Finance (No. 2) Act 1992 (c. 48)

(The document as of February, 2008)

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(b) any of those sums are treated for income tax purposes as derived from a source mentioned in sub-paragraph (1) above,

the individual is not a qualifying individual for the year (if he would be apart from this sub-paragraph).

(4) Sums fall within this sub-paragraph if they are not relevant sums accruing to the individual in respect of the residence or residences.

3 As regards a year of assessment a period is a basis period for a source mentioned in paragraph 2(1) above if it is a period on whose profits or gains income tax for the year falls to be finally computed in respect of the source.

4 A residence is a qualifying residence if it is the individual's only or main residence at any time in any period which as regards the year of assessment concerned is a basis period for a source mentioned in paragraph 2(1) above.

5 (1) This paragraph applies to determine an individual's limit for a year of assessment.

(2) Subject to the following provisions of this paragraph, the limit is the basic amount for the year.

(3) For the purposes of sub-paragraph (4) below a relevant period is--

(a) any period which as regards the year is a basis period for a source mentioned in paragraph 2(1) above;

(b) any period of one year which begins at the same time as any period which is less than one year and falls within paragraph (a) above;

(c) any period of one year which ends at the same time as any period which is less than one year and falls within paragraph (a) above.

(4) In a case where--

(a) at any time in a relevant period sums accrue to a person or persons other than the individual in respect of the use of residential accommodation in the residence or any of the residences, or in respect of relevant goods or services supplied in connection with that use, and

(b) at that time the residence concerned is the individual's only or main residence,

the limit is the amount equal to half the basic amount for the year.

6 The basic amount for a year of assessment is--

(a) such sum as may be specified for the year by order made by the Treasury;

(b) £3,250 if no sum is so specified.

7 "Residence" means a building, or part of a building, occupied or intended to be occupied as a separate residence, or a caravan or house-boat; but a building, or part of a building, which is designed for permanent use as a single residence shall be treated as a single residence notwithstanding that it is temporarily divided into two or more parts which are occupied or intended to be occupied as separate residences.

8 Relevant goods and services are meals, cleaning, laundry and goods and services of a similar nature.

Exemption etc.

9 (1) This paragraph applies if--

(a) an individual is a qualifying individual for a year of assessment,

(b) the amount of the sums mentioned in paragraph 2(1) above does not exceed the individual's limit for the year, and

(2) Where this paragraph applies the following shall be treated as nil for the purposes of the Tax Acts--

(a) the profits or gains of any period which as regards the year is a basis period for a source mentioned in paragraph 2(1) above;

(b) the losses of any such period.

(3) Where this paragraph applies no allowance or balancing charge shall be made for the year to or on the individual under section 24 of the [1990 c. 1.] Capital Allowances Act 1990 in respect of any machinery or plant provided for the purposes of any trade from which any of the sums mentioned in paragraph 2(1) above are derived.

(4) In a case where--

(a) apart from this sub-paragraph the preceding provisions of this paragraph would apply, and

(b) the amount of the sums mentioned in paragraph 2(1) above together with the amount of any relevant balancing charges would exceed the individual's limit for the year,

the preceding provisions of this paragraph shall not apply.

(5) For the purposes of sub-paragraph (4) above a relevant balancing charge is a balancing charge which (apart from this paragraph) would be made for the year on the individual under section 24 of the [1990 c. 1.] Capital Allowances Act 1990 in respect of any machinery or plant provided for the purposes of any trade from which any of the sums mentioned in paragraph 2(1) above are derived.

(6) In ascertaining the amount of sums for the purposes of this paragraph no deduction shall be made in respect of expenses or any other matter.

10 (1) An individual may elect that paragraph 9 above shall not apply to him for a year of assessment, and (unless withdrawn) the election shall have effect accordingly.

(2) An election under this paragraph shall have effect only for the year of assessment for which it is made.

(3) An individual who has made an election under this paragraph for a year of assessment may give a notice to withdraw the election, and if he does so the election shall not have effect for that year.

(4) An election, or notice of withdrawal, under this paragraph--

(a) must be made or given before the end of the period of one year beginning with the end of the year of assessment concerned or such longer period as the Board may in any particular case allow, and

(b) must be made or given in writing to the inspector.

(5) In a case where--

(a) an election is made, or a notice to withdraw an election is given, under this paragraph, and

(b) in order to give effect to the election or its withdrawal it is necessary to make an adjustment by way of an assessment,

the assessment shall not be out of time if it is made before the end of the period of one year beginning with the day when the election was made or (as the case may be) the notice to withdraw was given.

Adjusted profits etc.

11 (1) This paragraph applies if--

(a) an individual is a qualifying individual for a year of assessment,

(b) the amount of the sums mentioned in paragraph 2(1) above exceeds the individual's limit for the year, and

(2) In a case where--

(a) this paragraph applies, and

(b) the sums mentioned in paragraph 2(1) above are treated for income tax purposes as derived from a single source,

the profits or gains of any period which as regards the year is a basis period for the source shall be treated for the purposes of the Tax Acts as equal to the amount found by deducting amount B from amount A.

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

(a) amount A is the amount of the sums mentioned in paragraph 2(1) above;

(b) amount B is the amount of the individual's limit for the year.

(4) In a case where--

(a) this paragraph applies, and

(b) the sums mentioned in paragraph 2(1) above are treated for income tax purposes as derived from two or more separate sources,

the profits or gains of any period which as regards the year is a basis period for a separate source shall be treated for the purposes of the Tax Acts as equal to the amount found by deducting amount D from amount C.

(5) For the purposes of sub-paragraph (4) above--

(a) amount C is the amount of such of the sums mentioned in paragraph 2(1) above as are treated for income tax purposes as derived from the separate source, and

(b) amount D is the amount found by multiplying the amount of the individual's limit for the year by the appropriate fraction;

and the appropriate fraction is the fraction whose numerator is equal to the number of pounds in amount C and whose denominator is equal to the number of pounds in the sums mentioned in paragraph 2(1) above.

(6) Where this paragraph applies no allowance shall be made for the year to the individual under section 24 of the [1990 c. 1.] Capital Allowances Act 1990 in respect of any machinery or plant provided for the purposes of any trade from which any of the sums mentioned in paragraph 2(1) above are derived.

(7) In ascertaining the amount of sums for the purposes of this paragraph no deduction shall be made in respect of expenses or any other matter.

12 (1) An individual may elect that paragraph 11 above shall apply to him for a year of assessment.

(2) An election under this paragraph--

(a) shall (unless withdrawn) have effect for the year of assessment for which it is made and for subsequent years of assessment,

(b) must be made before the end of the period of one year beginning with the end of the year of assessment for which it is made or such longer period as the Board may in any particular case allow, and

(3) An individual who has made an election under this paragraph may give a notice to withdraw the election, and if he does so the election shall not have effect for the year of assessment for which the notice is given or any subsequent year.

(4) A notice of withdrawal under this paragraph--

(a) must be given before the end of the period of one year beginning with the end of the year of assessment for which it is given or such longer period as the Board may in any particular case allow,

(b) must be given in writing to the inspector, and

(5) Sub-paragraph (6) below applies where--

(a) an individual is a qualifying individual for a year of assessment,

(b) the amount of the sums mentioned in paragraph 2(1) above does not exceed the individual's limit for the year, and

(6) In such a case--

(a) the individual shall be deemed to have given notice to withdraw the election for the year of assessment concerned,

(b) the notice shall be deemed to have been given on the last day of the period of one year beginning with the end of the year of assessment concerned, and

(7) In a case where--

(a) an election is made, or a notice to withdraw an election is given, under this paragraph, and

(b) in order to give effect to the election or its withdrawal it is necessary to make an adjustment by way of an assessment,

Application of Schedule

13 This Schedule shall apply in relation to the year 1992-93 and subsequent years of assessment (whatever the basis period or periods for the source or sources mentioned in paragraph 2(1) above may be as regards the year of assessment concerned).

Section 63.

SCHEDULE 11 Paying and collecting agents etc.

1 (1) Section 123 of the Taxes Act 1988 (foreign dividends) shall be amended as follows.

(2) In subsection (2), for the words from "they shall be assessed" to the end there shall be substituted "they shall be chargeable to income tax under Schedule D".

(3) In subsection (3), the words from "and income tax" to the end shall be omitted.

(4) The following subsection shall be inserted after subsection (3)--

" (3A) Parts III and IV of Schedule 3 shall have effect in relation to tax chargeable by virtue of subsection (2) or (3) above. "

2 (1) Schedule 3 to that Act (machinery for assessment, charge and payment of income tax on public revenue dividends, foreign dividends, proceeds of coupons etc.) shall be amended as follows.

(2) The following paragraphs shall be inserted after paragraph 6--

" 6A (1) On the fourteenth day following the month in which a transaction such as is mentioned in paragraph 6 above is effected, income tax (at the basic rate in force at the time of payment) shall become due in respect of the relevant dividends or proceeds.

(2) The tax shall be payable by the chargeable person on behalf of the persons entitled to the dividends or proceeds.

(3) The tax shall be payable without the making of any assessment.

6B Any tax due under paragraph 6A above shall carry interest, at the rate applicable under section 178 of the [1989 c. 26.] Finance Act 1989, from the date on which it becomes due until it is paid.

6C (1) For each quarter in which a person effects a transaction in respect of which he is a chargeable person, he shall make a return to the Board.

(2) The return shall specify the chargeable person's name and address and give, in respect of each such transaction effected by him in the quarter, correct and complete particulars of--

(a) the relevant dividends or proceeds, and

(b) the income tax on those dividends or proceeds for which he has accounted, or is accountable, under paragraph 6A above.

(3) The return shall be made within 30 days from the end of the quarter.

(4) In this paragraph and paragraphs 6D to 6F below, "quarter" means any period of three months ending with 31st March, 30th June, 30th September or 31st December.

6D (1) Any income tax which has become due under paragraph 6A above and particulars of which are included in a return may be assessed on the chargeable person (whether or not it has been paid when the assessment is made) if it, or any part of it, was not paid on or before the date on which it became due.

(2) If it appears to the Board that there are any dividends or proceeds particulars of which ought to have been and have not been included in a return, or if the Board are not satisfied with any return, the Board may make an assessment on the chargeable person of the amount, or further amount, of income tax for which he is in their opinion accountable.

(3) Where the Board make an assessment under sub-paragraph (2) above they shall specify--

(a) which of the months in the quarter was the one in which they consider the transactions in question were effected, or

(b) where they consider that the transactions were effected in more than one of the months in the quarter, the proportion of the total amount of the assessment that is to be attributed to each of those months.

(4) Any income tax assessed under sub-paragraph (2) above shall be due within 14 days after the issue of the notice of assessment; but for the purposes of paragraph 6B above--

(a) it shall be treated as having become due on the fourteenth day following the month specified under sub-paragraph (3)(a) above, or

(b) each of the portions of it specified under sub-paragraph (3)(b) above shall be treated as having become due on the fourteenth day following the month to which it is to be attributed.

6E (1) None of the provisions of section 29 of the Management Act (assessing procedure) except subsections (5) and (6) shall apply in relation to assessments under paragraph 6D above.

(2) For the purposes of sections 34 and 36(1) of the Management Act (time limits for making assessments), an assessment under paragraph 6D above shall be taken to relate to the year of assessment in which the quarter to which the assessment relates ends.

(3) In the application of section 36(2) of the Management Act in relation to an assessment under paragraph 6D above, for the word "year" there shall be substituted the word "quarter".

6F If a person has made a payment purporting to be a payment of tax due under paragraph 6A above but it appears to the Board that--

(a) he was not liable to make any payment under that paragraph, or

(b) the sum paid exceeded his liability under that paragraph,

the Board shall make or allow to be made such repayments, adjustments or set-offs against unpaid tax as they think appropriate. "

(3) Paragraphs 6(2), 7, 8 and 9 (which are superseded by the paragraphs inserted by sub-paragraph (2) above) and paragraphs 10 and 15(2) (remuneration of chargeable persons etc.) shall be omitted.

(4) In paragraph 11, for "paragraphs 6 to 10" there shall be substituted "paragraphs 6 to 6F".

(5) In paragraph 13(1)--

(a) the words "Without prejudice to the generality of paragraph 7 above" shall be omitted, and

(b) for "accounts delivered by that person under paragraph 6 above are" there shall be substituted "return made by that person under paragraph 6C above is".

3 In section 86 of the [1970 c. 9.] Taxes Management Act 1970 (interest on overdue tax), paragraph 2 of the Table in subsection (4) (which relates to tax assessed under Part III of Schedule 3 to the Taxes Act 1988) shall be omitted.

4 In section 98 of the [1970 c. 9.] Taxes Management Act 1970 (penalties for failure to provide information etc.), in the second column of the Table, for "Schedule 3, paragraph 6" there shall be substituted "Schedule 3, paragraph 6C".

5 In section 178 of the [1989 c. 26.] Finance Act 1989 (setting rates of interest), in subsection (2)(m), after "826 of," there shall be inserted "and paragraph 6B of Schedule 3 to,".

6 This Schedule shall have effect in relation to transactions effected on or after 1st October 1992.

Section 66.

SCHEDULE 12 Banks etc. in compulsory liquidation

Introductory

1 (1) This Schedule applies where--

(a) a company is being, or has been, wound up by the court in the United Kingdom,

(b) the company was, at any time in the period mentioned in sub-paragraph (2) below, lawfully carrying on a deposit-taking business within the meaning of the [1987 c. 22.] Banking Act 1987 (otherwise than by virtue of an exemption under section 4 of that Act),

(c) the trade of the company that included the deposit-taking business (referred to in this Schedule as "the relevant trade") has been permanently discontinued, and

(d) the company is insolvent and either was so when the winding-up proceedings were commenced or became so at any time in the period of twelve months following the day on which they were commenced.

(2) The period mentioned in sub-paragraph (1)(b) above is the period of twelve months ending with--

(a) the day on which the winding-up proceedings were commenced, or

(b) the day on which the relevant trade was discontinued,

whichever was the earlier.

2 (1) Sub-paragraphs (2) to (5) below apply for the purposes of this Schedule.

(2) "Company" means--

(a) any company as defined in section 735 of the [1985 c. 6.] Companies Act 1985 or Article 3 of the [S.I. 1986/1032 (N.I. 6).] Companies (Northern Ireland) Order 1986, or

(b) any unregistered company as defined in section 220 of the [1986 c. 45.] Insolvency Act 1986 or Article 184 of the [S.I. 1989/2405 (N.I. 19).] Insolvency (Northern Ireland) Order 1989.

(3) Winding-up proceedings shall be taken to have been commenced against a company at the time of the presentation of the petition for its winding up by the court.

(4) A company's ceasing to carry on a trade, or to be within the charge to corporation tax in respect of a trade, shall be treated as the permanent discontinuance of the trade, whether or not the trade is in fact discontinued.

(5) A company shall be taken to be insolvent, or to have been insolvent at any time, if--

(a) it is unable to pay its debts as they fall due, or was at that time unable to pay its debts as they fell due, or

(b) the value of the its assets is, or was at that time, less than the amount of its liabilities (taking into account its contingent and prospective liabilities).

Taxation of certain receipts under Case VI of Schedule D

3 (1) Tax shall be charged under Case VI of Schedule D in respect of any sums within sub-paragraph (2) below that are received by the company or its liquidator after--

(a) the commencement of the winding-up proceedings, or

(b) the discontinuance of the relevant trade,

whichever was the later.

(2) Subject to sub-paragraph (3) below, any sum arising from the carrying on of the relevant trade is within this sub-paragraph, in so far as its value was not brought into account in computing the profits or gains of the trade for any period before the discontinuance.

(3) The following are not within sub-paragraph (2) above--

(a) any sum received on behalf of a person who is entitled to it to the exclusion of the company and its liquidator;

(b) any sum realised by the transfer of an asset required to be valued under section 100 of the Taxes Act 1988 (valuation of trading stock at discontinuance);

(c) any interest or dividend that, by reason of its having been subjected to tax under other provisions, would not have been taken into account under Case I of Schedule D in computing the profits or gains of the relevant trade, had it continued.

(4) Where tax is chargeable in respect of any sum by virtue of this paragraph, any other provision charging that sum to tax shall not apply.

Relief from tax

4 (1) In computing the tax that is chargeable by virtue of paragraph 3 above for any chargeable period, there shall be deducted from the amount that would otherwise be chargeable to tax the aggregate amount of all losses, expenses and debits within sub-paragraph (2) below incurred in that chargeable period or before it, in so far as relief (whether under this sub-paragraph, sub-paragraph (3) below or any other provision of the Tax Acts) has not been given in respect of them already.

(2) Any loss, expense or debit (other than a loss, expense or debit arising directly or indirectly from the discontinuance itself) incurred--

(a) after the later of the two events mentioned in paragraph 3(1) above, or

(b) in the case of a loss, at or before the discontinuance of the relevant trade,

is within this sub-paragraph if it would have been deducted in computing for tax purposes the profits or gains of the trade for any period, or deducted from or set off against those profits or gains as so computed, had the trade continued.

(3) If the aggregate amount exceeds the amount from which it is to be deducted under sub-paragraph (1) above, the company or its liquidator may make a claim requiring the excess to be deducted from or set off against the amount assessed to tax for the chargeable period in respect of any sums--

(a) received after the later of the two events mentioned in paragraph 3(1) above, and

(b) excluded from paragraph 3(2) above by paragraph 3(3)(c) above,

and relief, by repayment or otherwise, shall be given in respect of the excess accordingly.

Application of charge etc. where rights to payments transferred

5 Where the right of the company or its liquidator to receive any sum which is within paragraph 3(2) above (or which would be, if the right to receive it were not transferred) is transferred for value, any tax chargeable by virtue of paragraph 3 above shall be charged in respect of the amount or value of the consideration (or, in the case of a transfer otherwise than at arm's length, in respect of the value of the right transferred as between parties at arm's length); and references in this Schedule to sums received shall be construed accordingly.

Election for carry-back

6 (1) Where any sum is--

(a) chargeable to tax by virtue of paragraph 3 above, and

(b) received in any chargeable period beginning in the period of six years following the day on which the relevant trade was discontinued,

the company or its liquidator may, by notice sent to the inspector within two years after that chargeable period, elect that the tax so chargeable shall be charged as if the sum in question were received on the day on which the trade was discontinued.

(2) Where such an election has been made, an assessment shall (notwithstanding anything in the Tax Acts) be made accordingly.

Commencement

7 This Schedule shall have effect in relation to chargeable periods ending after 10th March 1992.

Section 70.

SCHEDULE 13 Capital allowances: enterprise zones

Introduction

1 Part I of the [1990 c. 1.] Capital Allowances Act 1990 (capital allowances for buildings and structures) shall be amended as follows.

Buildings and structures purchased before use

2 After section 10 (purchases of buildings and structures) there shall be inserted the following section--

" 10A Purchases of buildings and structures: special provision for enterprise zones

(1) This section shall apply where--

(a) expenditure is incurred on the construction of a building or structure (actual expenditure);

(b) some or all of that expenditure is incurred, or is incurred under a contract entered into, at a time when the site of the building or structure is in an enterprise zone, being a time not more than 10 years after the site was first included in the zone; and

(2) Where this section applies--

(a) the actual expenditure shall be left out of account for the purposes of sections 1 to 8, but

(b) subject to subsection (8) below, the person who buys the relevant interest shall be deemed for those purposes to have incurred, on the date when the purchase price becomes payable, expenditure on the construction of the building or structure (deemed expenditure) equal to the actual expenditure or to the net price paid by him for that interest, whichever is the less.

(3) The deemed expenditure shall be regarded as comprising an enterprise zone element and a non-enterprise zone element.

(4) The enterprise zone element of the deemed expenditure shall be calculated in accordance with the formula--

---

(5) In subsection (4) above--

A is the deemed expenditure;
B is the expenditure falling within subsection (1)(b) above; and
C is the actual expenditure.

(6) The non-enterprise zone element of the deemed expenditure shall be so much (if any) of the deemed expenditure as does not comprise the enterprise zone element.

(7) Notwithstanding the provisions of subsection (2)(b) above--

(a) the enterprise zone element of the deemed expenditure shall be treated for the purpose only of determining entitlement to allowances as incurred at a time when the site of the building or structure is in an enterprise zone, being a time not more than 10 years after the site was first included in the zone; and

(b) the non-enterprise zone element of the deemed expenditure shall be treated for that purpose as not incurred, and not incurred under a contract entered into, at such a time.

(8) Where the relevant interest in the building or structure is sold more than once before the building or structure is used, subsection (2)(b) above shall have effect only in relation to the last of those sales.

(9) Where the actual expenditure was incurred by a person carrying on a trade which consists, in whole or in part, in the construction of buildings or structures with a view to their sale and, before the building or structure is used, he sells the relevant interest in it in the course of that trade or, as the case may be, of that part of that trade, then--

(a) if that sale is the only sale of the relevant interest before the building or structure is used, paragraph (b) of subsection (2) above shall have effect as if the words "the actual expenditure or to" and "whichever is the less" were omitted; and

(b) in any other case, that paragraph shall have effect as if the reference to the actual expenditure were a reference to the price paid on that sale.

(10) This section shall have effect subject to section 17A. "

3 In section 1 (buildings and structures in enterprise zones) in subsection (10) the words from "and, except for that purpose" to the end of the subsection shall cease to have effect.

4 In section 6 (buildings and structures in enterprise zones) subsection (5) shall cease to have effect.

5 In section 10, at the beginning of subsection (1) there shall be inserted "Subject to subsection (3A) below,".

6 After that subsection there shall be inserted the following subsection--

" (1A) Notwithstanding the provisions of paragraph (b) of subsection (1) above, in the case of a building or structure the site of which is or has been in an enterprise zone, any expenditure which a person is deemed to have incurred by virtue of that paragraph shall be treated for the purpose only of determining entitlement to allowances as not incurred, and not incurred under a contract entered into, at a time when the site of the building or structure is in an enterprise zone. "

7 After subsection (3) of that section there shall be inserted the following subsection--

" (3A) Subsections (1) to (3) above shall not apply in any case where section 10A applies. "

Buildings and structures purchased within two years of use

8 After section 10A there shall be inserted the following section--

" 10B Purchases of buildings and structures in enterprise zones within two years of use

(1) Without prejudice to section 10A, this section shall apply where--

(a) expenditure is incurred on the construction of a building or structure (actual expenditure);

(c) whether or not there were any sales of the relevant interest in the building or structure before it was used, that interest is sold after the building or structure has been used but before the expiry of the period of two years beginning with the date on which the building or structure was first used; and

(d) that sale is the first such sale in that period.

(2) Where this section applies--

(a) any balancing allowance or charge which falls to be made on the occasion of the sale shall be so made;

(b) the residue of expenditure immediately after the sale (if any) shall be left out of account for the purposes of this Part;

(c) the person who buys the relevant interest (the purchaser) shall be deemed for the purposes of sections 1 to 8 to have incurred, on the date when the purchase price becomes payable, expenditure on the construction of the building or structure (deemed expenditure) of an amount determined in accordance with the following provisions of this section; and

(d) in relation to the deemed expenditure, the building or structure shall be treated for the purposes of sections 1 to 8 as not having been used before the date of the sale.

(3) The deemed expenditure shall be regarded as comprising an enterprise zone element and a non-enterprise zone element and the amount of the deemed expenditure shall accordingly be the sum of the enterprise zone element and the non-enterprise zone element.

(4) The enterprise zone element of the deemed expenditure shall be calculated in accordance with the formula--

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