Office of Public Sector Information
PART III continued CHAPTER I continued
(4) For the purposes of this section, an appropriate certificate is one containing—
(a) a statement to the effect that gains accruing to company A on the transfer would have been chargeable to tax under the law of the relevant member State but for the Mergers Directive;
(b) a statement of the amount of tax which would have been payable under that law in respect of the gains so accruing but for that Directive; and
(c) a statement to the effect that that amount has been computed on the required basis.
(5) For the purposes of this section, the required basis is that—
(a) so far as permitted under the law of the relevant member State, any losses arising on the transfer are set against any gains so arising, and
(b) any relief available to company A under that law has been duly claimed.
(6) In this section—
“the Mergers Directive” means the [O.J. No. L225/1.] Directive of the Council of the European Communities dated 23rd July 1990 on the common system of taxation applicable to mergers, divisions, transfers of assets and exchanges of shares concerning companies of different member States (no. 90/434/EEC);
“relevant member State” means the member State in which, immediately before the time of the transfer, company A carried on the trade through a branch or agency.”
(1) The following section shall be inserted after section 815A of the Taxes Act 1988—
(1) Subsection (2) below applies if the Arbitration Convention requires the Board to give effect to—
(a) an agreement or decision, made under the Convention by the Board (or their authorised representative) and any other competent authority, on the elimination of double taxation, or
(b) an opinion, delivered by an advisory commission set up under the Convention, on the elimination of double taxation.
(2) The Board shall give effect to the agreement, decision or opinion notwithstanding anything in any enactment; and any such adjustment as is appropriate in consequence may be made (whether by way of discharge or repayment of tax, the making of an assessment or otherwise).
(3) Any enactment which limits the time within which claims for relief under any provision of the Tax Acts may be made shall not apply to a claim made in pursuance of an agreement, decision or opinion falling within subsection (1)(a) or (b) above.
(4) In this section “the Arbitration Convention” means the Convention on the elimination of double taxation in connection with the adjustment of profits of associated enterprises, concluded on 23rd July 1990 by the parties to the treaty establishing the European Economic Community (90/436/EEC).”
(2) In section 816 of the Taxes Act 1988 (disclosure of information) the following subsection shall be inserted after subsection (2)—
“(2A) The obligation as to secrecy imposed by any enactment shall not prevent the Board, or any authorised officer of the Board, from disclosing information required to be disclosed under the Arbitration Convention in pursuance of a request made by an advisory commission set up under that Convention; and “the Arbitration Convention” here has the meaning given by section 815B(4).”
(3) The following section shall be inserted after section 182 of the [1989 c. 26.] Finance Act 1989 (disclosure of information)—
(1) A person who discloses any information acquired by him in the exercise of his functions as a member of an advisory commission set up under the Arbitration Convention is guilty of an offence.
(2) Subsection (1) above does not apply to any disclosure of information—
(a) with the consent of the person who supplied the information to the commission, or
(b) which has been lawfully made available to the public before the disclosure is made.
(3) It is a defence for a person charged with an offence under this section to prove that at the time of the alleged offence he believed that the information in question had been lawfully made available to the public before the disclosure was made and had no reasonable cause to believe otherwise.
(4) A person guilty of an offence under this section is liable—
(a) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine or both;
(b) on summary conviction, to imprisonment for a term not exceeding six months or a fine not exceeding the statutory maximum or both.
(5) No prosecution for an offence under this section shall be instituted in England and Wales or in Northern Ireland except—
(a) by the Board, or
(b) by or with the consent of the Director of Public Prosecutions or, in Northern Ireland, the Director of Public Prosecutions for Northern Ireland.
(6) In this section—
“the Arbitration Convention” has the meaning given by section 815B(4) of the Taxes Act 1988;
“the Board” means the Commissioners of Inland Revenue.”
(1) In the Taxes Act 1988 the following section shall be inserted after section 808—
(1) Subsection (2) below applies where any arrangements having effect by virtue of section 788—
(a) make provision, whether for relief or otherwise, in relation to interest (as defined in the arrangements), and
(b) make provision (the special relationship provision) that where owing to a special relationship the amount of the interest paid exceeds the amount which would have been paid in the absence of the relationship, the provision mentioned in paragraph (a) above shall apply only to the last-mentioned amount.
(2) The special relationship provision shall be construed as requiring account to be taken of all factors, including—
(a) the question whether the loan would have been made at all in the absence of the relationship,
(b) the amount which the loan would have been in the absence of the relationship, and
(c) the rate of interest and other terms which would have been agreed in the absence of the relationship.
(3) The special relationship provision shall be construed as requiring the taxpayer to show that there is no special relationship or (as the case may be) to show the amount of interest which would have been paid in the absence of the special relationship.
(4) In a case where—
(a) a company makes a loan to another company with which it has a special relationship, and
(b) it is not part of the first company’s business to make loans generally,
the fact that it is not part of the first company’s business to make loans generally shall be disregarded in construing subsection (2) above.
(5) Subsection (2) above does not apply where the special relationship provision expressly requires regard to be had to the debt on which the interest is paid in determining the excess interest (and accordingly expressly limits the factors to be taken into account).”
(2) This section shall apply in relation to interest (as defined in the arrangements) paid after 14th May 1992.
(1) Section 158 of the Taxes Act 1988 (car fuel) shall be amended as follows.
(2) For subsection (2) (cash equivalents) there shall be substituted—
“(2) Subject to the provisions of this section, the cash equivalent of that benefit shall be ascertained from—
(a) Table A below where the car has an internal combustion engine with one or more reciprocating pistons and is not a diesel car;
(b) Table AB below where the car has an internal combustion engine with one or more reciprocating pistons and is a diesel car;
(c) Table B below where the car does not have an internal combustion engine with one or more reciprocating pistons.
| Cylinder capacity of car in cubic centimetres | Cash equivalent |
|---|---|
| 1,400 or less | £500 |
| More than 1,400 but not more than 2,000 | £630 |
| More than 2,000 | £940 |
| Cylinder capacity of car in cubic centimetres | Cash equivalent |
|---|---|
| 2,000 or less | £460 |
| More than 2,000 | £590 |
| Original market value of car | Cash equivalent |
|---|---|
| Less than £6,000 | £500 |
| £6,000 or more but less than £8,500 | £630 |
| £8,500 or more | £940 |
(2A) For the purposes of subsection (2) above a diesel car is a car which uses heavy oil as fuel; and “heavy oil” here means heavy oil as defined by section 1(4) of the [1979 c. 5.] Hydrocarbon Oil Duties Act 1979.
(2B) For the purposes of Tables A and AB in subsection (2) above a car’s cylinder capacity is the capacity of its engine calculated as for the purposes of the [1971 c. 10.] Vehicles (Excise) Act 1971.”
(3) In subsection (4) (Treasury orders) for “either” there shall be substituted “any”.
(4) This section shall have effect for the year 1992-93 and subsequent years of assessment.
(1) In Schedule 12 to the Taxes Act 1988 (foreign earnings: provisions supplemental to section 193(1)) after paragraph 1 there shall be inserted—
1A For the purposes of section 193(1) and this Schedule the amount of the emoluments for a year of assessment from any employment shall be taken to be the amount remaining after any capital allowance and after any deductions under section 192(3), 193(4), 194(1), 195(7), 198, 199, 201, 332, 592 or 594.”
(2) This section shall have effect for the year 1992-93 and subsequent years of assessment.
(1) In section 502 of the Taxes Act 1988 (defined expressions for Chapter V of Part XII of that Act - petroleum extraction activities), in subsection (1), in the definition of “oil extraction activities”, in paragraph (c)—
(a) the words “as far as dry land in the United Kingdom” shall be omitted; and
(b) after the words “so held” there shall be inserted “where the transportation is—
(i) to the place where the oil is first landed in the United Kingdom, or
(ii) to the place in the United Kingdom or, in the case of oil first landed in another country, the place in that or any other country (other than the United Kingdom) at which the seller in a sale at arm’s length could reasonably be expected to deliver it or, if there is more than one such place, the one nearest to the place of extraction”.
(2) Subsection (1) above has effect with respect to chargeable periods ending after 27th November 1991.
(3) In so far as the amendments made by paragraph 3 of Schedule 15 to this Act amend the definitions of “initial storage” and “initial treatment” as they have effect, by virtue of section 502(2) of the Taxes Act 1988, for the purposes of Chapter V of Part XII of that Act, those amendments have effect with respect to chargeable periods ending after 27th November 1991.
Schedule 9 to this Act (which makes provision in relation to friendly societies) shall have effect.
(1) In the Taxes Act 1988, the following shall be inserted after section 33—
(1) Subsection (2) below applies where—
(a) any rents or receipts in respect of which a person is chargeable to tax under Schedule A accrue in a chargeable period of his earlier than the one in which they are payable,
(b) the person by whom they are payable is entitled to a deduction in respect of them in computing his profits or gains for tax purposes, and
(c) the two persons are connected with one another when the rents or receipts accrue, or were connected with one another at any time before they accrue and after both 9th March 1992 and the making of the lease or other agreement under which they accrue.
(2) The chargeable person shall be regarded for the purposes of Schedule A as becoming entitled to the rents or receipts in the chargeable period in which they accrue (rather than in the chargeable period in which they become payable).
(3) For the purposes of this section, any rents or receipts shall be taken to accrue at the times at which, and in the amounts in which, they are taken to accrue for the purposes of calculating the deduction mentioned in subsection (1)(b) above.
(4) Section 839 (connected persons) shall apply for the purposes of this section.
(1) Subsection (2) below applies where—
(a) any rents or receipts in respect of which a person is chargeable to tax under Schedule A accrue in a chargeable period of his earlier than the one in which they are payable,
(b) the land to which the rents or receipts relate is land in respect of which another person becomes entitled to a relevant tax deduction at any time before the rents or receipts become payable,
(c) the two persons are connected with one another when the rents or receipts accrue, or were connected with one another at any time before they accrue and after both 9th March 1992 and the making of the lease or other agreement referred to in subsection (4) below, and
(d) section 33A(2) does not apply.
(2) The chargeable person shall be regarded for the purposes of Schedule A as becoming entitled to the rents or receipts in the chargeable period in which they accrue (rather than in the chargeable period in which they become payable).
(3) For the purposes of this section, any rents or receipts payable to the chargeable person shall be taken to accrue at the times at which, and in the amounts in which, they would be taken to accrue for the purposes of calculating a deduction in respect of them in computing his profits or gains for tax purposes if—
(a) they were payable by him instead of to him, and
(b) he were assessable to tax under Case I of Schedule D in respect of his profits or gains.
(4) In this section, “relevant tax deduction”, in relation to a person and any land, means a deduction (in computing the person’s profits or gains for tax purposes) in respect of any rents or other sums payable after they accrue under a lease or other agreement relating to the land or any part of it.
(5) For the purposes of this section—
(a) a person shall be regarded as becoming entitled to a relevant tax deduction when the rents or other sums to which the deduction relates accrue, and
(b) any rents or other sums to which a relevant tax deduction relates shall be taken to accrue at the times at which, and in the amounts in which, they are taken to accrue for the purposes of calculating the deduction.
(6) Section 839 (connected persons) shall apply for the purposes of this section.”
(2) This section shall have effect in relation to rents or receipts accruing on or after 10th March 1992.
(1) In section 15(1) of the Taxes Act 1988 (Schedule A) the following paragraph shall be substituted for paragraph 4—
in a case where—
(a) a sum (whether rent or otherwise) is payable in respect of the use of premises (whether under a lease or otherwise),
(b) the tenant or other person entitled to the use of the premises is entitled to the use of furniture, and
(c) tax in respect of the payment for the use of the furniture is chargeable under Case VI of Schedule D,
tax in respect of the sum mentioned in sub-paragraph (a) above shall be charged under that Case instead of under this Schedule unless the person entitled to that sum elects that this paragraph shall not apply.”
(2) This section shall apply in relation to chargeable periods beginning on or after 6th April 1992.
Schedule 10 to this Act (which makes provision about furnished accommodation) shall have effect.
(1) In section 347A(5) of the [1988 c. 26.] Taxes Act 1988 and in section 38(9) of the Finance Act 1988 (no deduction on account of certain payments) after “section 65(1)(b)” there shall be inserted “, 68(1)(b) or 192(3)”.
(2) This section shall have effect for the year 1992-93 and subsequent years of assessment.
(1) In section 347B(1)(a) of the Taxes Act 1988 (payments under certain court orders or written agreements)—
(a) for “in the United Kingdom” there shall be substituted “in a member State”;
(b) for “a part of the United Kingdom” there shall be substituted “a member State or of a part of a member State”.
(2) This section shall have effect for the year 1992-93 and subsequent years of assessment.
(1) In section 347B of the Taxes Act 1988 (qualifying maintenance payments), the following subsections shall be added at the end—
“(8) In subsections (1)(a) and (5)(a) above, the reference to an order made by a court in the United Kingdom includes a reference to a maintenance assessment.
(9) Where—
(a) any periodical payment is made under a maintenance assessment by one of the parties to a marriage (including a marriage which has been dissolved or annulled),
(b) the other party to the marriage is, for the purposes of the [1991 c. 48.] Child Support Act 1991 or (as the case may be) the [S.I. 1991/2628 (N.I.23).] Child Support (Northern Ireland) Order 1991, a parent of the child or children with respect to whom the assessment has effect,
(c) the assessment was not made under section 7 of the Child Support Act 1991 (right of child in Scotland to apply for maintenance assessment), and
(d) any of the conditions mentioned in subsection (10) below is satisfied,
this section shall have effect as if the payment had been made to the other party for the maintenance by that other party of that child or (as the case may be) those children.
(10) The conditions are that—
(a) the payment is made to the Secretary of State in accordance with regulations made under section 29 of the [1991 c. 48.] Child Support Act 1991, by virtue of subsection (3)(a)(ii) of that section;
(b) the payment is made to the Department of Health and Social Services for Northern Ireland in accordance with regulations made under Article 29 of the [S.I. 1991/2628 (N.I.23).] Child Support (Northern Ireland) Order 1991, by virtue of paragraph (3)(a)(ii) of that Article;
(c) the payment is retained by the Secretary of State in accordance with regulations made under section 41 of that Act;
(d) the payment is retained by the Department of Health and Social Services for Northern Ireland in accordance with regulations made under Article 38 of that Order.
(11) In this section “maintenance assessment” means a maintenance assessment made under the Child Support Act 1991 or the Child Support (Northern Ireland) Order 1991.
(12) Where any periodical payment is made to the Secretary of State or to the Department of Health and Social Services for Northern Ireland—
(a) by one of the parties to a marriage (including a marriage which has been dissolved or annulled), and
(b) under an order made under section 106 of the [1992 c. 5.] Social Security Administration Act 1992 or section 101 of the [1992 c. 8.] Social Security Administration (Northern Ireland) Act 1992 (recovery of expenditure on benefit from person liable for maintenance) in respect of income support claimed by the other party to the marriage,
this section shall have effect as if the payment had been made to the other party to the marriage to or for the benefit, and for the maintenance, of that other party or (as the case may be) to that other party for the maintenance of the child or children concerned.”
(2) In section 36 of the [1988 c. 39.] Finance Act 1988 (annual payments), the following subsection shall be inserted after subsection (5)—
“(5A) The reference in subsection (4)(d) above to an order made by a court, and the reference in subsection (5)(b) above to an order, in each case includes a reference to a maintenance assessment made under the Child Support Act 1991 or the Child Support (Northern Ireland) Order 1991.”
(3) In section 38 of the [1988 c. 39.] Finance Act 1988 (maintenance payments under existing obligations), the following subsection shall be inserted after subsection (8)—
“(8A) The reference in subsection (1)(a) above to an order made by a court includes a reference to a maintenance assessment made under the Child Support Act 1991 or under the Child Support (Northern Ireland) Order 1991.”
(4) This section shall come into force on such date as the Secretary of State may by order provide.
(5) The power conferred by subsection (4) above shall be exercisable by statutory instrument.
(6) The provision made by this section shall have effect, so far as it concerns orders under section 106 of the [1992 c. 5.] Social Security Administration Act 1992 or section 101 of the [1992 c. 8.] Social Security Administration (Northern Ireland) Act 1992, only in relation to payments which fall due after the coming into force of this section.
Schedule 11 to this Act (which makes provision in relation to the payment of income tax on foreign dividends etc.) shall have effect.
(1) For the purposes of this section each of the following is a relevant order—
(a) the [S.I. 1985/1836.] Income Tax (Reduced and Composite Rate) Order 1985 (which sets out 25.25 per cent. as the reduced rate for building societies and the composite rate for deposit-takers for the year 1986-87);
(b) the [S.I. 1986/2147.] Income Tax (Reduced and Composite Rate) Order 1986 (which sets out 24.75 per cent. as the rate for the year 1987-88);
(c) the [S.I. 1987/2075.] Income Tax (Reduced and Composite Rate) Order 1987 (which sets out 23.25 per cent. as the rate for the year 1988-89);
(d) the [S.I. 1988/2145.] Income Tax (Reduced and Composite Rate) Order 1988 (which sets out 21.75 per cent. as the rate for the year 1989-90).
(2) If apart from this section a relevant order would not be so taken, it shall be taken to be and always to have been effective to determine the rate set out in the order as the reduced rate and the composite rate for the year of assessment for which the order was made.
(1) For the purposes of this section a claim is a relevant claim if it is made under or by virtue of any of the following provisions—
(a) section 393(1) of the Taxes Act 1988 (claim for carry forward of trading losses);
(b) section 393A(1) of the Taxes Act 1988 (claim for carry sideways and backwards of trading losses);
(c) section 402(2) of the Taxes Act 1988 (surrender of relief between members of groups and consortia: group claim);
(d) section 402(3) of the Taxes Act 1988 (surrender of relief between members of groups and consortia: consortium claim);
(e) any provision reproduced in any of the provisions mentioned in paragraphs (a) to (d) above (whether directly or indirectly and whether with or without modification).
(2) For the purposes of this section the following are relevant provisions—
(a) section 434(2) of the Taxes Act 1988 (profits derived from investments of life assurance fund treated as profits of life assurance business in ascertaining loss on that business);
(b) section 715(1)(a) of the Taxes Act 1988 (special treatment of transfer of securities with or without accrued interest not to apply to transferor where transfer falls to be taken into account in computing profits or losses of trade);
(c) section 715(2)(a) of the Taxes Act 1988 (special treatment of transfer of securities with or without accrued interest not to apply to transferee where transfer falls to be taken into account in computing profits or losses of trade);
(d) section 83(1) of the [1989 c. 26.] Finance Act 1989 (investment income etc. from assets of long-term business fund taken into account as receipts of life assurance business);
(e) section 37(1) of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (exclusion from consideration for disposal of asset of any money or moneys worth taken into account in computing profits or losses etc.);
(f) any provision reproduced in any of the provisions mentioned in paragraphs (a) to (c) and (e) above (whether directly or indirectly and whether with or without modification).
(3) For the purposes of this section—
(a) the I minus E basis is the basis commonly so called (under which a company carrying on life assurance business is charged to tax in respect of that business otherwise than under Case I of Schedule D);
(b) life assurance business includes annuity business.
(4) Neither the making of a relevant claim in respect of a trading loss incurred by a company in an accounting period nor the application of any commercial or accounting principle or practice in computing that loss—
(a) shall prevent the I minus E basis being applied for that or any other accounting period in respect of the company’s life assurance business;
(b) shall affect the calculation of the income or gains of that business for that or any other accounting period in applying that basis.
(5) The application of a relevant provision as regards a company for an accounting period shall not—
(a) prevent the I minus E basis being applied for that or any other accounting period in respect of its life assurance business;
(b) affect the calculation of the income or gains of that business for that or any other accounting period in applying that basis.
(6) This section—
(a) shall apply in relation to accounting periods beginning on or after the day on which this Act is passed;
(b) shall apply and be deemed always to have applied in relation to accounting periods beginning before that day.
Schedule 12 to this Act (which makes provision in relation to companies that are or have been carrying on a deposit-taking business and are in compulsory liquidation) shall have effect.
The following section shall be inserted after section 152A of the [1990 c. 1.] Capital Allowances Act 1990—
(1) References in this section to company A, company B and the transfer shall be construed in accordance with section 269A of the [1970 c. 10.] Income and Corporation Taxes Act 1970 or, as the case may be, section 140A of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992.
Finance (No. 2) Act 1992