Finance Act 1996

• (1) In section 271 of the Gains Act (miscellaneous exemptions) in subsections (1)(g) and (2), for “such extent as the Board are satisfied” there shall be substituted “ the extent ”.

• (2) In subsection (2) of that section, in the second paragraph, the words “the Board are satisfied that” shall cease to have effect.

64

In section 279(1) of the Gains Act (claimant for deduction in respect of gains accruing from the disposal of foreign assets must show that conditions in subsection (3) are satisfied) for paragraph (b) there shall be substituted—

(b) the person charged or chargeable makes a claim, and (c) the conditions set out in subsection (3) below are, so far as applicable, satisfied as respects those gains (“the qualifying gains”);

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65

In section 280 of the Gains Act (payment of tax by instalments where consideration payable by instalments) for “if the person making the disposal satisfies the Board that he would otherwise suffer undue hardship, the tax on a chargeable gain accruing on the disposal may, at his option,” there shall be substituted “ at the option of the person making the disposal, the tax on a chargeable gain accruing on the disposal may ”.

66

• (1) Schedule 6 to the Gains Act (retirement relief) shall be amended in accordance with the following provisions of this paragraph.

• (2) In paragraph 3, in sub-paragraphs (1), (3) and (4) (under each of which a person is treated as having retired on ill-health grounds if, on production of such evidence as the Board may reasonably require, the Board are satisfied as there mentioned)—

• (a) the words “on production of such evidence as the Board may reasonably require, the Board are satisfied” shall cease to have effect, and

• (b) for “that he” (in each place where those words occur) there shall be substituted “ he ”.

• (3) At the end of that paragraph there shall be added—

(5) In any case where— (a) an officer of the Board gives notice to any person under section 9A(1) of, or paragraph 5(1) of Schedule 1A to, the Management Act (notice of intention to enquire into a return or claim or an amendment of a return or claim), and (b) the enquiry to any extent relates to the question whether or not a person falls to be treated as having retired on ill-health grounds by virtue of the foregoing provisions of this paragraph, then, without prejudice to any other powers of such an officer in relation to such an enquiry, an officer of the Board may at the same or any subsequent time by notice in writing require that person, within such time (which shall not be less than 30 days) as may be specified in the notice, to produce such evidence relating to the question mentioned in paragraph (b) above as may reasonably be specified in the notice.

• (4) In paragraph 10 (limitation of retirement relief in certain cases)—

• (a) in sub-paragraph (1) for “appears to the Board to be” there shall be substituted “ is ”; and

• (b) in sub-paragraph (2) for “the Board shall have regard” there shall be substituted “ regard shall be had ”.

67

In Schedule 8 to the Gains Act (leases) in paragraph 10(2) (presumption as to sums being paid by way of premium unless the contrary is shown) for the words following “in so far as” there shall be substituted “ other sufficient consideration for the payment can be shown to have been given ”.

The Finance Act 1993

68

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69

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70

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The Finance Act 1994

71

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SCHEDULE 21

The Taxes Act 1988

1

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2

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3

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4

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5

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6

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7

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8

• (1) Section 356B of the Taxes Act 1988 (residence basis: married couples) shall be amended in accordance with the following provisions of this paragraph.

• (2) In subsection (2)(a) (election to be made before the end of the period of twelve months beginning with the end of the first year of assessment for which it is made or such longer period as the Board may in any particular case allow) for the words following “shall be made” there shall be substituted

on or before— (i) the first anniversary of the 31st January next following the first year of assessment for which it is made, or (ii) such later date as the Board may in any particular case allow,

.

• (3) In subsection (4)(b) (notice of withdrawal not to be given after the end of the period of twelve months beginning with the end of the first year of assessment for which it is given or such longer period as the Board may in any particular case allow) for the words following “shall not be given after” there shall be substituted—

(i) the first anniversary of the 31st January next following the year of assessment for which it is given, or (ii) such later date as the Board may in any particular case allow, and

.

9

In section 356C(6) of the Taxes Act 1988, for paragraph (a) (election to have effect for the period in which it is made and subsequent periods) there shall be substituted—

(a) shall be made on or before the first anniversary of the 31st January next following the year of assessment in which falls the first period for which it is made and shall have effect for that period and subsequent periods,

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10

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11

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12

In section 471 of the Taxes Act 1988 (exchange of securities in connection with conversion operations, nationalisation etc.) for subsection (2) (tax treatment under subsection (1) not to apply to a person who gives notice to the inspector that he desires not to be treated as mentioned in that subsection) there shall be substituted—

(2) Subsection (1) above shall not apply to a person who elects, by notice given to an officer of the Board, not to be treated as mentioned in that subsection. (2A) A notice under subsection (2) above— (a) for the purposes of income tax, shall be given on or before the first anniversary of the 31st January next following the year of assessment in whose basis period the exchange takes place; (b) for the purposes of corporation tax, shall be given no later than two years after the end of the accounting period in which the exchange takes place. (2B) In paragraph (a) of subsection (2A) above “basis period” means— (a) in relation to a year of assessment for which a basis period is given by sections 60 to 63, that basis period; (b) in relation to a year of assessment for which no basis period is given by those sections, the year of assessment.

13

• (1) In section 472 of the Taxes Act 1988 (distribution of securities issued in connection with nationalisation etc.) in subsection (1) (dealer to be treated for tax purposes in the manner specified in subsections (2) and (3), unless he gives notice to the inspector that he desires not to be so treated) for “gives notice to the inspector not later than two years after the end of the chargeable period in which the distribution takes place that he desires” there shall be substituted “ elects, by notice given to an officer of the Board, ”.

• (2) After subsection (3) of that section there shall be inserted—

(3A) A notice under subsection (1) above— (a) for the purposes of income tax, shall be given on or before the first anniversary of the 31st January next following the year of assessment in whose basis period the distribution takes place; (b) for the purposes of corporation tax, shall be given no later than two years after the end of the accounting period in which the distribution takes place. (3B) In paragraph (a) of subsection (3A) above “basis period” means— (a) in relation to a year of assessment for which a basis period is given by sections 60 to 63, that basis period; (b) in relation to a year of assessment for which no basis period is given by those sections, the year of assessment.

14

• (1) Section 504 of the Taxes Act 1988 shall be amended in accordance with the following provisions of this paragraph.

• (2) In subsection (6) (claim to be made within two years after the year of assessment or accounting period in which holiday accommodation is let) for “two years after that year or period” there shall be substituted “ the time specified in subsection (6A) below ”.

• (3) After subsection (6) there shall be inserted—

(6A) The time mentioned in subsection (6) above is— (a) in the case of a claim for the purposes of income tax, the period ending with the first anniversary of the 31st January next following the year of assessment in which the accommodation was let; (b) in the case of a claim for the purposes of corporation tax, the period of two years beginning at the end of the accounting period in which the accommodation was let.

15

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16

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17

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18

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19

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20

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21

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22

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23

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24

In Schedule 11 to the Taxes Act 1988, in paragraph 12 (election to be made by notice given to the inspector within six years after the year of assessment in which payment made) for “the inspector within six years after” there shall be substituted “ an officer of the Board on or before the fifth anniversary of the 31st January next following ”.

The Finance Act 1988 (c. 39)

25

In section 39(2)(b) of the Finance Act 1988 (election to be made not later than twelve months after the end of the first year of assessment for which it is to have effect) for “not later than twelve months after the end of” there shall be substituted “ on or before the first anniversary of the 31st January next following ”.

The Capital Allowances Act 1990 (c. 1)

26

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27

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28

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29

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30

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31

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32

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33

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34

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The Taxation of Chargeable Gains Act 1992 (c. 12)

35

In section 35(6) of the Taxation of Chargeable Gains Act 1992 (elections under section 35(5) to be made by notice to the inspector within period ending 2 years after the end of the year of assessment or accounting period in which the disposal is made or at such later time as the Board may allow)—

• (a) for “the inspector” there shall be substituted “ an officer of the Board ”; and

• (b) for paragraphs (a) and (b) there shall be substituted—

(a) in the case of an election for the purposes of capital gains tax, with the first anniversary of the 31st January next following the year of assessment in which the disposal is made; (aa) in the case of an election for the purposes of corporation tax, 2 years after the end of the accounting period in which the disposal is made; or (b) in either case, at such later time as the Board may allow;

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36

In section 161 of the Taxation of Chargeable Gains Act 1992 (appropriations to and from stock) after subsection (3) there shall be inserted—

(3A) An election under subsection (3) above shall be made— (a) for the purposes of capital gains tax, on or before the first anniversary of the 31st January next following the year of assessment in which ends the period of account in which the asset is appropriated for the purposes of the trade as trading stock; (b) for the purposes of corporation tax, within 2 years after the end of the accounting period in which the asset is appropriated for the purposes of the trade as trading stock; and in paragraph (a) above “period of account” means a period for which the accounts of the trade are made up.

37

In section 242 of the Taxation of Chargeable Gains Act 1992 (small part disposals) after subsection (2) there shall be inserted—

(2A) A claim under subsection (2) above shall be made— (a) for the purposes of capital gains tax, on or before the first anniversary of the 31st January next following the year of assessment in which the transfer is made; (b) for the purposes of corporation tax, within 2 years after the end of the accounting period in which the transfer is made.

38

In section 243 of the Taxation of Chargeable Gains Act 1992 (part disposal to authority with compulsory powers) after subsection (2) there shall be inserted—

(2A) A claim under subsection (2) above shall be made— (a) for the purposes of capital gains tax, on or before the first anniversary of the 31st January next following the year of assessment in which the transfer is made; (b) for the purposes of corporation tax, within 2 years after the end of the accounting period in which the transfer is made.

39

In section 244 of the Taxation of Chargeable Gains Act 1992 (part disposal: consideration exceeding allowable expenditure) after subsection (2) there shall be inserted—

(3) An election under subsection (2)(b) above shall be made— (a) for the purposes of capital gains tax, on or before the first anniversary of the 31st January next following the year of assessment in which the part disposal is made; (b) for the purposes of corporation tax, within 2 years after the end of the accounting period in which the part disposal is made.

40

In section 253 of the Taxation of Chargeable Gains Act 1992 (relief for loans to traders) after subsection (4) there shall be inserted—

(4A) A claim under subsection (4) above shall be made— (a) for the purposes of capital gains tax, on or before the fifth anniversary of the 31st January next following the year of assessment in which the payment was made; (b) for the purposes of corporation tax, within 6 years after the end of the accounting period in which the payment was made.

41

In section 279 of the Taxation of Chargeable Gains Act 1992 (foreign assets: delayed remittances) for subsection (5) (no claim under section 279 to be made more than 6 years after end of year of assessment in which chargeable gain accrues) there shall be substituted—

(5) No claim under this section in respect of a chargeable gain shall be made— (a) in the case of a claim for the purposes of capital gains tax, at any time after the fifth anniversary of the 31st January next following the year of assessment in which the gain accrues; or (b) in the case of a claim for the purposes of corporation tax, more than 6 years after the end of the accounting period in which the gain accrues.

42

• (1) Schedule 2 to the Taxation of Chargeable Gains Act 1992 shall be amended in accordance with the following provisions of this paragraph.

• (2) In paragraph 4 (election for pooling) in sub-paragraph (11) (election to be made by notice to the inspector not later than the expiration of 2 years from the end of the year of assessment or accounting period of a company in which the first relevant disposal is made, or such further time as the Board may allow) for the words following “notice to” there shall be substituted

an officer of the Board given— (a) in the case of an election for the purposes of capital gains tax, on or before the first anniversary of the 31st January next following the year of assessment in which the first relevant disposal is made; (b) in the case of an election for the purposes of corporation tax, not later than the expiration of 2 years from the end of the accounting period in which the first relevant disposal is made; or (c) in either case, within such further time as the Board may allow.

• (3) In paragraph 17 (election for valuation at 6th April) in sub-paragraph (3) (election to be made by notice to the inspector given within 2 years from the end of the year of assessment or accounting period of a company in which the disposal is made, or such further time as the Board may by notice allow) for the words following “by notice to” there shall be substituted

an officer of the Board given— (a) in the case of an election for the purposes of capital gains tax, on or before the first anniversary of the 31st January next following the year of assessment in which the disposal is made; (b) in the case of an election for the purposes of corporation tax, within 2 years from the end of the accounting period in which the disposal is made; or (c) in either case, within such further time as the Board may by notice allow.

43

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44

• (1) Schedule 6 to the Taxation of Chargeable Gains Act 1992 (retirement relief etc.) shall be amended in accordance with the following provisions of this paragraph.

• (2) In paragraph 2(1) (election to be made by notice given to the Board not more than 2 years after the end of the year of assessment in which the disposal occurred) for “not more than 2 years after the end of” there shall be substituted “ on or before the first anniversary of the 31st January next following ”.

• (3) In paragraph 5(2) (claim for relief to be made not later than 2 years after the end of the year of assessment in which the disposal occurred) for “not later than 2 years after the end of” there shall be substituted “ on or before the first anniversary of the 31st January next following ”.

• (4) In paragraph 12(5)(b) (election to be made by giving notice to the inspector not later than 2 years after the end of the year of assessment in which capital distribution received)—

• (a) for “not later than 2 years after the end of” there shall be substituted “ on or before the first anniversary of the 31st January next following ”; and

• (b) for “the inspector” there shall be substituted “ an officer of the Board ”.

• (5) In paragraph 16 (aggregation of spouse’s interest in the business: election to be made by giving notice to the inspector not later than 2 years after the end of the year of assessment in which material disposal occurred)—

• (a) in sub-paragraph (1)(e) for “not later than 2 years after the end of” there shall be substituted “ on or before the first anniversary of the 31st January next following ”; and

• (b) in sub-paragraph (2) for “the inspector” there shall be substituted “ an officer of the Board ”.

The Finance (No. 2) Act 1992 (c. 48)

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46

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47

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The Finance Act 1994 (c. 9)

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SCHEDULE 22

The Taxes Management Act 1970

1

The Taxes Management Act 1970 shall be amended in accordance with paragraphs 2 to 10 below.

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3

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4

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5

In section 33A (error or mistake in partnership statement), for subsection (8) there shall be substituted the following subsections—

(8) Subject to subsection (8A) below, the determination of the Special Commissioners of an appeal under subsection (6) above shall be final and conclusive (notwithstanding any provision having effect by virtue of section 56B of this Act). (8A) Subsection (8) above does not apply in relation to a point of law arising in connection with the computation of profits.

6

Section 42(12) and Schedule 2 (Commissioners to whom appeal lies where appeal is against amendment of claim not included in return) shall be omitted.

7

For section 47 there shall be substituted the following sections—

(46B) (1) In so far as the question in dispute on an appeal to which this section applies is a question which under this section is to be determined by the Special Commissioners, the question shall be determined by them. (2) This section applies to— (a) an appeal against an amendment under section 28A(2) or (4) of this Act of a self-assessment; (b) an appeal against a decision contained in a notice under section 28A(4A) of this Act disallowing a claim or election in whole or in part; (c) an appeal against an amendment under section 28B(3) or 30B(1) of this Act of a partnership statement; (d) an appeal against an assessment to tax which is not a self-assessment; (e) an appeal against an amendment under paragraph 7(3) of Schedule 1A to this Act of a claim or election made otherwise than by being included in a return; (f) an appeal against a decision contained in a notice under paragraph 7(3A) of Schedule 1A to this Act disallowing in whole or in part a claim or election made otherwise than by being included in a return. (3) Any question— (a) of the value of any shares or securities in a company resident in the United Kingdom, other than shares or securities quoted in The Stock Exchange Daily Official List, and (b) arising in relation to the taxation of chargeable gains (whether under capital gains tax or corporation tax) or in relation to a claim under the 1992 Act, is a question to be determined by the Special Commissioners. (4) Any question as to the application of any of the following provisions of the principal Act is a question to be determined by the Special Commissioners— (a) Chapter IA or IB of Part XV (settlements); (b) Part XVI (administration of estates); (c) sections 740 and 743(1) (liability in respect of transfer of assets abroad); (d) section 747(4)(a) (liability in respect of controlled foreign company). (5) Any question as to the application of— (a) section 830 of the principal Act, or (b) section 276 of the 1992 Act, (liability in relation to territorial sea and designated areas) is a question to be determined by the Special Commissioners. (46C) (1) In so far as the question in dispute on an appeal to which this section applies concerns a claim made— (a) to the Board, or (b) under any of the provisions of the principal Act listed in subsection (3) below, the question shall be determined by the Special Commissioners. (2) This section applies to— (a) an appeal against an amendment under section 28A(2) or (4) of this Act of a self-assessment; (b) an appeal against an amendment under section 28B(3) or 30B(1) of this Act of a partnership statement. (3) The provisions of the principal Act mentioned in subsection (1) above are— (a) section 121(1) and (2) (management expenses of owner of mineral rights); (b) sections 459 and 460 (exemption for certain friendly societies); (c) section 467 (exemption for certain trade unions and employers’ associations); (d) sections 527, 534, 536 and 538 (reliefs in respect of royalties, copyright payments etc.); (e) Chapter I of Part XVIII. (46D) (1) In so far as the question in dispute on an appeal to which this section applies— (a) is a question of the value of any land or of a lease of land, and (b) arises in relation to the taxation of chargeable gains (whether under capital gains tax or corporation tax) or in relation to a claim under the 1992 Act, the question shall be determined by the relevant Lands Tribunal. (2) This section applies to— (a) an appeal against an amendment under section 28A(2) or (4) of this Act of a self-assessment; (b) an appeal against a decision contained in a notice under section 28A(4A) of this Act disallowing a claim or election in whole or in part; (c) an appeal against an amendment under section 28B(3) or 30B(1) of this Act of a partnership statement; (d) an appeal against an assessment to tax which is not a self-assessment; (e) an appeal against an amendment under paragraph 7(3) of Schedule 1A to this Act of a claim or election made otherwise than by being included in a return; (f) an appeal against a decision contained in a notice under paragraph 7(3A) of Schedule 1A to this Act disallowing in whole or in part a claim or election made otherwise than by being included in a return. (3) In this section “the relevant Lands Tribunal” means— (a) in relation to land in England and Wales, the Lands Tribunal; (b) in relation to land in Scotland, the Lands Tribunal for Scotland; (c) in relation to land in Northern Ireland, the Lands Tribunal for Northern Ireland.

8

In section 57(3)(c) (power to make regulations authorising conditional decisions where more than one tribunal is determining questions in the proceedings), for “section 47” there shall be substituted “ section 46B, 46C or 46D ”.

9

In Schedule 1A (claims not included in returns), after paragraph 9 there shall be inserted the following paragraphs—

(10) An appeal against an amendment under paragraph 7(3) above of a claim made— (a) to the Board, (b) under Part XVI of the principal Act (administration of estates), or (c) under any of the provisions of the principal Act listed in section 46C(3) of this Act, shall be to the Special Commissioners. (11) (1) Subject to paragraph 10 above and the following provisions of this paragraph, an appeal under paragraph 9(1) above shall be to the General Commissioners. (2) The appellant may elect (in accordance with section 46(1) of this Act) to bring the appeal before the Special Commissioners. (3) Such an election shall be disregarded if— (a) the appellant and the officer of the Board agree in writing, at any time before the determination of the appeal, that it is to be disregarded; or (b) the General Commissioners have given a direction under sub-paragraph (5) below and have not revoked it. (4) At any time before the determination of an appeal in respect of which an election has been made an officer of the Board after giving notice to the appellant may refer the election to the General Commissioners. (5) On any such reference the Commissioners shall, unless they are satisfied that the appellant has arguments to present or evidence to adduce on the merits of the appeal, give a direction that the election be disregarded. (6) If, at any time after the giving of such a direction (but before the determination of the appeal) the General Commissioners are satisfied that the appellant has arguments to present or evidence to adduce on the merits of the appeal, they shall revoke the direction. (7) Any decision to give or revoke such a direction shall be final. (8) If— (a) a person bringing an appeal under paragraph 9(1) above has another appeal pending to either body of Commissioners concerning an assessment on him, and (b) the appeals relate to the same source of income, the appeal under paragraph 9(1) above shall be to the body of Commissioners before whom the appeal concerning the assessment is being brought. (9) This paragraph is subject to provision made by or under Part V of this Act.

10

The following Schedule shall be substituted for Schedule 3—

SCHEDULE 3 (1) In this Schedule— “the relevant place” means the place referred to in section 44(1) of this Act, which is used to identify the General Commissioners before whom proceedings are to be brought; and “the taxpayer”, in relation to any proceedings, means the party to the proceedings who is neither the Board nor an officer of the Board. (2) (1) In the case of any proceedings relating to income tax or capital gains tax the relevant place is whichever of the places specified in sub-paragraph (2) below is identified— (a) except where the proceedings are commenced by an officer of the Board, by an election made by the taxpayer; and (b) where the proceedings are so commenced, by an election made by the officer. (2) Those places are— (a) the place (if any) in the United Kingdom which, at the time when the election is made, is the taxpayer’s place of residence; (b) the place (if any) which at that time is the taxpayer’s place of business in the United Kingdom; (c) the place (if any) in the United Kingdom which at that time is the taxpayer’s place of employment; and, in the case of a place of employment, it shall be immaterial for the purposes of this paragraph whether the proceedings in question relate to matters connected with the employment of the taxpayer. (3) Where the taxpayer fails to make an election for the purposes of this paragraph before the time limit given by paragraph 5 below, an officer of the Board may elect which of the places specified in sub-paragraph (2) above is to be the relevant place. (4) In sub-paragraph (2)(a) above “place of residence” means— (a) in relation to an election made by the taxpayer, his usual place of residence; and (b) in relation to an election made by an officer of the Board, the taxpayer’s usual place of residence or, if that is unknown, his last known place of residence. (5) In sub-paragraph (2)(b) above “place of business” means— (a) the place where the trade, profession, vocation or business with which the proceedings are concerned is carried on, or (b) if the trade, profession, vocation or business is carried on at more than one place, the head office or place where it is mainly carried on. (6) This paragraph does not apply in the case of any proceedings to which paragraph 3, 4 or 7 below applies. (3) (1) In the case of an appeal in exercise of a right of appeal conferred by regulations under section 203 of the principal Act, the relevant place is— (a) except in a case falling in paragraph (b) below, the place determined by the regulations, and (b) if the appellant elects for one of the places specified in paragraph 2(2) above to be the relevant place instead, the place identified by the election. (2) This paragraph does not apply in the case of any proceedings to which paragraph 4 or 7 below applies. (4) (1) In the case of the proceedings mentioned in sub-paragraph (2) below the relevant place is whichever of the places specified in sub-paragraph (3) below is identified— (a) except where the proceedings are commenced by an officer of the Board, by an election made by the company or other body corporate which is a party to the proceedings (“the corporate taxpayer”); and (b) where the proceedings are so commenced, by an election made by the officer. (2) The proceedings are— (a) proceedings relating to corporation tax; (b) proceedings relating to income tax which are proceedings to which a company resident in the United Kingdom and within the charge to corporation tax is a party; (c) proceedings relating to tax assessable under sections 419 and 420 of the principal Act (close company loans). (3) The places are— (a) the place where, at the time when the election is made, the corporate taxpayer carries on its trade or business; (b) the place where, at that time, the head office or principal place of business of the corporate taxpayer is situated; (c) the place where, at that time, the corporate taxpayer resides. (4) Where the corporate taxpayer fails to make an election for the purposes of this paragraph before the time limit given by paragraph 5 below, an officer of the Board may elect which of the places specified in sub-paragraph (3) above is to be the relevant place. (5) This paragraph does not apply in the case of any proceedings to which paragraph 7 below applies. (5) (1) An election by a taxpayer for the purposes of this Schedule shall be made by notice in writing to an officer of the Board. (2) The time limit for the making of such an election in relation to proceedings is— (a) the time when the taxpayer gives notice of appeal or, if the proceedings are not an appeal, otherwise commences the proceedings; or (b) such later date as the Board allows. (3) Such an election shall be irrevocable. (6) An election by an officer of the Board for the purposes of this Schedule shall be made by notice in writing served on the taxpayer. (7) In the case of proceedings relating to a partnership to which a partner of that partnership is a party, the relevant place is— (a) the place where the trade, profession or business of the partnership is carried on, or (b) if the trade, profession or business is carried on at more than one place, the place where it is mainly carried on. (8) (1) The Board may give a direction in relation to any class of proceedings specified in the direction that, notwithstanding the preceding provisions of this Schedule, the relevant place shall be taken to be a place in a division specified in the direction. (2) A direction given under this paragraph shall not have effect in relation to any proceedings unless an officer of the Board has served on the taxpayer a notice in writing stating the effect of the direction in relation to those proceedings. (3) A direction given under this paragraph shall not have effect if the taxpayer gives a notice in accordance with sub-paragraph (4) below objecting to the direction. (4) The taxpayer gives a notice in accordance with this sub-paragraph if he gives it in writing to the Board within the period of 30 days beginning with the day on which the notice under sub-paragraph (2) above was served on him. (9) (1) The Board may give directions for determining the relevant place in cases where — (a) the proceedings fall within paragraph 2, 4 or 7 above, but there is no place falling within paragraph 2(2), 4(3) or, as the case may be, paragraph 7; or (b) the relevant place would, apart from the direction, be a place outside the United Kingdom. (2) A direction given under this paragraph by the Board shall not have effect in relation to any proceedings unless an officer of the Board has served on the taxpayer a notice in writing stating the effect of the direction in relation to those proceedings. (3) A direction under sub-paragraph (1) above may be given in relation to— (a) proceedings falling within that sub-paragraph; (b) any class of such proceedings specified in the direction; or (c) proceedings specified in the direction. (10) The provisions of this Schedule have effect subject to sections 44(2), 46A and 57 of this Act, sections 102(1), 113(5), 343(10) and 783(9) of the principal Act and section 151 of the Capital Allowances Act 1990.

Section 102 of the Taxes Act 1988

11

In section 102(1)(a) of the Taxes Act 1988 (cases where jurisdiction exercised by General Commissioners) for “both the trades, professions or vocations” there shall be substituted “ each of the persons whose trade, profession or vocation is one of those ”.

Commencement of Schedule

12

This Schedule has effect in relation to—

• (a) any proceedings relating to the year 1996-97 or any subsequent year of assessment, and

• (b) any proceedings relating to an accounting period ending on or after the day appointed under section 199 of the Finance Act 1994 for the purposes of Chapter III of Part IV of that Act (self-assessment).

SCHEDULE 23

Part I — Schedule 13 to the Taxes Act 1988

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Part II — Schedule 16 to the Taxes Act 1988

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SCHEDULE 24

Part I — Amendments of the Taxes Management Act 1970

Introductory

1

The Taxes Management Act 1970 shall be amended in accordance with this Part of this Schedule.

2

In section 11 (return of profits), after subsection (9) there shall be inserted the following subsection—

(10) In the following provisions of this Act “section 11 notice” means a notice under this section.

Power to enquire into return for wrong period, etc.

3

In section 11AA (return of profits to include self-assessment), after subsection (4) there shall be inserted the following subsections—

(5) This section, except subsection (4) above, applies in relation to a return for a period— (a) which ends in or at the end of the period specified in the section 11 notice; (b) which in the return is treated as an accounting period; but (c) which is not, or may not be, an accounting period. (6) In relation to such a return, “the filing date” means, in this section and section 11AB of this Act, the day which would be the day mentioned in section 11(4) of this Act if the period for which the return is made were an accounting period.

4

• (1) In section 11AB(1) (power to enquire into return of profits), after paragraph (c) (which is inserted by paragraph 2 of Schedule 19 to this Act), there shall be inserted

or (d) if it appears to the officer that a return delivered in response to a section 11 notice— (i) is or may be a return for the wrong period, or (ii) has become a return for the wrong period as a result of a direction under section 12(5A) of the principal Act, the period for which the return should have been made;

.

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

(4) For the purposes of subsection (1)(d) above a return is a return for the wrong period in each of the cases set out below. (5) The first case is where— (a) the return is made for a period which ends in or at the end of the period specified in the section 11 notice and which in the return is treated as an accounting period; but (b) the period for which the return is made is not an accounting period of the company. (6) The second case is where— (a) the return is made for a part of the period specified in the section 11 notice which in the return is treated as not falling within an accounting period of the company; but (b) there is an accounting period ending in or at the end of the period specified in the section 11 notice.

5

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Amendment of return for wrong period

6

After section 28A there shall be inserted the following sections—

(28AA) (1) Where an officer of the Board gives notice under section 11AB(1) of this Act to a company of his intention to enquire into the period for which a return should have been made, the officer’s enquiries shall be treated as completed at such time as he by notice— (a) informs the company that he has completed his enquiries; and (b) states his conclusions on the subject of his enquiries. (2) Subsections (3) and (4) below apply where the officer in the conclusions stated under subsection (1) above designates a period, in accordance with subsections (6) to (8) below, as the accounting period for which the return should have been made. (3) At any time in the period of 30 days beginning with the day on which the officer’s enquiries are completed, the company may amend the return for the purpose of making it a return appropriate to the designated period. (4) At any time in the period of 30 days beginning immediately after the period mentioned in subsection (3) above, the officer may by notice to the company amend the return for the purpose of making it a return appropriate to the designated period. (5) The power under subsections (3) and (4) above to amend a return includes the power to amend a self-assessment so as to make clear that it is a self-assessment for the designated period. (6) If there is only one accounting period ending in or at the end of the period specified in the section 11 notice, the only period which the officer may designate is that period. (7) If there is more than one accounting period ending in or at the end of the period specified in the section 11 notice, the only period which the officer may designate is the earliest of those accounting periods for which no return has been delivered. (8) In designating a period, the officer must specify the dates on which the period begins and ends. (28AB) (1) On an application made by the company, the Commissioners shall direct the officer to give a notice under section 28AA(1) of this Act within a period specified in the direction, unless they are satisfied that the officer has reasonable grounds for not giving such a notice. (2) Proceedings under subsection (1) above shall be heard and determined in the same way as an appeal. (3) An appeal may be brought against an amendment made under section 28AA(4) of this Act within the period of 30 days beginning with the date on which the notice of the amendment was issued. (4) The provisions of this Act relating to appeals shall have effect in relation to an appeal under subsection (3) above as they have effect in relation to an appeal against an assessment to tax. (5) Subsection (6) below applies where— (a) a return is delivered in response to a section 11 notice; (b) following a statement of conclusions under section 28AA of this Act, a period is finally determined to be the accounting period for which the return should have been made; (c) the effect of the determination is that there is a period (“a further period”) which— (i) before the determination was not an accounting period ending in or at the end of the period specified in the section 11 notice, and (ii) as a result of the determination, becomes a period so ending; and (d) there is no return which can be amended under section 28AA of this Act so as to become a return for that further period. (6) Where this subsection applies, the section 11 notice shall be taken to require a return for the further period before the postponed final day. (7) The postponed final day is whichever is the later of— (a) the final day determined under section 11(4) of this Act; and (b) the last day of the period of 30 days beginning with the day on which the accounting period for the return mentioned in subsection (5)(a) above is finally determined. (8) In relation to any return for the further period the provisions of this Act shall have effect as if any reference to the filing date in relation to that return were a reference to the postponed final day.

Failure to deliver return: determinations

7

After section 28C there shall be inserted the following sections—

(28D) (1) Where— (a) a section 11 notice has been served on a company, and (b) no return is delivered to an officer of the Board in response to the notice before the relevant day, the officer may make a determination of the amounts in which, to the best of his information and belief, the company is chargeable to corporation tax for the relevant period. (2) In subsection (1) above “the relevant period” means— (a) if there is only one accounting period ending in or at the end of the period specified in the section 11 notice, that accounting period; (b) if there is more than one accounting period ending in or at the end of the period so specified, each of those accounting periods; (c) if the officer has insufficient information to identify the accounting periods of the company, such period or periods ending in or at the end of the period so specified as he may determine. (3) Subject to subsections (4) and (5) below, a determination under subsection (1) above shall have effect for the purposes of Parts VA, VI, IX and XI of this Act as if— (a) it were a self-assessment made under section 11AA of this Act; and (b) (where subsection (2)(c) above applies) the period for which the determination is made were an accounting period of the company. (4) If— (a) the company delivers a return for a period ending in or at the end of the period specified in the section 11 notice, (b) the period is, or is treated in the return as, an accounting period, and (c) the return includes a self-assessment under section 11AA of this Act, the self-assessment shall supersede the determination under subsection (1) above or, if there is more than one determination under that subsection, the determination for the period which is, or most closely approximates to, the period for which the return is made. (5) If the company shows— (a) that there is no period ending in or at the end of the period specified in the section 11 notice which is an accounting period of the company, or (b) that it has delivered a return containing a self-assessment for the accounting period, or each accounting period, ending in or at the end of the period specified in the section 11 notice, any determination under subsection (1) above shall be of no effect. (28E) (1) Where— (a) a company delivers a return for an accounting period ending in or at the end of the period specified in a section 11 notice served on the company, but (b) there is another period so ending (an “outstanding period”) which it appears to an officer of the Board is or may be an accounting period but for which no return has been delivered before the relevant day, the officer may make a determination of the amounts in which, to the best of his information and belief, the company is chargeable to corporation tax for the outstanding period. (2) Subject to subsections (3) and (4) below, a determination under subsection (1) above shall have effect for the purposes of Parts VA, VI, IX and XI of this Act as if— (a) it were a self-assessment made under section 11AA of this Act; and (b) where the officer has insufficient information to determine whether the outstanding period is an accounting period, the period for which the determination is made were an accounting period of the company. (3) If, after the determination is made— (a) the company delivers a further return for a period ending in or at the end of the period specified in the section 11 notice, (b) the period is, or is treated in the return as, an accounting period, and (c) the return includes a self-assessment under section 11AA of this Act, the self-assessment shall supersede the determination under subsection (1) above. (4) If the company shows that it has delivered a return containing a self-assessment for the accounting period, or each accounting period, ending in or at the end of the period specified in the section 11 notice, the determination under subsection (1) above shall be of no effect. (28F) (1) Notice of any determination under section 28D or 28E of this Act shall be served on the person in respect of whom it is made and shall state the date on which it is issued. (2) No determination may be made under section 28D or 28E of this Act after the end of the period of five years beginning with the relevant day. (3) A self-assessment shall not supersede a determination under section 28D or 28E of this Act if it is made after whichever is the later of— (a) the end of the period of five years beginning with the relevant day; and (b) the end of the period of twelve months beginning with the date of the determination. (4) Where— (a) an officer of the Board has commenced any proceedings for the recovery of any tax charged by a determination under section 28D or 28E of this Act, and (b) before those proceedings are concluded, the determination is superseded by a self-assessment, those proceedings may be continued as if they were proceedings for the recovery of so much of the tax charged by the self-assessment as is due and payable and has not been paid. (5) In sections 28D and 28E of this Act and this section “the relevant day” means, in relation to a section 11 notice— (a) if the final day for the delivery of any return required by the notice can be ascertained in accordance with section 11(4) of this Act, that day; (b) in any other case, the day determined in accordance with subsection (6) below. (6) The day is whichever is the later of— (a) the last day of the period of 30 months from the end of the period specified in the section 11 notice; and (b) the last day of the period of three months from the day on which the section 11 notice was served.

Commencement

8

• (1) Paragraphs 3 to 6 above have effect in relation to returns made for periods ending on or after the day appointed under section 199 of the Finance Act 1994 for the purposes of Chapter III of Part IV of that Act (self-assessment).

• (2) Paragraph 7 above has effect in relation to notices under section 11 of the Taxes Management Act 1970 specifying a period ending on or after the day so appointed.

Part II — Other amendments

General

9

In this Part of this Schedule “the appointed day” means the day appointed as mentioned in paragraph 8(1) above.

Repeal of section 8A of the Taxes Act 1988

10

Section 8A of the Taxes Act 1988 (resolutions to reduce corporation tax) shall cease to have effect.

Determination of accounting date

11

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Companies in liquidation

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Construction of references to assessments

13

In section 197(1) of the Finance Act 1994 (construction of certain references), in paragraph (b) after “28C” there shall be inserted “ , 28D or 28E ”.

SCHEDULE 25

Amendments of section 240 of the Taxes Act 1988

1

• (1) Section 240 of the Taxes Act 1988 (set-off of company’s advance corporation tax against subsidiary’s liability to corporation tax) shall be amended as follows.

• (2) For subsection (1) there shall be substituted the following subsections—

(1) Where a company (“the surrendering company”) has paid an amount of advance corporation tax in respect of a dividend or dividends paid by it in an accounting period, it may under this section surrender the benefit of so much of that amount as is available for surrender, or any part of that amount that is available for surrender, to any company which was a subsidiary of it throughout that accounting period. (1A) The surrender shall take effect on the surrendering company making a claim in accordance with Schedule 13A. (1B) A claim to surrender an amount exceeding the amount the benefit of which, at the time the claim is made, is available for surrender shall be of no effect.

• (3) For subsections (6) and (7) there shall be substituted the following subsections—

(5A) A claim under subsection (1A) above may be withdrawn by the surrendering company with the consent of the subsidiary to whom the surrender was made. (5B) The withdrawal of a claim under subsection (1A) above to make a surrender for an accounting period of the surrendering company shall not prevent the making of a further claim under that subsection for that accounting period (whether to the same or a different subsidiary). (5C) Where the surrendering company withdraws a claim by virtue of which an amount of advance corporation tax was treated under subsection (2) above as paid by its subsidiary in respect of a distribution made on a date determined under that subsection— (a) the subsidiary shall be treated as if it had not paid that amount in respect of a distribution made by it on the date so determined; and (b) subject to the effect of any further claim, the surrendering company shall be treated as having paid a corresponding amount of advance corporation tax in respect of a distribution made by it on the date so determined. (5D) The amount of advance corporation tax the benefit of which is at any time available for surrender is the amount referred to in subsection (1) above less any amount which at that time falls within subsection (5E) below. (5E) The amounts are— (a) any amount which has been repaid to the surrendering company; (b) any amount which has been dealt with under section 239(3); (c) any amount surrendered under a claim for that period which has not been withdrawn. (5F) Subject to subsection (5C)(b) above, no amount of advance corporation tax the benefit of which has been surrendered under this section shall be treated for the purposes of section 239 as advance corporation tax paid by the surrendering company.

• (4) After subsection (13) there shall be inserted the following subsection—

(14) Schedule 13A (which makes supplementary provision with respect to surrenders of advance corporation tax) shall have effect.

The new Schedule 13A to the Taxes Act 1988

2

After Schedule 13 to the Taxes Act 1988 there shall be inserted the following Schedule—

SCHEDULE 13A (1) (1) In this Schedule any reference to a claim is to a claim under section 240(1A). (2) In this Schedule “the relevant accounting period of the surrendering company” means, in relation to a claim by the surrendering company, the accounting period referred to in section 240(1). (2) (1) Surrenders to different subsidiaries or to the same subsidiary at different times shall be treated as made by separate claims (however the claims are presented). (2) Where a surrendering company makes more than one claim at the same time, the claims shall be treated as made in such sequence as the surrendering company at that time elects or as, in default of such an election, an officer of the Board determines. (3) (1) A claim must specify— (a) the amount the benefit of which is surrendered; and (b) the subsidiary to whom the surrender is made. (2) The amount specified in compliance with sub-paragraph (1)(a) above must be an amount which is quantified at the time when the claim is made. (4) A claim by the surrendering company must be made within the period of six years from the end of the relevant accounting period of the surrendering company. (5) (1) Where a claim could be made by being included in a return under section 11 of the Management Act, or an amendment of such a return, it must be so made. (2) Section 42 of and Schedule 1A to the Management Act (procedure for making claims) shall not apply to the making of claims. (6) (1) A claim not included in a return or an amendment of a return must be made to an officer of the Board and must be supported by such documents as the officer may require. (2) The claim shall be made in such form as the Board may determine. (3) 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. (7) (1) A claim shall not be withdrawn except by a notice given to an officer of the Board in such form as the Board may determine. (2) A notice withdrawing a claim must specify— (a) the surrendering company which made the claim; (b) the amount the benefit of which was surrendered under the claim; (c) the subsidiary to whom the surrender was made; and (d) the relevant accounting period of the surrendering company in relation to the claim. (3) A notice withdrawing a claim must be accompanied by a notice signifying the consent required by section 240(5A). (4) Where a claim included in a return is withdrawn and the withdrawal could be made by an amendment of the return, it must be so made. (8) Where— (a) a claim (“claim A”) is withdrawn, and (b) at the time when claim A is withdrawn, another claim (“claim B”) is made, claim A shall be treated as being withdrawn before claim B is treated as made. (9) (1) Subject to sub-paragraph (3) below, a claim shall not be withdrawn after the earlier of— (a) the end of the period of six years from the end of the relevant accounting period of the surrendering company; and (b) the date on which an assessment for any relevant accounting period of the subsidiary in whose favour the claim was made becomes final. (2) In this paragraph “relevant accounting period of the subsidiary” means, in relation to a claim, any period in which a distribution is treated under section 240(2) as made by virtue of the claim. (3) In the circumstances given by sub-paragraph (4) below, a claim may be withdrawn at any time before the end of the period of six years from the end of the relevant accounting period of the surrendering company. (4) The circumstances are that— (a) the claim was made— (i) after the date on which an assessment for a relevant accounting period of the subsidiary in whose favour the claim is made becomes final; and (ii) after a further assessment has been made on the subsidiary for that period by an officer of the Board or the Board; and (b) immediately before the claim is withdrawn, none of the advance corporation tax which, by virtue of the claim, is treated as paid by the subsidiary has been finally dealt with to the subsidiary’s advantage. (5) For the purposes of sub-paragraph (4) above, advance corporation tax is finally dealt with to the subsidiary’s advantage if— (a) it is set against any liability of the subsidiary under any assessment to corporation tax which has become final; or (b) any of it is repaid to the subsidiary. (10) Nothing in the Management Act shall be read as allowing a claim to be amended. (11) (1) Where— (a) a claim is made after an assessment to corporation tax for the relevant accounting period of the surrendering company has become final, (b) under section 239(1), advance corporation tax has been set against the company’s liability to corporation tax for that period, and (c) the claim is a claim to surrender the benefit of an amount which is or includes the whole or a part of the amount set-off, the claim must be accompanied by an assessment (a self-assessment) of the corporation tax due as a result of the claim. (2) The tax shall be treated as due and payable, in accordance with section 59D of the Management Act, on the day following the expiry of nine months from the end of the relevant accounting period. (3) The standard provisions about enquiries into self-assessments (given by paragraph 14 below) apply to self-assessments provided under this paragraph. (12) (1) Where— (a) by virtue of section 239(4), advance corporation tax paid in the relevant accounting period of the surrendering company has been set against the company’s liability to corporation tax for a later accounting period, (b) the claim is made after assessments to corporation tax for both periods have become final, and (c) the claim is a claim to surrender the benefit of an amount which is or includes the whole or a part of the amount set-off, the claim must be accompanied by an assessment (a self-assessment) of the corporation tax due as a result of the claim. (2) The tax shall be treated as due and payable, in accordance with section 59D of the Management Act, on the day following the expiry of nine months from the end of the later accounting period. (3) The standard provisions about enquiries into self-assessments (given by paragraph 14 below) apply to self-assessments provided under this paragraph. (4) For the purposes of sub-paragraph (1)(a) above, advance corporation tax which was in fact paid in the relevant accounting period of the surrendering company shall be treated as set against the liability of the company to corporation tax for the later accounting period after any other advance corporation tax available to be so treated. (13) (1) Sub-paragraph (3) below applies where— (a) under section 239(1), advance corporation tax has been set against the subsidiary’s liability to corporation tax for an accounting period (“the relevant accounting period”), (b) the advance corporation tax is, includes or is part of advance corporation tax which is treated as paid by the subsidiary in respect of that period on the assumption that section 240(2) required that treatment, and (c) after an assessment to corporation tax for that period has become final, the subsidiary becomes aware of facts (“the true facts”) which, by virtue of section 240(1B), make that treatment incorrect. (2) Sub-paragraph (3) below also applies where— (a) by virtue of section 239(4), advance corporation tax has been set against the subsidiary’s liability to corporation tax for an accounting period (“the relevant accounting period”), (b) the advance corporation tax is, includes or is part of advance corporation tax which is treated as paid by the subsidiary in respect of a previous accounting period on the assumption that section 240(2) required that treatment, and (c) after an assessment to corporation tax for that period has become final, the subsidiary becomes aware of facts (“the true facts”) which, by virtue of section 240(1B), make that treatment incorrect. (3) The subsidiary must, before the end of the period of three months beginning with the day on which it becomes aware of the true facts, provide an officer of the Board with an assessment (a self-assessment) of the amount of corporation tax which was due for the relevant accounting period on the basis of the true facts. (4) The tax shall be treated as due and payable, in accordance with section 59D of the Management Act, on the day following the expiry of nine months from the end of the relevant accounting period of the subsidiary. (5) The standard provisions about enquiries into self-assessments (given by paragraph 14 below) apply to self-assessments provided under this paragraph. (6) For the purposes of this paragraph it shall be assumed that advance corporation tax actually paid (or correctly treated as paid) by the subsidiary has been set against the subsidiary’s liability to corporation tax before any advance corporation tax incorrectly treated as paid by the subsidiary. (14) (1) The standard provisions about enquiries into self-assessments (which correspond, in general terms, to certain provisions of section 28A of the Management Act) are as follows. (2) An officer of the Board may, at any time before the end of the period of one year beginning with the day on which the self-assessment is received, give notice of his intention to enquire into the self-assessment. (3) The officer’s enquiries shall end on such day as he by notice— (a) informs the company that he has completed his enquiries, and (b) states his conclusions as to the amount of tax which should be contained in the company’s self-assessment. (4) At any time in the period of 30 days beginning with the day on which the enquiries end, the company may amend its self-assessment so as to make good any deficiency or eliminate any excess in the amount of tax contained in the self-assessment. (5) At any time in the period of 30 days beginning immediately after the period mentioned in sub-paragraph (4) above, the officer may by notice to the company amend the company’s self-assessment so as to make good any deficiency or eliminate any excess in the amount of tax contained in the self-assessment. (6) The provisions of the Management Act apply to an amendment of a self-assessment under sub-paragraph (5) above as they apply to an amendment of a self-assessment under section 28A(4) of that Act. (7) At any time before a notice is given under sub-paragraph (3) above, the company may apply for a direction that the officer shall give such a notice within such period as may be specified in the direction. (8) Subject to sub-paragraph (9) below, an application under sub-paragraph (7) above shall be heard and determined in the same way as an appeal against an amendment of a self-assessment under section 28A(2) or (4) of the Management Act. (9) The Commissioners hearing an application under sub-paragraph (7) above shall give the direction applied for unless they are satisfied that the officer has reasonable grounds for not giving the notice. (15) (1) Where— (a) a claim is withdrawn after an assessment for the relevant accounting period of the surrendering company has become final, and (b) an amount of corporation tax paid by the surrendering company in respect of that period would not have been payable if the claim had not been made, the surrendering company shall be entitled by notice to claim repayment of that amount. (2) Where— (a) a claim is made after the date on which an assessment for any relevant accounting period of the subsidiary in whose favour the claim is made becomes final, and (b) an amount of corporation tax paid by the subsidiary in respect of that period would not have been payable if the claim had not been made, the subsidiary shall be entitled by notice to claim repayment of that amount. (3) In this paragraph “relevant accounting period of the subsidiary” has the same meaning as in paragraph 9.

3

Paragraphs 1 and 2 above have effect where the accounting period of the surrendering company ends on or after the day appointed under section 199 of the Finance Act 1994 for the purposes of Chapter III of Part IV of that Act (self-assessment).

Other amendments

4

Section 239(5) of the Taxes Act 1988 (manner in which claims under section 239(1) and (4) to be given effect) shall cease to have effect in relation to accounting periods ending on or after the day appointed as mentioned in paragraph 3 above.

5

In the Table in section 98 of the Taxes Management Act 1970 (penalties in respect of certain information provisions), after the entry in the second column relating to Schedule 13 to the Taxes Act 1988, there shall be inserted the following entry—

Schedule 13A, paragraphs 11, 12 and 13;

.

SCHEDULE 26

The sections inserted after section 329 of the Taxes Act 1988 by section 150 of this Act are as follows—

SCHEDULE 27

Companies that pay FIDs

1

• (1) In section 246A(1) of the Taxes Act 1988 (foreign income dividends) after “a company” there shall be inserted “ resident in the United Kingdom ”.

• (2) This paragraph has effect in relation to dividends paid on or after 28th November 1995.

Recipients of FIDs

2

Section 246D(5) of that Act (exclusion of section 233(1) and (1A) in the case of foreign income dividends) shall have effect, and be deemed always to have had effect, as if at the end there were inserted “ to which an individual is beneficially entitled, a foreign income dividend paid to personal representatives or a foreign income dividend paid to trustees in a case in which the dividend is income to which section 686 applies. ”

Calculation of the distributable foreign profit and the notional foreign source ACT

3

• (1) In section 246I(6) of that Act, for the words from “an amount equal” onwards there shall be substituted “ the amount of corporation tax payable, before double taxation relief is afforded, in respect of the foreign source profit. ”

• (2) In section 246P(2) of that Act (assumptions to apply for the purposes of calculating the notional foreign source ACT), the following paragraph shall be inserted before the “and” at the end of paragraph (e)—

(ea) where any of the matched foreign source profits represent an amount (“a gross profit”) reduced by one or more such deductions as are mentioned in section 246I(2), the amount of double taxation relief which is to be taken, in finding the amount of corporation tax falling finally to be borne, to have been available (after the reduction) to be allowed by reference to the amount representing the gross profit was equal to the amount that would have been available to be so allowed had no reduction been made;

.

• (3) In section 246P of that Act, after subsection (12) there shall be inserted the following subsection—

(12A) In this section “double taxation relief” has the same meaning as in section 246I.

• (4) Subject to sub-paragraph (5) below, this paragraph has effect in relation to accounting periods ending after 28th November 1995.

• (5) This paragraph, so far as applicable as respects authorised unit trusts, has effect in relation to any distribution period ending after 28th November 1995.

International headquarters company

4

• (1) Section 246S of that Act (conditions for treatment as international headquarters company) shall be amended as follows.

• (2) In subsection (3) (wholly-owned subsidiary of foreign quoted parent company), in paragraph (a), for “wholly owned by” there shall be substituted “ a 100 per cent. subsidiary of ”.

• (3) Subsection (8) (extension of subsection (3)) shall cease to have effect.

• (4) After subsection (10) there shall be inserted the following subsection—

(10A) For the purposes of this section a company is a 100 per cent. subsidiary of another if and so long as it is a body corporate all of whose share capital would fall to be treated for the purposes of section 838 as owned directly or indirectly by the other and that other is a body corporate; but for this purpose references in that section to owning share capital shall be construed in accordance with subsection (12) below.

• (5) Subject to sub-paragraph (6) below, this paragraph has effect in relation to any accounting period ending after 28th November 1995.

• (6) Where—

• (a) this paragraph has effect under sub-paragraph (5) above in relation to an accounting period in which a dividend is paid, and

• (b) the immediately preceding period ended on or before 28th November 1995,

subsection (9) (requirement to be international headquarters company in the period before that in which a dividend is paid) shall have effect in the case of that dividend as if this paragraph also had effect in relation to that immediately preceding period.

Life assurance business charged under Case I of Schedule D

5

• (1) In section 440B of that Act (modifications for life assurance business charged under Case I of Schedule D), after subsection (1) there shall be inserted the following subsection—

(1A) Nothing in section 208 shall prevent foreign income dividends from being taken into account in any computation of the profits of the company’s life assurance business charged in accordance with Case I of Schedule D.

• (2) This paragraph has effect in relation to accounting periods beginning on or after 1st January 1996.

Foreign income distributions to corporate unit holders

6

• (1) In section 468R of that Act (foreign income distributions to corporate unit holders), after subsection (3) there shall be inserted the following subsection—

(4) No repayment shall be made of any tax which is deemed to have been deducted by virtue of the application of paragraph (b) of section 468Q(2) in relation to a foreign income distribution.

• (2) This paragraph applies in relation to any distribution period ending on or after 28th November 1995.

SCHEDULE 28

The Taxes Act 1988

1

Section 47 of the Taxes Act 1988 (FOTRA securities) shall cease to have effect.

2

Section 474(2) of that Act (which prevents the deduction of expenses in respect of securities the income on which is exempt from tax) shall cease to have effect.

3

• (1) In section 475 of that Act (tax-free securities: exclusion of interest on borrowed money), ...

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

• (3) Subsections (6) and (7) of that section shall cease to have effect.

4

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

5

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

6

In paragraph 1(3) of Schedule 24 to that Act ... (amount taken into account in computing tax of company on the assumption that it is resident in the United Kingdom), for “by virtue of section 47 or 48” there shall be substituted, in each case, “ and have been so received by virtue of section 154(2) of the Finance Act 1996 ”.

The Inheritance Tax Act 1984 (c. 51)

7

In section 6(2) of the Inheritance Tax Act 1984 (FOTRA securities to be excluded property in specified circumstances), for the words from “neither” to “United Kingdom” there shall be substituted “ of a description specified in the condition ”.

8

In each of paragraphs (a) and (b) of section 48(4) of that Act (excluded property in the case of settlements), for the words from “neither” to “United Kingdom” there shall be substituted “ of a description specified in the condition in question ”.

SCHEDULE 29

Part I — The New Chapter

1

In Part IV of the Taxes Act 1988 (provisions relating to the Schedule D charge) the following Chapter shall be inserted after Chapter VII—

(118A) In this Chapter— (a) except in the terms “agent concerned”, “collecting agent” and “paying agent”, references to an “agent” include a person acting as nominee or sub-agent for an agent; (b) “bank” has the meaning given by section 840A; (c) the “chargeable date”— (i) in the case of a relevant payment, has the meaning given by section 118B(5); and (ii) in the case of a relevant receipt, has the meaning given by section 118C(4); (d) “collecting agent” has the meaning given by section 118C(1), and in relation to any relevant receipt or chargeable receipt, a reference to the collecting agent is a reference to the collecting agent by virtue of whose performance of a relevant function that receipt was received or arose; (e) in relation to any dividends, references to “coupons” include warrants for and bills of exchange purporting to be drawn or made in payment of those dividends; (f) references to a depositary include references to a person acting as agent or nominee for a depositary; (g) except in paragraph (h) below, references to “dividends” are references to foreign dividends, United Kingdom public revenue dividends or relevant dividends as the context requires; (h) “foreign dividends” means any annual payments, interest or dividends payable out of or in respect of foreign holdings; (i) “foreign holdings” means the stocks, funds, shares or securities of any body of persons not resident in the United Kingdom or of a government or public or local authority in a country outside the United Kingdom; (j) “gilt-edged securities” means any securities which— (i) are gilt-edged securities for the purposes of the 1992 Act; or (ii) will be such securities on the making of any order under paragraph 1 of Schedule 9 to that Act the making of which is anticipated in the prospectus under which they were issued; (k) “international organisation” has the meaning given by section 51A(8); (l) references to a “nominee” include a person acting as agent or nominee for a nominee; (m) “paying agent” has the meaning given by section 118B(1); (n) “prescribed” means prescribed in regulations made by the Board under this Chapter or prescribed by the Board in accordance with such regulations; (o) “quoted Eurobond” means a quoted Eurobond within the meaning of section 124 the interest on which is chargeable to tax under Case III of Schedule D, and “quoted Eurobond interest” means interest on such a quoted Eurobond; (p) “relevant dividends” means foreign dividends and quoted Eurobond interest; (q) “relevant holdings” means foreign holdings and quoted Eurobonds; (r) “relevant payment” has the meaning given by section 118B(5); (s) “relevant receipt” has the meaning given by section 118C(2); (t) “securities” includes any loan stocks or similar securities, whether secured or unsecured; and (u) “United Kingdom public revenue dividends” means income from securities which is payable out of the public revenue of the United Kingdom or Northern Ireland. (118B) (1) A person specified in column 1 of Table A below shall be a paying agent for the purposes of this Chapter in relation to such dividends as are— (a) of a description set out in column 2 of that Table opposite his specification; and (b) entrusted to him for payment or distribution.

Table A	Table A
1	2
1. Any person in the United Kingdom.	United Kingdom public revenue dividends
2. The Bank of England	United Kingdom public revenue dividends paid on securities entered in the register of the Bank of Ireland in Dublin
3. Any person in the United Kingdom	foreign dividends which are payable to persons in the United Kingdom and do not fall within subsection (4) below

(2) The Bank of England and the Bank of Ireland shall be treated as paying agents for the purposes of this Chapter in relation to United Kingdom public revenue dividends which are payable to them. (3) The National Debt Commissioners shall be treated as paying agents for the purposes of this Chapter in relation to United Kingdom public revenue dividends payable by them. (4) Foreign dividends fall within this subsection if they are payable out of, or in respect of, the stocks, funds, shares or securities of an organisation which is for the time being designated for the purposes of this subsection pursuant to section 582A(1). (5) Any payment in relation to which a person is a paying agent shall be a relevant payment for the purposes of this Chapter; and the chargeable date is— (a) in relation to such a payment as is mentioned in subsection (2) above, the date on which the payment is received; and (b) in relation to any other relevant payment, the date on which the payment is made. (118C) (1) Subject to subsection (3) below, a person described in column 1 of Table B below shall be a collecting agent for the purposes of this Chapter in relation to such functions performed by him as are set out in that description, which shall be relevant functions for the purposes of this Chapter. (2) Such dividends or proceeds of sale or other realisation as— (a) are set out in column 2 of Table B below opposite the description of a collecting agent in column 1; and (b) are received or arise by virtue of that collecting agent’s performance of a relevant function comprised in that description shall be relevant receipts for the purposes of this Chapter.

Table B	Table B
1	2
1. Any person in the United Kingdom who, in the course of a trade or profession, acts as custodian of any relevant holdings	any relevant dividends in respect of those relevant holdings which are received by him or are paid to another person at his direction or with his consent
2. Any person in the United Kingdom who, in the course of a trade or profession, by means of coupons collects or secures payment of or receives relevant dividends for another person	the relevant dividends which he so collects or receives or of which he so secures payment
3. Any person in the United Kingdom who, in the course of a trade or profession, otherwise acts for another person in arranging to collect or secure payment of relevant dividends	the relevant dividends which he so collects or of which he so secures payment
4. Any bank in the United Kingdom which sells or otherwise realises coupons for relevant dividends and pays over the proceeds or carries them into an account	the proceeds of sale or other realisation of those coupons
5. Any dealer in coupons in the United Kingdom who purchases any coupons for relevant dividends otherwise than from a bank or another dealer in coupons	the proceeds of sale of those coupons