Finance Act 2001 (c. 9)

(The document as of February, 2008)

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(b) so far as relating to the amendment made by paragraph 3 of Schedule 31 to this Act, has effect in relation to supplies made, or to be made, on or after 1st November 2001.

100 VAT representatives

(1) In section 48 of the Value Added Tax Act 1994 (VAT representatives), in subsection (1) (directions requiring appointment of representative), for paragraph (b) substitute--

" (b) is not established, and does not have any fixed establishment, in the United Kingdom;

(ba) is established in a country or territory in respect of which it appears to the Commissioners that the condition specified in subsection (1A) below is satisfied; and " .

(2) After that subsection insert--

" (1A) The condition mentioned in subsection (1)(ba) above is that--

(a) the country or territory is neither a member State nor a part of a member State, and

(b) there is no provision for mutual assistance between the United Kingdom and the country or territory similar in scope to the assistance provided for between the United Kingdom and each other member State by the mutual assistance provisions.

(1B) In subsection (1A) above "the mutual assistance provisions" means--

(a) section 11 of the Finance Act 1977 (c. 36) (recovery of duty due etc. in other member States),

(b) section 77 of the Finance Act 1978 (c. 42) (disclosure of tax information to tax authorities in other member States), and

(c) Council Regulation (EEC) No. 218/92 of 27th January 1992 on administrative cooperation in the field of indirect taxation (VAT). " .

(3) For subsection (2) of that section (power of taxable person to appoint representative) substitute--

" (2) With the agreement of the Commissioners, a person--

(a) who has not been required under subsection (1) above to appoint another person to act on his behalf in relation to VAT, and

(b) in relation to whom the conditions specified in paragraphs (a), (b) and (c) of that subsection are satisfied,

may appoint another person to act on his behalf in relation to VAT.

(2A) In this Act "VAT representative" means a person appointed under subsection (1) or (2) above. "

(4) The amendments made by this section come into force on 31st December 2001.

Petroleum revenue tax

101 PRT: unrelievable field losses

(1) In section 6 of the Oil Taxation Act 1975 (c. 22) (allowance of unrelievable loss from abandoned field), for subsections (1) and (1A) substitute--

" (1) In the case of a participator in an oil field, an allowable unrelievable field loss is the unrelievable portion of an allowable loss falling within subsection (1B) below.

(1A) Subsection (1) above is subject to subsections (5) to (9) below and Schedule 8 to this Act.

(1B) An allowable loss falls within this subsection if--

(a) the loss accrued in any chargeable period from another field ("the abandoned field"),

(b) the person to whom the loss accrued is--

(i) the participator, or

(ii) if the participator is a company, a company associated with the participator in respect of the loss (see subsection (3) below),

(d) the winning of oil from the abandoned field has permanently ceased.

(1C) The "unrelievable portion" of an allowable loss falling within subsection (1B) above is so much of that loss as cannot under the provisions of section 7 of this Act be relieved against assessable profits accruing from the abandoned field to the person to whom the loss accrued.

(1D) Subsection (1C) above is subject to Schedule 32 to the Finance Act 2001 (determination of unrelievable portion where Parts 2 and 3 of Schedule 17 to the Finance Act 1980 did not apply to transfer of interest in abandoned field). " .

(2) In subsection (2) of that section, for "subsection (1) above" substitute "subsection (1B) above".

(3) In section 113(2) of the Finance Act 1984 (c. 43)--

(a) for the words from "which, in the case" to "in subsection (1)" substitute "falling within subsection (1B)"; and

(b) for "from that other field" substitute "from the abandoned field".

(4) Schedule 32 to this Act has effect.

(5) The provisions of this section shall be deemed to have come into force on 7th March 2001.

102 PRT: allowable decommissioning expenditure

(1) In section 3 of the Oil Taxation Act 1975 (c. 22) (allowable expenditure), for subsections (1C) and (1D) (apportionment of decommissioning expenditure) substitute--

" (1C) In any case where--

(a) any expenditure incurred by a participator in a taxable field would, apart from this subsection, be allowable for the field under subsection (1)(i) or (j) above, and

(b) the qualifying asset that is relevant to the incurring of that expenditure has at some time been used otherwise than in connection with the field,

only the relevant portion of the expenditure is allowable for the field under subsection (1)(i) or (j) above.

(1D) In subsection (1C) above "the relevant portion" of the expenditure is the portion of the expenditure that it is just and reasonable to apportion to use of the asset that is use in connection with the field.

(1E) Subsections (1C) and (1D) above have effect subject to the transitional provisions in section 102(5) to (11) of the Finance Act 2001. " .

(2) In subsection (6) of that section, for "subsection (1C) or subsection (1D)" substitute "subsections (1C) and (1D)".

(3) In section 10(2) of that Act (which, in particular, provides that although excluded oil is not oil for the purposes of section 3 of that Act it is oil for the purposes of section 3(1D)), for "subsection (1D)" substitute "subsections (1C) and (1D)".

(4) The amendments made by subsections (1) to (3) apply to expenditure incurred on or after 7th March 2001.

(5) Subsections (6) to (8) apply where--

(a) on or after 7th March 2001 a participator in a taxable field ("the transitional participator") incurs expenditure that falls to be apportioned under the new provision,

(b) the transitional participator was a participator in the field both immediately before, and at the beginning of, 7th March 2001,

(c) the qualifying asset that is relevant to the incurring of the expenditure was, at both of the times mentioned in paragraph (b), a qualifying asset in relation to the transitional participator and the field, and

(d) at a time before 7th March 2001--

(i) a person was a participator in two or more oil fields, and

(ii) the asset was a qualifying asset in relation to that person and each of at least two of those fields.

(6) If there would be no apportionment of the expenditure under the old provision, for the purpose of applying the new provision to the expenditure "the relevant portion" of the expenditure is the taxable field portion.

(7) If the expenditure would be apportioned between two or more oil fields under the old provision, for the purpose of applying the new provision to the expenditure "the relevant portion" of the expenditure is the portion of the taxable field portion which it is just and reasonable to apportion to use of the asset in connection with the field.

(8) In carrying out that apportionment of the taxable field portion, ignore use of the asset in connection with an oil field that is not one of the oil fields between which the expenditure would be apportioned under the old provision.

(9) In subsections (6) to (8) "the taxable field portion" means the portion of the expenditure that it is just and reasonable to apportion to use of the asset in connection with a taxable field.

(10) In subsections (5) to (8)--

"the new provision" means section 3(1C) of the Oil Taxation Act 1975 (c. 22) as substituted by subsection (1);
"the old provision" means section 3(1C) of that Act as it would have effect apart from the amendments made by subsections (1) to (3);
"qualifying asset" has the same meaning as it has for the purposes of the Oil Taxation Act 1983 (c. 56) (see section 8 of that Act).

(11) Subsections (5) to (10) shall be construed as one with Part 1 of the Oil Taxation Act 1975.

103 PRT: expenditure in certain gas-producing fields

(1) In section 10 of the Oil Taxation Act 1975 (modifications of Part 1 in connection with gas sold to the British Gas Corporation under contracts made before end of June 1975), for subsection (3) (modified apportionment rule for expenditure allowable under section 3(1)(a), (b), (c), (hh), (i) or (j)) substitute--

" (3) Subsections (3A) to (3H) below apply where, in the case of any taxable field, the oil--

(a) won and saved from the field, or

(b) expected to be won and saved from the field,

includes oil falling within subsection (1)(a) above.

(3A) Any expenditure allowable under section 3 of this Act for the field by virtue of any of paragraphs (a) to (c) of section 3(1) of this Act shall be a proportion of what it would otherwise have been.

(3B) The proportion mentioned in subsection (3A) above is that which, according to estimates submitted to the Secretary of State after the end of June 1975 and approved by him as reasonable, the field's original reserves of oil exclusive of oil falling within subsection (1)(a) above bear to the field's original reserves of oil inclusive of oil so falling.

(3C) Until estimates have been submitted and approved for the purpose of subsection (3B) above, the expenditure allowable for the field under section 3 of this Act by virtue of section 3(1)(a), (b) or (c) of this Act shall be deemed to be nil.

(3D) Any expenditure allowable under section 3 of this Act for the field by virtue of section 3(1)(hh) of this Act shall be a portion of what it would otherwise have been.

(3E) That portion is determined in accordance with the following rules--

1. Identify the abandonment guarantee (within the meaning given by section 104 of the Finance Act 1991 (c. 31)) on the obtaining of which the expenditure was incurred.

2. Identify the liabilities covered by the guarantee.

3. Identify which of those liabilities relate to qualifying assets.

4. Identify the portion of the expenditure that it is just and reasonable to apportion to the liabilities identified under rule 3.

5. Identify the qualifying assets to which the liabilities identified under rule 3 relate.

6. Identify the use of those qualifying assets that has been (or is expected to be) non-excluded use.

7. Assume that expenditure is incurred on the provision of those qualifying assets and identify the proportion of the hypothetical expenditure that it would be just and reasonable to apportion to the use of those assets identified under rule 6.

8. The portion mentioned in subsection (3D) above is then determined by multiplying--

(i) the portion identified under rule 4, by

(ii) the proportion (expressed as a fraction) identified under rule 7.

(3F) Any expenditure allowable under section 3 of this Act for the field by virtue of section 3(1)(i) or (j) of this Act shall be a portion of what it would otherwise have been.

(3G) That portion is determined in accordance with the following rules--

1. Identify the qualifying asset that is relevant to the incurring of the expenditure.

2. Identify the use of that qualifying asset that has been non-excluded use.

3. Assume that expenditure is incurred on the provision of that qualifying asset and identify the proportion of the hypothetical expenditure that it would be just and reasonable to apportion to the use of that asset identified under rule 2.

4. The portion mentioned in subsection (3F) above is then determined by multiplying--

(i) the expenditure, by

(ii) the proportion (expressed as a fraction) identified under rule 3.

(3H) In subsections (3E) and (3G) above--

"non-excluded use" means--
(a)
use in connection with the winning and saving of oil, other than excluded oil, from the field, or
(b)
use giving rise to receipts that, for the purposes of the Oil Taxation Act 1983 (c. 56), are tariff receipts attributable to a participator in the field;
"qualifying asset" has the same meaning as it has for the purposes of the Oil Taxation Act 1983 (see section 8 of that Act). " .

(2) The amendments made by this section apply to expenditure incurred on or after 7th March 2001.

Landfill tax

104 Landfill tax: rate

(1) In section 42 of the Finance Act 1996 (c. 8) (amount of landfill tax), in subsections (1)(a) and (2) for "£11" substitute "£12".

(2) This section has effect in relation to taxable disposals made, or treated as made, on or after 1st April 2001.

Climate change levy

105 Climate change levy

(1) Schedule 6 to the Finance Act 2000 (c. 17) (climate change levy) is amended as follows.

(2) After paragraph 11 insert--

" Exemption: Northern Ireland gas supplies

11A A supply of gas is exempt from the levy if--

(a) the supply is made by a gas utility, and

(b) the person to whom the supply is made intends to cause the gas to be burned in Northern Ireland. " .

(3) In paragraph 14(2) (exemption for supplies to electricity producers does not apply to supplies to exempt unlicensed electricity suppliers, no matter what the electricity they produce is used for), at the end insert-- " , and

(4) For paragraph 14(3)(c) (uses of electricity produced by an auto-generator that cause auto-generator to lose benefit of exemption for supplies to electricity producers), substitute--

" (c) uses the electricity produced otherwise than in exemption-retaining ways. " .

(5) In paragraph 14, after sub-paragraph (3) insert--

" (3A) For the purposes of this paragraph, electricity is used in an "exemption-retaining" way if it is used--

(a) in making supplies that are excluded under paragraphs 8 to 10 or exempt under any of paragraphs 11, 12 and 18, or

(b) in any of the ways mentioned in sub-paragraphs (i) to (iv) of paragraph 13(b). " .

(6) In paragraph 15(1)(a) (exemption for supplies to combined heat and power stations), for "the commodity is to be used by that person" there is substituted "that person intends to cause the commodity to be used".

(7) The amendments made by this section have effect in relation to supplies made on or after 1st April 2001.

Inheritance tax

106 Transfers within group etc

(1) Section 97 of the Inheritance Tax Act 1984 (c. 51) (transfers within group etc.) is amended as follows.

(2) In subsection (1) (minority participators in close company to be excluded from apportionment under section 94) for paragraph (a) (disposals to which section 171(1) of the Taxation of Chargeable Gains Act 1992 (c. 12) applies which are also transfers of value) substitute--

" (a) there is--

(i) a disposal of an asset by the transferor company, which is a disposal to which section 171(1) of the 1992 Act applies, or

(ii) by virtue of an election under section 171A(2) of that Act, a deemed transfer by the transferor company to another member of the group,

(aa) the disposal is also, or the deemed transfer gives rise to, a transfer of value, and " .

(3) The amendment made by this section has effect, and shall be taken always to have had effect, in relation to disposals made, or transfers deemed to have been made, on or after 1st April 2000.

Part 5 Miscellaneous and supplementary provisions

Miscellaneous

107 Interest on unpaid tax, etc.: foot-and-mouth disease

(1) This section applies in any case where, in exercise of their powers of care and management, the Commissioners of Inland Revenue agree that, by reason of circumstances arising as a result of the outbreak of foot-and-mouth disease, the payment of tax by a person may be deferred.

For this purpose "tax" includes any amount chargeable by way of tax, or as a result of the non-payment of tax, in respect of which interest would, apart from this section, be chargeable.

(2) Where this section applies no interest on the amount deferred shall be chargeable in respect of the period--

(a) beginning with 31st January 2001 or, if the Commissioners so direct in any case, any later date from which the agreement for deferred payment has effect, and

(b) ending with the date on which the agreement for deferred payment ceases to have effect.

(3) An agreement for deferred payment ceases to have effect at the end of the period of deferment specified in the agreement, subject as follows.

An agreement for deferred payment shall be treated as not ceasing to have effect if, or to the extent that, the Commissioners agree (whether before or after the end of the period of deferment specified in the agreement) to extend that period by reason of circumstances arising as a result of the outbreak of foot-and-mouth disease.

(4) For the purposes of subsection (3) as it applies to an agreement for payment by instalments, the period of deferment in relation to each instalment ends with the date on or before which that instalment is to be paid.

But if any instalment is not paid by the agreed date and the Commissioners do not agree in accordance with that subsection to extend the period of deferment, the whole agreement shall be treated as ceasing to have effect on that date.

(5) This section shall cease to have effect on a date specified by the Treasury by order made by statutory instrument.

This is without prejudice to its continued operation in relation to an agreement for deferred payment made by the Commissioners before the specified date.

(6) This section applies--

(a) whether the agreement for deferred payment was made before or after the passing of this Act, and

(b) whether the agreement for deferred payment was made before or after the amount to which it relates became due and payable.

(7) If in any case the Commissioners are satisfied that, although no agreement for deferred payment such as is mentioned in subsection (1) was made, such an agreement could have been made, this section shall apply as if such an agreement had been made.

The terms of the notional agreement shall be assumed to be such as the Commissioners are satisfied would have been agreed in the circumstances.

108 Trading funds

(1) Section 2C of the Government Trading Funds Act 1973 (c. 63) (limits on borrowing and public dividend capital) is amended as follows.

(2) In subsection (3) (upper limit on aggregate of borrowing etc. maxima of trading funds), for "£2,000 million" substitute "£8,000 million".

(3) In subsection (4) (power to increase limit in subsection (3) but not above £4,000 million), for "£4,000 million" substitute "£10,000 million".

Supplementary

109 Interpretation

In this Act "the Taxes Act 1988" means the Income and Corporation Taxes Act 1988 (c. 1).

110 Repeals and revocations

(1) The enactments mentioned in Schedule 33 to this Act (which include provisions that are spent or of no practical utility) are repealed or revoked to the extent specified.

(2) The repeals and revocations specified in that Schedule have effect subject to the commencement provisions and savings contained or referred to in the notes set out in that Schedule.

111 Short title

This Act may be cited as the Finance Act 2001.

SCHEDULES

Section 6.

SCHEDULE 1 General betting duty

For sections 1 to 5 of the Betting and Gaming Duties Act 1981 (c. 63) (general betting duty: charge, rate and payment) substitute--

" General betting duty

1 The duty

A duty of excise to be known as general betting duty shall be charged in accordance with sections 2 to 5D.

2 Bookmakers: general bets

(1) General betting duty shall be charged on a bet made with a bookmaker who is in the United Kingdom.

(2) Subsection (1) does not apply to--

(a) an on-course bet,

(b) a spread bet,

(d) a bet made by way of coupon betting.

(3) The amount of duty charged in respect of bets made with a bookmaker in an accounting period shall be 15 per cent. of the amount of his net stake receipts for that period.

3 Bookmakers: spread bets

(1) General betting duty shall be charged on a spread bet made with a bookmaker who--

(a) is in the United Kingdom, and

(b) holds a bookmaker's permit.

(2) A bet is a spread bet if it constitutes a contract to which section 63 of the Financial Services Act 1986 applies by virtue of paragraphs 9 and 12 of Schedule 1 to that Act (gaming contracts: investments).

(3) The amount of duty charged under subsection (1) in respect of spread bets made with a bookmaker in an accounting period shall be--

(a) 3 per cent. of the amount of his net stake receipts in respect of financial spread bets for that period (if any), plus

(b) 10 per cent. of the amount of his net stake receipts in respect of other spread bets for that period (if any).

(4) A "financial spread bet" is a spread bet the subject of which is a financial matter.

(5) The Commissioners may by order provide that a specified matter--

(a) shall be treated as a financial matter for the purpose of subsection (4), or

(b) shall not be treated as a financial matter for that purpose.

4 Other betting

(1) General betting duty shall be charged on sponsored pool betting.

(2) General betting duty shall be charged on a bet made by means of facilities provided by the Horserace Totalisator Board.

(3) General betting duty shall be charged on a bet made on an event on a track falling within subsection (4) if the bet is made--

(a) by means of a totalisator which operates on that track, and

(b) on the day of the event.

(4) A track falls within this subsection if--

(a) a track betting licence is in force for the track under Schedule 3 to the Betting, Gaming and Lotteries Act 1963,

(b) a track betting licence is in force for the track under Article 37 of the Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985, or

(5) The amount of duty charged under subsections (1) to (3) in respect of bets made by means of facilities provided by a person in an accounting period shall be 15 per cent. of the amount of his net stake receipts for that period.

(6) Subsections (1) to (3) do not apply to--

(a) on-course bets, or

(b) coupon betting.

5 Net stake receipts

(1) For the purposes of a charge under a provision of sections 2 to 4 in respect of the class of bets to which the provision applies, the amount of a person's net stake receipts for an accounting period is X minus Y, where--

(a) X is the aggregate of amounts which fall due to that person in the accounting period in respect of bets of that class made with him, and

(b) Y is the aggregate of amounts paid by the person in that period by way of winnings to persons who made bets of that class with him (irrespective of when the bets were made or determined).

(2) Where--

(a) a person makes a bet other than a spread bet, and

(b) the sum which he will lose if unsuccessful is known when the bet is made,

that sum shall be treated for the purposes of subsection (1)(a) as falling due when the bet is made (irrespective of when it is actually paid or required to be paid).

(3) Where the amount of a person's net stake receipts is zero or a negative amount, it shall be disregarded for the purposes of sections 2 to 4.

(4) In calculating an amount due to a person in respect of a bet, no deduction shall be made in respect of--

(a) any other benefit secured by the person who makes the bet as a result of paying the money,

(b) a person's expenses, whether in paying duty or otherwise, or

(5) Where a person makes a bet in pursuance of an offer which permits him to pay nothing or less than the amount which he would have been required to pay without the offer, he shall be treated for the purposes of this section as being due to pay that amount--

(a) to the person with whom the bet is made, and

(b) at the time when the bet is made.

(6) For the purpose of subsection (1)(b)--

(a) the reference to paying an amount to a person includes a reference to holding it in an account if the person is notified that the amount is being held for him in the account and that he is entitled to withdraw it on demand,

(b) the return of a stake shall be treated as a payment by way of winnings, and

(7) In the application of this section to a charge under section 4(1) to (3), a reference to bets made with a person shall be treated as a reference to bets made by means of facilities provided by him.

5A Multiple bets

(1) Subject to subsection (3), this section applies where--

(a) a person bets on more than one contingency, and

(b) he bets on terms that if his bet in respect of one contingency is successful the stake or winnings will be carried forward as the stake in respect of another contingency.

(2) Where this section applies--

(a) the person mentioned in subsection (1)(a) shall be treated for the purposes of sections 2 to 4 as making a separate bet on each contingency, and

(b) each bet which depends on the result of an earlier bet shall be treated as being made at the time of that result.

(3) This section does not apply where a person bets on more than one contingency if--

(a) the betting takes the form of a single bet or of bets placed at a single time, and

(b) the terms mentioned in subsection (1) do not permit the arrangement for carrying forward to be varied or terminated.

(4) In subsection (1)(b) the reference to "the stake or winnings" includes a reference to--

(a) any part of the stake,

(b) any part of the winnings, and

5B Liability to pay

(1) At the end of each accounting period all general betting duty chargeable in respect of bets made in the period shall become due.

(2) In the case of bets made with a bookmaker in an accounting period the general betting duty shall be paid--

(a) when it becomes due, and

(b) by the bookmaker.

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