Finance Act 2003 (c. 14)

(The document as of February, 2008)

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(1) In Part 4 of the Taxes Management Act 1970 (assessment and claims), after section 43B insert--

" 43C Consequential claims etc

(1) Where--

(a) a return is amended under section 28A(2)(b), 28B(2)(b) or 28B(4), and

(b) the amendment is made for the purpose of making good to the Crown any loss of tax attributable to fraudulent or negligent conduct on the part of the taxpayer or a person acting on his behalf,

sections 36(3) and 43(2) apply in relation to the amendment as they apply in relation to any assessment under section 29.

(2) Where--

(a) a return is amended under section 28A(2)(b), 28B(2)(b) or 28B(4), and

(b) the amendment is not made for the purpose mentioned in subsection (1)(b) above,

sections 43(2), 43A and 43B apply in relation to the amendment as they apply in relation to any assessment under section 29.

(3) References to an assessment in sections 36(3), 43(2), 43A and 43B, as they apply by virtue of subsection (1) or (2) above, shall accordingly be read as references to the amendment of the return.

(4) Where it is necessary to make any adjustment by way of an assessment on any person--

(a) in order to give effect to a consequential claim, or

(b) as a result of allowing a consequential claim,

the assessment is not out of time if it is made within one year of the final determination of the claim.

For this purpose a claim is not taken to be finally determined until it, or the amount to which it relates, can no longer be varied, on appeal or otherwise.

(5) In subsection (4) above "consequential claim" means any claim, supplementary claim, election, application or notice that may be made or given under section 36(3), 43(2) or 43A (as it applies by virtue of subsection (1) or (2) above or otherwise). " .

(2) In section 43A of that Act (further assessments: claims etc), in subsection (2A) (elections to which extension of time limit does not apply) for the words from "an election under" to the end substitute " an election under--

(a) section 257BA of the principal Act (election as to transfer of married couple's allowance),

(b) Schedule 13B to that Act (elections as to transfer of children's tax credit), or

(3) So far as it applies in relation to an amendment of a return, this section applies only where the notice of the amendment is issued after the day on which this Act is passed.

National Savings

208 Ordinary accounts and investment accounts

(1) The National Savings Bank Act 1971 (c. 29) is amended as follows.

(2) In section 3 (ordinary and investment deposits), after subsection (1) insert--

" (1A) But subsection (1) is subject to any provision made in relation to ordinary accounts or ordinary deposits by regulations under section 2 of this Act made by virtue of section 8(3) of this Act. " .

(3) Section 6 (interest on investment deposits) is amended as follows.

(4) In subsection (2), for "Director of Savings may from time to time determine with the consent of the Treasury" substitute "Treasury may from time to time determine".

(5) After that subsection insert--

" (2ZA) The Treasury may determine that a rate of interest payable on investment deposits, or investment deposits of a particular description, is to be a rate produced by the operation of a formula involving the movement of an index or indices or any other factor. " .

(6) In subsection (3), after "description" insert "(other than one occasioned by the operation of a formula)".

(7) After that subsection insert--

" (4) In the case of an alteration in a rate of interest not affecting deposits received before it is made, any notice of the alteration required to be given by subsection (3) above may be given after the alteration is made. " .

(8) Section 8 (regulations as to particular matters) is amended as follows.

(9) In subsection (1), after paragraph (b) insert--

" (ba) for the issuing of cards for use in making investment deposits or in withdrawing cash from investment accounts (or both) and regulating the use of such cards; " .

(10) After subsection (2) insert--

" (3) Regulations under section 2 of this Act may also make provision--

(a) prohibiting the opening of ordinary accounts after a prescribed date;

(b) prohibiting the opening of investment accounts of a prescribed description after a date prescribed in relation to that description of accounts;

(d) prohibiting the making of deposits in investment accounts of a prescribed description after a date prescribed in relation to that description of accounts;

(e) requiring the withdrawal of all of the money deposited in any dormant account of a prescribed description if any of the money deposited in it is withdrawn after a date prescribed in relation to that description of account;

(f) for the transfer to investment accounts of a prescribed description of deposits in dormant accounts of a prescribed description;

(g) for the transfer to a special Director's account of deposits in dormant accounts of a prescribed description or in accounts to which deposits have been transferred pursuant to provision made by virtue of paragraph (f) above.

(4) In subsection (3) above--

"dormant account" means an account in which deposits may not be made because of provision made by virtue of paragraph (c) or (d) of that subsection; and
"special Director's account" means an investment account in the name of the Director of Savings in which deposits are held on behalf of the persons entitled to them. " .

(11) After section 9 insert--

" 9A Investment account terms and conditions

(1) Any provision which may be made in relation to investment deposits by regulations under section 2 of this Act may, in the case of deposits in investment accounts of any description first made available after the passing of the Finance Act 2003, be included instead in the terms and conditions of the accounts.

(2) Any provision included in the terms and conditions of investment accounts under subsection (1) above has effect subject to regulations under section 2 of this Act and orders under section 4 of this Act.

(3) In this section "terms and conditions" means terms and conditions set by the Treasury and published by Director of Savings in a manner approved by the Treasury. " .

209 Abolition of accounting requirements relating to investment deposits

In section 120 of the Finance Act 1980 (c. 48) (investment deposits with National Savings Bank: accounting provisions etc), omit subsections (4) and (5) (which require the Director of Savings to keep an account of investment deposits etc and transmit annual statements to the Comptroller and Auditor General for examination etc).

Other financial matters

210 Payments for service of national debt

(1) Section 15 of the National Loans Act 1968 (c. 13) (payments for service of national debt) is amended as follows.

(2) In subsection (1) (payments to be made out of Consolidated Fund into National Loans Fund), for "charges on the National Loans Fund for the service of national debt over" substitute " payments out of the National Loans Fund--

(a) which represent interest on liabilities of the National Loans Fund, or

(b) which, in the opinion of the Treasury, ought to be treated in the same way as payments which represent such interest,

over " .

(3) Omit subsection (3) (which defines "charges on the National Loans Fund for the service of national debt").

(4) In paragraph 13 of Schedule 5A to that Act (Debt Management Account: payments to be made out of National Loans Fund into Debt Management Account), omit sub-paragraph (2) (payments to be treated as charges on the National Loans Fund for the service of national debt).

211 Definition of liabilities and assets of National Loans Fund

In section 19(4) of the National Loans Act 1968 (c. 13) (which defines as the liabilities of the National Loans Fund the nominal amount of the debt outstanding to it and as its assets its balance and loans etc outstanding to it), for the words from "of the National Loans Fund" onwards substitute "and assets of the National Loans Fund shall be as determined by the Treasury.".

212 Accounts of Consolidated Fund and National Loans Fund

(1) Section 21 of the National Loans Act 1968 (accounts of Consolidated Fund and National Loans Fund) is amended as follows.

(2) In subsection (1) (annual accounts of payments in and out), for the words from "in such form" onwards substitute "an account relating to the Consolidated Fund, and an account relating to the National Loans Fund, in such form and containing such information as the Treasury consider appropriate.".

(3) Omit subsection (3) (statements of additional information regarding transactions, assets and liabilities of Consolidated Fund and National Loans Fund).

(4) Subsection (2) has effect for the financial year ending with 31st March 2004 and subsequent financial years.

(5) Subsection (3) has effect for such financial year as the Treasury may by order made by statutory instrument appoint and subsequent financial years.

213 Debt Management Account: abolition of borrowing cap

In Schedule 5A to the National Loans Act 1968 (Debt Management Account), omit paragraph 8 (borrowings otherwise than from National Loans Fund not to exceed total standing to credit of that Account in that Fund and at Bank of England).

214 Payments in error from or to National Loans Fund

In paragraph 11 of Schedule 5A to the National Loans Act 1968 (c. 13) (payments between National Loans Fund and Debt Management Account in respect of difference between assets and liabilities of that Account), insert at the end--

" (4) If any amount paid under sub-paragraph (1A) or (3) above should not have been paid, the Treasury may repay the whole or any part of it. " .

Supplementary

215 Interpretation

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

216 Repeals

(1) The enactments mentioned in Schedule 43 to this Act (which include provisions that are spent or of no practical utility) are repealed to the extent specified.

(2) The repeals 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.

217 Short title

This Act may be cited as the Finance Act 2003.

SCHEDULES

Section 19

SCHEDULE 1 VAT: face-value vouchers

1 In Part 3 of the Value Added Tax Act 1994 (c. 23) (application of Act in particular cases) insert after section 51A--

" 51B Face-value vouchers

Schedule 10A shall have effect with respect to face-value vouchers. " .

2 After Schedule 10 to that Act insert--

" SCHEDULE 10A Face-value vouchers

Meaning of "face-value voucher" etc

1 (1) In this Schedule "face-value voucher" means a token, stamp or voucher (whether in physical or electronic form) that represents a right to receive goods or services to the value of an amount stated on it or recorded in it.

(2) References in this Schedule to the "face value" of a voucher are to the amount referred to in sub-paragraph (1) above.

Nature of supply

2 The issue of a face-value voucher, or any subsequent supply of it, is a supply of services for the purposes of this Act.

Treatment of credit vouchers

3 (1) This paragraph applies to a face-value voucher issued by a person who--

(a) is not a person from whom goods or services may be obtained by the use of the voucher, and

(b) undertakes to give complete or partial reimbursement to any such person from whom goods or services are so obtained.

Such a voucher is referred to in this Schedule as a "credit voucher".

(2) The consideration for any supply of a credit voucher shall be disregarded for the purposes of this Act except to the extent (if any) that it exceeds the face value of the voucher.

(3) Sub-paragraph (2) above does not apply if any of the persons from whom goods or services are obtained by the use of the voucher fails to account for any of the VAT due on the supply of those goods or services to the person using the voucher to obtain them.

Treatment of retailer vouchers

4 (1) This paragraph applies to a face-value voucher issued by a person who--

(a) is a person from whom goods or services may be obtained by the use of the voucher, and

(b) if there are other such persons, undertakes to give complete or partial reimbursement to those from whom goods or services are so obtained.

Such a voucher is referred to in this Schedule as a "retailer voucher".

(2) The consideration for the issue of a retailer voucher shall be disregarded for the purposes of this Act except to the extent (if any) that it exceeds the face value of the voucher.

(3) Sub-paragraph (2) above does not apply if--

(a) the voucher is used to obtain goods or services from a person other than the issuer, and

(b) that person fails to account for any of the VAT due on the supply of those goods or services to the person using the voucher to obtain them.

(4) Any supply of a retailer voucher subsequent to the issue of it shall be treated in the same way as the supply of a voucher to which paragraph 6 below applies.

Treatment of postage stamps

5 The consideration for the supply of a face-value voucher that is a postage stamp shall be disregarded for the purposes of this Act except to the extent (if any) that it exceeds the face value of the stamp.

Treatment of other kinds of face-value voucher

6 (1) This paragraph applies to a face-value voucher that is not a credit voucher, a retailer voucher or a postage stamp.

(2) A supply of such a voucher is chargeable at the rate in force under section 2(1) (standard rate) except where sub-paragraph (3), (4) or (5) below applies.

(3) Where the voucher is one that can only be used to obtain goods or services in one particular non-standard rate category, the supply of the voucher falls in that category.

(4) Where the voucher is used to obtain goods or services all of which fall in one particular non-standard rate category, the supply of the voucher falls in that category.

(5) Where the voucher is used to obtain goods or services in a number of different rate categories--

(a) the supply of the voucher shall be treated as that many different supplies, each falling in the category in question, and

(b) the value of each of those supplies shall be determined on a just and reasonable basis.

Vouchers supplied free with other goods or services

7 Where--

(a) a face-value voucher (other than a postage stamp) and other goods or services are supplied to the same person in a composite transaction, and

(b) the total consideration for the supplies is no different, or not significantly different, from what it would be if the voucher were not supplied,

the supply of the voucher shall be treated as being made for no consideration.

Interpretation

8 (1) In this Schedule--

"credit voucher" has the meaning given by paragraph 3(1) above;
"face value" has the meaning given by paragraph 1(2) above;
"face value voucher" has the meaning given by paragraph 1(1) above;
"retailer voucher" has the meaning given by paragraph 4(1) above.

(2) For the purposes of this Schedule--

(a) the "rate categories" of supplies are--

(i) supplies chargeable at the rate in force under section 2(1) (standard rate),

(ii) supplies chargeable at the rate in force under section 29A (reduced rate),

(iii) zero-rated supplies, and

(iv) exempt supplies and other supplies that are not taxable supplies;

(b) the "non-standard rate categories" of supplies are those in sub-paragraphs (ii), (iii) and (iv) of paragraph (a) above;

(3) A reference in this Schedule to a voucher being used to obtain goods or services includes a reference to the case where it is used as part-payment for those goods or services. " .

3 In Schedule 6 to the Value Added Tax Act 1994 (c. 23) (valuation: special cases), omit paragraph 5 (vouchers etc).

4 The amendments made by this Schedule apply to supplies of tokens, stamps or vouchers issued on or after 9th April 2003.

Section 23

SCHEDULE 2 Supply of electronic services in member States: VAT special accounting scheme

Introductory

1 The Value Added Tax Act 1994 (c. 23) is amended as follows.

Insertion of new section 3A

2 After section 3 insert--

" 3A Supply of electronic services in member States: special accounting scheme

(1) Schedule 3B (scheme enabling persons who supply electronically supplied services in any member State, but who are not established in a member State, to account for and pay VAT in the United Kingdom on those supplies) has effect.

(2) The Treasury may by order amend Schedule 3B.

(3) The power of the Treasury by order to amend Schedule 3B includes power to make such incidental, supplemental, consequential and transitional provision in connection with any amendment of that Schedule as they think fit. " .

Persons registered under Schedule 1

3 In Schedule 1 (registration in respect of taxable supplies) in paragraph 13 (cancellation of registration) at the end insert--

" (8) This paragraph is subject to paragraph 18 of Schedule 3B (cancellation of registration under this Schedule of persons seeking to be registered under that Schedule, etc). " .

The special accounting scheme

4 After Schedule 3A insert--

Section 3A

" SCHEDULE 3B Supply of electronic services in member States: special accounting scheme

Part 1 Registration

The register

1 Persons registered under this Schedule are to be registered in a single register kept by the Commissioners for the purposes of this Schedule.

Persons who may be registered

2 (1) A person may be registered under this Schedule if he satisfies the following conditions.

(2) Condition 1 is that the person makes or intends to make qualifying supplies in the course of a business carried on by him.

(3) Condition 2 is that the person has neither his business establishment nor a fixed establishment in the United Kingdom or in another member State in relation to any supply of goods or services.

(4) Condition 3 is that the person is not--

(a) registered under this Act,

(b) identified for the purposes of VAT in accordance with the law of another member State, or

(c) registered under an Act of Tynwald for the purposes of any tax imposed by or under an Act of Tynwald which corresponds to VAT.

(5) Condition 4 is that the person--

(a) is not required to be registered or identified as mentioned in condition 3, or

(b) is required to be so registered or identified, but solely by virtue of the fact that he makes or intends to make qualifying supplies.

(6) Condition 5 is that the person is not identified under any provision of the law of another member State which implements Article 26c.

(7) In this Schedule, "Article 26c" means Article 26c of the 1977 VAT Directive (which is inserted by Article 1(3) of the 2002 VAT Directive).

(8) References in this Schedule to a person's being registered under this Act do not include a reference to that person's being registered under this Schedule.

Qualifying supplies

3 In this Schedule, "qualifying supply" means a supply of electronically supplied services (within the meaning of paragraph 7C of Schedule 5) to a person who--

(a) belongs in the United Kingdom or another member State, and

(b) receives those services otherwise than for the purposes of a business carried on by him.

Registration request

4 (1) If a person--

(a) satisfies the Commissioners that the conditions in paragraph 2 above are satisfied in his case, and

(b) makes a request in accordance with this paragraph (a "registration request"),

the Commissioners must register him under this Schedule.

(2) Sub-paragraph (1) above is subject to paragraph 9 below.

(3) A registration request must contain the following particulars--

(a) the name of the person making the request;

(b) his postal address;

(d) where he has been allocated a number by the tax authorities in the country in which he belongs, that number;

(e) the date on which he began, or intends to begin, making qualifying supplies.

(4) A registration request must include a statement that the person making the request is not--

(a) registered under this Act,

(b) identified for the purposes of VAT in accordance with the law of another member State, or

(c) registered under an Act of Tynwald for the purposes of any tax imposed by or under an Act of Tynwald which corresponds to VAT.

(5) A registration request must be made by such electronic means, and in such manner, as the Commissioners may direct or may by regulations prescribe.

Date on which registration takes effect

5 (1) Where a person is registered under this Schedule, his registration takes effect--

(a) on the date on which his registration request is made, or

(b) on such earlier or later date as may be agreed between him and the Commissioners.

(2) For the purposes of sub-paragraph (1) above--

(a) no registration is to take effect before 1st July 2003, and

(b) registration requests made before that date are to be treated as if they were made on that date.

Registration number

6 On registering a person under this Schedule, the Commissioners must--

(a) allocate a registration number to him, and

(b) notify him electronically of the number.

Obligation to notify changes

7 (1) A person who has made a registration request must notify the Commissioners if subsequently--

(a) there is a change in any of the particulars contained in his request in accordance with paragraph 4(3) above,

(b) he ceases to make, or to have the intention of making, qualifying supplies, or

(2) A notification under this paragraph must be given within the period of 30 days beginning with the date of the change of particulars or of the cessation.

(3) A notification under this paragraph must be given by such electronic means, and in such manner, as the Commissioners may direct or may by regulations prescribe.

Cancellation of registration

8 (1) The Commissioners must cancel a person's registration under this Schedule if--

(a) he notifies them that he has ceased to make, or to have the intention of making, qualifying supplies,

(b) they otherwise determine that he has ceased to make, or to have the intention of making, qualifying supplies,

(c) he notifies them that he has ceased to satisfy the conditions in any of sub-paragraphs (3) to (6) of paragraph 2 above,

(d) they otherwise determine that he has ceased to satisfy any of those conditions, or

(e) they determine that he has persistently failed to comply with his obligations under this Schedule.

(2) In a case falling within sub-paragraph (1)(a) or (c) above, cancellation of a person's registration under this paragraph takes effect--

(a) on the date on which the notification is received, or

(b) on such earlier or later date as may be agreed between him and the Commissioners.

(3) In a case falling within sub-paragraph (1)(b), (d) or (e) above, cancellation of a person's registration under this paragraph takes effect--

(a) on the date on which the determination is made, or

(b) on such earlier or later date as the Commissioners may in his particular case direct.

Registration after cancellation for persistent default

9 (1) The Commissioners--

(a) are not required by paragraph 4(1) above to register a person under this Schedule if he is a persistent defaulter, but

(b) shall have the power to do so.

(2) In this paragraph, "persistent defaulter" means a person--

(a) whose previous registration under this Schedule has been cancelled under paragraph 8(1)(e) above (persistent failure to comply with obligations under this Schedule), or

(b) who has been excluded from the identification register under any provision of the law of another member State which implements Article 26c(B)(4)(d) of the 1977 VAT Directive (persistent failure to comply with rules concerning the special scheme).

Part 2 Obligations following registration, etc

Liability for VAT

10 (1) A person is liable to pay VAT under and in accordance with this Schedule if--

(a) he makes a qualifying supply, and

(b) he is registered under this Schedule when he makes the supply.

(2) The amount of VAT which a person is liable to pay by virtue of this Schedule on any qualifying supply is to be determined in accordance with sub-paragraphs (3) and (4) below.

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