Finance Act 1993 (c. 34)

(The document as of February, 2008)

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8 (1) In subsections (2)(a) and (3) of section 185, the words "or (4A)" shall be treated as inserted after the words "subsection (4)".

(2) The following subsections shall be treated as inserted after subsection (4) of that section--

" (4A) Subject to subsection (4B) below, if at any time after the relevant time the company is an overseas life insurance company--

(a) any assets of its long term business fund which, immediately after the relevant time--

(i) are situated outside the United Kingdom and are used or held for the purposes of the branch or agency in the United Kingdom through which the company carries on life assurance business; or

(ii) are attributed to the branch or agency by virtue of section 11B of the Taxes Act,

shall be excepted from subsection (2) above; and

(b) any new assets of its long term business fund which, after that time--

(i) are so situated and are so used or held; or

(ii) are so attributed,

shall be excepted from subsection (3) above.

(4B) Subsection (4A) above shall not apply if the relevant time falls before the relevant day; and for the purposes of this subsection the relevant day is the first day of the company's first accounting period to begin after 31st December 1992. "

(3) In subsection (5) of that section, the following paragraph shall be treated as inserted after paragraph (b)--

" (ba) "life assurance business" and "long term business fund" have the meanings given by section 431(2) of the Taxes Act; " .

9 (1) In section 191(1)(b), the words "section 11(2)(b), (c), (d) or (e) of the Taxes Act" shall be treated as substituted for the words "section 10(3)".

(2) This paragraph shall apply in relation to accounting periods beginning after 31st December 1992.

10 (1) In section 212, the following subsection shall be treated as inserted after subsection (5)--

" (5A) In its application to an overseas life insurance company this section shall have effect as if the references in subsections (1) and (2) to assets were to such of the assets concerned as are--

(a) section 11(2)(b) assets;

(b) section 11(2)(c) assets; or

(c) assets which by virtue of section 11B of the Taxes Act are attributed to the branch or agency in the United Kingdom through which the company carries on life assurance business;

and any expression used in this subsection to which a meaning is given by section 11A of the Taxes Act has that meaning. "

(2) This paragraph shall apply in relation to accounting periods beginning after 31st December 1992.

11 (1) In section 213(4), the words "in the United Kingdom through a branch or agency" shall be treated as inserted after the words "long term business".

(2) This paragraph shall apply in relation to events occurring in accounting periods beginning after 31st December 1992.

12 (1) In section 214, the following subsection shall be treated as inserted after subsection (11)--

" (12) In its application to an overseas life insurance company this section shall have effect as if--

(a) the references in subsections (1), (2) and (6) to (10) to assets were to such of the assets concerned as are--

(i) section 11(2)(b) assets; or

(ii) section 11(2)(c) assets;

(b) the references in subsections (1), (7) and (8) to liabilities were to such of the liabilities concerned as are attributable to the branch or agency in the United Kingdom through which the company carries on life assurance business;

and any expression used in this subsection to which a meaning is given by section 11A of the Taxes Act has that meaning. "

(2) This paragraph shall apply where the accounting period mentioned in section 214(6)(d) begins after 31st December 1992.

13 (1) In subsection (4) of section 214A, in item G the words "in the United Kingdom through a branch or agency" shall be treated as inserted after the words "cessation of the carrying on".

(2) In subsection (6) of that section, the words "in the United Kingdom through a branch or agency" shall be treated as inserted after the words "long term business".

(3) In subsection (11) of that section, the following words shall be treated as inserted at the end "; and, as it applies for the purposes of this section, the words "(with the modifications set out in subsection (12) of that section)" shall be treated as inserted after the words "section 214"."

14 (1) In section 228(6)(b), the words "section 11(2)(b), (c) or (d) of the Taxes Act" shall be treated as substituted for the words "section 10(3)".

(2) This paragraph shall apply in relation to acquisitions made in chargeable periods beginning after 31st December 1992. "

Section 114.

SCHEDULE 12 Initial allowances for agricultural buildings

1 The [1990 c. 1.] Capital Allowances Act 1990 shall be amended as follows.

2 (1) In subsection (1) of section 124 (expenditure qualifying for allowances)--

(a) for "this Part, including" there shall be substituted "writing-down allowances or"; and

(b) in paragraph (b), for "this Part" there shall be substituted "writing-down allowances or, as the case may be, section 122".

(2) In subsection (2) of that section, for "this Part" there shall be substituted "writing-down allowances".

3 After section 124 there shall be inserted the following sections--

" 124A Initial allowances: contracts entered into between October 1992 and November 1993

(1) Subject to the following provisions of this Part, if a person having a major interest in any agricultural land incurs any expenditure to which this section applies, there shall be made to him, for the chargeable period which is that related to the incurring of the expenditure, an allowance ("an initial allowance") equal to 20 per cent. of the amount of that expenditure.

(2) This section applies to any expenditure falling within section 123 which is incurred under a contract which--

(a) is entered into either--

(i) in the period beginning with 1st November 1992 and ending with 31st October 1993; or

(ii) for the purpose of securing that obligations under a contract entered into in that period are complied with;

but

(b) is not entered into for the purpose of securing that obligations under a contract entered into before the beginning of that period are complied with.

(3) No expenditure on the construction of any building, fence or other works shall be taken into account for the purposes of any initial allowance under this Part unless it is incurred for the purposes of husbandry on the agricultural land in question; and no initial allowance shall be made under this Part in respect of expenditure on the construction of any building, fence or other works unless the building, fence or other works is or is to be first used for the purposes of husbandry on or before 31st December 1994.

(4) Where expenditure is incurred on a farmhouse or any asset (other than a farmhouse) which is to serve partly the purposes of husbandry and partly other purposes, the same apportionment of that expenditure shall be made for the purposes of any initial allowance under this Part as is required by section 124(1)(a) or (b) to be made for the purposes of writing-down allowances.

(5) In a case where--

(a) any expenditure to which this section applies is incurred on the construction of any building, fence or other works; and

(b) either--

(i) when the building, fence or other works comes to be used it is not used for the purposes of husbandry; or

(ii) it has not come to be so used by the end of 31st December 1994,

the expenditure shall be left out of account for the purposes of initial allowances under this Part and, accordingly, any initial allowance made in respect of the expenditure under this section shall be withdrawn and all such assessments and adjustments of assessments shall be made as may be necessary to give effect to that withdrawal.

(6) Subject to subsection (7) below, a person making a claim by virtue of this section as it applies for income tax purposes may require the initial allowance to be reduced to a specified amount; and a company may by notice given to the inspector not later than two years after the end of the chargeable period for which the allowance falls to be made disclaim the initial allowance or require it to be reduced to a specified amount.

(7) Subsection (6) above shall have effect as respects allowances falling to be made for accounting periods ending after the day appointed for the purposes of section 10 of the principal Act (pay and file) with the omission of the words "as it applies for income tax purposes" and the words from "and a company" onwards.

124B Restriction on writing-down allowance where initial allowance made.

Where an initial allowance under this Part is made for any chargeable period in respect of any expenditure on the construction of a building, fence or other works, a writing-down allowance in respect of that expenditure shall be made under this Part for the same chargeable period only if the building, fence or other works has come to be used for the purposes of husbandry before the end of that period. "

4 (1) In subsection (1) of section 126 (transfers of relevant interest), for "a writing-down allowance" there shall be substituted "an allowance under this Part".

(2) For subsection (2) of that section there shall be substituted the following subsection--

" (2) If, in a case falling within subsection (1) above, the date of the acquisition occurs during a chargeable period of the former owner or its basis period, the former owner shall be entitled--

(a) to the whole of any initial allowance for the chargeable period related to the acquisition; but

(b) only to an appropriate proportion of any writing-down allowance for the chargeable period so related;

and, similarly, if the date of the acquisition occurs during a chargeable period of the new owner or its basis period, the new owner shall be entitled only to an appropriate proportion of any writing-down allowance for the chargeable period (of his) related to the acquisition. "

(3) In subsection (6) of that section (balancing increase of last writing-down allowance in respect of allowance lost on transfers), after "total allowances" there shall be inserted "(including any initial allowance)".

5 (1) After subsection (3) of section 127 (buildings etc. bought unused) there shall be inserted the following subsections--

" (3A) The expenditure referred to in subsection (1) above includes neither--

(a) expenditure which falls to be disregarded for the purposes of writing-down allowances by virtue of section 124(1); nor

(b) expenditure some or all of which is expenditure to which section 124A applies.

(3B) Accordingly, any expenditure which is treated as incurred under subsection (2)(c) above shall be treated (without prejudice to section 124(2)) as incurred for the purposes mentioned in section 124(1). "

(2) In subsection (4) of that section, for "and (3)" there shall be substituted "(3) and (3B)".

6 After section 127 there shall be inserted the following section--

" 127A Purchases of buildings and structures: cases involving initial allowances

(1) This section shall apply (subject to subsection (2) below) where--

(a) there is expenditure on the construction of any building, fence or other works ("the actual expenditure") which--

(i) is expenditure falling within section 123; and

(ii) is not expenditure which would fall to be disregarded for the purposes of writing-down allowances by virtue of section 124(1);

(b) some or all of the actual expenditure is expenditure to which section 124A applies or would be such expenditure if it were capital expenditure; and

(2) In relation to any case in which the relevant interest is sold in pursuance of a contract entered into in the period beginning with 1st November 1992 and ending with 31st October 1993 by a person who--

(a) carries on a trade which consists, in whole or in part, in the construction of buildings or structures with a view to their sale; and

(b) has been entitled to that interest since before 1st November 1992,

section 124A(2) above shall have effect for the purposes of subsection (1)(b) above and subsection (6) below as if for the words from "contract which" onwards there were substituted "contract entered into either before 1st November 1993 or for the purpose of securing that obligations under a contract entered into before that date are complied with."

(3) Where this section applies--

(a) the actual expenditure shall be left out of account for the purposes of this Part and, accordingly--

(i) any initial allowance or writing-down allowance made in respect of the actual expenditure shall be withdrawn; and

(ii) all such assessments and adjustments of assessments shall be made as may be necessary to give effect to that withdrawal;

(b) section 126 shall not apply;

(c) the person who buys the relevant interest shall be treated for the purposes of this Part as having incurred, on the date when the purchase price becomes payable, expenditure falling within section 123 on the construction of the building, fence or other works ("the deemed expenditure"); and

(d) the deemed expenditure shall be treated (without prejudice to section 124(2) and 124A(5)) as incurred for the purposes of husbandry on the agricultural land in question.

(4) The deemed expenditure--

(a) shall be whichever is the lesser of the net price paid by the person concerned for the purchase of the relevant interest and the actual expenditure; and

(b) shall be regarded as comprising a section 124A element and a residual element.

(5) The section 124A element of the deemed expenditure shall be calculated in accordance with the formula--

---

(6) In subsection (5) above--

A is the deemed expenditure;
B is so much of the actual expenditure as is expenditure to which section 124A applies or expenditure that would be such expenditure if it were capital expenditure; and
C is the actual expenditure.

(7) The residual element of the deemed expenditure shall be so much (if any) of the deemed expenditure as does not comprise the section 124A element.

(8) Notwithstanding the provisions of subsection (3)(c) above--

(a) the section 124A element of the deemed expenditure shall be treated for the purpose only of determining entitlement to allowances as expenditure to which that section applies; and

(b) the residual element of the deemed expenditure shall be treated for that purpose as expenditure which is not expenditure to which that section applies.

(9) Where the relevant interest is sold more than once before the building, fence or other works is used, subsections (2) and (3)(c) and (d) above shall have effect only in relation to the last of those sales. "

7 (1) In subsection (1) of section 128 (balancing allowances and charges), for "a writing-down allowance" there shall be substituted "an allowance under this Part".

(2) In subsection (2) of that section, for "this Part less the aggregate of any writing-down allowances" there shall be substituted "any allowances under this Part less the aggregate of any such allowances".

(3) In subsection (3) of that section, after "purposes of" there shall be inserted "allowances under".

(4) In subsection (6) of that section, for "writing-down allowances" there shall be substituted "allowances under this Part".

8 In section 129(1) (balancing events), for "a writing-down allowance" there shall be substituted "an allowance under this Part".

9 In section 131(2) (application of Chapter I of Part V to forestry buildings etc.), in the words after paragraph (b), before "subject" there shall be inserted "with the omission of sections 124A, 127(3A)(b) and 127A and".

10 In section 146(3) (allowances under Parts V and VI not to exceed expenditure), after "made under" there shall be inserted "Part V or".

Section 115.

SCHEDULE 13 First-year allowances for machinery and plant

1 The [1990 c. 1.] Capital Allowances Act 1990 shall be amended as follows.

2 In section 23(6) (interpretation of information provisions relating to first-year allowances), at the end there shall be inserted "and references in this section to a first-year allowance shall not include references to a first-year allowance in respect of expenditure to which section 22 applies by virtue only of subsection (3B) of that section."

3 In section 30(2)(c) (special provision for ships), for "section" there shall be substituted "sections 46(8)(e) and".

4 In section 38(m) (assets attracting first-year allowances not to be treated as short-life assets), after "section 22" there shall be inserted "(2), (3) or (3A)".

5 (1) In subsection (2)(a) of section 39 (definition of a qualifying purpose), for "subsections (2) and (3)" there shall be substituted "subsections (2) to (3B)".

(2) In subsection (8)(b) of that section (anti-avoidance provision in respect of chartering), after "new expenditure," there shall be inserted "a first-year allowance by virtue of section 22(3B) or".

6 After subsection (8) of section 42 (modifications in relation to "old expenditure" of provisions relating to overseas leasing) there shall be inserted the following subsection--

" (9) For the purposes of the application of this section to any expenditure to which section 22 applies by virtue only of subsection (3B) of that section, this section shall have effect--

(a) as if subsection (4) above included a reference to a first-year allowance made in respect of that expenditure; and

(b) for the purposes of paragraph (a) above, as if the reference in that subsection to an event occurring such that there is no right to that allowance included a reference to an event occurring such that, if subsection (3) included a reference to first-year allowances, there would be no such right. "

7 (1) In subsection (1) of section 43 (cases where section applies), for "This section" there shall be substituted "Subsections (2) and (3) below".

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

" (4) Section 22(6A)(a) shall not prevent a first-year allowance being made in respect of expenditure incurred by any person on the provision of machinery or plant for leasing where it appears that--

(a) the machinery or plant will be leased as mentioned in subsection (1) above; and

(b) the circumstances are such that subsection (2) above will require the whole or any part of the expenditure to be treated as not falling within section 42(1);

and any first-year allowance made by virtue of this subsection in respect of that expenditure shall be made on the same assumptions and subject to the same apportionments (if any) as it appears would, by virtue of subsection (3) above, be applicable in the case of a writing-down allowance. "

8 In section 44 (further provisions in relation to joint lessees in cases involving new expenditure), after subsection (4) there shall be inserted the following subsection--

" (5) For the purposes of the application of this section to any expenditure to which section 22 applies by virtue of subsection (3B) of that section, this section shall have effect as if--

(a) references to section 43(2) included references to section 43(4);

(b) references to a normal writing-down allowance included references to a first-year allowance; and

(c) the reference in subsection (2) above to the separate item of machinery or plant referred to in section 43(3)(a) were, in relation to a first-year allowance, a reference to the machinery or plant in respect of which, in accordance with section 43(4), that allowance is or is treated as made. "

9 In section 46 (recovery of allowances made in respect of plant and machinery subsequently let to a foreign resident), after subsection (7) there shall be inserted the following subsection--

" (8) For the purposes of the application of this section to any expenditure to which section 22 applies by virtue of subsection (3B) of that section, this section shall have effect as if--

(a) in subsection (1) above, after "qualified for a" there were inserted "first-year allowance or any";

(b) in subsection (2) above--

(i) in paragraph (a), at the beginning there were inserted "the aggregate of any first-year allowance and"; and

(ii) in paragraph (b), after the word "no" there were inserted "first-year allowance or";

(i) after "and a" there were inserted "first-year allowance or"; and

(ii) in paragraph (a), for the words from "it referred" to the end of the paragraph there were substituted "that allowance were such a first-year allowance or, as the case may be, normal writing-down allowance as is referred to in paragraph (a) of that subsection and the references to the expenditure in respect of which an allowance is made were construed accordingly;"

(d) in subsection (6) above--

(i) in paragraph (a), after "for a" there were inserted "first-year allowance or"; and

(ii) in the words after paragraph (b), for "a normal writing-down allowance has been made" there were substituted "the allowance that has been made is a first-year allowance or normal writing-down allowance";

and

(e) in subsection (7) above--

(i) in paragraph (a), after "section" there were inserted "30(2)(c) or"; and

(ii) for "section 31" there were substituted "section 30 or 31". "

10 In section 48 (information provisions in relation to joint lessees in cases involving new expenditure), after subsection (6) there shall be inserted the following subsection--

" (7) For the purposes of the application of this section to any expenditure to which section 22 applies by virtue of subsection (3B) of that section, this section shall have effect as if the references in subsections (1) and (2) above to a normal writing-down allowance included references to a first-year allowance; but nothing in this subsection shall prevent subsection (1) above from continuing to apply where the use for permitted leasing is after the expenditure has qualified for one allowance and before it qualifies for another. "

11 (1) In subsection (3) of section 50, in paragraph (i) of the definition of "old expenditure" (old expenditure to include expenditure falling within section 22) after "22" there shall be inserted "other than expenditure to which that section applies by virtue only of subsection (3B) of that section".

(2) After subsection (4) of that section there shall be inserted the following subsection--

" (4A) In the case of expenditure to which section 22 applies by virtue only of subsection (3B) of that section, any reference in this Chapter to the expenditure having qualified for a first-year allowance is a reference to such an allowance having fallen to be made in respect of the whole or any part of that expenditure. "

12 (1) In section 81 (assets used for purposes not attracting capital allowances and assets received by way of gift), after subsection (1) there shall be inserted the following subsection--

" (1A) Subject to section 63, in a case falling within subsection (1)(a) or (b) above, the assumptions applied by that subsection in relation to sections 24 to 26--

(a) shall apply in relation to section 22 as they apply in relation to those sections but only for the purposes of first-year allowances by virtue of section 22(3B); and

(b) where those assumptions require any person to be treated as having incurred expenditure in a chargeable period related to any event, shall apply for those purposes as if they required that person to be treated as having incurred that expenditure on the date of that event. "

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

" (2A) Where a person is treated as having incurred capital expenditure on the provision of machinery or plant by virtue of subsection (1)(a) above, he shall be treated for the purposes of section 75(1), as it has effect in relation to first-year allowances by virtue of section 22(3B), as having done so by way of purchase from a person connected with him. "

(3) Sub-paragraph (2) above shall have effect in cases where machinery or plant is brought into use on or after 14th April 1993.

13 (1) In subsection (1)(a) of section 147 (exclusion of double allowances), after "those Parts" there shall be inserted "or section 22".

(2) In subsection (2) of that section, after "any person" there shall be inserted "an allowance is made under section 22 in respect of any capital expenditure or".

Section 120.

SCHEDULE 14 Pay and file: miscellaneous amendments

Failure to give notice of liability for corporation tax

1 In section 10(3) of the [1970 c. 9.] Taxes Management Act 1970 (penalty for failure to give notice of liability for corporation tax for accounting periods ending after appointed day), for the words from "borne" onwards there shall be substituted "which, under section 7(2) or 11(3) of the principal Act, is to be set off against the corporation tax so chargeable".

Further claims etc. where assessment made

2 In section 43A(1)(a) of that Act of 1970 (section to apply where assessment made by virtue of section 29(3) of that Act), after "section 29(3) of this Act" there shall be inserted "or section 412(3) of the principal Act".

Interest on overdue corporation tax: transitional cases

3 (1) Section 86 of that Act of 1970 (interest on overdue tax) shall be amended as follows.

(2) In subsection (3)(b), for "subject to subsection (3A)" there shall be substituted "subject to subsections (3A) and (4A)".

(3) In subsection (3A), at the beginning there shall be inserted "Subject to subsection (4A) below,".

(4) After subsection (4) there shall be inserted the following subsections--

" (4A) For the purposes of this section where--

(a) a notice served under section 11 above at any time after the appointed day for the purposes of section 82 of the [1987 c. 51.] Finance (No. 2) Act 1987 (amendment of section 11 for the purposes of pay and file) is to be taken as requiring a company to make a return for any accounting period ending on or before the day appointed for the purposes of section 10 of the principal Act; and

(b) the tax charged by any assessment to corporation tax for that accounting period does not become due and payable until after the date nine months from the end of that accounting period,

the reckonable date, in relation to tax charged for that accounting period by that assessment, is the date mentioned in paragraph (b) above (instead of the date which would otherwise be determined under subsection (3) or (3A) above).

(4B) The Board may at their discretion mitigate (whether before or after judgment) any interest due under this section in a case where the reckonable date is determined under subsection (4A) above and may stay or compound any proceedings for the recovery thereof. "

Interest on overdue corporation tax: pay and file cases

4 (1) In subsection (4) of section 87A of that Act of 1970 (which is set out in section 85 of the [1987 c. 51.] Finance (No. 2) Act 1987 and makes provision from an appointed day for interest on overdue corporation tax), at the beginning there shall be inserted the words "Subject to subsection (7) below".

(2) For subsection (6) of that section there shall be substituted the following subsections--

" (6) In any case where--

(a) on a claim under section 393A(1) of the principal Act, the whole or any part of a loss incurred in an accounting period ("the later period") has been set off for the purposes of corporation tax against profits of a preceding accounting period ("the earlier period");

(b) the earlier period does not fall wholly within the period of twelve months immediately preceding the later period; and

(c) if the claim had not been made, there would be an amount or, as the case may be, an additional amount of corporation tax for the earlier period which would carry interest in accordance with this section,

then, for the purposes of the determination at any time of whether any interest is payable under this section or of the amount of interest so payable, the amount mentioned in paragraph (c) above shall be taken to be an amount of unpaid corporation tax for the earlier period except so far as concerns interest for any time after the date on which any corporation tax for the later period became (or, as the case may be, would have become) due and payable as mentioned in subsection (1) above.

(7) Where, in a case falling within subsection (6)(a) and (b) above--

(a) there is in the earlier period, as a result of the claim under section 393A(1) of the principal Act, an amount of surplus advance corporation tax, as defined in subsection (3) of section 239 of that Act; and

(b) pursuant to a claim under the said subsection (3), the whole or any part of that amount is to be treated for the purposes of the said section 239 as discharging liability for an amount of corporation tax for an accounting period before the earlier period,

the claim under the said subsection (3) shall be disregarded for the purposes of subsection (6) above but subsection (4) above shall have effect in relation to that claim as if the reference in the words after paragraph (c) to the later period within the meaning of subsection (4) above were a reference to the period which, in relation to the claim under the said section 393A(1), would be the later period for the purposes of subsection (6) above. "

Effect on interest of reliefs

5 In section 91(1B) of that Act of 1970 (subsection (1A) subject to section 87A(4)), after "section 87A(4)" there shall be inserted "(6) and (7)".

Failure to make return for corporation tax

6 (1) In subsection (6) of section 94 of that Act of 1970 (penalty for failure to make return for corporation tax within eighteen months of end of return period), as it is to apply with respect to the failures mentioned in section 83 of the [1987 c. 51.] Finance (No. 2) Act 1987 (failures after appointed day), after the word "before", in the first place where it occurs, there shall be inserted "whichever is the later of the end of the final day for the delivery of the return and".

(2) In subsection (7) of that section, as it is so to apply, (calculation of unpaid tax for the purposes of penalty), for the words from "borne" onwards there shall be substituted "which, under section 7(2) or 11(3) of the principal Act, is to be set off against the corporation tax so chargeable".

Things to be done by companies

7 In section 108(1) of that Act of 1970 (which includes provision requiring companies to act for the purposes of the Taxes Acts through their proper officers), after "proper officer of the company" there shall be inserted "or, except where a liquidator has been appointed for the company, through such other person as may for the time being have the express, implied or apparent authority of the company to act on its behalf for the purpose".

Relief under section 393 of the Taxes Act 1988

8 (1) In relation to any case in which by virtue of section 99 of the [1990 c. 29.] Finance Act 1990 losses may be set off under subsection (1) of section 393 or of section 396 of the Taxes Act 1988 without the making of a claim, the Taxes Act 1988 shall have effect with the following amendments.

(2) In section 343(3) (company reconstructions without change of ownership), the word "claim", in the second place where it occurs, shall be omitted.

(3) In section 395 (leasing contracts and company reconstructions)--

(a) in subsection (1)(b), for the words "to claim relief under section 393(1) or 393A(1)" there shall be substituted "under section 393(1) or in pursuance of a claim under section 393A(1) to relief"; and

(b) in the words after paragraph (c) of subsection (1) and in subsection (4), the words "to claim relief" shall be omitted.

(4) In section 398 (transactions in deposits), for the words from "he may" onwards there shall be substituted "the amount of his loss may be set off in pursuance of a claim under section 392 or, as the case may be, against which the amount of his loss may be set off under section 396".

(5) In section 400(2)(a) (write-off of government investments), the words "or, if a claim had been made under that subsection, would be" shall be omitted.

9 In section 65(6) of the [1992 c. 48.] Finance (No. 2) Act 1992 (I minus E basis for life assurance business not to be affected by certain claims), after paragraph (b) there shall be inserted the words-- " but, in relation to any case in which by virtue of section 99 of the Finance Act 1990 losses may be set off under subsection (1) of section 393 of the Taxes Act 1988 without the making of a claim, this section shall have effect as if references to the making of a claim under that subsection were references to the setting off of any loss under that subsection. "

Interest on tax overpaid

10 (1) In subsection (7) of section 826 of the Taxes Act 1988 (interest on overpaid tax)--

(a) at the beginning, there shall be inserted the words "Subject to subsection (7AA) below,";

(b) in paragraph (c), for "made for the earlier period" there shall be substituted "paid for the earlier period or of income tax in respect of a payment received by the company in that accounting period"; and

(c) in the words after paragraph (c), for the words from "of corporation tax" to "resulting from" there shall be substituted "referred to in paragraph (c) above, no account shall be taken of so much of the amount of the repayment as falls to be made as a result of the claim under".

(2) In subsection (7A) of that section, for "any increase in the amount of that repayment" there shall be substituted "so much of the amount of that repayment as falls to be made".

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

" (7AA) Where, in a case falling within subsection (7A)(a) and (b) above--

(a) there is in the earlier period, as a result of the claim under section 393A(1), an amount of surplus advance corporation tax, as defined in section 239(3); and

(b) pursuant to a claim under section 239(3) the whole or any part of that amount is to be treated for the purposes of section 239 as discharging liability for an amount of corporation tax for an accounting period before the earlier period,

then subsection (7) above shall have effect in relation to the claim under the said subsection (3) as if the reference in the words after paragraph (c) to the later period within the meaning of subsection (7) above were a reference to the period which, in relation to the claim under section 393A(1), would be the later period for the purposes of subsection (7A) above. "

(4) In subsection (7B) of that section, for "any increase in the amount of that payment" there shall be substituted "so much of the amount of that payment as falls to be made".

(5) Sub-paragraph (3) above shall have effect, subject to sub-paragraph (6) below, in relation to any claim under section 393A(1) of the Taxes Act 1988 as a result of which there is an amount of surplus advance corporation tax in an accounting period ending after the day appointed for the purposes of section 826 of that Act.

(6) Where in the case of any claim in relation to which sub-paragraph (3) above has effect--

(a) the case is one falling within subsection (7AA)(a) and (b) of section 826 of the Taxes Act 1988; but

(b) the period mentioned in subsection (7AA)(b) ended on or before the appointed day for the purposes of that section,

subsection (7AA) of that section shall not apply but section 825(4)(a) of that Act shall have effect as if the reference to the accounting period in the case of which the amount of surplus advance corporation tax arose were a reference to the period which, in relation to the claim, would be the later period for the purposes of subsection (7A) of section 826 of that Act.

Surrender of refunds

11 In section 102 of the [1989 c. 26.] Finance Act 1989 (surrender of company tax refund etc. within group), after subsection (4) there shall be inserted the following subsection--

" (4A) Where subsection (4) above has effect in relation to any amount and there is, by virtue of any of subsections (7) to (7C) of section 826 of the Taxes Act 1988, a period for which the whole or any part of that amount would not, had the refund been made to the surrendering company, have carried interest under that section, that period shall be treated as excluded--

(a) from any period for which any refund made by virtue of subsection (4) above to the recipient company in respect of some or all of that amount or, as the case may be, that part of it is to carry interest under that section; and

(b) from any period for which a sum representing some or all of that amount or part would (apart from this subsection) be treated by virtue of subsection (4) above as not carrying interest under section 87A of the [1970 c. 9.] Taxes Management Act 1970;

and in determining for the purposes of this subsection which part of any amount is applied in discharging a liability of the recipient company to pay any corporation tax and which part is represented by a refund to the recipient company, it shall be assumed that the part in relation to which there is a period which would not have carried interest under section 826 of the Taxes Act 1988 is applied in preference to any other part of that amount in or towards discharging the liability. "

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