Finance Act 2002 (c. 23)

(The document as of February, 2008)

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(2) The Secretary of State may by regulations make provision--

(a) for assessing an amount of supplement due under section 7A from any person and for notifying that amount to that person or any person acting in a representative capacity in relation to that person;

(b) for an amount assessed and notified under such regulations to be deemed to be an amount of vehicle excise duty due from the person assessed and recoverable accordingly;

(c) for review of decisions under such regulations and for appeals with respect to such decisions or decisions on such reviews.

(3) Regulations under subsection (2) may, in particular, make provision that, subject to any modifications that the Secretary of State considers appropriate, corresponds or is similar to--

(a) any provision made by sections 12A and 12B of the Finance Act 1994 (assessments related to excise duty matters), or

(b) any provision made by sections 14 to 16 of that Act (customs and excise reviews and appeals).

(4) Sums received by way of supplements under section 7A shall be paid into the Consolidated Fund. " .

6 (1) In section 22 (registration regulations), in subsection (1D) (power to require details about unlicensed vehicles), after paragraph (a) insert--

" (aa) who does not renew a vehicle licence for a vehicle registered under this Act in his name, " .

(2) After that subsection insert--

" (1DA) For the purposes of subsection (1D)(aa) a person shall be regarded as not renewing a vehicle licence for a vehicle registered in his name if--

(a) a vehicle for which a vehicle licence is in force is registered in his name, and

(b) he does not, at such time as may be prescribed by the regulations or within such period as may be so prescribed, take out a vehicle licence to have effect from the expiry of the vehicle licence mentioned in paragraph (a). " .

7 In section 29(7) (rate of duty by reference to which penalty is calculated), for "section 2(2) to (4)" substitute "section 2(3) to (6)".

8 After section 31 insert--

" Offence of being registered keeper of unlicensed vehicle

31A Offence by registered keeper where vehicle unlicensed

(1) If a vehicle registered under this Act is unlicensed, the person in whose name the vehicle is registered is guilty of an offence.

(2) For the purposes of this section a vehicle is unlicensed if no vehicle licence or trade licence is in force for or in respect of the vehicle.

(3) Subsection (1) does not apply to a vehicle if--

(a) it is an exempt vehicle in respect of which regulations under this Act require a nil licence to be in force and a nil licence is in force in respect of the vehicle, or

(b) it is an exempt vehicle that is not one in respect of which regulations under this Act require a nil licence to be in force.

(4) Where a vehicle for which a vehicle licence is in force is transferred by the holder of the licence to another person, the licence is to be treated for the purposes of subsection (2) as no longer in force unless it is delivered to the other person with the vehicle.

(5) Where--

(a) an application is made for a vehicle licence for any period, and

(b) a temporary licence is issued pursuant to the application,

subsection (4) does not apply to the licence applied for if, on a transfer of the vehicle during the currency of the temporary licence, the temporary licence is delivered with the vehicle to the transferee.

31B Exceptions to section 31A

(1) A person ("the registered keeper") in whose name an unlicensed vehicle is registered at any particular time ("the relevant time") does not commit an offence under section 31A at that time if any of the following conditions are satisfied.

(2) The first condition is that the registered keeper--

(a) is not at the relevant time the person keeping the vehicle, and

(b) if previously he was the person keeping the vehicle, he has by the relevant time complied with any requirements under section 22(1)(d)--

(i) that are prescribed for the purposes of this condition, and

(ii) that he is required to have complied with by the relevant or any earlier time.

(3) The second condition is that--

(a) the registered keeper is at the relevant time the person keeping the vehicle,

(b) at the relevant time the vehicle is neither kept nor used on a public road, and

(i) that are prescribed for the purposes of this condition, and

(ii) that he is required to have complied with by the relevant or any earlier time.

(4) The third condition is that--

(a) the vehicle has been stolen before the relevant time,

(b) the vehicle has not been recovered by the relevant time, and

(c) any requirements under subsection (6) that, in connection with the theft, are required to have been complied with by the relevant or any earlier time have been complied with by the relevant time.

(5) The fourth condition is that the relevant time falls within a period ("the grace days")--

(a) beginning with the expiry of the last vehicle licence to be in force for the vehicle, and

(b) of a prescribed length,

and a vehicle licence for the vehicle is taken out within the grace days for a period beginning with the grace days.

(6) The Secretary of State may by regulations make provision for the purposes of subsection (4)(c) as to the persons to whom, the times at which and the manner in which the theft of a vehicle is to be notified.

(7) The Secretary of State may by regulations make provision amending this section for the purpose of providing for further exceptions to section 31A(1) (or varying or revoking any such further exceptions).

(8) A person accused of an offence under section 31A(1) is not entitled to the benefit of an exception conferred by or under this section unless evidence is adduced that is sufficient to raise an issue with respect to that exception, but where evidence is so adduced it is for the prosecution to prove beyond reasonable doubt that the exception does not apply.

(9) In this section--

(a) references to the expiry of a vehicle licence include a reference to--

(i) its surrender, and

(ii) its being treated as no longer in force for the purposes of subsection (2) of section 31A by subsection (4) of that section;

(b) "prescribed" means prescribed by regulations made by the Secretary of State.

31C Penalties for offences under section 31A

(1) A person guilty of an offence under section 31A(1) is liable on summary conviction to--

(a) an excise penalty of--

(i) level 3 on the standard scale, or

(ii) five times the amount of vehicle excise duty chargeable in respect of the vehicle concerned,

whichever is the greater; and

(b) if subsection (3) applies to him, an excise penalty (in addition to any under paragraph (a)) of an amount that complies with subsection (2).

(2) An amount complies with this subsection if it--

(a) is not less than the greater of--

(i) the maximum of the penalty to which the person is liable under subsection (1)(a), and

(ii) the amount of the supplement (if any) that became payable by him by reason of non-renewal of the vehicle licence for the vehicle that last expired before the commission of the offence; and

(b) is not more than the greatest of--

(i) the maximum of the penalty to which the person is liable under subsection (1)(a),

(ii) the amount mentioned in paragraph (a)(ii), and

(iii) ten times the amount of vehicle excise duty chargeable in respect of the vehicle.

(3) This subsection applies to the person if--

(a) he was, at the time proceedings for the offence were commenced, the person in whose name the vehicle concerned was registered under this Act, and

(b) that vehicle was unlicensed throughout the period beginning with the commission of the offence and ending with the commencement of those proceedings.

(4) The amount of vehicle excise duty chargeable in respect of a vehicle is to be taken for the purposes of subsections (1) and (2) to be an amount equal to the annual rate of duty applicable to the vehicle at the date on which the offence was committed.

(5) Where in the case of a vehicle kept (but not used) on a public road that annual rate differs from the annual rate by reference to which the vehicle was at that date chargeable under section 2(3) to (6), the amount of the vehicle excise duty chargeable in respect of the vehicle is to be taken for those purposes to be an amount equal to the latter rate.

(6) In the case of a conviction for a continuing offence, the offence is to be taken for the purposes of subsections (4) and (5) to have been committed on the date or latest date to which the conviction relates.

(7) In this section, references to the expiry of a vehicle licence include a reference to--

(a) its surrender, and

(b) its being treated as no longer in force for the purposes of subsection (2) of section 31A by subsection (4) of that section.

Offences under sections 29 and 31A: supplementary " .

9 (1) In section 32 (sections 29 to 31: supplementary), in subsection (1) (discharges to be treated as convictions)--

(a) in the words before paragraph (a), after "section 29" insert "or 31A", and

(b) in the words after paragraph (c), after "sections 29 to 31" insert "or (as the case may be) sections 31A to 31C".

(2) In the heading of that section, for "31" substitute "31C".

10 In section 33(3)(b) (offences of not exhibiting licence are without prejudice to offences of not having a licence), after "sections 29" insert ", 31A".

11 In section 34(4) (rate of duty by reference to which penalty is calculated), for "section 2(2) to (4)" substitute "section 2(3) to (6)".

12 In section 47 (proceedings in England and Wales or Northern Ireland), in each of subsections (1) and (2)(a) (who may prosecute and time limit), after "section 29," insert "31A,".

13 In section 48(3)(a) (proceedings in Scotland: time limit), after "section 29," insert "31A,".

14 In section 53 (burden of proof of certain matters in proceedings for certain offences), after "section 29," insert "31A,".

15 In section 54 (single witness sufficient in Scottish proceedings), after "section 29" insert ", 31A".

16 In section 57 (regulations), after subsection (7) insert--

" (7A) Subsection (7) does not apply to a statutory instrument containing regulations under section 7A to which subsection (6) of that section applies. " .

17 In section 62(1) (definitions), for the definition of "vehicle" substitute--

" "vehicle" shall be construed in accordance with section 1(1B); " .

Section 37

SCHEDULE 6 Minor amendments to Schedule E charge

Share options

1 In section 135 of the Taxes Act 1988 (gains by directors and employees from share options), for subsection (5)(a) substitute--

" (a) the amount so charged shall be deducted from any amount which is chargeable under subsection (1) above by reference to the gain realised by the exercise, assignment or release of that right; and " .

Credit-tokens and non-cash vouchers

2 In section 144 of the Taxes Act 1988 (supplementary provisions relating to vouchers and credit-tokens), after subsection (4) insert--

" (4A) Section 142(1) has effect as if--

(a) use of a credit-token by a relation of an employee were use of the token by the employee, and

(b) money, goods or services obtained by a relation of an employee by use of a credit-token were money, goods or services obtained by the employee by the employee's use of the token. " .

3 In each of the following provisions of the Taxes Act 1988--

(a) section 157 (cars available for private use),

(b) section 159AA (vans available for private use), and

in subsection (3)(b) after "him" insert "or a relation of his (within the meaning of section 144)".

Taxation of benefit where income received free of tax

4 In section 144A(1) of the Taxes Act 1988 (payments etc received free of tax), for the words from "income of the employee" to the end substitute "emoluments of the employment and charged to income tax under Schedule E for the tax year in which the date mentioned in paragraph (c) above falls".

Benefits in connection with termination of employment or change in duties or emoluments

5 In section 148 of the Taxes Act 1988 (payments and other benefits in connection with termination of employment, etc), for subsection (2) substitute--

" (2) For the purposes of this section "benefit" includes anything which, disregarding any exemption--

(a) would be an emolument of the employment, or

(b) would be chargeable to tax as an emolument of the employment,

if received for the performance of the duties of the employment.

(2A) But subsection (1) does not apply--

(a) to any payment or other benefit received in connection with any change in the duties of, or emoluments from, a person's employment to the extent that it is a benefit which, if received for the performance of the duties of the employment, would fall within paragraph 1(1) of Schedule 11A, or

(b) to any payment or other benefit received in connection with the termination of a person's employment--

(i) that is a benefit which, if received for the performance of the duties of the employment, would fall within section 155(1) or (5), 155AA, 156A, 157(3), 159AA(3), 159AC(3), 200B(2)(b), 200E(2)(b), 588(1), 589A or 643(1), or

(ii) to the extent that it is a benefit which, if so received, would not be included in the emoluments of that person by virtue of section 200D(1) or 200J(2). " .

Priority between charges under sections 148 and 595 of the Taxes Act 1988

6 In section 595 of the Taxes Act 1988 (charge to tax in respect of certain sums paid by employer etc), in subsection (1)(a) after "if" insert "(disregarding section 148) it is".

Section 43

SCHEDULE 7 Chargeable gains: roll-over of degrouping charge: modification of enactments

The following Schedule is inserted after Schedule 7AA to the Taxation of Chargeable Gains Act 1992 (c. 12)--

" SCHEDULE 7AB Roll-over of degrouping charge: modification of enactments

Introductory

1 (1) This Schedule sets out how sections 152 and 153 and other related enactments are modified for the purposes of section 179B (roll-over of degrouping charge on business assets).

(2) In the enactments as so modified--

"company A" and "company B" have the same meanings as in section 179;
"relevant asset" means the asset mentioned in section 179B(1);
"deemed sale" means the sale of the relevant asset that is treated as taking place by virtue of section 179(3) or (6);
"deemed sale consideration" means the amount for which company A is treated as having sold the relevant asset;
"time of accrual" means--
(a)
in a case where section 179(3) applies, the time at which, by virtue of section 179(4), the gain or loss accruing on the deemed sale is treated as accruing to company A;
(b)
in a case where section 179(6) applies, the latest time at which the company satisfies the conditions in section 179(7).

Section 152

2 (1) For subsection (1) of section 152 (roll-over relief) substitute--

" (1) If--

(a) company B was carrying on a trade at the time when it disposed of the relevant asset to company A,

(b) the relevant asset was used, and used only, for the purposes of that trade throughout the period when it was owned by company B,

(c) an amount that is not less than the deemed sale consideration is applied by company A in acquiring other assets, or an interest in other assets ("the new assets"),

(d) on acquisition the new assets are taken into use, and used only, for the purposes of a trade carried on by company A,

(e) both the relevant asset and the new assets are within the classes of assets listed in section 155, and

(f) company A makes a claim as respects the amount applied as mentioned in paragraph (c),

company A shall be treated for the purposes of this Act as if the deemed sale consideration were (if otherwise of a greater amount) reduced to such amount as would secure that neither a gain nor a loss accrues to the company in respect of the deemed sale.

(1A) Where subsection (1) applies, company A shall be treated for the purposes of this Act as if the amount or value of the consideration for the acquisition of, or of the interest in, the new assets were reduced by the same amount as the amount of the reduction under that subsection.

(1B) Subsection (1) does not affect the value at which company A is treated by virtue of section 179 as having reacquired the relevant asset.

(1C) Subsection (1A) does not affect the treatment for the purposes of this Act of the other party to the transaction involving the new assets. " .

(2) In subsection (2) of that section (application of subsection (1) where old assets held on 6th April 1965)--

(a) for "subsection (1)(a)" substitute "subsection (1)";

(b) for "subsection (1)(b)" substitute "subsection (1A)".

(3) In subsection (3) of that section (reinvestment period), for "after the disposal of, or of the interest in, the old assets" substitute "after the time of accrual".

(4) In subsection (5) of that section (new assets must be acquired for purposes of trade), for "the trade" substitute "the trade carried on by company A".

(5) In subsection (6) of that section (apportionment where part of building etc not used for purposes of trade), omit "or disposal" and insert at the end "or of the deemed sale consideration".

(6) After that subsection insert--

" (6A) In subsection (6) "period of ownership", in relation to the relevant asset, means the period during which the asset was owned by company B. " .

(7) In subsection (7) of that section (apportionment where old assets not used for purposes of trade throughout period of ownership)--

(a) for the words from the beginning to "period of ownership" substitute "If the relevant asset was not used for the purposes of the trade carried on by company B throughout the period during which it was owned by that company";

(b) for the words from "or disposal" to the end substitute "of the asset or of the deemed sale consideration".

(8) In subsection (9) of that section ("period of ownership" does not include period before 31st March 1982), for ""period of ownership" does not" substitute "the references to the period during which the relevant asset was owned by company B do not".

(9) In subsection (11) of that section (apportionment of consideration for assets not all of which are subject of claim), omit "or disposal" and insert at the end "; and similarly in relation to the deemed sale consideration".

Section 153

3 For subsection (1) of section 153 (assets only partly replaced) substitute--

" (1) If--

(a) an amount that is less than the deemed sale consideration is applied by company A in acquiring other assets, or an interest in other assets ("the new assets"),

(b) the difference between the deemed sale consideration and the amount so applied ("the shortfall") is less than the amount of the gain (whether all chargeable gain or not) accruing on the deemed sale,

(d) company A makes a claim as respects the amount applied as mentioned in paragraph (a) above,

company A shall be treated for the purposes of this Act as if the amount of the gain accruing as mentioned in paragraph (b) above were reduced to the same amount as the shortfall (with a proportionate reduction, if not all of that gain is chargeable gain, in the amount of the chargeable gain).

(1A) Where subsection (1) applies, company A shall be treated for the purposes of this Act as if the amount or value of the consideration for the acquisition of, or of the interest in, the new assets were reduced by the amount by which the gain is reduced (or as the case may be the amount by which the chargeable gain is proportionately reduced) under that subsection.

(1B) Subsection (1) does not affect the value at which company A is treated by virtue of section 179 as having reacquired the relevant asset.

(1C) Subsection (1A) does not affect the treatment for the purposes of this Act of the other party to the transaction involving the new assets. " .

Section 153A

4 (1) In subsection (1) of section 153A (provisional application of sections 152 and 153)--

(a) for the words from "a person" to "takes place" substitute "company A declares, in its return for the chargeable period in which the time of accrual falls";

(b) for "the trade" substitute "a trade carried on by company A";

(c) for "the whole or any specified part of the consideration" substitute "an amount equal to the deemed sale consideration or any specified part of that amount".

(2) In subsection (5) of that section (meaning of "relevant day"), for paragraphs (a) and (b) substitute "the fourth anniversary of the last day of the accounting period of company A in which the time of accrual falls".

Section 155

5 In section 155 (relevant classes of assets), in Head A of Class 1, after paragraph 2 insert-- " In Head A "the trade" means--

(a) for the purposes of determining whether the relevant asset is within this head, the trade carried on by company B;

(b) for the purposes of determining whether the new assets are within this head, the trade carried on by company A. " .

Section 159

6 (1) In subsection (1) of section 159 (new assets must be chargeable assets), for the words from "in the case of a person" to the second "in relation to him" substitute "if the relevant asset (or, as the case may be, the property mentioned in section 179(3)(b)) is a chargeable asset in relation to company A at the time of accrual, unless the new assets are chargeable assets in relation to that company".

(2) In subsection (2) of that section (subsection (1) not to apply where new assets acquired by UK resident after disposal of old ones)--

(a) for paragraph (a) substitute--

" (a) company A acquires the new assets after the time of accrual, and " ;

(b) in paragraph (b) for "the person" substitute "that company".

(3) In subsection (3) of that section (subsection (2) not to apply in certain cases where new assets acquired by dual resident), for "the person" substitute "company A".

(4) In subsection (6) of that section (definitions)--

(a) in paragraph (a) for ""the old assets" and "the new assets" have the same meanings" substitute ""the new assets" has the same meaning";

(b) omit paragraph (b).

(5) Omit subsection (7) of that section (acquisitions before 14th March 1989).

Section 175

7 (1) In subsection (2) of section 175 (single-trade rule for group members not to apply in case of dual resident investing company)--

(a) for "the consideration for the disposal of the old assets" substitute "the amount of the deemed sale consideration";

(b) for ""the old assets" and "the new assets" have the same meanings" substitute ""the new assets" has the same meaning".

(2) In subsection (2A) of that section (claim by two group members to be treated as same person for roll-over purposes), for paragraph (a) substitute--

" (a) company A is a member of a group of companies at the time of accrual, " .

(3) In subsection (2AA) of that section (conditions for claim under subsection (2A))--

(a) in paragraph (a) for the words from the beginning to "chargeable assets" substitute "that company A is resident in the United Kingdom at the time of accrual, or the relevant asset (or, as the case may be, the property mentioned in section 179(3)(b)) is a chargeable asset";

(b) in paragraph (b) for "the assets" substitute "the new assets (within the meaning of section 152)".

(4) Immediately before subsection (2B) of that section (roll-over relief for group member not itself carrying on trade) insert--

" (2AB) Section 152 or 153 shall apply where--

(a) company B was not carrying on a trade at the time when it disposed of the relevant asset to company A, but was a member of a group of companies at that time, and

(b) immediately before that time the relevant asset was used, and used only, for the purposes of the trade which (in accordance with subsection (1) above) is treated as carried on by the members of the group which carried on a trade,

as if company B had been carrying on that trade. " .

(5) In subsection (2B) of that section--

(a) omit paragraph (a);

(b) in paragraph (b), for "those purposes" substitute "the purposes of the trade which (in accordance with subsection (1) above) is treated as carried on by the members of the group which carry on a trade".

(6) Omit subsection (4) of that section (acquisitions before 20th March 1990).

Section 185

8 (1) In subsection (3) of section 185 (no roll-over relief in certain cases where company acquires new assets after becoming non-resident)--

(a) omit "the company";

(b) for paragraph (a) substitute--

" (a) the time of accrual falls before the relevant time; and " ;

(2) In subsection (5) of that section (definitions), in paragraph (c) for ""the old assets" and "the new assets" have the same meanings" substitute ""the new assets" has the same meaning".

Section 198

9 (1) For subsection (1) of section 198 (replacement of business assets used in connection with oil fields) substitute--

" (1) If at the time of accrual the relevant asset (or, as the case may be, the property mentioned in section 179(3)(b)) was used by company A for the purposes of a ring fence trade carried on by it, section 152 or 153 shall not apply unless the new assets are on acquisition taken into use, and used only, for the purposes of that trade. " .

(2) In subsection (3) of that section (new asset conclusively presumed to be depreciating asset), for "in relation to any of the consideration on a material disposal" substitute "in a case falling within subsection (1) above".

(3) In subsection (5) of that section (definitions), omit paragraph (a).

Schedule 22 to the Finance Act 2000

10 In sub-paragraph (2) of paragraph 67 of Schedule 22 to the Finance Act 2000 (c. 17) (no roll-over relief for tonnage tax assets)--

(a) after "the disposal", in the first and third places, insert "or deemed sale";

(b) in paragraph (a) after "Asset No.1" insert "or, as the case may be, the deemed sale consideration". " .

Section 44(2)

SCHEDULE 8 Chargeable gains: exemptions in case of substantial shareholding

Part 1 New Schedule 7AC to the Taxation of Chargeable Gains Act 1992

1 The following Schedule is inserted after Schedule 7AB to the Taxation of Chargeable Gains Act 1992 (c. 12)--

" SCHEDULE 7AC Exemptions for disposals by companies with substantial shareholding

Part 1 The exemptions

The main exemption

1 (1) A gain accruing to a company ("the investing company") on a disposal of shares or an interest in shares in another company ("the company invested in") is not a chargeable gain if the requirements of this Schedule are met.

(2) The requirements are set out in--

Part 2 (the substantial shareholding requirement), and
Part 3 (requirements to be met in relation to the investing company and the company invested in).

(3) The exemption conferred by this paragraph does not apply in the circumstances specified in paragraph 5 or the cases specified in paragraph 6.

Subsidiary exemption: disposal of asset related to shares where main exemption conditions met

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