall apply in the case of the old participator or, as the case may be, his predecessor as it is expressed to apply in the case of the electing participator.

• (3) If, as a result of the operation of sub-paragraph (2) above, there is a reduction in the amount which would otherwise be the accumulated capital expenditure of the old participator at the end of the last chargeable period before the transfer period, paragraph 8 of Schedule 17 to the Finance Act 1980 shall be taken to have transferred a correspondingly reduced amount to the electing participator.

• (4) In this paragraph—

• (a) the expressions “the old participator”, “the new participator” and “the transfer period” have the same meaning as in Schedule 17 to the Finance Act 1980; and

• (b) any reference to a predecessor of the old participator is a reference to a person who (before the transfer referred to in sub-paragraph (1)(a) above) transferred the whole or part of his interest in the field to which the election applies either to the old participator or to another person who is a predecessor in title of the old participator in respect of that interest or part.

Transfer of elected assets

12

• (1) This paragraph applies if there is a disposal of an asset which, immediately before the disposal or at an earlier time, was an asset to which an election applies; and in this paragraph—

• (a) “the asset transferred” means the asset so disposed of;

• (b) “the vendor” means the electing participator or other person by whom the asset is disposed of.

• (2) Where a person has incurred expenditure on the acquisition of a transferred asset, he shall be treated for the purposes of the expenditure relief provisions as having incurred that expenditure only to the extent that it does not exceed the amount which, having regard to section 232 of this Act or the previous operation of this paragraph, was (in the case of the vendor) allowable under those provisions immediately before the disposal in respect of his expenditure on the asset.

• (3) Any expenditure incurred on the asset after the disposal shall be left out of account for the purposes of the expenditure relief provisions.

Restriction of relief for expenditure incurred after 30th November 1993 and before the date of an election

13

• (1) This paragraph applies if, after 30th November 1993 and before the date of an election, expenditure was incurred by the electing participator under a contract—

• (a) for the acquisition from any other person of, or of an interest in, an asset to which the election applies; or

• (b) for the provision by any other person of services or other business facilities of whatever kind in connection with the use of an asset to which the election applies.

• (2) If, in a case where this paragraph applies, the other person referred to in paragraph (a) or paragraph (b) of sub-paragraph (1) above (“the contractor”) has performed his obligations by entering into one or more further contracts, the contractor shall be treated for the purposes of subsection (2) of section 191 of the Finance Act 1993 (time when expenditure is incurred) as having performed his obligations under the contract only to the extent that, at that time, the asset or interest in question has been acquired by or, as the case may be, the services or other business facilities have been provided to, the electing participator.

SCHEDULE 23

1

• (1) In section 2 (assessable profits and allowable losses), in subsection (5) (amounts to be included in calculation of gross profit or loss) in each of paragraphs (b) and (c), after the word “oil”, in the first place where it occurs, there shall be inserted “ (not being light gases) ” and after paragraph (c) there shall be inserted—

(ca) the market value, ascertained in accordance with paragraph 3A of Schedule 3 to this Act, of so much of any light gases so won and disposed of by him otherwise than in sales at arm’s length as was delivered by him in the period; and (cb) the market value, ascertained in accordance with paragraph 3A of Schedule 3 to this Act, of so much of any light gases so won as was relevantly appropriated by him in the period without being disposed of; and

.

• (2) In subsection (9) of that section (amounts to be taken into account in determining amount of debit or credit in respect of expenditure), in paragraph (a)—

• (a) in sub-paragraph (i) the words “or, as the case may be” shall be omitted;

• (b) in that sub-paragraph after the words “delivery was made” there shall be inserted the words “ or (in the case of light gases) its market value as determined in accordance with paragraph 3A of Schedule 3 to this Act, as the case may require ”; and

• (c) at the end of sub-paragraph (ii) there shall be inserted the words “ or (in the case of light gases) the market value as determined in accordance with paragraph 3A of Schedule 3 to this Act ”.

2

In Schedule 2 (management and collection of PRT), in paragraph 2(2) (returns by participators), in paragraph (a)(iii) after the words “delivery was made” and in paragraph (b)(ii) after the word “made” there shall be inserted the words “ or (in the case of light gases) the market value as determined in accordance with paragraph 3A of Schedule 3 to this Act ”.

3

• (1) In Schedule 3 (miscellaneous provisions relating to PRT), in paragraph 2 (definition of market value of oil)—

• (a) at the beginning of sub-paragraph (1) there shall be inserted the words “ Except in the case of light gases ”; and

• (b) at the end of that sub-paragraph there shall be added the words “ and, accordingly, references in the following provisions of this paragraph to oil do not apply to light gases ”.

• (2) In paragraph 2A of that Schedule (definition of market value of oil consisting of or including gas), after sub-paragraph (1) there shall be inserted the following sub-paragraph—

(1A) Sub-paragraphs (2) and (3) below also apply where the market value of any light gases falls to be ascertained under paragraph 3A below.

• (3) In sub-paragraph (2) of paragraph 2A, after the words “paragraph 2 above”, in each place where they occur, there shall be inserted “ or, as the case may require, sub-paragraph (2)(b) of paragraph 3A below ”.

• (4) In sub-paragraph (3) of paragraph 2A, after the words “paragraph 2”, in the first place where they occur, there shall be inserted “ or, as the case may require, in accordance with paragraph 3A below ”.

• (5) Sub-paragraph (4) of paragraph 2A shall be omitted.

4

After paragraph 3 of Schedule 3 (aggregate market value of oil) there shall be inserted—

(3A) (1) The market value of any light gases for the purposes of this Part of this Act is the price at which, having regard to all the circumstances relevant to the disposal or appropriation in question, light gases of that kind might reasonably have been expected to be sold under a contract of sale satisfying the conditions specified in sub-paragraph (2) below. (2) The conditions referred to in sub-paragraph (1) above are that— (a) the contract is for the sale of the gases at arm’s length to a willing buyer; (b) the contract requires the gases to have been subjected to appropriate initial treatment before delivery; and (c) the contract requires the gases to be delivered— (i) in the case of gases extracted in the United Kingdom, at the place of extraction; or (ii) in the case of gases extracted from strata in the sea bed and subsoil of the territorial sea of the United Kingdom or of a designated area, at the place in the United Kingdom or another country at which the seller could reasonably be expected to deliver the gases or, if there is more than one such place, the one nearest to the place of extraction. (3) If the circumstances referred to in sub-paragraph (1) above are such that the price referred to in that sub-paragraph might reasonably be expected to include— (a) any such payments as are referred to in subsection (2) of section 114 of the Finance Act 1984 (treatment of certain payments relating to gas sales), or (b) any capacity payments, as defined in subsection (5) of that section, section 114 of the Finance Act 1984 shall apply accordingly in relation to the notional contract specified in sub-paragraph (1) above as it applies in relation to an actual contract. (4) This paragraph has effect subject to sub-paragraphs (2) and (3) of paragraph 2A above.

SCHEDULE 24

Interpretation

1

• (1) In this Schedule—

• . . .

• “the Board” means the British Railways Board;

• “the Capital Allowances Act” means the Capital Allowances Act 2001 and includes, where the context admits, enactments which under the Taxes Act 1988 are to be treated as contained in the Capital Allowances Act 2001;

• “fixture” has the same meaning as it has in Chapter 14 of Part 2 of the Capital Allowances Act;

• “franchise company” has the meaning given by section 85(8) of the Railways Act 1993;

• “the Franchising Director” means the Director of Passenger Rail Franchising;

• “the Gains Act” means the Taxation of Chargeable Gains Act 1992;

• “predecessor”, in relation to any relevant transfer, means the body from which the property, rights or liabilities in question are transferred by virtue of the restructuring scheme in question;

• “property”, “rights” and “liabilities” have the same meaning as they have in Part II of the Railways Act 1993;

• “publicly owned railway company” has the same meaning as it has in the Railways Act 1993;

• “relevant transfer” means a transfer of any property, rights or liabilities by virtue of a restructuring scheme;

• “restructuring scheme” means a section 85 transfer scheme made by, or pursuant to a direction of, the Secretary of State, if and to the extent that the transfer scheme provides for the transfer of property, rights or liabilities from—the Board,a wholly owned subsidiary of the Board,a publicly owned railway company, ora company which is wholly owned by the Franchising Director,to any other body falling within paragraphs (a) to (d) above;

• “section 85 transfer scheme” means a scheme made under or by virtue of section 85 of the Railways Act 1993;

• “subsidiary” has the meaning given by section 736 of the Companies Act 1985;

• “successor company” has the same meaning as it has in Part II of the Railways Act 1993;

• “transfer date” shall be construed in accordance with section 85(6) of the Railways Act 1993;

• “transfer scheme” means a scheme made under or by virtue of section 85 or 86 of the Railways Act 1993;

• “transferee”, in relation to a relevant transfer, means the body to which the property, rights or liabilities in question are transferred by virtue of the restructuring scheme in question;

• “wholly owned subsidiary” has the meaning given by section 736 of the Companies Act 1985.

• (2) Section 151(2) and (3) of the Railways Act 1993 (companies wholly owned by the Crown or the Franchising Director) shall have effect for the purposes of this Schedule as it has effect for the purposes of that Act.

• (3) Any reference in this Schedule to “assignment” shall be construed in Scotland as a reference to “assignation”.

• (4) This Schedule—

• (a) so far as it relates to income tax, shall be construed as one with the Income Tax Acts,

• (b) so far as it relates to corporation tax, shall be construed as one with the Corporation Tax Acts, and

• (c) so far as it relates to capital allowances, shall be construed as one with the Capital Allowances Act.

Chargeable gains: transfer to be without gain or loss

2

• (1) For the purposes of the Gains Act, where there is a relevant transfer, the disposal of property, rights and liabilities which is constituted by that transfer shall, subject to the following provisions of this Schedule, be taken, in relation to the transferee as well as the predecessor, to be for a consideration such that no gain or loss accrues to the predecessor.

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

• (3) Section 171(1) of the Gains Act (which makes provision in relation to the disposal of assets from one member of a group of companies to another member of the group) shall not apply where the disposal in question is a relevant transfer.

Chargeable gains: receipt of compensation or insurance policies

3

• (1) Subsection (4) of section 23 of the Gains Act (adjustments where compensation or insurance money used for purchase of replacement asset) shall have effect in accordance with sub-paragraph (3) below in any case where—

• (a) there is a relevant transfer such that—

• (i) any capital sum received by the predecessor by way of compensation for the loss or destruction of any asset, or under a policy of insurance of the risk of the loss or destruction of any asset, becomes available to the transferee; or

• (ii) any right of the predecessor to receive such a sum is transferred to the transferee, and the transferee receives that sum; and

• (b) the transferee acquires an asset in circumstances where—

• (i) had there been no such relevant transfer, and

• (ii) had the predecessor acquired the asset by the application of that sum,

the predecessor would be treated for the purposes of that subsection as having so acquired the asset in replacement for the asset lost or destroyed.

• (2) Subsection (5) of that section (adjustments where a part of any compensation or insurance money is used for the purchase of a replacement asset) shall have effect in accordance with sub-paragraph (3) below in any case where—

• (a) there is a relevant transfer such that—

• (i) any capital sum received by the predecessor by way of compensation for the loss or destruction of any asset, or under a policy of insurance of the risk of the loss or destruction of any asset, becomes available to the transferee; or

• (ii) any right of the predecessor to receive such a sum is transferred to the transferee, and the transferee receives that sum; and

• (b) the transferee acquires an asset in circumstances where—

• (i) had there been no such relevant transfer, and

• (ii) had the predecessor acquired the asset by the application of all of that sum except for a part which was less than the amount of the gain (whether all chargeable gain or not) accruing on the disposal of the asset lost or destroyed,

the predecessor would be treated for the purposes of that subsection as having so acquired the asset in replacement for the asset lost or destroyed.

• (3) In a case falling within sub-paragraph (1) or (2) above, subsection (4) or, as the case may be, subsection (5) of section 23 of the Gains Act shall have effect as if the transferee and the predecessor were the same person, except that—

• (a) in a case falling within sub-paragraph (1)(a)(i) or (2)(a)(i) above—

• (i) any claim under the subsection in question must be made by the predecessor and the transferee; and

• (ii) any adjustment to be made in consequence of paragraph (a) of that subsection shall be made for the purposes only of the taxation of the predecessor; and

• (b) in a case falling within sub-paragraph (1)(a)(ii) or (2)(a)(ii) above—

• (i) any claim under the subsection in question must be made by the transferee; and

• (ii) any adjustment to be made in consequence of paragraph (a) of that subsection shall be made for the purposes only of the taxation of the transferee.

Chargeable gains: section 30 of the Gains Act

4

• (1) Nothing in Part II or III of the Railways Act 1993, and no instrument or agreement made, or other thing done, under or by virtue of either of those Parts, shall be regarded as a scheme or arrangement for the purposes of section 30 of the Gains Act (value-shifting).

• (2) In any case where—

• (a) an asset which is the subject of a relevant transfer or qualifying disposal has previously been the subject of a scheme or arrangements falling within subsection (1) of that section,

• (b) in consequence, subsection (5) of that section (consideration on disposal to be treated as increased for certain purposes) would, apart from sub-paragraph (3) below, have had effect in relation to the consideration for the relevant transfer or qualifying disposal, and

• (c) the consideration for the relevant transfer or qualifying disposal falls to be determined under paragraph 2 above or paragraph 7(2), 11(3) or 25(2) below,

sub-paragraph (3) below shall apply.

• (3) Where this sub-paragraph applies—

• (a) the said subsection (5) shall not have effect in relation to the consideration for the relevant transfer or qualifying disposal; but

• (b) on the first subsequent disposal of the asset which is neither a relevant transfer or qualifying disposal nor a group disposal—

• (i) that subsection shall have effect in relation to the consideration for that disposal (whether or not it would otherwise have done so); and

• (ii) the increase that falls to be made under that subsection shall be so calculated as to include any increase which would, but for paragraph (a) above, have fallen to be made in relation to the relevant transfer or qualifying disposal.

• (4) In this paragraph—

• “group disposal” means a disposal which falls to be treated by virtue of section 171(1) of the Gains Act as made for a consideration such that no gain or loss accrues to the person making the disposal;

• “qualifying disposal” means—a disposal to which paragraph 7(2) below applies; ora disposal falling within paragraph 11(3) or 25(2) below.

Chargeable gains: section 41 of the Gains Act

5

Subsection (1) of section 174 of the Gains Act (which applies section 41 of that Act to cases where assets have been acquired without gain or loss) shall have effect, without prejudice to paragraph 2 above or paragraph 7(2), 11(3) or (4) or 25(2) below, where there has been—

• (a) a relevant transfer,

• (b) a disposal to which paragraph 7(2) below applies, or

• (c) a disposal falling within paragraph 11(3) or (4) or 25(2) below,

as if the asset to which the transfer or disposal relates had thereby been transferred and acquired in relevant circumstances, within the meaning of that subsection.

Chargeable gains: roll-over relief

6

• (1) Subject to the following provisions of this paragraph, where any asset, or any interest in an asset, is the subject of a relevant transfer, sections 152 to 160 of the Gains Act (roll-over relief on replacement of business assets) shall have effect as if—

• (a) the asset or interest had been acquired by the transferee—

• (i) at the time at which, and for the consideration for which, the predecessor acquired it; and