Legalize / United Kingdom / Public General Act

Finance Act 1996

Type Public General Act

Publication 1996-04-29

Last updated 2026-03-18

State In force

Department Statute Law Database

Source legislation.gov.uk

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Reform history JSON API

Part I — Excise Duties

Alcoholic liquor duties

Pool betting duty.

1

(1) In section 5 of the Alcoholic Liquor Duties Act 1979 (spirits), for “£20.60” there shall be substituted “ £19.78 ”.

(2) This section shall be deemed to have come into force at 6 o’clock in the evening of 28th November 1995.

Wine and made-wine: rates

2

(1) In the Table of rates of duty in Schedule 1 to the Alcoholic Liquor Duties Act 1979 (wine and made-wine)—

(a) in Part I of the Table for “200.64”, where it appears as the rate for wine or made-wine of a strength exceeding 15 per cent. but not exceeding 22 per cent., there shall be substituted “ 187.24 ”; and

(b) in Part II of that Table (wine or made-wine of a strength exceeding 22 per cent.), for “20.60” there shall be substituted “ 19.78 ”.

(2) Paragraph (a) of subsection (1) above shall be deemed to have come into force on 1st January 1996 and paragraph (b) shall be deemed to have come into force at 6 o’clock in the evening of 28th November 1995.

Licensing and registration.

3

(1) In subsection (1) of section 62 of the Alcoholic Liquor Duties Act 1979 (cider), for “rate of £23.78 per hectolitre” there shall be substituted “ rates shown in subsection (1A) below. ”

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

(1A) The rates at which the duty shall be charged are— (a) £35.67 per hectolitre in the case of cider of a strength exceeding 7.5 per cent.; and (b) £23.78 per hectolitre in any other case.

(3) This section shall come into force on 1st October 1996.

Hydrocarbon oil duties

Returns and self assessment.

4

(1) In section 6(1) of the Hydrocarbon Oil Duties Act 1979, for “£0.3614” (duty on light oil) and “£0.3132” (duty on heavy oil) there shall be substituted “ £0.3912 ” and “ £0.3430 ”, respectively.

(2) In section 8(3) of that Act (duty on road fuel gas), for “£0.3314” there shall be substituted “ £0.2817 ”.

(3) In section 11(1) of that Act (rebate on heavy oil), for “£0.0166” (fuel oil) and “£0.0214” (gas oil) there shall be substituted “ £0.0181 ” and “ £0.0233 ”, respectively.

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

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) In section 14(1) of that Act (rebate on light oil for use as furnace fuel), for “£0.0166” there shall be substituted “ £0.0181 ”.

(7) Subsections (1) to (3) and (6) above shall be deemed to have come into force at 6 o’clock in the evening of 28th November 1995; and subsection (4) above shall come into force on 15th May 1996.

Transfers to members of electronic transfer systems etc.

5

(1) The Hydrocarbon Oil Duties Act 1979 shall be amended as mentioned in subsections (2) to (5) below.

(2) In section 11(1) (rebate on heavy oil), for “and 13” there shall be substituted “ 13, 13AA and 13AB ”.

(3) In section 12(2) (restriction on use of rebated heavy oil for road vehicles), after “allowed” there shall be inserted “ (whether under section 11(1) above or 13AA(1) below) ”.

(4) After section 13 there shall be inserted the following sections—

(13AA) (1) If, on the delivery of kerosene for home use, it is intended to use the kerosene as fuel for— (a) an engine provided for propelling an excepted vehicle, or (b) an engine which is used neither for propelling a vehicle nor for heating, a declaration shall be made to that effect and thereupon rebate shall be allowed at the rate for rebated gas oil which is then in force, instead of at the rate then in force under section 11(1)(c) above. (2) Subject to subsection (3) below, no kerosene on whose delivery for home use a rebate at the rate given by section 11(1)(c) above has been allowed shall— (a) be used as fuel for an engine provided for propelling an excepted vehicle; (b) be used as fuel for an engine which is used neither for propelling a vehicle nor for heating; or (c) be taken into the fuel supply of an engine falling within paragraph (a) or (b) above. (3) Subsection (2) above does not apply to any quantity of kerosene in respect of which there has been paid to the Commissioners an amount equal to duty on the same quantity of gas oil at the rate for rebated gas oil which is in force at the time of the payment. (4) A payment under subsection (3) above shall be made in accordance with regulations made under section 24(1) below for the purposes of this section. (5) For the purposes of this section and section 13AB below— “excepted vehicle” means a vehicle which is an excepted vehicle under any provision of Schedule 1 to this Act; and “kerosene” means heavy oil of which more than 50 per cent. by volume distils at a temperature of 240°C or less. (6) For the purposes of this section and section 13AB below the rate for rebated gas oil which is in force at any time is the rate of duty which at that time is in force under section 6(1) above in the case of heavy oil as reduced by the rate of rebate allowable at that time under section 11(1)(b) above. (13AB) (1) If a person uses kerosene in contravention of section 13AA(2) above— (a) the Commissioners may recover from him, in respect of the quantity of kerosene used, an amount equal to duty on the same quantity of gas oil at the rate for rebated gas oil which is in force at the time of the contravention; (b) his use of the kerosene shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties); and (c) if he uses the kerosene with the relevant intent, he shall be guilty of an offence. (2) If a person is liable for kerosene being taken into a fuel supply of an engine in contravention of section 13AA(2) above— (a) the Commissioners may recover from him, in respect of the quantity of kerosene taken into the fuel supply, an amount equal to duty on the same quantity of gas oil at the rate for rebated gas oil which is in force at the time of the contravention; (b) his becoming so liable shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties); and (c) if he has the relevant intent in relation to the kerosene being taken into the fuel supply, he shall be guilty of an offence. (3) For the purposes of subsection (2) above, a person is liable for kerosene being taken into a fuel supply of an engine if at the time— (a) he has the charge of the engine; or (b) subject to subsection (4) below, he is the owner of the engine. (4) If a person other than the owner is for the time being entitled to possession of the engine, that other person and not the owner is liable. (5) If— (a) a person supplies kerosene having reason to believe that it will be put to a particular use, and (b) that use is one which, if a payment is not made under subsection (3) of section 13AA above, will contravene subsection (2) of that section, his supplying the kerosene shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties) and, if he makes the supply with the relevant intent, he shall be guilty of an offence. (6) In this section “the relevant intent” means the intent that the restrictions imposed by section 13AA(2) above shall be contravened. (7) A person guilty of an offence under this section shall be liable— (a) on summary conviction, to a penalty of the statutory maximum, or to imprisonment for a term not exceeding 6 months, or to both; (b) on conviction on indictment, to a penalty of any amount, or to a term of imprisonment not exceeding 7 years, or to both. (8) Any kerosene falling within subsection (9) or (10) below is liable to forfeiture. (9) Kerosene falls within this subsection if it is taken into a fuel supply in contravention of section 13AA(2) above. (10) Kerosene falls within this subsection if— (a) it has been supplied in circumstances in which there is reason to believe that it will be put to a particular use; and (b) that use is one which, if payment is not made under subsection (3) of section 13AA above, will contravene subsection (2) of that section.

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) This section shall have effect in relation to cases where kerosene is—

(a) used as fuel, or

(b) taken into a fuel supply,

on or after such day as the Commissioners of Customs and Excise may by order made by statutory instrument appoint.

Mixing of rebated oil

6

(1) The Hydrocarbon Oil Duties Act 1979 shall be amended as mentioned in subsections (2) to (4) below.

(2) In section 20 (contaminated or accidentally mixed oil), after subsection (3) there shall be inserted the following subsection—

(4) The power to make a payment to a person under subsection (2) above in relation to oils that have become accidentally mixed does not apply in relation to a mixture in respect of which he is liable to pay duty under section 20AAA below.

(3) After section 20A there shall be inserted the following sections—

(20AAA) (1) Where— (a) a mixture which is leaded or unleaded petrol is produced in contravention of Part I of Schedule 2A to this Act, and (b) the mixture is not produced as a result of approved mixing, a duty of excise shall be charged on the mixture. (2) Where— (a) a mixture of heavy oils is produced in contravention of Part II of Schedule 2A to this Act, (b) the mixture is not produced as a result of approved mixing, and (c) the mixture is supplied for use as fuel for a road vehicle or an excepted vehicle, a duty of excise shall be charged on the mixture. (3) The person liable to pay the duty charged under subsection (1) above is the person producing the mixture. (4) The person liable to pay the duty charged under subsection (2) above is the person supplying the mixture. (5) The Commissioners may exempt a person from liability to pay duty charged under this section in respect of the production or supply of a mixture if they are satisfied— (a) that the mixture has been produced or (as the case may be) supplied accidentally; and (b) that, having regard to all the circumstances, the person should be exempted from liability to pay the duty. (6) Part III of Schedule 2A to this Act makes provision with respect to rates and amounts of duty charged under this section. (7) In this section— - “approved mixing” has the meaning given by section 20A(5) above; and - “excepted vehicle” means a vehicle which is an excepted vehicle under any provision of Schedule 1 to this Act. (20AAB) (1) A person who— (a) produces a mixture on which duty is charged under section 20AAA(1) above, or (b) supplies a mixture on which duty is charged under section 20AAA(2) above, must notify the Commissioners that he has done so within the period of seven days beginning with the date on which he produced or (as the case may be) supplied the mixture. (2) A person is not required to give a notification under subsection (1) above if, before he produced or (as the case may be) supplied the mixture, he notified the Commissioners that he proposed to do so. (3) Notification under subsection (1) or (2) above must be given in such form and in such manner, and must contain such particulars, as the Commissioners may direct. (4) Subject to subsection (7) below, where it appears to the Commissioners— (a) that a person has produced or supplied a mixture on which duty is charged under section 20AAA above, and (b) that he is the person liable to pay the duty, they may assess the amount of duty due from him to the best of their judgement and notify that amount to him or his representative. (5) An assessment under subsection (4) above shall be treated as if it were an assessment under section 12(1) of the Finance Act 1994. (6) The Commissioners may give a direction that a person who is, or expects to be, liable to pay duty charged under section 20AAA above— (a) shall account for duty charged under that section by reference to such periods (“accounting periods”) as may be determined by or under the direction; (b) shall make, in relation to accounting periods, returns in such form and at such times and containing such particulars as may be so determined; (c) shall pay duty charged under that section at such times and in such manner as may be so determined. (7) The power to make an assessment under subsection (4) above does not apply in relation to a person who is for the time being subject to a direction under subsection (6) above. (8) Where any person— (a) fails to give a notification which he is required to give under subsection (1) above, or (b) fails to comply with a direction under subsection (6) above, his failure shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties).

(4) After Schedule 2 there shall be inserted the Schedule set out in Schedule 1 to this Act.

(5) This section and Schedule 1 to this Act shall have effect in relation to—

(a) the production on or after the appointed day of a mixture which is leaded or unleaded petrol; and

(b) the supply on or after the appointed day of a mixture of heavy oils;

and “the appointed day” here means such day as the Commissioners of Customs and Excise may by order made by statutory instrument appoint.

Marked oil used as fuel for road vehicles

7

(1) After section 24 of the Hydrocarbon Oil Duties Act 1979 (control of use of duty free and rebated oil) there shall be inserted the following section—

(24A) (1) Marked oil shall not be used as fuel for a road vehicle. (2) For the purposes of this section marked oil is any hydrocarbon oil in which a marker is present which is for the time being designated by regulations made by the Commissioners under subsection (3) below. (3) The Commissioners may for the purposes of this section designate any marker which appears to them to be used for the purposes of the law of any place (whether within or outside the United Kingdom) for identifying hydrocarbon oil that is not to be used as fuel for road vehicles, or for road vehicles of a particular description. (4) For the purposes of this section marked oil shall be taken to be used as fuel for a road vehicle if, but only if, it is used as fuel for the engine provided for propelling the vehicle or for an engine which draws its fuel from the same supply as that engine. (5) Where a person uses any hydrocarbon oil in contravention of subsection (1) above, his use of the oil shall attract a penalty under section 9 of the Finance Act 1994 (civil penalties). (6) If a person who uses any marked oil in contravention of subsection (1) above does so in the knowledge that the oil he is using is marked oil, he shall be guilty of an offence and liable— (a) on summary conviction, to a penalty of the statutory maximum, or to imprisonment for a term not exceeding 6 months, or to both; (b) on conviction on indictment, to a penalty of any amount, or to a term of imprisonment not exceeding 7 years, or to both. (7) Any marked oil which is in a road vehicle as part of the fuel supply for the engine which propels the vehicle shall be liable to forfeiture. (8) Where in any proceedings relating to this section a question arises as to the nature of any substance present at any time in any hydrocarbon oil— (a) a certificate of the Commissioners to the effect that that substance is or was a marker designated for the purposes of this section shall be sufficient, unless the contrary is shown, for establishing that fact; and (b) any document purporting to be such a certificate shall be taken to be one unless it is shown not to be.

(2) In section 24(1) of that Act (purposes for which regulations may be made), for “or section 19A above” there shall be inserted “ , section 19A or section 24A of this Act ”.

Relief for marine voyages

8

(1) The following provisions of the Hydrocarbon Oil Duties Act 1979 are hereby repealed—

(a) section 18 (fuel for ships in home waters), and

(b) in subsection (1) of section 19 (fuel used in fishing boats, etc.), paragraph(a) and the words from “by the owner” to “be”.

(2) This section shall come into force on such day as the Commissioners of Customs and Excise may by order made by statutory instrument appoint.

Tobacco products duty

Rates of duty

9

(1) For the Table of rates of duty in Schedule 1 to the Tobacco Products Duty Act 1979 there shall be substituted—

1. Cigarettes	An amount equal to 20 per cent. of the retail price plus £62.52 per thousand cigarettes.
2. Cigars	£91.52 per kilogram.
3. Hand-rolling tobacco	£85.94 per kilogram.
4. Other smoking tobacco and chewing tobacco	£40.24 per kilogram.

(2) This section shall be deemed to have come into force at 6 o’clock in the evening of 28th November 1995.

Betting duties: rates

General betting duty

10

(1) In section 1(2) of the Betting and Gaming Duties Act 1981 (rate of general betting duty), for “7.75 per cent.” there shall be substituted “ 6.75 per cent. ”

(2) This section shall apply in relation to bets made on or after 1st March 1996.

Pool betting duty

11

In section 7(1) of the Betting and Gaming Duties Act 1981 (rate of pool betting duty), for “32.50 per cent” there shall be substituted—

(a) in relation to bets the stake money on which has been or is paid on or after 3rd December 1995 and before the first Sunday to follow the day on which this Act is passed, “ 27.50 per cent. ”; and

(b) in relation to bets the stake money on which is paid on or after that first Sunday, “ 26.50 per cent. ”

Amusement machine licence duty

Licences for machines as well as premises

12

(1) In subsection (1) of section 21 of the Betting and Gaming Duties Act 1981 (requirement for amusement machine licence with respect to premises), at the end there shall be inserted “ or the machine ”.

(2) In subsection (2) of that section (licences to be known as amusement machine licences), at the end there shall be inserted “ and, if it is granted with respect to a machine, rather than with respect to premises, as a special amusement machine licence. ”

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

(3AA) A special amusement machine licence shall not be granted except where— (a) the machine with respect to which it is granted is of a description of machine for which special amusement machine licences are available; (b) such conditions as may be prescribed by regulations made by the Commissioners are satisfied in relation to the application for the licence, the machine and the person by whom the application is made; and (c) the licence is for twelve months. (3AB) Special amusement machine licences shall be available for amusement machines of each of the following descriptions— (a) machines that are not gaming machines; and (b) small prize machines.

(4) In section 24(4) of that Act (provision of unlicensed machines), at the end there shall be inserted “ or the machines ”.

(5) In paragraph 4 of Schedule 4 to that Act (seasonal licences), after sub-paragraph (7) there shall be inserted the following sub-paragraph—

(7AA) Sub-paragraphs (4) and (5) above shall have effect where— (a) an amusement machine is provided on any premises at any time in a winter period, and (b) the provision of that machine on those premises at that time is authorised by a special amusement machine licence, as if an amusement machine licence had been granted in respect of those premises for that winter period.

(6) Paragraph 5 of that Schedule shall become sub-paragraph (1) of that paragraph, and after that sub-paragraph there shall be inserted the following sub-paragraphs—

(2) Regulations may provide for this Schedule to have effect in relation to special amusement machine licences with such exceptions, adaptations and modifications as may be prescribed. (3) Without prejudice to the generality of sub-paragraphs (1) and (2) above, regulations may include provision requiring— (a) a special amusement machine licence to be displayed on such premises and in such manner, and (b) the machine to which such a licence relates to bear such labels and marks, as may be determined by directions given, in accordance with the regulations, by the Commissioners.

Air passenger duty

Pleasure flights

13

(1) In section 31 of the Finance Act 1994 (air passenger duty: exceptions for certain passengers) after subsection (4) there shall be inserted—

(4A) A passenger is not a chargeable passenger in relation to a flight if under his agreement for carriage (whether or not it is evidenced by a ticket)— (a) the flight is to depart from and return to the same airport, and (b) the duration of the flight (excluding any period during which the aircraft’s doors are open for boarding or disembarkation) is not to exceed 60 minutes.

(2) In section 32 of that Act (change of circumstances after ticket issued etc.)—

(a) in subsection (1) (which provides that that section applies where a person’s agreement for carriage is evidenced by a ticket) for the words “This section applies” there shall be substituted the words “ Subsections (2) and (3) below apply ”;

(b) after subsection (3) there shall be added—

(4) Where— (a) at the time a passenger’s flight begins, by virtue of section 31(4A) above he would not (assuming there is no change of circumstances) be a chargeable passenger in relation to the flight, and (b) by reason only of a change of circumstances not attributable to any act or default of his, the flight does not return to the airport from which it departed or exceeds 60 minutes in duration (excluding any period during which the aircraft’s doors are open for boarding or disembarkation), he shall not by reason of the change of circumstances be treated as a chargeable passenger in relation to that flight.

Vehicle excise duty

Increase in general rate

14

(1) In Schedule 1 to the Vehicle Excise and Registration Act 1994 (annual rates of duty), in paragraph 1(2) (the general rate), for “£135” there shall be substituted “ £140 ”.

(2) Subsection (1) above applies in relation to licences taken out after 28th November 1995.

Electrically propelled vehicles

15

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

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

(3) In section 62 of that Act (definitions), after subsection (1) there shall be inserted the following subsection—

(1A) For the purposes of this Act, a vehicle is not an electrically propelled vehicle unless the electrical motive power is derived from— (a) a source external to the vehicle, or (b) an electrical storage battery which is not connected to any source of power when the vehicle is in motion.

(4) Subsections (1) to (3) above apply in relation to licences taken out after 28th November 1995.

(5) In Schedule 2 to that Act (exemptions), after paragraph 2 there shall be inserted the following paragraph—

(2A) (1) An electrically assisted pedal cycle is an exempt vehicle. (2) For the purposes of sub-paragraph (1) an electrically assisted pedal cycle is a vehicle of a class complying with such requirements as may be prescribed by regulations made by the Secretary of State for the purposes of this paragraph.

Steam powered vehicles etc

16

(1) In Schedule 1 to the Vehicle Excise and Registration Act 1994 (annual rates of duty), after paragraph 4E there shall be inserted the following paragraph—

(4EE) A steam powered vehicle is a special concessionary vehicle.

(2) In paragraph 3 of that Schedule (buses), in sub-paragraph (2)(b) (vehicles which are not buses), after “excepted vehicle” there shall be inserted “ or a special concessionary vehicle ”.

(3) In paragraph 4(2) of that Schedule (meaning of “special vehicle”), for “and is” there shall be substituted “ which is not a special concessionary vehicle and which is ”.

(4) In paragraph 5 of that Schedule (recovery vehicles), after sub-paragraph (5) there shall be inserted the following sub-paragraph—

(5A) A vehicle is not a recovery vehicle if it is a special concessionary vehicle.

(5) In paragraph 6(1) of that Schedule (vehicles used for exceptional loads), after paragraph (b) there shall be inserted—

and which is not a special concessionary vehicle.

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

(8) This section applies in relation to licences taken out after 28th November 1995.

Vehicles capable of conveying loads

17

(1) Schedule 1 to the Vehicle Excise and Registration Act 1994 (annual rates of duty) shall be amended in accordance with subsections (2) to (8) below.

(2) In paragraph 4(2) (meaning of “special vehicle”), immediately before paragraph (c) there shall be inserted the following paragraph—

(bb) a vehicle falling within sub-paragraph (2A) or (2B),

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

(2A) A vehicle falls within this sub-paragraph if— (a) it is designed or adapted for use for the conveyance of goods or burden of any description; but (b) it is not so used or is not so used for hire or reward or for or in connection with a trade or business. (2B) A vehicle falls within this sub-paragraph if— (a) it is designed or adapted for use with a semi-trailer attached; but (b) it is not so used or, if it is so used, the semi-trailer is not used for the conveyance of goods or burden of any description.

(4) In paragraph 9(2) (rigid goods vehicles which are subject to basic goods vehicle rate), after paragraph (b) there shall be inserted

and (c) to any rigid goods vehicle which is used loaded only in connection with a person learning to drive the vehicle or taking a driving test,

(5) In paragraph 10(1) (trailer supplement), after “exceeding 12,000 kilograms” there shall be inserted “ , which does not fall within paragraph 9(2)(b) or (c) ”.

(6) In paragraph 11(2) (tractive units which are subject to basic goods vehicle rate), after paragraph (b) there shall be inserted

and (c) to any tractive unit to which a semi-trailer is attached which is used loaded only in connection with a person learning to drive the tractive unit or taking a driving test,

(7) In paragraph 16(1) (cases where Part VIII of Schedule 1 does not apply), paragraph (b), and the word “or” immediately preceding it, shall be omitted.

(8) After paragraph 18 there shall be inserted the following paragraph—

(19) (1) In this Part “driving test” means any test of competence to drive mentioned in section 89(1) of the Road Traffic Act 1988. (2) For the purposes of this Part a vehicle or a semi-trailer is used loaded if the vehicle or, as the case may be, the semi-trailer is used for the conveyance of goods or burden of any description.

(9) In section 7 of the Vehicle Excise and Registration Act 1994 (issue of licences), in subsection (2) (declarations and particulars in relation to goods vehicles)—

(a) after “goods vehicle” there shall be inserted “ or a special vehicle ”; and

(b) after “goods vehicles” there shall be inserted “ or, as the case may be, special vehicles ”.

(10) After subsection (7) of that section there shall be inserted the following subsection—

(8) In this section “special vehicle” has the same meaning as in paragraph 4 of Schedule 1.

(11) Subject to subsection (13) below, subsections (1) to (8) above apply in relation to licences taken out after 28th November 1995.

(12) Subsection (13) below applies where a vehicle licence is taken out—

(a) on or before 28th November 1995, and

(b) at the rate applicable (at the time it is taken out) under Schedule 1 to the Vehicle Excise and Registration Act 1994.

(13) While the licence is in force duty shall not, by virtue of this section, become chargeable under section 15 of that Act (vehicle used in manner attracting higher rate).

(14) Subsections (9) and (10) above apply in relation to applications made after 28th November 1995.

(15) Paragraph 15 of Schedule 1 to that Act (which is unnecessary) shall be omitted.

Old vehicles

18

(1) In Schedule 2 to the Vehicle Excise and Registration Act 1994 (exempt vehicles), immediately before paragraph 2 there shall be inserted the following paragraph—

(1A) (1) A vehicle of a description mentioned in sub-paragraph (2) is an exempt vehicle at any time if it was constructed more than 25 years before the beginning of the year in which that time falls. (2) The descriptions of vehicles are— (a) a vehicle in respect of which no annual rate is specified by any provision of Parts II to VIII of Schedule 1; (b) a motorcycle which does not exceed 450 kilograms in weight unladen. (3) In sub-paragraph (2)(b) “motorcycle” has the same meaning as in Part II of Schedule 1.

(2) In Schedule 1 to that Act (annual rates of duty), in paragraph 1 (rate for vehicle for which no other rate is specified)—

(a) for paragraphs (a) and (b) of sub-paragraph (1) there shall be substituted “ the general rate ”; and

(b) sub-paragraphs (3) to (5) shall be omitted;

and, in paragraph 2 (motorcycles), sub-paragraph (2) shall be omitted.

(3) In section 2(4) of that Act (rate of duty for vehicle not currently in use and for which no previous licence issued), for the words from “whichever” to the end there shall be substituted “ the general rate currently specified in paragraph 1(2) of Schedule 1 ”.

(4) In that Act—

(a) in section 13 (trade licences), in subsection (3)(b),

(b) in section 13 as substituted under paragraph 8 of Schedule 4, in subsection (4)(b), and

for “1(1)(a)” there shall be substituted “ 1 ”.

(5) This section has effect in relation to times after 28th November 1995.

Old vehicles: further provisions

19

(1) In Schedule 2 to the Vehicle Excise and Registration Act 1994 (exempt vehicles), for paragraph 1A (inserted by section 18 above) there shall be substituted the following paragraph—

(1A) (1) Subject to sub-paragraph (2), a vehicle is an exempt vehicle at any time if it was constructed more than 25 years before the beginning of the year in which that time falls. (2) A vehicle is not an exempt vehicle by virtue of sub-paragraph (1) if— (a) an annual rate is specified in respect of it by any provision of Part III, V, VI, VII or VIII of Schedule 1; or (b) it is a special vehicle, within the meaning of Part IV of Schedule 1, which— (i) falls within sub-paragraph (3) or (4); and (ii) is not a digging machine, mobile crane, works truck or road roller. (3) A vehicle falls within this sub-paragraph if— (a) it is designed or adapted for use for the conveyance of goods or burden of any description; (b) it is put to a commercial use on a public road; and (c) that use is not a use for the conveyance of goods or burden of any description. (4) A vehicle falls within this sub-paragraph if— (a) it is designed or adapted for use with a semi-trailer attached; (b) it is put to a commercial use on a public road; and (c) in a case where that use is a use with a semi-trailer attached, the semi-trailer is not used for the conveyance of goods or burden of any description. (5) In sub-paragraph (2) “digging machine”, “mobile crane” and “works truck” have the same meanings as in paragraph 4 of Schedule 1. (6) In sub-paragraphs (3) and (4) “commercial use” means use for hire or reward or for or in connection with a trade or business.

(2) This section has effect in relation to times on or after 1st June 1996.

Exemptions for vehicle testing: general

20

(1) Paragraph 22 of Schedule 2 to the Vehicle Excise and Registration Act 1994 (exemption for vehicle testing) shall be amended as follows.

(2) In sub-paragraph (1) (use for the purposes of submitting a vehicle to, or bringing it away from, a compulsory test), after the words “compulsory test”, in each place where they occur, there shall be inserted “ or a vehicle weight test ”.

(3) After sub-paragraph (1) there shall be inserted the following sub-paragraph—

(1A) A vehicle is an exempt vehicle when it is being used solely for the purpose of— (a) taking it (by previous arrangement for a specified time on a specified date) for a relevant re-examination, or (b) bringing it away from such a re-examination.

(4) In sub-paragraph (2) (use by an authorised person in the course of compulsory test)—

(a) after “compulsory test” there shall be inserted “ , a vehicle weight test or a relevant re-examination and is being so used ”; and

(b) in paragraphs (a) and (b), after the words “the test”, in each place where they occur, there shall be inserted “ or re-examination ”.

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

(2A) A vehicle is an exempt vehicle when it is being used by an authorised person solely for the purpose of warming up its engine in preparation for the carrying out of— (a) a compulsory test, or (b) a relevant re-examination that is to be carried out for the purposes of an appeal relating to a determination made on a compulsory test.

(6) In sub-paragraph (3) (exemption applying where the relevant certificate is refused), after “a vehicle” there shall be inserted “ or as a result of a relevant re-examination, ”.

(7) In sub-paragraph (5) (relevant examinations)—

(a) for paragraph (a), there shall be substituted the following paragraph—

(a) an examination under regulations under section 49(1)(b) or (c) of the Road Traffic Act 1988 (examination as to compliance with construction and use or safety requirements)

;

(b) the word “ and ” shall be inserted at the end of paragraph (b); and

(c) paragraph (c) (examinations for the purpose of an appeal under section 60 of the Road Traffic Act 1988) shall be omitted.

(8) After sub-paragraph (6) there shall be inserted the following sub-paragraphs—

(6A) In this paragraph “a vehicle weight test” means any examination of a vehicle for which provision is made by regulations under— (a) section 61A of this Act, (b) section 49(1)(a) of the Road Traffic Act 1988 (tests for selecting plated weights and other plated particulars), or (c) Article 65(1)(a) of the Road Traffic (Northern Ireland) Order 1995. (6B) In this paragraph “a relevant re-examination” means any examination or re-examination which is carried out in accordance with any provision or requirement made or imposed for the purposes of an appeal relating to a determination made on a compulsory test or vehicle weight test.

(9) Subject to section 21(3) below, in sub-paragraph (7) (meaning of “authorised person”)—

(a) the word “and” at the end of paragraph (b) shall be omitted;

(b) at the end of paragraph (c) there shall be inserted the word “ and ”; and

(d) in the case of a relevant re-examination— (i) the person to whom the appeal in question is made, or (ii) any person who, by virtue of an appointment made by that person, is authorised by or under any enactment to carry out that re-examination.

(10) This section shall be deemed to have come into force on 28th November 1995.

Exemptions for vehicle testing in Northern Ireland

21

(1) Paragraph 22 of Schedule 2 to the Vehicle Excise and Registration Act 1994 (exemption for vehicle testing) shall be further amended as follows.

(2) For sub-paragraph (6) (meaning of “compulsory test” in Northern Ireland) there shall be substituted the following sub-paragraph—

(6) In this paragraph “compulsory test” means, as respects Northern Ireland— (a) an examination to obtain a test certificate under Article 61 of the Road Traffic (Northern Ireland) Order 1995 without which a vehicle licence cannot be obtained for the vehicle, (b) an examination to obtain a goods vehicle test certificate under Article 65 of that Order, or (c) an examination to obtain a public service vehicle licence under Article 60(1) of the Road Traffic (Northern Ireland) Order 1981.

(3) For paragraph (c) of sub-paragraph (7) (as amended by section 20(9) above) there shall be substituted the following paragraph—

(c) in the case of an examination within sub-paragraph (6), an authorised examiner within the meaning of Article 61(3)(a) of the Road Traffic (Northern Ireland) Order 1995 or a vehicle examiner within the meaning of Part III of that Order; and

(4) In sub-paragraph (9) (meaning of “relevant certificate” in Northern Ireland), for paragraphs (a) and (b) there shall be substituted the following paragraphs—

(a) a test certificate (within the meaning of Article 61(2) of the Road Traffic (Northern Ireland) Order 1995), (b) a goods vehicle test certificate (within the meaning of Article 65(2) of that Order), or

(5) In sub-paragraph (10)(a) (meaning of “relevant work”), the words “(or, in Northern Ireland, a vehicle test certificate)” shall be omitted.

(6) This section shall be deemed to have come into force on the date of the coming into operation of Articles 61 and 65 of the Road Traffic (Northern Ireland) Order 1995 (“the operational date”).

(7) Subsections (2), (4) and (5) above do not have effect in relation to a compulsory test carried out in Northern Ireland before the operational date except for the purpose of construing, in relation to such a test, the reference to a further compulsory test in paragraph 22(10)(a) of Schedule 2 to the Vehicle Excise and Registration Act 1994.

Other provisions relating to Northern Ireland

22

(1) In section 42 of the Vehicle Excise and Registration Act 1994 (not fixing registration mark), in subsection (5)(b), for “Article 34 of the Road Traffic (Northern Ireland) Order 1981” there shall be substituted “ Article 63 of the Road Traffic (Northern Ireland) Order 1995 ”.

(2) In subsection (6) of that section, for paragraph (b) there shall be substituted—

(b) it is being driven for the purposes of, or in connection with, its examination under Article 61 of the Road Traffic (Northern Ireland) Order 1995 in circumstances in which its use is exempted from paragraph (1) of Article 63 of that Order by regulations under paragraph (6) of that Article.

(3) In section 60A(11) of that Act (special maximum weight in Northern Ireland), for “Article 29(3) of the Road Traffic (Northern Ireland) Order 1981” there shall be substituted “ Article 60(1) of the Road Traffic (Northern Ireland) Order 1995 ”.

(4) In section 61(6) of that Act (meaning of “weight unladen”), for paragraph (b) there shall be substituted—

(b) in Northern Ireland, has the same meaning as it has for the purposes of the Road Traffic (Northern Ireland) Order 1995 by virtue of Article 7 of that Order.

(5) In paragraph 6 of Schedule 1 to that Act (vehicles used for exceptional loads), in sub-paragraph (2) for paragraph (b) there shall be substituted—

(b) Article 60 of the Road Traffic (Northern Ireland) Order 1995,

(6) In that paragraph—

(a) in sub-paragraph (3)(a), for “Article 28 of the Road Traffic (Northern Ireland) Order 1981” there shall be substituted “ Article 55 of the Road Traffic (Northern Ireland) Order 1995 ”; and

(b) in sub-paragraph (4), for “the Road Traffic (Northern Ireland) Order 1981” there shall be substituted “ the Road Traffic (Northern Ireland) Order 1995 ”.

(7) In paragraph 17 of Schedule 3 to that Act (amendments of the Road Traffic (Northern Ireland) Order 1981)—

(a) in sub-paragraph (1), “29(2),” and “34(6),” shall be omitted, and

(b) sub-paragraph (2) shall be omitted.

Licensing and registration

23

Schedule 2 to this Act (which makes provision in connection with powers conferred on the Secretary of State by the Vehicle Excise and Registration Act 1994) shall have effect.

Repeal of certain drawbacks and allowances

24

The following provisions (which provide for repayments, drawbacks or allowances in the case of certain excise duties) shall cease to have effect, that is to say—

(a) section 3 of the Finance Act 1977 (repayment in respect of tobacco used in the manufacture of a tobacco product after having borne duty under section 4 of the Finance Act 1964);

(b) section 22(6) of the Alcoholic Liquor Duties Act 1979 (additions in respect of waste which are deemed to be made to tinctures exported or shipped as stores);

(d) section 92(6) of that Act of 1979 (transitional right to drawback); and

(e) section 9(2) and (3) of the Isle of Man Act 1979 (removal to the Isle of Man treated as export for the purposes of drawback).

Part II — Value Added Tax

EC Second VAT Simplification Directive

25

Sections 26 to 29 of and Schedule 3 to this Act are for the purpose of giving effect to requirements of the directive of the Council of the European Communities dated 17th May 1977 No.77/388/EEC and the amendments of that directive by the directive of that Council dated 10th April 1995 No.95/7/EC (amendments with a view to introducing new simplification measures with regard to value added tax).

Fiscal and other warehousing

26

(1) The provisions of Schedule 3 to this Act shall have effect.

(2) Subject to subsection (3) below, this section and Schedule 3 to this Act shall come into force on such day as the Commissioners of Customs and Excise may by order made by statutory instrument appoint, and shall apply to any acquisition of goods from another member State and any supply taking place on or after that day.

(3) In so far as the provisions inserted by Schedule 3 to this Act confer power to make regulations they shall come into force on the day this Act is passed.

Value of imported goods

27

(1) Section 21 of the Value Added Tax Act 1994 (value of imported goods) shall be amended as follows.

(2) In subsection (2) of that section at the end of paragraph (a) the word “and” shall be omitted.

(3) For paragraph (b) of that subsection there shall be substituted—

(b) all incidental expenses, such as commission, packing, transport and insurance costs, up to the goods’ first destination in the United Kingdom; and (c) if at the time of the importation of the goods from a place outside the member States a further destination for the goods is known, and that destination is within the United Kingdom or another member State, all such incidental expenses in so far as they result from the transport of the goods to that other destination; and in this subsection “the goods’ first destination” means the place mentioned on the consignment note or any other document by means of which the goods are imported into the United Kingdom, or in the absence of such documentation it means the place of the first transfer of cargo in the United Kingdom.

(4) This section shall have effect in relation to goods imported on or after 1st January 1996.

Adaptation of aircraft and hovercraft

28

(1) Section 22 of the Value Added Tax Act 1994 shall be omitted.

(2) This section shall apply to supplies made on or after 1st January 1996.

Work on materials

29

(1) The Value Added Tax Act 1994 shall be amended as follows.

(2) After subsection (2) of section 30 there shall be inserted the following subsection—

(2A) A supply by a person of services which consist of applying a treatment or process to another person’s goods is zero-rated by virtue of this subsection if by doing so he produces goods, and either— (a) those goods are of a description for the time being specified in Schedule 8; or (b) a supply by him of those goods to the person to whom he supplies the services would be of a description so specified.

(3) In subsection (5) of section 55 (supplies of gold), after paragraph (b) there shall be inserted the following—

; or (c) any supply of services consisting in the application to another person’s goods of a treatment or process which produces goods a supply of which would fall within paragraph (a) above.

;

and the word “or” at the end of paragraph (a) shall be omitted.

(4) Paragraph 2 of Schedule 4 (which provides that the treatment or processing of another person’s goods shall in certain circumstances be a supply of goods) shall be omitted.

(5) This section shall apply to supplies made on or after 1st January 1996.

Other provisions relating to charges to VAT

Refunds in connection with construction and conversion

30

(1) For subsection (1) of section 35 of the Value Added Tax Act 1994 (refund of VAT to persons constructing certain buildings) there shall be substituted the following subsections—

(1) Where— (a) a person carries out works to which this section applies, (b) his carrying out of the works is lawful and otherwise than in the course or furtherance of any business, and (c) VAT is chargeable on the supply, acquisition or importation of any goods used by him for the purposes of the works, the Commissioners shall, on a claim made in that behalf, refund to that person the amount of VAT so chargeable. (1A) The works to which this section applies are— (a) the construction of a building designed as a dwelling or number of dwellings; (b) the construction of a building for use solely for a relevant residential purpose or relevant charitable purpose; and (c) a residential conversion. (1B) For the purposes of this section goods shall be treated as used for the purposes of works to which this section applies by the person carrying out the works in so far only as they are building materials which, in the course of the works, are incorporated in the building in question or its site. (1C) Where— (a) a person (“the relevant person”) carries out a residential conversion by arranging for any of the work of the conversion to be done by another (“a contractor”), (b) the relevant person’s carrying out of the conversion is lawful and otherwise than in the course or furtherance of any business, (c) the contractor is not acting as an architect, surveyor or consultant or in a supervisory capacity, and (d) VAT is chargeable on services consisting in the work done by the contractor, the Commissioners shall, on a claim made in that behalf, refund to the relevant person the amount of VAT so chargeable. (1D) For the purposes of this section works constitute a residential conversion to the extent that they consist in the conversion of a non-residential building, or a non-residential part of a building, into— (a) a building designed as a dwelling or a number of dwellings; (b) a building intended for use solely for a relevant residential purpose; or (c) anything which would fall within paragraph (a) or (b) above if different parts of a building were treated as separate buildings.

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

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

(4) The notes to Group 5 of Schedule 8 shall apply for construing this section as they apply for construing that Group. (5) The power of the Treasury by order under section 30 to vary Schedule 8 shall include— (a) power to apply any variation made by the order for the purposes of this section; and (b) power to make such consequential modifications of this section as they may think fit.

(4) This section applies in relation to any case in which a claim for repayment under section 35 of the Value Added Tax Act 1994 is made at any time on or after the day on which this Act is passed.

Groups: anti-avoidance

31

(1) In section 43 of the Value Added Tax Act 1994 (groups of companies), after subsection (8) there shall be inserted the following subsection—

(9) Schedule 9A (which makes provision for ensuring that this section is not used for tax avoidance) shall have effect.

(2) After Schedule 9 to that Act there shall be inserted the Schedule set out in Schedule 4 to this Act.

(3) In section 83 of that Act (appeals), after paragraph (w) there shall be inserted the following paragraph—

(wa) any direction or assessment under Schedule 9A;

(4) In section 84 of that Act (further provisions relating to appeals), after subsection (7) there shall be inserted the following subsection—

(7A) Where there is an appeal against a decision to make such a direction as is mentioned in section 83(wa), the cases in which the tribunal shall allow the appeal shall include (in addition to the case where the conditions for the making of the direction were not fulfilled) the case where the tribunal are satisfied, in relation to the relevant event by reference to which the direction was given, that— (a) the change in the treatment of the body corporate, or (b) the transaction in question, had as its main purpose or, as the case may be, as each of its main purposes a genuine commercial purpose unconnected with the fulfilment of the condition specified in paragraph 1(3) of Schedule 9A.

(5) Subsection (1A) of section 43 of that Act shall not have effect in relation to supplies on or after the day on which this Act is passed.

Supplies of gold etc

32

(1) In section 55 of the Value Added Tax Act 1994 (supplies of gold), for paragraph (a) of subsection (5) there shall be substituted the following paragraph—

(a) any supply of goods consisting in fine gold, in gold grain of any purity or in gold coins of any purity; or

(2) This section applies in relation to any supply after 28th November 1995.

Small gifts

33

(1) In Schedule 4 to the Value Added Tax Act 1994 (matters to be treated as supply of goods or services), in paragraph 5(2)(a) (gift of goods in the course or furtherance of a business not a supply if cost to donor is not more than £10), for “£10” there shall be substituted “ £15 ”.

(2) At the end of paragraph 5 of Schedule 4 to that Act there shall be inserted the following sub-paragraph—

(7) The Treasury may by order substitute for the sum for the time being specified in sub-paragraph (2)(a) above such sum, not being less than £10, as they think fit.

(3) In section 97(4) of that Act (orders which are subject to affirmative procedure), after paragraph (a) there shall be inserted the following paragraph—

(ab) an order under paragraph 5(7) of Schedule 4 substituting a lesser sum for the sum for the time being specified in paragraph 5(2)(a) of that Schedule;

(4) Subsection (1) above shall apply where a gift is made after 28th November 1995.

Payment and enforcement

Method of making payments on account

34

In section 28 of the Value Added Tax Act 1994 (payments on account of VAT), after subsection (2) there shall be inserted the following subsection—

(2A) The Commissioners may give directions, to persons who are or may become liable by virtue of any order under this section to make payments on account of VAT, about the manner in which they are to make such payments; and where such a direction has been given to any person and has not subsequently been withdrawn, any duty of that person by virtue of such an order to make such a payment shall have effect as if it included a requirement for the payment to be made in the manner directed.

Default surcharges

35

(1) The Value Added Tax Act 1994 shall be amended as follows.

(2) After section 59 (default surcharge) there shall be inserted the following section—

(59A) (1) For the purposes of this section a taxable person shall be regarded as in default in respect of any prescribed accounting period if the period is one in respect of which he is required, by virtue of an order under section 28, to make any payment on account of VAT and either— (a) a payment which he is so required to make in respect of that period has not been received in full by the Commissioners by the day on which it became due; or (b) he would, but for section 59(1A), be in default in respect of that period for the purposes of section 59. (2) Subject to subsections (10) and (11) below, subsection (4) below applies in any case where— (a) a taxable person is in default in respect of a prescribed accounting period; and (b) the Commissioners serve notice on the taxable person (a “surcharge liability notice”) specifying as a surcharge period for the purposes of this section a period which— (i) begins, subject to subsection (3) below, on the date of the notice; and (ii) ends on the first anniversary of the last day of the period referred to in paragraph (a) above. (3) If— (a) a surcharge liability notice is served by reason of a default in respect of a prescribed accounting period, and (b) that period ends at or before the expiry of an existing surcharge period already notified to the taxable person concerned, the surcharge period specified in that notice shall be expressed as a continuation of the existing surcharge period; and, accordingly, the existing period and its extension shall be regarded as a single surcharge period. (4) Subject to subsections (7) to (11) below, if— (a) a taxable person on whom a surcharge liability notice has been served is in default in respect of a prescribed accounting period, (b) that prescribed accounting period is one ending within the surcharge period specified in (or extended by) that notice, and (c) the aggregate value of his defaults in respect of that prescribed accounting period is more than nil, that person shall be liable to a surcharge equal to whichever is the greater of £30 and the specified percentage of the aggregate value of his defaults in respect of that prescribed accounting period. (5) Subject to subsections (7) to (11) below, the specified percentage referred to in subsection (4) above shall be determined in relation to a prescribed accounting period by reference to the number of such periods during the surcharge period which are periods in respect of which the taxable person is in default and in respect of which the value of his defaults is more than nil, so that— (a) in relation to the first such prescribed accounting period, the specified percentage is 2 per cent.; (b) in relation to the second such period, the specified percentage is 5 per cent.; (c) in relation to the third such period, the specified percentage is 10 per cent.; and (d) in relation to each such period after the third, the specified percentage is 15 per cent. (6) For the purposes of this section the aggregate value of a person’s defaults in respect of a prescribed accounting period shall be calculated as follows— (a) where the whole or any part of a payment in respect of that period on account of VAT was not received by the Commissioners by the day on which it became due, an amount equal to that payment or, as the case may be, to that part of it shall be taken to be the value of the default relating to that payment; (b) if there is more than one default with a value given by paragraph (a) above, those values shall be aggregated; (c) the total given by paragraph (b) above, or (where there is only one default) the value of the default under paragraph (a) above, shall be taken to be the value for that period of that person’s defaults on payments on account; (d) the value of any default by that person which is a default falling within subsection (1)(b) above shall be taken to be equal to the amount of any outstanding VAT less the amount of unpaid payments on account; and (e) the aggregate value of a person’s defaults in respect of that period shall be taken to be the aggregate of— (i) the value for that period of that person’s defaults (if any) on payments on account; and (ii) the value of any default of his in respect of that period that falls within subsection (1)(b) above. (7) In the application of subsection (6) above for the calculation of the aggregate value of a person’s defaults in respect of a prescribed accounting period— (a) the amount of outstanding VAT referred to in paragraph (d) of that subsection is the amount (if any) which would be the amount of that person’s outstanding VAT for that period for the purposes of section 59(4); and (b) the amount of unpaid payments on account referred to in that paragraph is the amount (if any) equal to so much of any payments on account of VAT (being payments in respect of that period) as has not been received by the Commissioners by the last day on which that person is required (as mentioned in section 59(1)) to make a return for that period. (8) If a person who, apart from this subsection, would be liable to a surcharge under subsection (4) above satisfies the Commissioners or, on appeal, a tribunal— (a) in the case of a default that is material for the purposes of the surcharge and falls within subsection (1)(a) above— (i) that the payment on account of VAT was despatched at such a time and in such a manner that it was reasonable to expect that it would be received by the Commissioners by the day on which it became due, or (ii) that there is a reasonable excuse for the payment not having been so despatched, or (b) in the case of a default that is material for the purposes of the surcharge and falls within subsection (1)(b) above, that the condition specified in section 59(7)(a) or (b) is satisfied as respects the default, he shall not be liable to the surcharge and for the purposes of the preceding provisions of this section he shall be treated as not having been in default in respect of the prescribed accounting period in question (and, accordingly, any surcharge liability notice the service of which depended upon that default shall be deemed not to have been served). (9) For the purposes of subsection (8) above, a default is material to a surcharge if— (a) it is the default which, by virtue of subsection (4) above, gives rise to the surcharge; or (b) it is a default which was taken into account in the service of the surcharge liability notice upon which the surcharge depends and the person concerned has not previously been liable to a surcharge in respect of a prescribed accounting period ending within the surcharge period specified in or extended by that notice. (10) In any case where— (a) the conduct by virtue of which a person is in default in respect of a prescribed accounting period is also conduct falling within section 69(1), and (b) by reason of that conduct, the person concerned is assessed to a penalty under section 69, the default shall be left out of account for the purposes of subsections (2) to (5) above. (11) If the Commissioners, after consultation with the Treasury, so direct, a default in respect of a prescribed accounting period specified in the direction shall be left out of account for the purposes of subsections (2) to (5) above. (12) For the purposes of this section the Commissioners shall be taken not to receive a payment by the day on which it becomes due unless it is made in such a manner as secures (in a case where the payment is made otherwise than in cash) that, by the last day for the payment of that amount, all the transactions can be completed that need to be completed before the whole amount of the payment becomes available to the Commissioners. (13) In determining for the purposes of this section whether any person would, but for section 59(1A), be in default in respect of any period for the purposes of section 59, subsection (12) above shall be deemed to apply for the purposes of section 59 as it applies for the purposes of this section. (14) For the purposes of this section references to a thing’s being done by any day include references to its being done on that day.

(3) In section 59, at the beginning of subsection (1) (circumstances amounting to a default in respect of any prescribed accounting period), there shall be inserted “Subject to subsection (1A) below”; and after that subsection there shall be inserted the following subsection—

(1A) A person shall not be regarded for the purposes of this section as being in default in respect of any prescribed accounting period if that period is one in respect of which he is required by virtue of any order under section 28 to make any payment on account of VAT.

(4) After subsection (10) of that section there shall be inserted the following subsection—

(11) For the purposes of this section references to a thing’s being done by any day include references to its being done on that day.

(5) After the section 59A inserted by subsection (2) above there shall be inserted the following section—

(59B) (1) This section applies in each of the following cases, namely— (a) where a section 28 accounting period ends within a surcharge period begun or extended by the service on a taxable person (whether before or after the coming into force of section 59A) of a surcharge liability notice under section 59; and (b) where a prescribed accounting period which is not a section 28 accounting period ends within a surcharge period begun or extended by the service on a taxable person of a surcharge liability notice under section 59A. (2) In a case falling within subsection (1)(a) above section 59A shall have effect as if— (a) subject to paragraph (b) below, the section 28 accounting period were deemed to be a period ending within a surcharge period begun or, as the case may be, extended by a notice served under section 59A; but (b) any question— (i) whether a surcharge period was begun or extended by the notice, or (ii) whether the taxable person was in default in respect of any prescribed accounting period which was not a section 28 accounting period but ended within the surcharge period begun or extended by that notice, were to be determined as it would be determined for the purposes of section 59. (3) In a case falling within subsection (1)(b) above section 59 shall have effect as if— (a) subject to paragraph (b) below, the prescribed accounting period that is not a section 28 accounting period were deemed to be a period ending within a surcharge period begun or, as the case may be, extended by a notice served under section 59; (b) any question— (i) whether a surcharge period was begun or extended by the notice, or (ii) whether the taxable person was in default in respect of any prescribed accounting period which was a section 28 accounting period but ended within the surcharge period begun or extended by that notice, were to be determined as it would be determined for the purposes of section 59A; and (c) that person were to be treated as having had outstanding VAT for a section 28 accounting period in any case where the aggregate value of his defaults in respect of that period was, for the purposes of section 59A, more than nil. (4) In this section “a section 28 accounting period”, in relation to a taxable person, means any prescribed accounting period ending on or after the day on which the Finance Act 1996 was passed in respect of which that person is liable by virtue of an order under section 28 to make any payment on account of VAT.

(6) In section 69(4)(a) and (9)(b) (disregard in connection with penalties for breach of regulations of conduct giving rise to a surcharge), after the words “section 59”, in each case, there shall be inserted “ or 59A ”.

(7) In section 76(1) and (3)(a) (assessments for surcharges), after the words “section 59”, in each case, there shall be inserted “ or 59A ”.

(8) This section applies in relation to any prescribed accounting period ending on or after 1st June 1996, but a liability to make a payment on account of VAT shall be disregarded for the purposes of the amendments made by this section if the payment is one becoming due before that date.

Repeated misdeclaration penalty

36

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

Penalties for failure to notify

37

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

VAT invoices and accounting

38

(1) Paragraph 2 of Schedule 11 to the Value Added Tax Act 1994 (regulations about accounting for VAT, VAT invoices etc.) shall be amended as follows.

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

(3) In sub-paragraph (10) (adjustments of VAT accounts), at the end of paragraph (c) there shall be inserted

and (d) for a person, for purposes connected with the making of any such entry or financial adjustment, to be required to provide to any prescribed person, or to retain, a document in the prescribed form containing prescribed particulars of the matters to which the entry or adjustment relates; and (e) for enabling the Commissioners, in such cases as they may think fit, to dispense with or relax a requirement imposed by regulations made by virtue of paragraph (d) above.

Part III — Landfill Tax

The basic provisions

Landfill tax

39

(1) A tax, to be known as landfill tax, shall be charged in accordance with this Part.

(2) The tax shall be under the care and management of the Commissioners of Customs and Excise.

Charge to tax

40

(1) Tax shall be charged on a taxable disposal made in England ... or Northern Ireland .

(2) A taxable disposal takes place where material is disposed of and either—

(a) the disposal is made at a landfill site (see subsection (4)), or

(b) the disposal requires a permit or licence mentioned in subsection (4) but is not made at a landfill site.

(3) For this purpose a disposal is made at a landfill site if the land on or under which it is made constitutes or falls within land which is a landfill site at the time of the disposal.

(4) Land is a landfill site at a given time if at that time—

(a) a permit under regulations made under—

(i) section 2 of the Pollution Prevention and Control Act 1999, or

(ii) Article 4 of the Environment (Northern Ireland) Order 2002 (S.I. 2002/3153 (N.I. 7)),

is in force in relation to the land and authorises deposits or disposals in or on the land,

(b) a waste management licence issued under Part 2 of the Waste and Contaminated Land (Northern Ireland) Order 1997 (S.I. 1997/2778 (N.I. 19)) (waste on land) is in force in relation to the land and authorises deposits in or on the land, or

(c) a licence under any provision for the time being having effect in Northern Ireland and corresponding to section 35 of the Environmental Protection Act 1990 (waste management licences) is in force in relation to the land and authorises disposals in or on the land.

Liability to pay tax

41

(1) The person liable to pay tax charged on a taxable disposal made at a landfill site is the landfill site operator.

(2) The reference here to the landfill site operator is to the person who is at the time of the disposal the operator of the landfill site which constitutes or contains the land on or under which the disposal is made.

(3) A person is liable to pay tax charged on a taxable disposal not made at a landfill site if the person—

(a) makes the disposal, or

(b) knowingly causes or knowingly permits the disposal to be made.

(4) Every such person is jointly and severally liable to pay the tax charged.

(5) In the case of a taxable disposal not made at a landfill site, a person within subsection (6) or (7) is taken for the purposes of this Part to be a person who knowingly causes or knowingly permits the disposal to be made, unless it is shown to the satisfaction of the Commissioners that the person did not do so.

(6) A person is within this subsection if, before the time of the disposal of the material in question, the person—

(a) took any action with a view to the disposal of the material,

(b) was party to a contract for the sale of the material, or

(7) A person is within this subsection if at the time of the disposal the person—

(a) is the owner, or a lessee or occupier, of the land at which the disposal is made,

(b) controls, or is able to control, a vehicle or trailer from which the disposal is made, or

(8) In subsection (7)(c) “officer”—

(a) in relation to a body corporate, means a director, manager, secretary, chief executive or member of the committee of management, or a person purporting to act in such a capacity;

(b) in relation to an unincorporated association, means an officer of the association or a member of its governing body, or a person purporting to act in such a capacity.

Amount of tax

42

(1) The amount of tax charged on a taxable disposal shall be found by taking—

(a) £130.75for each whole tonne disposed of and a proportionately reduced sum for any additional part of a tonne, or

(b) a proportionately reduced sum if less than a tonne is disposed of.

(2) Where—

(a) the material disposed of consists entirely of qualifying material or qualifying fines, and

(b) the disposal is made at a landfill site,

this section applies as if the reference to £130.75 were to £8.65.

(3) Qualifying material is material for the time being listed for the purposes of this section in an order.

(3A) Qualifying fines are a mixture of—

(a) fines that consist of such qualifying material as is prescribed by order, and

(b) fines that consist of material that is not qualifying material,

that satisfies all the requirements prescribed in an order.

(3B) An order under subsection (3A) relating to the mixture of fines may require, in particular—

(a) that fines that consist of material that is not qualifying material do not exceed a prescribed proportion;

(b) that the mixture of fines does not include prescribed materials or prescribed descriptions of materials;

(d) that the mixture of fines originates, or does not originate, in a prescribed way.

(4) The Treasury must—

(a) set criteria to be considered in determining from time to time what material is to be listed or what fines are to be qualifying fines,

(b) keep those criteria under review, and

(5) The Commissioners must publish the criteria (and any revised criteria) set by the Treasury.

(6) In determining from time to time what material is to be listed, or what fines are to be qualifying fines, the Treasury must have regard to—

(a) the criteria (or revised criteria) published under subsection (5), and

(b) any other factors they consider relevant.

Exemptions

Material removed from water

43

(1) A disposal made at a landfill site is not a taxable disposal for the purposes of this Part if it is shown to the satisfaction of the Commissioners that the disposal is of material all of which—

(a) has been removed (by dredging or otherwise) from water falling within subsection (2) below, and

(b) formed part of or projected from the bed of the water concerned before its removal.

(2) Water falls within this subsection if it is—

(a) a river, canal or watercourse (whether natural or artificial), or

(b) a dock or harbour (whether natural or artificial).

(3) A disposal made at a landfill site is not a taxable disposal for the purposes of this Part if it is shown to the satisfaction of the Commissioners that the disposal is of material all of which—

(a) has been removed (by dredging or otherwise) from water falling within the approaches to a harbour (whether natural or artificial),

(b) has been removed in the interests of navigation, and

(4) A disposal made at a landfill site is not a taxable disposal for the purposes of this Part if it is shown to the satisfaction of the Commissioners that the disposal is of material all of which—

(a) consists of naturally occurring mineral material, and

(b) has been removed (by dredging or otherwise) from the sea in the course of commercial operations carried out to obtain substances such as sand or gravel from the seabed.

(5) A disposal made at a landfill site is not a taxable disposal for the purposes of this Part if it is shown to the satisfaction of the Commissioners that the disposal is of material all of which comprises material falling within subsection (1) or (3) and other material which has been added to that material for the purpose of securing that it is not liquid waste.

Mining and quarrying

44

(1) A disposal made at a landfill site is not a taxable disposal for the purposes of this Part if it is shown to the satisfaction of the Commissioners that the disposal is of material all of which fulfils each of the conditions set out in subsections (2) to (4) below.

(2) The material must result from commercial mining operations (whether the mining is deep or open-cast) or from commercial quarrying operations.

(3) The material must be naturally occurring material extracted from the earth in the course of the operations.

(4) The material must not have been subjected to, or result from, a non-qualifying process carried out at any stage between the extraction and the disposal.

(5) A non-qualifying process is—

(a) a process separate from the mining or quarrying operations, or

(b) a process forming part of those operations and permanently altering the material’s chemical composition.

Pet cemeteries

45

(1) A disposal made at a landfill site is not a taxable disposal for the purposes of this Part if—

(a) the disposal is of material consisting entirely of the remains of dead domestic pets, and

(b) the landfill site at which the disposal is made fulfils the test set out in subsection (2) below.

(2) The test is that during the relevant period—

(a) no disposal of material was made at the site, or

(b) the only disposals of material made at the site were of material consisting entirely of the remains of dead domestic pets.

(3) For the purposes of subsection (2) above the relevant period—

(a) begins with 1st October 1996 or (if later) with the coming into force in relation to the site of the licence , resolution or permit mentioned in section 66 below, and

(b) ends immediately before the disposal mentioned in subsection (1) above.

Power to vary

46

(1) Provision may be made by order to produce the result that—

(a) a disposal which would otherwise be a taxable disposal (by virtue of this Part as it applies for the time being) is not a taxable disposal;

(b) a disposal which would otherwise not be a taxable disposal (by virtue of this Part as it applies for the time being) is a taxable disposal.

(2) Without prejudice to the generality of subsection (1) above, an order under this section may—

(za) confer exemption by reference to guidance (as it has effect from time to time) issued by—

(i) a body established by or under any enactment, or

(ii) a government department or an agency of a government department,

to the effect that particular kinds of disposal do not require a permit or licence mentioned in section 40(4);

(a) confer exemption by reference to certificates issued by the Commissioners and to conditions set out in certificates;

(b) allow the Commissioners to direct requirements to be met before certificates can be issued;

(3) Provision may be made under this section in such way as the Treasury think fit (whether by amending this Part or otherwise).

Administration

Registration

47

(1) The register kept under this section may contain such information as the Commissioners think is required for the purposes of the care and management of the tax.

(2) A person who—

(a) carries out taxable activities at a landfill site, and

(b) is not registered,

is liable to be registered.

(3) Where—

(a) a person at any time forms the intention of carrying out taxable activities, and

(b) he is not registered,

he shall notify the Commissioners of his intention.

(3A) A registered person who forms the intention of carrying out taxable activities elsewhere than at a landfill site shall notify the Commissioners of that intention.

(4) A person who at any time ceases to have the intention of carrying out taxable activities at a landfill site shall notify the Commissioners of that fact.

(5) Where a person is liable to be registered by virtue of subsection (2) above the Commissioners shall register him with effect from the time when he begins to carry out taxable activities; and this subsection applies whether or not he notifies the Commissioners under subsection (3) above.

(5A) Where a person who is not registered carries out taxable activities elsewhere than at a landfill site, the Commissioners may register the person with effect from the date when the person begins carrying out those activities.

(5B) Subsections (2) to (5A) do not apply to a person within subsection (6) of section 41 who, but for that subsection, would not be treated as carrying out taxable activities.

(6) Where the Commissioners are satisfied that a registered person has ceased to carry out taxable activities at a landfill site they may cancel his registration with effect from the earliest practicable time after he so ceased; and this subsection applies whether or not he notifies the Commissioners under subsection (4) above.

(7) Where—

(a) a person notifies the Commissioners under subsection (4) above,

(b) they are satisfied that he will not carry out taxable activities,

(d) they are satisfied that no credit to which he is entitled under regulations made under section 51 below is outstanding, and

(e) subsection (8) below does not apply,

the Commissioners shall cancel his registration with effect from the earliest practicable time after he ceases to carry out taxable activities.

(8) Where—

(a) a person notifies the Commissioners under subsection (4) above, and

(b) they are satisfied that he has not carried out, and will not carry out, taxable activities,

the Commissioners shall cancel his registration with effect from the time when he ceased to have the intention to carry out taxable activities.

(9) For the purposes of this section regulations may make—

(a) provision as to the time within which a notification is to be made (including provision enabling the Commissioners to grant an extension of time);

(b) provision as to the form and manner in which any notification is to be made and as to the information to be contained in or provided with it;

(c) provision as to the criteria that the Commissioners are to apply in deciding whether to register a person under subsection (5A);

(d) provision under which, in prescribed circumstances, taxable activities at a site within subsection (9B) may, on a provisional or conditional basis, be treated as carried out at a landfill site;

(e) provision requiring a person who has made a notification to notify the Commissioners if any information contained in or provided in connection with it is or becomes inaccurate;

(f) provision as to the correction of entries in the register (including provision for a person provisionally or conditionally registered by virtue of paragraph (d) to be treated, in prescribed circumstances, as never having been so registered).

(9A) Provision made by regulations under subsection (9)(c) may be supplemented by provision made by notice published by the Commissioners in accordance with the regulations.

(9B) A site is within this subsection if—

(a) it is not a landfill site, or

(b) it not known at the relevant time whether it is a landfill site or not.

(10) In this Part—

“registered person” means—a person registered under subsection (5) or (5A), anda person who was registered under this section before the passing of FA 2018 and who remains registered;

“registrable person” means a person who carries out taxable activities (whether registered or not), excluding a person within subsection (6) of section 41 who, but for that subsection, would not be treated as carrying out taxable activities.

Information required to keep register up to date

48

(1) Regulations may make provision requiring a registrable person to notify the Commissioners of particulars which—

(a) are of changes in circumstances relating to the registrable person or any business carried on by him,

(b) appear to the Commissioners to be required for the purpose of keeping the register kept under section 47 above up to date, and

(2) Regulations may make provision—

(a) as to the time within which a notification is to be made;

(b) as to the form and manner in which a notification is to be made;

(c) requiring a person who has made a notification to notify the Commissioners if any information contained in it is inaccurate.

Accounting for tax and time for payment

49

Regulations may provide that a registered person shall—

(a) account for tax by reference to such periods (accounting periods) as may be determined by or under the regulations;

(b) make, in relation to accounting periods, returns in such form ... and at such times as may be so determined;

Power to assess

50

(1) Where—

(a) a registered person has failed to make any returns required to be made under this Part,

(b) a registered person has failed to keep any documents necessary to verify returns required to be made under this Part,

(c) a registered person has failed to afford the facilities necessary to verify returns required to be made under this Part, or

(d) it appears to the Commissioners that returns required to be made by a registered person under this Part are incomplete or incorrect,

the Commissioners may assess the amount of tax due from the person concerned to the best of their judgment and notify it to him.

(2) Where a registered person has for an accounting period been paid an amount to which he purports to be entitled under regulations made under section 51 below, then, to the extent that the amount ought not to have been paid or would not have been paid had the facts been known or been as they later turn out to be, the Commissioners may assess the amount as being tax due from him for that period and notify it to him accordingly.

(3) Where a person is assessed under subsections (1) and (2) above in respect of the same accounting period the assessments may be combined and notified to him as one assessment.

(4) Where the person failing to make a return, or making a return which appears to the Commissioners to be incomplete or incorrect, was required to make the return as a personal representative, trustee in bankruptcy, receiver, liquidator or person otherwise acting in a representative capacity in relation to another person, subsection (1) above shall apply as if the reference to tax due from him included a reference to tax due from that other person.

(5) An assessment under subsection (1) or (2) above of an amount of tax due for an accounting period shall not be made after the later of the following—

(a) two years after the end of the accounting period;

(b) one year after evidence of facts, sufficient in the Commissioners’ opinion to justify the making of the assessment, comes to their knowledge;

but where further such evidence comes to their knowledge after the making of an assessment under subsection (1) or (2) above another assessment may be made under the subsection concerned in addition to any earlier assessment.

(6) Where—

(a) as a result of a person’s failure to make a return in relation to an accounting period the Commissioners have made an assessment under subsection (1) above for that period,

(b) the tax assessed has been paid but no proper return has been made in relation to the period to which the assessment related, and

(c) as a result of a failure to make a return in relation to a later accounting period, being a failure by the person referred to in paragraph (a) above or a person acting in a representative capacity in relation to him, as mentioned in subsection (4) above, the Commissioners find it necessary to make another assessment under subsection (1) above,

then, if the Commissioners think fit, having regard to the failure referred to in paragraph (a) above, they may specify in the assessment referred to in paragraph (c) above an amount of tax greater than that which they would otherwise have considered to be appropriate.

(7) Where an amount has been assessed and notified to any person under subsection (1) or (2) above it shall 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.

(8) For the purposes of this section notification to—

(a) a personal representative, trustee in bankruptcy, receiver or liquidator, or

(b) a person otherwise acting in a representative capacity in relation to another person,

shall be treated as notification to the person in relation to whom the person mentioned in paragraph (a) above, or the first person mentioned in paragraph (b) above, acts.

(9) Subsection (5) above has effect subject to paragraph 33 of Schedule 5 to this Act.

(10) In this section “trustee in bankruptcy” means, as respects Scotland, a trustee or interim trustee in the sequestration, under the Bankruptcy (Scotland) Act 2016, of a person’s estate or a trustee acting under a trust deed (within the meaning of that Act).

Credit

Credit: general

51

(1) Regulations may provide that where—

(a) a person has paid or is liable to pay tax in respect of the disposal of material at a landfill site, and

(b) prescribed conditions are fulfilled,

the person shall be entitled to credit of such an amount as is found in accordance with prescribed rules.

(2) Regulations may make provision as to the manner in which a person is to benefit from credit, and in particular may make provision—

(a) that a person shall be entitled to credit by reference to accounting periods;

(b) that a person shall be entitled to deduct an amount equal to his total credit for an accounting period from the total amount of tax due from him for the period;

(c) that if no tax is due from a person for an accounting period but he is entitled to credit for the period, the amount of the credit shall be paid to him by the Commissioners;

(d) that if the amount of credit to which a person is entitled for an accounting period exceeds the amount of tax due from him for the period, an amount equal to the excess shall be paid to him by the Commissioners;

(e) for the whole or part of any credit to be held over to be credited for a subsequent accounting period;

(f) as to the manner in which a person who has ceased to be registrable is to benefit from credit.

(3) Regulations under subsection (2)(c) or (d) above may provide that where at the end of an accounting period an amount is due to a person who has failed to submit returns for an earlier period as required by this Part, the Commissioners may withhold payment of the amount until he has complied with that requirement.

(4) Regulations under subsection (2)(e) above may provide for credit to be held over either on the person’s application or in accordance with directions given by the Commissioners from time to time; and the regulations may allow directions to be given generally or with regard to particular cases.

(5) Regulations may provide that—

(a) no benefit shall be conferred in respect of credit except on a claim made in such manner and at such time as may be determined by or under regulations;

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