Finance Act 1999 (c. 16)

(The document as of February, 2008)

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(4) The expenditure which for the purposes of sections 95 and 96 above shall be taken to be operating expenditure shall be so much of the expenditure incurred by the lessee or, as the case may be, a successor of his under the lease concerned as appears, on a just and reasonable estimate, to be operating expenditure.

(5) References in this section to a successor of the lessee shall be construed in accordance with section 96(5) above.

(6) In this section and sections 95 and 96 above--

"the chargeable field" has the same meaning as in the Oil Taxation Act 1983;
"lease", in relation to an asset, has the same meaning as in sections 781 to 784 of the Taxes Act 1988;
"the lease in question", "the lessee", "the lessee's oil field", "the relevant asset", "the seller" and "the seller's oil field" shall be construed in accordance with section 95(1) above;
"operating expenditure" means expenditure (for example, in respect of the provision of staff or crew or the maintenance or operation of the relevant asset) of such a nature that the lessee or, as the case may be, his successor would or might have incurred it, otherwise than under any arrangements to finance his ownership, if he had been the owner of the asset;
"the new participator's lease" shall be construed in accordance with section 96(1) above;
"the principal Act" means the [1975 c. 22.] Oil Taxation Act 1975;
"qualifying asset" has the same meaning as in the Oil Taxation Act 1983; and
"tariff receipts" has the same meaning as in that Act.

(7) This section and sections 95 and 96 above shall be construed as one with Part I of the principal Act.

98 Qualifying assets

(1) Subsection (2) below applies where--

(a) an asset which is not a mobile asset is a qualifying asset for the purposes of the [1983 c. 56.] Oil Taxation Act 1983 in relation to a person ("the taxpayer") who is a participator in an oil field ("the field");

(b) tariff receipts or disposal receipts of the taxpayer which are referable to the asset are attributable to the field for a chargeable period ("the earlier period");

(c) receipts of the taxpayer which are referable to the asset for a subsequent chargeable period ("the later period") would not, apart from this section, be tariff receipts or disposal receipts attributable to the field for that period as a result of--

(i) the taxpayer's ceasing to be a participator in the field; or

(ii) his becoming a participator in another oil field; and

(d) not more than two chargeable periods intervene between the earlier period and the later period.

(2) The Oil Taxation Acts shall have effect, in relation to the later period and any subsequent chargeable period, as if--

(a) receipts of the taxpayer which are referable to the asset for the period concerned were tariff receipts or disposal receipts attributable to the field for that period; and

(b) in a case falling within subsection (1)(c)(i) above, the taxpayer continued to be a participator in the field.

(3) Subsection (4) below applies where--

(a) an asset which is not a mobile asset is a qualifying asset for the purposes of the Oil Taxation Act 1983 in relation to a person ("the taxpayer") who is a participator in an oil field ("the field");

(b) tariff receipts or disposal receipts of the taxpayer which are referable to the asset are attributable to the field for a chargeable period ("the earlier period");

(i) the asset; or

(ii) an interest in the asset,

to another person ("the transferee") in circumstances such that section 7 of the Oil Taxation Act 1983 does not apply to the disposal; and

(d) not more than two chargeable periods intervene between the earlier period and the later period.

(4) The Oil Taxation Acts shall have effect, in relation to the later period and any subsequent chargeable period, as if--

(a) receipts of the transferee which are referable to the asset for the period concerned were tariff receipts or disposal receipts attributable to the field for that period; and

(b) the transferee were a participator in the field.

(5) Subject to subsection (6) below, any reference in this section to receipts of any person which are referable to the asset for a period is a reference to any sums which--

(a) are received or receivable by that person in that period in respect of the use of the asset, or the provision of services or other business facilities of whatever kind in connection with its use; or

(b) are received or receivable by that person in respect of the disposal in that period of the asset, or an interest in the asset.

(6) In a case falling within subsection (3)(c)(ii) above--

(a) any sums which are received or receivable by the transferee otherwise than by virtue of his acquisition of the interest shall not be regarded for the purposes of subsection (4) above as receipts of his which are referable to the asset for any period; and

(b) for the purposes of paragraph (a) above, such apportionments shall be made as may be just and reasonable.

(7) This section shall be construed as one with Part I of the [1975 c. 22.] Oil Taxation Act 1975; and in this section "the Oil Taxation Acts" means--

(a) the enactments relating to petroleum revenue tax (including this section);

(b) Chapter V of Part XII of the Taxes Act 1988 (petroleum extraction activities); and

(8) Nothing in this section shall be taken to affect the meaning of "participator" in paragraph 4 of Schedule 2 to the principal Act.

(9) Subject to subsection (11) below, subsection (1) above applies where--

(a) the disposal by virtue of which the taxpayer ceased to be a participator in the field; or

(b) the acquisition by virtue of which he became a participator in the other oil field,

was made on or after 1st July 1999.

(10) Subject to subsection (11) below, subsection (3) above applies where the asset, or the interest in the asset, was disposed of on or after that date.

(11) Neither subsection (1) nor subsection (3) above applies where the disposal or acquisition concerned was made pursuant to an agreement which was made before 1st July 1999 and either--

(a) the agreement was not conditional; or

(b) the agreement was conditional and the condition was satisfied before that date.

99 PRT instalments

(1) In paragraph 3 of Schedule 19 to the [1982 c. 39.] Finance Act 1982 (months in which instalments may be withheld)--

(a) in sub-paragraph (1), at the beginning there shall be inserted "Subject to sub-paragraph (1A) below," and after "month" there shall be inserted "(the relevant month)"; and

(b) after that sub-paragraph there shall be inserted the following sub-paragraph--

" (1A) Sub-paragraph (1) above does not apply if the relevant month is a month in which any consideration (whether in the nature of income or capital) is received or receivable by the participator in respect of any such matter as is mentioned in paragraph (a) or (b) of section 6(2) of the [1983 c. 56.] Oil Taxation Act 1983 (chargeable tariff receipts). "

(2) Subsection (1) above applies for the purpose of determining whether instalments are payable in respect of chargeable periods ending on or after 31st December 1999.

100 Sale and lease-back: ring fence profits

(1) After section 494 of the Taxes Act 1988 there shall be inserted the following section--

" 494AA Sale and lease-back

(1) This section applies where--

(a) a company ("the seller") carrying on a trade has disposed of an asset which was used for the purposes of that trade, or an interest in such an asset;

(b) the asset is used, under a lease, by the seller or a company associated with the seller ("the lessee") for the purposes of a ring fence trade carried on by the lessee; and

(2) Subject to subsection (4) below, subsection (3) below applies to so much (if any) of the expenditure incurred by the lessee under the lease as--

(a) falls, in accordance with normal accountancy practice, to be treated in the accounts of the lessee as a finance charge; or

(b) would so fall if the lessee were a company incorporated in the United Kingdom.

(3) The expenditure shall not be allowable in computing for the purposes of Schedule D the profits of the ring fence trade.

(4) Expenditure shall not be disallowed by virtue of subsection (3) above to the extent that the disposal referred to in subsection (1) above is made for a consideration which--

(a) is used to meet expenditure incurred by the seller in carrying on oil extraction activities or in acquiring oil rights otherwise than from a company associated with the seller; or

(b) is appropriated to meeting expenditure to be so incurred by the seller.

(5) Where any expenditure--

(a) would apart from subsection (3) above be allowable in computing for the purposes of Schedule D the profits of the ring fence trade for an accounting period, but

(b) by virtue of that subsection is not so allowable,

that expenditure shall be brought into account for the purposes of Chapter II of Part IV of the [1996 c. 8.] Finance Act 1996 as if it were a non-trading debit in respect of a loan relationship of the lessee for that accounting period.

(6) In this section, "lease", in relation to an asset, has the same meaning as in sections 781 to 784. "

(2) Subject to subsection (3) below, this section applies to assets, or interests in assets, disposed of on or after 9th March 1999.

(3) This section does not apply to assets, or interests in assets, disposed of pursuant to an agreement made before that date if--

(a) the agreement is not conditional; or

(b) the agreement is conditional and the condition is satisfied before that date.

101 Pipe-line elections

(1) In subsection (1)(b) of section 233 of the [1994 c. 9.] Finance Act 1994 (relief for tariff receipts from participator in non-taxable field)--

(a) for "a participator in a non-taxable field" there shall be substituted "any person", and

(b) for "in connection with that non-taxable field" there shall be substituted "otherwise than in connection with a taxable field".

(2) Subsection (1) above applies to sums received or receivable in any chargeable period ending on or after 31st December 1999.

102 PRT returns

(1) In paragraph 2 of Schedule 2 to the [1975 c. 22.] Oil Taxation Act 1975 (returns by participators)--

(a) in sub-paragraph (1) (returns must be delivered within two months of the end of a chargeable period), after "the period" there shall be inserted "or within such longer period as the Board may allow"; and

(b) after sub-paragraph (4) there shall be inserted the following sub-paragraph--

" (5) The power of the Board to allow an extension of time under sub-paragraph (1) above shall include power--

(a) to allow an extension for an indefinite period; and

(b) to provide for the period of any extension to end at such time as may be stipulated in a notice given by the Board. "

(2) In paragraph 5 of that Schedule (returns by the responsible person)--

(a) in sub-paragraph (1) (returns must be delivered within one month of the end of a chargeable period), after "the period" there shall be inserted "or within such longer period as the Board may allow"; and

(b) after sub-paragraph (3) there shall be inserted the following sub-paragraph--

" (4) The power of the Board to allow an extension of time under sub-paragraph (1) above shall include power--

(a) to allow an extension for an indefinite period; and

(b) to provide for the period of any extension to end at such time as may be stipulated in a notice given by the Board. "

(3) After paragraph 12 of that Schedule there shall be inserted the following paragraph--

" 12A (1) Where--

(a) the Board has extended the period for the delivery of any return that is required under paragraph 2 of this Schedule to be delivered for any chargeable period, and

(b) the relevant time falls more than one year after the end of the chargeable period,

the period within which the Board may make an assessment under this Schedule for that chargeable period shall not expire before the end of the period of five years beginning with the relevant time.

(2) In this paragraph "the relevant time" means the earlier of--

(a) the time which, as a result of the extension, is the latest time for the delivery of the return; and

(b) the time when the return is delivered. "

(4) In paragraph 2 of Schedule 5 to that Act, after sub-paragraph (6) there shall be inserted the following sub-paragraphs--

" (7) Where--

(a) the claim period in which any expenditure allowable under section 3 or 4 of this Act for an oil field is incurred coincides with or includes a chargeable period, and

(b) the Board has extended the period for the delivery of the return that is required under paragraph 5 of Schedule 2 to this Act to be delivered for that chargeable period by the responsible person, and

sub-paragraph (1) above shall have effect as if the reference to six years after the end of the claim period in which the expenditure is incurred were a reference to two years after the relevant time.

(8) In sub-paragraph (7) above "the relevant time" means the earlier of--

(a) the time which, as a result of the extension mentioned in that sub-paragraph, is the latest time for the delivery of the return there mentioned; and

(b) the time when that return is delivered. "

(5) In the Table in paragraph 2 of Schedule 6 to that Act (application of provisions of Schedule 5 to claims under Schedule 6), after the entry relating to paragraph 2(6) of Schedule 5 there shall be inserted the following entries--

" 2(7)

For the reference to paragraph 5 of Schedule 2 to this Act substitute a reference to paragraph 2 of that Schedule;

for the reference to paragraph 2(1) of Schedule 5 to this Act substitute a reference to paragraph 1(2) of this Schedule.

2(8)

-- "

(6) In subsection (4) of section 62 of the [1987 c. 16.] Finance Act 1987 (returns relating to sales of oil), for the words from the beginning to "additional return" there shall be substituted--

" (4) In any case where paragraph 2 of Schedule 2 to the principal Act requires a participator in any oil field to make a return for any chargeable period (including cases where the latest time for the delivery of that return is deferred), that participator shall also be required, not later than the end of the second month after the end of that chargeable period, to deliver to the Board a return " .

(7) In subsection (6) of that section, for paragraph (b) (return under subsection (4) not to include details included in return under paragraph 2 of Schedule 2 to the principal Act) there shall be substituted the following paragraph--

" (b) details of which are not included in a return for the period under paragraph 2 of Schedule 2 to the principal Act which is delivered to the Board at the same time as the return required by subsection (4) above or which was delivered to them previously; and " .

(8) The preceding provisions of this section apply in relation to chargeable periods ending on or after 30th June 1999.

103 Business assets: roll-over relief

(1) Section 193 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (roll-over relief not available for gains on oil licences) shall cease to have effect.

(2) This section has effect in relation to--

(a) a disposal of a licence or an interest in a licence which occurs on or after 1st July 1999;

(b) an acquisition of a licence or an interest in a licence which occurs on or after 1st July 1999.

Part V Inheritance tax

104 Gifts

The following shall be inserted after section 102 of the [1986 c. 41.] Finance Act 1986 (inheritance tax: gifts with reservation)--

" 102A Gifts with reservation: interest in land

(1) This section applies where an individual disposes of an interest in land by way of gift on or after 9th March 1999.

(2) At any time in the relevant period when the donor or his spouse enjoys a significant right or interest, or is party to a significant arrangement, in relation to the land--

(a) the interest disposed of is referred to (in relation to the gift and the donor) as property subject to a reservation; and

(b) section 102(3) and (4) above shall apply.

(3) Subject to subsections (4) and (5) below, a right, interest or arrangement in relation to land is significant for the purposes of subsection (2) above if (and only if) it entitles or enables the donor to occupy all or part of the land, or to enjoy some right in relation to all or part of the land, otherwise than for full consideration in money or money's worth.

(4) A right, interest or arrangement is not significant for the purposes of subsection (2) above if--

(a) it does not and cannot prevent the enjoyment of the land to the entire exclusion, or virtually to the entire exclusion, of the donor; or

(b) it does not entitle or enable the donor to occupy all or part of the land immediately after the disposal, but would do so were it not for the interest disposed of.

(5) A right or interest is not significant for the purposes of subsection (2) above if it was granted or acquired before the period of seven years ending with the date of the gift.

(6) Where an individual disposes of more than one interest in land by way of gift, whether or not at the same time or to the same donee, this section shall apply separately in relation to each interest.

102B Gifts with reservation: share of interest in land

(1) This section applies where an individual disposes, by way of gift on or after 9th March 1999, of an undivided share of an interest in land.

(2) At any time in the relevant period, except when subsection (3) or (4) below applies--

(a) the share disposed of is referred to (in relation to the gift and the donor) as property subject to a reservation; and

(b) section 102(3) and (4) above shall apply.

(3) This subsection applies when the donor--

(a) does not occupy the land; or

(b) occupies the land to the exclusion of the donee for full consideration in money or money's worth.

(4) This subsection applies when--

(a) the donor and the donee occupy the land; and

(b) the donor does not receive any benefit, other than a negligible one, which is provided by or at the expense of the donee for some reason connected with the gift.

102C Sections 102A and 102B: supplemental

(1) In sections 102A and 102B above "the relevant period" has the same meaning as in section 102 above.

(2) An interest or share disposed of is not property subject to a reservation under section 102A(2) or 102B(2) above if or, as the case may be, to the extent that the disposal is an exempt transfer by virtue of any of the provisions listed in section 102(5) above.

(3) In applying sections 102A and 102B above no account shall be taken of--

(a) occupation of land by a donor, or

(b) an arrangement which enables land to be occupied by a donor,

in circumstances where the occupation, or occupation pursuant to the arrangement, would be disregarded in accordance with paragraph 6(1)(b) of Schedule 20 to this Act.

(4) The provisions of Schedule 20 to this Act, apart from paragraph 6, shall have effect for the purposes of sections 102A and 102B above as they have effect for the purposes of section 102 above; and any question which falls to be answered under section 102A or 102B above in relation to an interest in land shall be determined by reference to the interest which is at that time treated as property comprised in the gift.

(5) Where property other than an interest in land is treated by virtue of paragraph 2 of that Schedule as property comprised in a gift, the provisions of section 102 above shall apply to determine whether or not that property is property subject to a reservation.

(6) Sections 102 and 102A above shall not apply to a case to which section 102B above applies.

(7) Section 102A above shall not apply to a case to which section 102 above applies. "

105 Delivery of accounts

(1) For subsection (3) of section 216 of the [1984 c. 51.] Inheritance Tax Act 1984 (delivery of accounts) there shall be substituted the following subsections--

" (3) Subject to subsections (3A) and (3B) below, where an account is to be delivered by personal representatives (but not where it is to be delivered by a person who is an executor of the deceased only in respect of settled land in England and Wales), the appropriate property is--

(a) all property which formed part of the deceased's estate immediately before his death, other than property which would not, apart from section 102(3) of the [1986 c. 41.] Finance Act 1986, form part of his estate; and

(b) all property to which was attributable the value transferred by any chargeable transfers made by the deceased within seven years of his death.

(3A) If the personal representatives, after making the fullest enquiries that are reasonably practicable in the circumstances, are unable to ascertain the exact value of any particular property, their account shall in the first instance be sufficient as regards that property if it contains--

(a) a statement to that effect;

(b) a provisional estimate of the value of the property; and

(3B) The Board may from time to time give such general or special directions as they think fit for restricting the property to be specified in pursuance of subsection (3) above by any class of personal representatives. "

(2) This section has effect in relation to deaths occurring on or after 9th March 1999.

106 Power to call for documents etc

After section 219 of the [1984 c. 51.] Inheritance Tax Act 1984 there shall be inserted the following sections--

" 219A Power to call for documents etc

(1) An officer of the Board may by notice in writing require any person who has delivered, or is liable to deliver, an account under section 216 or 217 above, within such time as may be specified in the notice--

(a) to produce to the officer such documents as are in the person's possession or power and as the officer may reasonably require for any of the purposes mentioned in subsection (2) below; and

(b) to furnish the officer with such accounts or particulars as he may reasonably require for any of those purposes.

(2) The purposes are--

(a) enquiring into an account under section 216 or 217 above (including any claim or election included in the account);

(b) determining whether and, if so, the extent to which such an account is incorrect or incomplete; and

(3) To comply with a notice under subsection (1) above, copies of documents may be produced instead of originals; but the copies must be photographic or otherwise by way of facsimile.

(4) If so required by a notice in writing given by the officer, in the case of any document specified in the notice, the original of any copy produced under subsection (3) above must be produced for inspection by him within such time as may be specified in the notice.

(5) The time specified in a notice under subsection (1) or (4) above shall not be less than thirty days.

(6) The officer may take copies of, or make extracts from, any document produced to him under subsection (1) or (4) above.

(7) A notice under subsection (1) above does not oblige a person to produce documents or furnish accounts or particulars relating to the conduct of any pending appeal by him.

219B Appeal against requirement to produce documents etc

(1) An appeal may be brought against any requirement imposed by a notice under section 219A(1) above to produce any document or to furnish any accounts or particulars.

(2) Subject to the following provisions of this section, the provisions of this Act relating to appeals shall have effect in relation to an appeal under this section as they have effect in relation to an appeal against a determination specified in a notice under section 221 below.

(3) An appeal under this section must be brought within the period of thirty days beginning with the date on which the notice under section 219A(1) above is given.

(4) On an appeal under this section the Special Commissioners may--

(a) if it appears to them that the production of the document or the furnishing of the accounts or particulars was reasonably required by the officer of the Board for any of the purposes mentioned in section 219A(2) above, confirm the notice under section 219A(1) above so far as relating to the requirement; or

(b) if it does not so appear to them, set aside that notice so far as so relating.

(5) Where, on an appeal under this section, the Special Commissioners confirm the notice under section 219A(1) above so far as relating to any requirement, the notice shall have effect in relation to that requirement as if it had specified thirty days beginning with the determination of the appeal.

(6) Neither the person required to produce documents or furnish accounts or particulars nor the officer of the Board shall be entitled to appeal under section 225 below against the determination of an appeal under this section. "

107 Inland revenue charge

(1) In subsection (3) of section 237 of the [1984 c. 51.] Inheritance Tax Act 1984 (imposition of Inland Revenue charge), for ""personal property" includes leaseholds" there shall be substituted ""personal property" does not include leaseholds".

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

" (3B) Subsection (3C) below applies to any tax charged--

(a) under section 32, 32A or 79(3) above in respect of any property,

(b) under paragraph 8 of Schedule 4 to this Act in respect of any property, or

(3C) Where any tax to which this subsection applies, or any interest on it, is for the time being unpaid, a charge for the amount unpaid is also by virtue of this section imposed in favour of the Board--

(a) except where the event giving rise to the charge was a disposal to a purchaser of the property or object in question, on that property or object; and

(b) in the excepted case, on any property for the time being representing that property or object. "

(3) Subsection (1) above has effect in relation to deaths occurring on or after 9th March 1999; and subsection (2) above has effect in relation to tax charged on or after that day.

108 Penalties

(1) For section 245 of the [1984 c. 51.] Inheritance Tax Act 1984 (failure to provide information) there shall be substituted the following sections--

" 245 Failure to deliver accounts

(1) This section applies where a person ("the taxpayer") fails to deliver an account under section 216 or 217 above.

(2) The taxpayer shall be liable--

(a) to a penalty not exceeding £100; and

(b) to a further penalty not exceeding £60 for every day after the day on which the failure has been declared by a court or the Special Commissioners and before the day on which the account is delivered.

(3) If--

(a) proceedings in which the failure could be declared are not commenced before the end of the relevant period, and

(b) the taxpayer has not delivered the account by the end of that period,

he shall be liable to a further penalty not exceeding £100.

(4) In subsection (3) above "the relevant period" means the period of six months beginning immediately after the end of the period given by section 216(6) or (7) or section 217 above (whichever is applicable).

(5) If the taxpayer proves that his liability to tax does not exceed a particular amount, the penalty under subsection (2)(a) above, together with any penalty under subsection (3) above, shall not exceed that amount.

(6) A person shall not be liable to a penalty under subsection (2)(b) above if he delivers the account required by section 216 or 217 before proceedings in which the failure could be declared are commenced.

(7) A person who has a reasonable excuse for failing to deliver an account shall not be liable by reason of that failure to a penalty under this section, unless he fails to deliver the account without unreasonable delay after the excuse has ceased.

245A Failure to provide information etc

(1) A person who fails to make a return under section 218 above shall be liable--

(a) to a penalty not exceeding £300; and

(b) to a further penalty not exceeding £60 for every day after the day on which the failure has been declared by a court or the Special Commissioners and before the day on which the return is made.

(2) A person who fails to comply with a notice under section 219 above shall be liable--

(a) to a penalty not exceeding £300; and

(b) to a further penalty not exceeding £60 for every day after the day on which the failure has been declared by a court or the Special Commissioners and before the day on which the notice is complied with.

(3) A person who fails to comply with a notice under section 219A(1) or (4) above shall be liable--

(a) to a penalty not exceeding £50; and

(b) to a further penalty not exceeding £30 for every day after the day on which the failure has been declared by a court or the Special Commissioners and before the day on which the notice is complied with.

(4) A person shall not be liable to a penalty under subsection (1)(b), (2)(b) or (3)(b) above if--

(a) he makes the return required by section 218 above,

(b) he complies with the notice under section 219 above, or

before proceedings in which the failure could be declared are commenced.

(5) A person who has a reasonable excuse for failing to make a return or to comply with a notice shall not be liable by reason of that failure to a penalty under this section, unless he fails to make the return or to comply with the notice without unreasonable delay after the excuse has ceased. "

(2) In section 247 of that Act (provision of incorrect information)--

(a) in subsection (1)--

(i) for "£50 and twice the difference" there shall be substituted "£3,000 and the difference"; and

(ii) for "£50", in the other place where it occurs, there shall be substituted "£1,500";

(b) in subsection (3), for "£500" and "£250" there shall be substituted "£3,000" and "£1,500" respectively; and

(3) Subsection (1) above does not have effect in relation to a failure by any person--

(a) to deliver an account under section 216 or 217 of the [1984 c. 51.] Inheritance Tax Act 1984,

(b) to make a return under section 218 of that Act, or

where the period within which the person is required to perform the obligation in question expires before the day on which this Act is passed.

(4) Subsection (2) above has effect in relation to incorrect accounts, information or documents delivered, furnished or produced on or after the day on which this Act is passed.

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