Coal industry Act 1994 (c. 21)

(The document as of February, 2008)

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(a) shall not be so deductible; but

(b) subject to sub-paragraph (3) below, shall be deductible in computing the transferee's profits to the same extent as if the transferee had become subject to the obligation in pursuance of which the liability arises or has arisen at the same time and for the same consideration, and otherwise on the same terms and in the same circumstances, as the predecessor;

and for the purposes of this sub-paragraph it shall be assumed, where it is not the case, that the accounting period of the predecessor current on the day before the transfer comes into force ends immediately before the coming into force of that transfer.

(3) For the purposes of corporation tax, where any relevant transfer has the effect that any liability falls to any extent to be discharged by the transferee instead of by the predecessor, the amounts deductible in computing the transferee's profits, or any description of the transferee's profits, for any accounting period shall not include any amount in respect of so much of that liability as falls to be so discharged unless it is an amount which (but for that and any other transfer) would have fallen to be deductible in computing the predecessor's profits, or any description of the predecessor's profits, for any accounting period beginning or ending after the coming into force of that transfer.

(4) The preceding provisions of this paragraph shall apply in relation to the deduction of charges on income against the total profits of the predecessor or transferee for any period as they apply in relation to the deduction of any amount in the computation for that period of the profits of the predecessor or, as the case may be, of the transferee.

(5) For the purposes of Chapter II of Part VI of the 1988 Act (definition of distributions), where in the case of any relevant transfer any consideration given or treated as given in respect of a security relating to--

(a) any liability, or

(b) the use of the principal to which any liability, being a liability to interest or an equivalent liability, relates,

would fall (apart from this sub-paragraph) to be regarded for those purposes as new consideration received by the predecessor, that consideration shall be treated instead, to the extent that it relates to so much of the liability as falls in consequence of the transfer to be discharged by the transferee and is not a liability to which sub-paragraph (1) above applies, as if it were new consideration received by the transferee.

Losses to be retained by the predecessor

14 (1) Notwithstanding anything in the preceding provisions of this Part of this Schedule or in Schedule 2 or 3 to this Act, the relevant unallowed tax losses of the predecessor--

(a) shall not be capable, at any time after a relevant transfer comes into force, of being brought into account for any of the purposes of the Corporation Tax Acts in relation to the taxation of the transferee; but

(b) shall continue, to the same extent as before, to be treated after any relevant transfer as unallowed tax losses of the predecessor.

(2) In sub-paragraph (1) above "relevant unallowed tax losses" means--

(a) if the accounting period of the predecessor ends immediately before the coming into force of the relevant transfer, the unallowed tax losses of the predecessor as at the end of that period; and

(b) in any other case, any losses, expenses, charges or amounts which would be unallowed tax losses of the predecessor immediately before the coming into force of the relevant transfer, if an accounting period of the predecessor had ended at that time.

(3) In this paragraph "unallowed tax losses" means any losses, expenses, charges or amounts which are tax losses within the meaning of section 400(2)(a), (b), (d) or (e) of the 1988 Act.

Section 35 of the 1988 Act

15 (1) Section 35 of the 1988 Act (charge on lease granted at an undervalue) shall not apply in the case of any lease the grant of which is effected by means of a relevant transfer.

(2) Section 87 of the 1988 Act (taxable premiums) shall not apply where there is an amount which would have become chargeable in relation to any land but for sub-paragraph (1) above; and, accordingly, references to any such amount shall not be included in references in that section to the amount chargeable.

(3) In this paragraph "lease" has the same meaning as in Part II of the 1988 Act.

Group relief

16 The existence of the powers of the Secretary of State under section 12 of and Schedule 2 to this Act shall not be regarded as constituting arrangements within the meaning of section 410 of the 1988 Act (arrangements for the transfer of a company to another group or consortium) or as constituting option arrangements for the purposes of paragraph 5B of Schedule 18 to that Act.

Special provision for successor companies

17 (1) Where--

(a) by virtue of any relevant transfer any liability for any loan made to the predecessor vests in a successor company, and

(b) at the coming into force of that transfer that company is wholly owned by the Crown,

the vesting of liability for that loan in that company shall not affect any direction in respect of the loan given or having effect as if given by the Treasury under section 581 of the 1988 Act (income tax exemption for interest on foreign currency securities).

(2) Any share issued by a successor company in pursuance of paragraph 2 of Schedule 3 to this Act shall be treated for the purposes of the Corporation Tax Acts as if it had been issued wholly in consideration of a subscription paid to that company of an amount equal to the nominal value of the share.

(3) Any debenture issued by a successor company in pursuance of paragraph 2 of Schedule 3 to this Act shall be treated for the purposes of the Corporation Tax Acts as if it had been issued--

(a) wholly in consideration of a loan made to that company of an amount equal to the principal sum payable under the debenture; and

(b) wholly and exclusively for the purposes of the trade carried on by that company.

(4) If any debenture issued as mentioned in sub-paragraph (3) above includes provisions for the payment of a sum expressed as interest in respect of a period which falls wholly or partly before the issue of the debenture, any payment made in pursuance of that provision in respect of that period shall be treated for the purposes of the Corporation Tax Acts as if the debenture had been issued at the commencement of that period and, accordingly, as interest on the principal sum payable under the debenture.

Leased assets

18 (1) For the purposes of section 781 of the 1988 Act (assets leased to traders and others), where the interest of the lessor or the lessee under a lease, or any other interest in an asset, vests in any person by virtue of a relevant transfer--

(a) the transfer shall be treated as made without any capital sum having been obtained in respect of that interest by the predecessor or the transferee; and

(b) in a case where the interest is an interest under a lease, payments made by the predecessor under the lease before the coming into force of the transfer shall be deemed to have been made under that lease by the transferee.

(2) Section 782 of the 1988 Act (deduction of payment under leases: special cases) shall not apply to any payments made--

(a) under any lease granted for the purposes of the creation in accordance with a restructuring scheme of any leasehold interest, including, where effect has been given without the grant of a lease to the creation of a leasehold interest in accordance with such a scheme, any lease which for those purposes is deemed to have been granted; or

(b) under any lease granted by a person whose ability to grant that lease derives from the transfer to him in accordance with a restructuring scheme of the asset to which the lease relates.

(3) In this paragraph "lease" and "asset" have the meanings given by section 785 of the 1988 Act and references to a leasehold interest are references to any such interest as may subsist under a lease.

Continuity in relation to capital allowances etc. where trade transferred

19 (1) Subject to the following provisions of this Part of this Schedule, where, apart from this paragraph--

(a) the predecessor would be treated for the purposes of the Corporation Tax Acts as having ceased, by virtue of the coming into force of a relevant transfer, to carry on any trade, and

(b) the transferee would be treated as having begun, on the coming into force of that transfer, to carry it on,

then the trade shall not be treated as permanently discontinued, nor a new trade as set up, for the purposes of the allowances and charges provided for by the Capital Allowances Acts, but sub-paragraphs (2) to (4) below shall apply.

(2) Subject to sub-paragraphs (3) and (4) below, in a case falling within sub-paragraph (1) above--

(a) there shall be made to or on the transferee in accordance with the Capital Allowances Acts all such allowances and charges as would, if the predecessor had continued to carry on the trade, have fallen to be made to or on the predecessor; and

(b) the amount of any such allowance or charge shall be computed as if--

(i) the transferee had been carrying on the trade since the predecessor began to do so; and

(ii) everything done to or by the predecessor had been done to or by the transferee (but so that the relevant transfer itself, so far as it relates to any assets in use for the purpose of the trade, shall not be treated as giving rise to any allowance or charge).

(3) For the purposes of the Corporation Tax Acts, only such amounts (if any) as may be specified in or determined in accordance with the restructuring scheme providing for a relevant transfer shall be allocated to the transferee in respect of--

(a) expenditure by reference to which capital allowances may be made by virtue of sub-paragraph (2) above in relation to anything to which the transfer relates; and

(b) allowances which (apart from the allocation and irrespective of what are in fact the accounting periods of the predecessor) would, under section 145(2) of the 1990 Act, be carried forward, in relation to anything to which the transfer relates, to an accounting period of the predecessor beginning immediately before the coming into force of that transfer.

(4) Sub-paragraph (2) above shall affect the amounts falling to be taken into account in relation to the predecessor--

(a) as expenditure by reference to which capital allowances may be made, or

(b) as an allowance carried forward under section 145(2) of the 1990 Act,

only so far as necessary to give effect to a reduction of any such amount by a sum equal to so much of that amount as is allocated to the transferee as mentioned in sub-paragraph (3) above.

(5) Subject to sub-paragraph (6) below, the provisions of a restructuring scheme providing for the determination of any amount which for the purposes of sub-paragraph (3) above is to be allocated, in the case of any relevant transfer, to the transferee may include provision--

(a) for such a determination to be made by the Secretary of State in such manner as may be described in the scheme;

(b) for any amount determined to be calculated by reference to such factors or to the opinion of such person as may be so described; and

(c) for a determination under those provisions to be capable of being modified, on one or more occasions, in such manner and in such circumstances as may be so described.

(6) The consent of the Treasury shall be required for the making or modification of a determination of any such amount as is mentioned in sub-paragraph (5) above; and the consent of the transferee shall also be required for any such modification after the relevant transfer.

Capital allowances in cases where paragraph 19 does not apply

20 (1) Subject to paragraph 21 below, the Capital Allowances Acts shall have effect in accordance with this paragraph in relation to any property if--

(a) it is property to which a relevant transfer relates; and

(b) paragraph 19 above does not apply in relation to its transfer to the transferee;

and in this paragraph "the relevant scheme", in relation to property to which a relevant transfer relates, means the restructuring scheme that provides for that transfer.

(2) Where--

(a) subsection (6) of section 21 of the 1990 Act (transfer of industrial buildings or structures to be deemed to be sale at market price) applies on the relevant transfer in relation to the property, and

(b) the relevant scheme contains provision for the sale of that property which is deemed to occur by virtue of that subsection (6) to be deemed for the purposes of the Capital Allowances Acts to be at a price specified in or determined in accordance with the scheme,

that deemed sale shall be treated as a sale at the price so specified or determined (instead of at the price determined in accordance with that subsection or any other provision of those Acts), sections 157 and 158 of the 1990 Act shall not apply and that provision of the scheme shall have an equivalent effect in relation to the expenditure which the transferee is to be treated as having incurred in making the corresponding purchase.

(3) Where the property is plant or machinery which would, for the purposes of the Capital Allowances Acts, be treated on the coming into force of the relevant transfer as disposed of by the predecessor to the transferee and the relevant scheme contains provision for the disposal value of that property to be deemed for the purposes of those Acts to be of such amount as may be specified in or determined in accordance with the scheme--

(a) that provision shall have effect, instead of section 26(1) or 59 of the 1990 Act, for determining an amount as the disposal value of the property or, as the case may be, as the price at which any fixture is to be treated as sold;

(b) the transferee shall be deemed to have incurred expenditure of that amount on the provision of that property; and

(c) in the case of a fixture, the expenditure which falls to be treated as incurred by the transferee shall be deemed for the purposes of section 54 of that Act to be incurred by the giving of a consideration consisting in a capital sum of that amount.

(4) Where--

(a) the predecessor has been carrying on a trade of mineral extraction, and

(b) the relevant scheme contains provision for the amount specified in or determined in accordance with the scheme to be brought into account under section 99 of the 1990 Act (disposal receipts in relation to mineral extraction allowances) as a disposal receipt,

that amount, instead of any other amount, shall be so brought into account as such a receipt in respect of the transfer of the property in accordance with the relevant scheme or of the predecessor's otherwise ceasing to use the property in consequence of that transfer.

(5) Where--

(a) the acquisition of the property by the transferee in accordance with the relevant scheme would be a balancing event for the purposes of Part V of the 1990 Act (agricultural buildings etc.) if an election were made under section 129(2) of that Act, and

(b) the relevant scheme contains provision for the price paid by the transferee to the predecessor for the property to be deemed, for the purposes of the Capital Allowances Acts, to be such amount as may be specified in or determined in accordance with the scheme,

such an election shall be deemed to have been made and the sale moneys related to that event shall be deemed for the purposes of section 128(2) of that Act (calculation of balancing allowance or charge) to be equal to that amount.

(6) Where--

(a) the transfer of the property in accordance with the relevant scheme would be a relevant event for the purposes of section 138 of the 1990 Act (assets representing allowable scientific research expenditure ceasing to belong to traders), and

(b) the relevant scheme contains provision for an amount specified in or determined in accordance with the scheme to be treated for the purposes of subsection (2) of that section as the disposal value of that property,

that section shall have effect accordingly.

(7) A disposal or acquisition in relation to which provision is made by the relevant scheme under any of sub-paragraphs (4) to (6) above shall not for any of the purposes of the 1990 Act be treated as, or as part of, a transaction falling within section 157(1)(a) of that Act (sales between connected persons etc.).

(8) Sub-paragraphs (5) and (6) of paragraph 19 above shall apply in relation to any determination of any amount in accordance with any provision made by a restructuring scheme for the purposes of this paragraph as they apply for the purposes of a determination such as is mentioned in those sub-paragraphs.

Capital allowances in cases where interests created by restructuring scheme

21 (1) This paragraph shall apply where--

(a) an interest or right in or in relation to any property ("the relevant property") is retained, or under paragraph 24 below is deemed to be retained, by the predecessor following any relevant transfer; and

(b) any other interest or right in or in relation to that property vests by virtue of that transfer in the transferee;

and in this paragraph references to the retained property are references to the interest or right mentioned in paragraph (a) above and references to the transferred property are references to the interest or right mentioned in paragraph (b) above.

(2) Where--

(a) the relevant transfer is one which is deemed to be made by virtue of paragraph 24(4) below, and

(b) the restructuring scheme in accordance with which it is made provides for this sub-paragraph to apply in relation to the relevant property,

the Capital Allowances Acts, sections 41 and 174 of the 1992 Act and paragraphs 19 and 20 above shall have effect for all purposes as if the interests or rights of the predecessor in or in relation to the relevant property had always been confined to the retained property and, accordingly, as if all allowances and charges made to or on the predecessor in relation to the relevant property, and anything done by or with respect to the predecessor in relation to the relevant property, had been made or done in relation to the retained property.

(3) Where--

(a) any interest or right of any person is under sub-paragraph (2) above to be treated as having always been confined to a particular interest or right in or in relation to any property,

(b) that property is a fixture, and

(c) any of the requirements of Chapter VI of Part II of the 1990 Act which did not in fact apply in relation to the property before the coming into force of the scheme in question would have had to be satisfied (if the interest had been so confined) for the Capital Allowances Acts to apply in relation to that property as they did in fact apply before that time,

those Acts and the preceding provisions of this Part of this Schedule shall have effect as if those requirements had been satisfied.

(4) Where--

(a) any interest or right of any person in or in relation to any property is under sub-paragraph (2) above to be treated as having always been confined to an interest under a lease (within the meaning of section 61 of the 1990 Act) of that property,

(b) that property is machinery or plant which is not so installed or otherwise fixed in or to a building or any other description of land as to become, in law, a part of that building or land, and

(c) the restructuring scheme in accordance with which the relevant transfer relating to the machinery or plant is made provides for this sub-paragraph to apply in relation to that property,

the Capital Allowances Acts and the preceding provisions of this Part of this Schedule shall have effect (with the provisions of sub-paragraph (2) above so far as they apply to the lease) as if the capital expenditure on the provision of that machinery or plant was expenditure on machinery or plant which that person was required to provide under the terms of the lease.

(5) Where sub-paragraph (2) above is not applied in relation to the relevant property, paragraph 5 above shall not apply but the capital allowances which shall be taken into account in pursuance of section 41 of the 1992 Act (restriction of losses by reference to capital allowances) on--

(a) the disposal by the transferee of the transferred property or any part of it, or

(b) the disposal by the predecessor of the retained property or any part of it,

shall include, so far as not already taken into account under that section or this sub-paragraph, any capital allowances (within the meaning of that section) which have been made or fall to be made to the predecessor in relation to the relevant property.

(6) In determining for the purposes of sub-paragraph (5) above whether or the extent to which any amount has been taken into account in pursuance of section 41 of the 1992 Act or that sub-paragraph, an amount so taken into account for the purpose of restricting any loss shall be assumed to be taken into account at the time when the loss accrues.

Capital allowances for machinery and plant: connected persons

22 For the purposes of Part II of the 1990 Act references in that Part to a transaction (however described) between connected persons within the meaning of section 839 of the 1988 Act shall not include references to any relevant transfer.

Exchange gains and losses

23 (1) This paragraph shall apply where--

(a) in consequence of so much of any relevant transfer as relates to any qualifying asset, qualifying liability or currency contract, any accrual period ends, as regards that asset, liability or contract, with the time immediately before the coming into force of the transfer; and

(b) that time would not be a translation time apart from the transfer.

(2) For the purposes of Chapter II of Part II of the [1993 c. 34.] Finance Act 1993 (exchange gains and losses) the exchange rate to be used in finding the local currency equivalent at the translation time mentioned in sub-paragraph (1) above of--

(a) the basic valuation of an asset or liability,

(b) the nominal amount of a debt outstanding, or

shall (subject to sub-paragraph (3) below) be the same as that used at the translation time with which the accrual period so mentioned began.

(3) Where the accrual period mentioned in sub-paragraph (1) above is one in relation to which section 127 of the Finance Act 1993 (accrual on debts whose amounts vary) applies, that section shall have effect as if the local currency equivalent, at the translation time with which that period ends, of the nominal amount of the debt then outstanding were an amount equal to the first amount (within the meaning of that section).

(4) For the purposes mentioned in sub-paragraph (2) above, where the preceding provisions of this paragraph apply for finding the local currency equivalent of any valuation or amount at the time immediately before the coming into force of a relevant transfer, the equivalent found in accordance with those provisions shall also be deemed to be the local currency equivalent of that valuation or amount at the translation time which, in consequence of the transfer, falls immediately after the transfer comes into force.

(5) This paragraph shall be construed as one with Chapter II of Part II of the [1993 c. 34.] Finance Act 1993.

Transfers of property in coal and lease back etc.

24 (1) Subject to the following provisions of this paragraph--

(a) this Part of this Schedule shall have effect as if the transfer made by section 7(3) of this Act were made in accordance with a restructuring scheme coming into force on the restructuring date; and

(b) any provisions of this Part of this Schedule by virtue of which provision may be contained in the restructuring scheme in accordance with which a relevant transfer is made shall have effect, in relation to the transfer made by section 7(3) of this Act, as if they authorised the inclusion of that provision in any restructuring scheme which is to take effect on the restructuring date.

(2) Subject to sub-paragraph (3) below, where any interests or rights are created, in accordance with any restructuring scheme, in or in relation to any property which--

(a) is property to which section 7(3) of this Act applies,

(b) is retained, subject to those interests and rights, by the Corporation or any of its wholly-owned subsidiaries, or

(c) in accordance with a restructuring scheme is transferred, with effect from the time at or immediately before which the creation of the interests or rights takes effect, from the Corporation or one of its wholly-owned subsidiaries to any other person,

those interests or rights, so far as they are created in favour of a public sector body shall be treated for the purposes of the Corporation Tax Acts and this Part of this Schedule as transferred from the Corporation or, as the case may be, its subsidiary to that body but not, except for the purposes of paragraphs 2, 4, 10, 15 and 18(1) above, as transferred by virtue of a relevant transfer.

(3) Sub-paragraph (2) above shall not apply in relation to the creation in favour of the Corporation or any of its wholly-owned subsidiaries, in accordance with any restructuring scheme, of any interest or right in or in relation to--

(a) property to which section 7(3) of this Act applies; or

(b) any other property in or in relation to which the Corporation or, as the case may be, that subsidiary owned some other interest or right immediately before the created interest or right comes into existence.

(4) Where any restructuring scheme contains provision for the creation in favour of the Corporation or any of its wholly-owned subsidiaries of any interest or right in or in relation to any such property as is mentioned in sub-paragraph (3)(a) or (b) above, the only transfer which shall be deemed for the purposes of the Corporation Tax Acts and this Part of this Schedule to have taken place in accordance with that provision shall be a transfer (subject to the retention of the created interest or right) from the Corporation or that subsidiary of--

(a) any interest or right in or in relation to that property which, by virtue of that scheme, is to be retained by the Authority; and

(b) the interest or right in or in relation to that property which in accordance with the scheme is transferred to any other person, together with any interest or right which in accordance with that scheme is created in favour of another person.

(5) Where--

(a) any interest or right is created in accordance with a restructuring scheme in or in relation to any property which has vested in any person ("the intermediary") by virtue of a relevant transfer,

(b) the intermediary and the person in favour of whom the right or interest is created are both public-sector bodies at the time when the interest or right is created, and

the creation of that interest or right shall be treated for the purposes of the Corporation Tax Acts and this Schedule as a transfer in accordance with a restructuring scheme of the interest or right from the intermediary to the person in favour of whom it is created but not, except for the purposes of paragraphs 2, 4, 10, 15 and 18(1) above and this sub-paragraph, as a relevant transfer.

(6) Where paragraph 10 above applies in the case of any transaction which by virtue of sub-paragraph (5) above is treated for the purposes of that paragraph as a relevant transfer, that paragraph shall have effect in relation to that transaction as if references to the predecessor were references to the person who is the predecessor in relation to the relevant transfer by virtue of which the property in question vested in the intermediary or, where there has been more than one such transaction, the person who by virtue of this sub-paragraph is deemed for the purposes of that paragraph to be the predecessor in the case of the earliest such transaction.

(7) The creation in accordance with a restructuring scheme of any interest or right in any property in which different interests or rights subsist shall not be treated for the purposes of this Schedule as a transfer in accordance with that scheme of the created interest or right except so far as it falls to be so treated by virtue of the preceding provisions of this paragraph.

(8) Subsections (1) and (2) of section 779 of the 1988 Act (sale and lease back) shall not apply where the liability of the transferor (within the meaning of that section) or of the person associated with that transferor is as a result of either--

(a) the creation in accordance with any restructuring scheme of any interest or right; or

(b) any other transaction or series of transactions for which such a scheme provides.

(9) Section 28 of the 1992 Act and paragraph 2(2) above shall apply for determining for the purposes of this paragraph the time as from which the creation of any interest or right takes effect as they apply for the purpose of determining the time of the disposal and acquisition of any asset.

Modifications of restructuring scheme

25 Where the effect of any restructuring scheme is modified in pursuance of any agreement which takes effect under paragraph 6(2) of Schedule 2 to this Act, the Corporation Tax Acts and this Part of this Schedule shall have effect as if--

(a) the scheme originally made had been the scheme as modified; and

(b) anything done by or in relation to the person who without the modification became entitled or subject in accordance with the scheme to any property, rights or liabilities had, so far as relating to the property, rights or liabilities to which another person becomes entitled or subject in consequence of the modification, been done by or in relation to that other person.

Part II Stamp Duty and Stamp Duty Reserve Tax

Transactions attracting exemptions

26 For the purposes of this Part of this Schedule a transaction is an exempt transaction if it is a transaction by virtue of which property, rights or liabilities are vested by or under Part I of this Act in a person who is a public-sector body within the meaning of Part I of this Schedule.

Stamp duty

27 (1) Subject to sub-paragraph (2) below, an exempt transaction shall not give rise to any charge to stamp duty except in so far as the charge to duty is on an instrument under this Act which is neither a restructuring scheme nor an instrument that has been certified to the Commissioners of Inland Revenue by the Secretary of State to have been made--

(a) in pursuance of a restructuring scheme; or

(b) by virtue of any provision of this Act, for the purpose of modifying the effect of such a scheme.

(2) No instrument which is certified as mentioned in sub-paragraph (1) above shall be taken to be duly stamped unless--

(a) it is stamped with the duty to which it would, but for that sub-paragraph, be liable; or

(b) it has, in accordance with section 12 of the [1891 c. 39.] Stamp Act 1891, been stamped with a particular stamp denoting that it is not chargeable with that duty or that it is duly stamped.

(3) Stamp duty shall not be chargeable on any instrument by which the Treasury or the Secretary of State, or any nominee of the Treasury or the Secretary of State, transfers securities of a company to another company if--

(a) at least one of those companies is a successor company; and

(b) each of the companies is wholly owned by the Crown at the time when the instrument is made.

Stamp duty reserve tax

28 (1) No agreement for the purposes of, or for purposes connected with giving effect to--

(a) so much of any restructuring scheme as relates to an exempt transaction, or

(b) any exempt transaction to which effect is given by the modification of any restructuring scheme,

shall give rise to a charge to stamp duty reserve tax.

(2) No agreement by which the Treasury or the Secretary of State, or any nominee of the Treasury or the Secretary of State, agrees to transfer securities of a company to another company shall give rise to a charge to stamp duty reserve tax if--

(a) at least one of those companies is a successor company; and

(b) each of the companies is wholly owned by the Crown at the time when the instrument is made.

Section 22.

SCHEDULE 5 Pensions Provision in connection with Restructuring

Interpretation of Schedule

1 (1) In this Schedule--

"assets", in relation to any existing scheme, means all the assets for the time being held for the purposes of the scheme by the trustees of the scheme, including every interest in property and right to which the trustees of the scheme are for the time being entitled, together with any liabilities, not being liabilities in respect of pension obligations, to which any entitlement of the trustees to any of the scheme's assets is subject;
"existing scheme" means any scheme having effect by virtue of regulations made under section 37 of the 1946 Act for purposes relating to pensions, gratuities or other like benefits;
"pension", in relation to any person, means a pension of any kind payable to or in respect of that person, including--
(a)
a lump sum, allowance or gratuity so payable; and
(b)
a return of contributions, with or without interest or any other addition;
"pension obligation" means any present, future or contingent obligation to make a payment which is an obligation to which pension rights of the person to whom it is owed give rise;
"pension rights", in relation to any person, includes all forms of right to or eligibility for the present or future payment of a pension to or in respect of that person and any right of allocation in respect of the present or future payment of a pension;
"prescribed" means prescribed by regulations made by the Secretary of State;
"the relevant enactments" means Chapter I of Part XIV of the [1988 c. 1.] Income and Corporation Taxes Act 1988 (retirement benefit schemes) and Part III of the [1993 c. 48.] Pension Schemes Act 1993 (so far as relating to occupational pension schemes within the meaning of that Act).

(2) References in this Schedule to a scheme being approved for the purposes of Part III of the [1993 c. 48.] Pension Schemes Act 1993 are references to its being included in a contracting-out certificate having effect for the purposes of that Part of that Act.

Modification of existing schemes

2 (1) The Secretary of State may by regulations make provision in relation to an existing scheme for it to continue in force notwithstanding the repeal by this Act of section 37 of the 1946 Act and of the enactments modifying that section.

(2) Without prejudice to any powers conferred (so long as it remains in force) by section 37 of the 1946 Act, the Secretary of State may by regulations make such provision as he considers appropriate in connection with the provisions of this Act for modifying any existing scheme.

(3) Without prejudice to the generality of the power conferred by sub-paragraph (2) above, the modifications of an existing scheme that may be made by regulations under this paragraph shall include modifications for any of the following purposes, that is to say--

(a) for conferring power on the Secretary of State or any other prescribed person to appoint trustees of the existing scheme or for requiring trustees to be appointed only in such manner and in such circumstances, or with the approval of the Secretary of State or such other person, as may be prescribed;

(b) for enabling a person who is entitled to appoint trustees of the existing scheme to remove trustees of the scheme from office;

(c) for requiring or enabling powers or duties of any person under the existing scheme to be exercisable or performed by or in accordance with the directions of such persons or in such circumstances, or to be exercisable or performed only in such manner or with the consent of such persons, as may be prescribed;

(d) for providing that persons who have become entitled in respect of any period of employment to be participants in another prescribed scheme are not, as from such time as may be determined in accordance with the regulations, to be entitled in respect of that period of employment to be participants in the existing scheme;

(e) for facilitating the transfer in prescribed circumstances to another scheme of--

(i) rights and liabilities under the existing scheme of any participant in the existing scheme who becomes a participant in the other scheme; or

(ii) the benefit of any arrangements under which participants in the existing scheme are relieved from any obligation to make contributions;

(f) for the apportionment and allocation to particular rights and liabilities of assets of the existing scheme and for the transfer of assets to other schemes in connection with any provision made by virtue of this Schedule;

(g) for restricting the persons who are to be able on and after the restructuring date to become participants in the existing scheme;

(h) for enabling expenses incurred in or in connection with the management or other administration of the existing scheme to be met out of the assets of the scheme;

(i) for securing that the existing scheme continues to be approved for the purposes of the relevant enactments;

(j) for enabling the existing scheme to be wound up (in whole or in part) in such circumstances as may be prescribed.

(4) The modifications of an existing scheme that may be made by regulations under this paragraph shall include modifications making such provision as the Secretary of State considers appropriate for cases where either--

(a) there are assets of the scheme representing a relevant surplus, or

(b) the assets of the scheme are insufficient for meeting pension obligations under the scheme.

(5) The modifications mentioned in sub-paragraph (4) above may contain--

(a) provision for a relevant surplus, and the assets representing it, to be apportioned between--

(i) the part (if any) of the surplus which is to be retained in a reserve ("an investment reserve") as an asset of the scheme, and

(ii) the remainder ("the distributable part") of the surplus;

(b) provision for the management of assets representing an investment reserve and for the manner in which any such assets are to be applied;

(d) provision for the manner in which assets representing the distributable part of a relevant surplus are to be applied; and

(e) provision, for the purposes of any provision under paragraphs (a) to (d) above, for modifying any decisions as to the way in which relevant surpluses determined as at times before the restructuring date, and the assets representing any such surpluses, are to be treated.

(6) The provision as to the apportionment of any surplus or assets to an investment reserve that may be contained in modifications made by virtue of sub-paragraph (4) above shall not include any provision authorising the allocation to such a reserve of any part of a surplus determined as at a time after 31st March 1994, or of any assets representing any part of such a surplus, except where the allocation is made for making good amounts which (apart from any entitlement for which provision is made by virtue of sub-paragraph (7) below) would have been comprised in the value of the reserve if assets representing any part of it had not been applied from the reserve in meeting a deficiency that arose as at any time by reason of the other assets of the scheme having been insufficient as at that time for meeting pension obligations under the scheme.

(7) The provision as to the application of assets representing an investment reserve that may be contained in modifications made by virtue of sub-paragraph (4) above shall include provision for the Secretary of State to become entitled where--

(a) any such arrangements as are mentioned in sub-paragraph (9) below have been entered into in relation to pension obligations under the scheme in question, and

(b) the value of the assets representing the reserve exceeds the aggregate amount required for the purposes for which the reserve has been retained,

to assets of the scheme representing the amount of the excess or, where those purposes have ceased, the value of the reserve.

(8) The provision as to the application of assets representing the distributable part of a relevant surplus that may be contained in modifications made by virtue of sub-paragraph (4) above shall include provision for the Secretary of State to become entitled where--

(a) the surplus is one determined as at a time on or after 31st March 1994, and

(b) any such arrangements as are mentioned in sub-paragraph (9) below have been entered into in relation to pension obligations under the scheme in question,

to assets of the scheme representing no more than one half of the distributable part of that surplus.

(9) The Secretary of State may, with the consent of the Treasury, enter into such arrangements as he may consider appropriate for guaranteeing or otherwise securing, in relation to any existing scheme, that the assets of the scheme are at all times sufficient for meeting the principal pension obligations and such other pension obligations under the scheme as are obligations to which he considers such arrangements should apply.

(10) Sums required by the Secretary of State for making any payment in pursuance of any arrangements entered into by him under sub-paragraph (9) above shall be paid out of money provided by Parliament; and any sums received by him by virtue of sub-paragraph (7) or (8) above shall be paid into the Consolidated Fund.

(11) Regulations under this paragraph may provide for--

(a) any such apportionments or allocations as are mentioned in the preceding sub-paragraphs,

(b) any determination for the purposes of any existing scheme of the amount of, or of any part of, any surplus or excess or of the assets for the time being to be treated as representing the whole or any part of any such surplus or excess, and

(c) the determination of any other matter falling to be determined for the purposes of any provision relating, in the case of any such scheme, to the management or application of the assets representing any reserve or surplus,

to be made as at such times, on such basis and by reference to the opinion of such persons as may be prescribed.

(12) The power by regulations under this paragraph to modify an existing scheme shall not authorise the making of any modification which, in relation to the person entitled to it, adversely affects so much of any pension right as gives rise to any of the principal pension obligations under that scheme.

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