Finance Act 1997 (c. 16)

(The document as of February, 2008)

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"the former owner" shall be construed in accordance with subsection (1) of section 59; and
"the purchaser" means the purchaser or lessee referred to in subsection (2) or, as the case may be, subsection (3) of that section.

59C Elections under section 59B: supplemental

(1) A section 59B election must be made by notice given to an officer of the Board.

(2) A notice containing a section 59B election (in addition to specifying the amount fixed by the election) must contain the following information--

(a) the name of each of the persons making the election;

(b) information sufficient to identify the machinery or plant;

(d) particulars of the interest acquired by the purchaser or, as the case may be, of the lease granted to him; and

(e) the tax district references of each of the persons making the election.

(3) The amount specified as the amount fixed by a section 59B election must be quantified at the time when the election is made; but if, as a result of circumstances arising after the making of the election, the maximum amount which could be fixed by the election is reduced to an amount which is less than the amount specified in the election, that election shall be deemed for the purposes of this Act to have specified the amount to which the maximum is reduced.

(4) A section 59B election shall not be made more than two years after the time when the purchaser acquires the interest in question or, as the case may be, is granted the lease in question.

(5) Where a person who has joined in making a section 59B election subsequently makes a return for his relevant period, a copy of the notice containing the election must accompany the return.

(6) A section 59B election shall be irrevocable once made.

(7) Nothing in section 42 of, or Schedule 1A to, the [1970 c. 9.] Taxes Management Act 1970 (claims in returns and claims not included in returns) shall apply to a section 59B election.

(8) Where any question relating to a section 59B election falls to be determined by any body of Commissioners for the purposes of any proceedings before them--

(a) each of the persons who has joined in making the election shall be entitled to appear and be heard by the Commissioners, or to make representations to them in writing;

(b) the Commissioners shall determine that question separately from any other questions in those proceedings; and

(c) their determination on that question shall have effect as if made in an appeal to which each of those persons was a party.

(9) In this section--

"relevant period", in relation to any person who has joined in making a section 59B election, means the period for which a return is made by that person which is the first such period in which the election has an effect in his case for the purposes of income tax or corporation tax; and
"a section 59B election" means an election under section 59B;

and subsection (6) of section 59B applies for the purposes of this section as it applies for the purposes of that section.

(10) In the case of an election for the purposes of a trade, profession or business carried on by persons in partnership, the references in this section to a return shall be construed, in relation to those persons, as references to a return under section 12AA of the [1970 c. 9.] Taxes Management Act 1970 (partnership returns). "

(2) This paragraph has effect for chargeable periods ending on or after the day on which this Act is passed wherever the time when the fixture in question is or would be treated as ceasing to belong to the former owner is a time on or after that day.

Prohibition of double allowances

7 (1) In section 147 (exclusion of double allowances), after subsection (2) there shall be inserted the following subsections--

" (2A) Subject to subsection (2B) below, where--

(a) a person entitled to do so has at any time made a claim for an allowance under any of the preceding Parts of this Act, other than Part II, and

(b) that claim is for an allowance in respect of capital expenditure relating, in whole or in part, to the construction, acquisition or provision of an asset,

no capital expenditure (whenever incurred) relating to the provision of that asset shall, by virtue of Chapter VI of Part II, be brought into account at any time after that time by any person at all.

(2B) Subsection (2A) above shall not prevent capital expenditure from being brought into account by virtue of Chapter VI of Part II where--

(a) the only claim made under a provision of this Act not contained in Part II is a claim under Part I or Part VII; and

(b) section 56C or 56D would apply by reference to that claim in relation to any claim for that expenditure to be so brought into account.

(2C) Where capital expenditure relating to the provision of any asset has at any time been brought into account by virtue of Chapter VI of Part II by any person entitled to do so, no capital expenditure (whenever incurred) relating to the construction, acquisition or provision of that asset shall, at any time after that time, be the subject of a claim made, by any person at all, for an allowance under any of the preceding Parts of this Act other than Part II.

(2D) For the purposes of subsections (2A) to (2C) above a person shall be taken to bring an amount of capital expenditure into account by virtue of Chapter VI of Part II if--

(a) he makes a claim for an allowance in respect of that expenditure, as expenditure on the provision of a fixture within the meaning of that Chapter,

(b) he makes a return in which that expenditure is taken into account, as expenditure on the provision of such a fixture, in determining his qualifying expenditure for the purpose of an allowance or charge under section 24, or

(c) he gives notice of any such amendment of a return as provides for that expenditure to be taken into account as mentioned in paragraph (b) above. "

(2) In subsection (3) of that section after the definition of "capital expenditure" there shall be inserted " and

"return" means any return required to be made under the [1970 c. 9.] Taxes Management Act 1970 for income tax or corporation tax purposes, " .

(3) This paragraph has effect for chargeable periods ending on or after 24th July 1996 but shall not be taken to prevent any allowance from being made, or any amount from being taken into account, in respect of expenditure incurred before that date.

Construction of amendments

8 Notwithstanding anything in subsection (1) of section 163 of the [1990 c. 1.] Capital Allowances Act 1990 (continuity of the law), subsection (2) of that section (under which references in that Act to provisions of that Act include references to repealed enactments) applies for construing that Act as amended by this Schedule as it applies for construing the provisions of that Act as originally enacted.

Part II Consequential amendment of the Taxes Management Act 1970

9 In the second column of the Table in section 98 of the [1970 c. 9.] Taxes Management Act 1970 (penalties in respect of certain information provisions), in the entry relating to sections 23(2), 33F(4), 48 and 49(2) of the [1990 c. 1.] Capital Allowances Act 1990, for "and 49(2)" there shall be substituted ", 49(2) and 51(6A)".

Section 87.

SCHEDULE 17 Chargeable gains: re-investment relief

Introductory

1 The [1992 c. 12.] Taxation of Chargeable Gains Act 1992 shall be amended in accordance with the provisions of this Schedule.

Qualifying investments

2 (1) In subsection (8) of section 164A (cases where eligible shares are not a qualifying investment), after "in a qualifying company shall" there shall be inserted ", subject to subsection (8A) below,".

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

" (8A) Where the eligible shares acquired by any person in a qualifying company are shares which he acquires by their being issued to him, his acquisition of the shares shall not be regarded as the acquisition of a qualifying investment unless the qualifying company, or a qualifying subsidiary of that company, is intending to employ the money raised by the issue of the shares wholly for the purposes of a qualifying trade carried on by it.

(8B) For the purposes of subsection (8A) above--

(a) the purposes of a trade include the purpose of preparing for the carrying on of the trade; and

(b) "qualifying subsidiary" has the same meaning as in section 164G. "

Loss of relief

3 (1) In subsection (1) of section 164F (failure of conditions of relief), after "or this section" there shall be inserted "or section 164FA".

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

" 164FA Loss of relief in cases where shares acquired on being issued

(1) Subsection (5) below applies in any case falling within any of subsections (2) to (4) below which is a case where--

(a) a person has acquired any eligible shares in a qualifying company ("the acquired holding") for a consideration which is treated as reduced, under section 164A or 164F or this section, by any amount ("the held-over gain"); and

(b) that person acquired those shares by their being issued to him.

(2) A case falls within this subsection if--

(a) the money raised by the issue of the shares comprised in the acquired holding was, at the time when those shares were acquired, intended to be employed for the purposes of a qualifying trade then being carried on; and

(b) that money has not been wholly employed for permissible purposes by the end of the initial utilisation period.

(3) A case falls within this subsection if--

(b) that trade begins to be carried on before the end of the period of 2 years from that time; and

(c) that money (apart from any part of it wholly employed for permissible purposes within the initial utilisation period) has not been wholly employed for the purposes of that trade by the end of the period of 1 year from the time when that trade begins to be carried on ("the first trading year").

(4) A case falls within this subsection if--

(b) that trade does not begin to be carried on before the end of the period of 2 years from that time; and

(5) In a case in which this subsection applies, but subject to the following provisions of this section, a chargeable gain equal to the appropriate portion of the held-over gain shall be treated as accruing to the person mentioned in subsection (1) above immediately before the utilisation time; and in this subsection "the utilisation time" means--

(a) in relation to a case falling within subsection (2) above, the end of the initial utilisation period;

(b) in relation to a case falling within subsection (3) above, the end of the first trading year; and

(c) in relation to a case falling within subsection (4) above, the end of the period of 2 years mentioned in that subsection.

(6) If, in a case in which subsection (5) above applies, part (but only part) of the money raised by the issue of the shares comprised in the acquired holding has been permissibly employed, this Chapter shall have effect in relation to that holding--

(a) as if it were two separate holdings consisting of--

(i) a holding from which that part of the money was raised; and

(ii) a holding from which the remainder was raised;

and

(b) as if its value were to be apportioned accordingly between those two holdings;

but nothing in this subsection shall require any money whose use is disregarded by virtue of subsection (8)(e) below to be treated as raised by a different holding.

(7) For the purposes of subsection (6) above a part of the money raised by the issue of the shares comprised in the acquired holding shall be taken to have been permissibly employed if--

(a) in a case falling within subsection (2) or (4) above, that part has been wholly employed for permissible purposes within the initial utilisation period; or

(b) in a case falling within subsection (3) above that part has been wholly employed--

(i) for permissible purposes within the initial utilisation period, or

(ii) for the purposes of the trade mentioned in that subsection before the end of the first trading year.

(8) For the purposes of this section--

(a) the appropriate portion of the held-over gain is so much, if any, of that gain as has not already been charged on any disposal or under section 164F or this section;

(b) "the initial utilisation period" means the period of 1 year from the time when the acquired holding was acquired;

(c) "permissible purposes", in relation to a company, means the purposes of any qualifying trade carried on by it or by any of its qualifying subsidiaries;

(d) "qualifying subsidiary" has the same meaning as in section 164G;

(e) money shall not be treated as employed otherwise than wholly for particular purposes if the only amount employed for other purposes is an amount which is not a significant amount; and

(f) the purposes of a qualifying trade shall be taken to include the purpose of preparing for the carrying on of the trade.

(9) Subsections (4) to (5) and (10A) to (11) of section 164F shall apply for the purposes of this section as they apply for the purposes of that section, but--

(a) subsection (5) of that section shall so apply--

(i) with the omission of paragraphs (e) to (g), and

(ii) as if the reference in paragraph (d) to any charge under subsection (2) of that section were a reference to any charge under subsection (5) of this section;

and

(b) subsection (10A) of that section shall so apply as if the reference to subsection (2) of that section were a reference to subsection (5) of this section. "

Meaning of "qualifying company"

4 (1) For paragraphs (b) and (c) of subsection (2) of section 164G (company must be of one of the given descriptions) there shall be substituted " or

(aa) an unquoted company which is the parent company of a trading group. "

(2) For subsections (4) and (5) of that section (meaning of "qualifying subsidiary") there shall be substituted the following subsections--

" (4) In this section "qualifying subsidiary", in relation to a company ("the holding company"), means any company which is a member of a group of companies of which the holding company is the principal company.

(4A) For the purposes of this section a company is the parent company of a trading group if--

(a) it is the principal company of a group of companies; and

(b) the requirements of subsection (4B) below are fulfilled by what would be the business of the company and its qualifying subsidiaries if all the activities, taken together, of the company and its qualifying subsidiaries were regarded as one business.

(4B) A business fulfils the requirements of this subsection if--

(a) it is carried on wholly or mainly in the United Kingdom; and

(b) neither the business nor a substantial part of it consists in, or in either of, the following, that is to say--

(i) activities falling within section 164I(2) but not within subsection (4C) below; and

(ii) activities carried on otherwise than in the course of a trade.

(4C) The activities falling within this subsection are--

(a) the receiving of royalties or licence fees in circumstances where the requirements mentioned in paragraphs (a) and (b) of section 164I(5) or (6) are satisfied in relation to the company receiving them;

(b) the letting of ships, other than oil rigs or pleasure craft, on charter in circumstances where the requirements mentioned in paragraphs (a) to (d) of section 164I(7) are satisfied in relation to the company so letting them.

(4D) Activities of a company or of any of its qualifying subsidiaries shall be disregarded for the purposes of subsections (4A) to (4C) above to the extent that they consist in--

(a) the holding of shares in or securities of, or the making of loans to, one or more of the company's qualifying subsidiaries; or

(b) the holding and managing of property used by the company or any of its qualifying subsidiaries for the purposes of--

(i) research and development from which it is intended that a qualifying trade to be carried on by the company or any of its qualifying subsidiaries will be derived; or

(ii) one or more qualifying trades so carried on.

(4E) Activities of a qualifying subsidiary of a company shall also be disregarded for the purposes of subsections (4A) to (4C) above to the extent that they consist in--

(a) the making of loans to the company; or

(b) in the case of a mainly trading subsidiary, activities carried on in pursuance of its insignificant purposes (within the meaning given by subsection (4F) below).

(4F) In subsection (4E) above "mainly trading subsidiary" means a qualifying subsidiary which, apart from purposes ("its insignificant purposes") capable of having no significant effect (other than in relation to incidental matters) on the extent of its activities, exists wholly for the purpose of carrying on one or more qualifying trades. "

Meaning of "qualifying trade"

5 (1) In paragraph (a) of subsection (1) of section 164I (meaning of "qualifying trade"), after "complies with the requirements of this section" there shall be inserted "and is carried on wholly or mainly in the United Kingdom".

(2) In paragraph (b) of that subsection--

(a) after the words "the carrying on" (where they first occur) there shall be inserted ", wholly or mainly in the United Kingdom,"; and

(b) after "complying with those requirements" there shall be inserted ", and to be carried on wholly or mainly in the United Kingdom,".

Interpretation of Chapter IA of Part V

6 (1) For subsection (2) of section 164N (application of section 170 for the interpretation of sections 164G and 164I) there shall be substituted the following subsection--

" (2) Section 170 shall apply for the interpretation of sections 164G and 164I as it would apply for the interpretation of sections 171 to 181 if section 170(2)(a) together with the words "(although resident in the United Kingdom)" in section 170(9)(b) were omitted. "

(2) In section 164N (interpretation of Chapter IA), after subsection (4) there shall be inserted the following subsection--

" (5) For the purposes of this Chapter, any allotment of shares before their issue shall be disregarded in determining whether and when a person acquires shares by their issue to him. "

Commencement

7 (1) This Schedule--

(a) applies in relation to shares acquired after 26th November 1996; and

(b) subject to sub-paragraph (3) below, applies after 26th November 1996 in relation to shares that fall within sub-paragraph (2) below.

(2) Shares fall within this sub-paragraph if--

(a) they were acquired by a person at any time on or before 26th November 1996;

(b) they were held by him throughout the period beginning with that time and ending with 26th November 1996; and

(c) at all times in that period they were, for the purposes of Chapter IA of Part V of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992, eligible shares in a qualifying company.

(3) The application of the preceding provisions of this Schedule in relation to any shares falling within sub-paragraph (2) above shall not prevent those shares from being (or having been) shares in a qualifying company at any relevant time when those shares would have been shares in such a company if this Schedule had not been enacted.

(4) For the purposes of sub-paragraph (3) above a time is a relevant time in relation to any shares falling within sub-paragraph (2) above if it is a time after 26th November 1996 and within the period of 3 years after the acquisition of the shares.

Section 113.

SCHEDULE 18 Repeals

Part I Hydrocarbon Oil Duty

Chapter	Short title	Extent of repeal
1979 c. 5.	The Hydrocarbon Oil Duties Act 1979.	In section 11(2), the definition of "gas oil" and the word "and" immediately preceding that definition.
		In section 27(1), the word "and" immediately following the definition of "road fuel gas".

The power in subsection (10) of section 7 of this Act applies in relation to these repeals as it applies in relation to the provisions of that section.

Part II Gaming Duty

Chapter	Short title	Extent of repeal
1979 c. 2.	The Customs and Excise Management Act 1979.	In section 1(1)-- (a) the word "and" at the end of paragraph (c) of the definition of "the revenue trade provisions of the customs and excise Acts"; and (b) the word "or" at the end of paragraph (a)(ia) of the definition of "revenue trader".
1981 c. 63.	The Betting and Gaming Duties Act 1981.	Sections 13 to 16.
		In section 27, the words "15 or" and "paragraph 7 of Schedule 2,".
		In section 31, the words "gaming licences or".
		In section 32-- (a) in subsection (2), the words "Subject to subsection (3) below,"; and (b) subsection (3).
		In section 35(3), paragraphs (a) and (c) and the words after paragraph (d). Schedule 2.
1984 c. 60.	The Police and Criminal Evidence Act 1984.	In Schedule 6, paragraph 39(a).
1985 c. 66.	The Bankruptcy (Scotland) Act 1985.	In paragraph 2(3) of Schedule 3, paragraph (c) and the word "or" immediately preceding it.
1986 c. 45.	The Insolvency Act 1986.	In paragraph 5 of Schedule 6, paragraph (c) and the word "or" immediately preceding it.
1988 c. 39.	The Finance Act 1988.	In section 12(4), the words "and paragraph 7 of Schedule 2" and the word "each".
S.I. 1989/2405 (N.I. 19).	The Insolvency (Northern Ireland) Order 1989.	In paragraph 5 of Schedule 4, paragraph (c) and the word "or" immediately preceding it.
1991 c. 31.	The Finance Act 1991.	Section 6.
1994 c. 9.	The Finance Act 1994.	In section 12(7)(b), the words ", paragraph 7(3) of Schedule 2".
		In Schedule 4, paragraph 63.

1 The repeals in the Bankruptcy (Scotland) Act 1985, the Insolvency Act 1986 and the Insolvency (Northern Ireland) Order 1989 shall not apply in relation to any amount due in respect of duty chargeable for a period beginning before 1st October 1997.

2 The other repeals have effect in relation to any gaming on or after 1st October 1997.

Part III Vehicle Excise and Registration: Exempt vehicles

Chapter	Short title	Extent of repeal
1994 c. 22.	The Vehicle Excise and Registration Act 1994.	In Schedule 2, paragraph 20(4).

The power in paragraph 9 of Schedule 3 to this Act applies in relation to this repeal as it applies in relation to the provisions of that Schedule.

Part IV Value Added Tax

(1) Aggregation of businesses

Chapter

Short title

Extent of repeal

1994 c. 23.

The Value Added Tax Act 1994.

In Schedule 1, in paragraph 2--

(a)

in sub-paragraph (2)(b), the words from "which should properly" to "described in the direction";

(b)

paragraph (d) of sub-paragraph (2) and the word "and" immediately preceding it; and

(c)

in sub-paragraph (4), the word "properly".

These repeals have effect in relation to the making of directions on or after the day on which this Act is passed.

(2) The option to tax buildings and land

Chapter	Short title	Extent of repeal
1994 c. 23.	The Value Added Tax Act 1994.	In Schedule 10, paragraphs 2(3A) and 3(8A).

These repeals have effect in accordance with section 37(1) of this Act.

(3) Bad debt relief

Chapter	Short title	Extent of repeal
1994 c. 23.	The Value Added Tax Act 1994.	In section 36(4), paragraph (b) and the word "and" immediately preceding it. In Schedule 13, paragraph 9(1).

These repeals have effect in accordance with section 39 of this Act.

Part V Indirect taxes

(1) Interest repayments

Chapter	Short title	Extent of repeal
1994 c. 9.	The Finance Act 1994.	In Schedule 6, in paragraph 9(2), the words after paragraph (b).
1996 c. 8.	The Finance Act 1996.	In section 197(2), the word "and" at the end of paragraph (c).

The repeal in the Finance Act 1994 has effect in accordance with paragraph 8 of Schedule 5 to this Act.

(2) Distress and diligence

Chapter	Short title	Extent of repeal
1979 c. 2.	The Customs and Excise Management Act 1979.	In section 117-- (a) subsections (5) to (7A); (b) in subsection (9), paragraphs (c) to (f); and (c) subsection (10).
1981 c. 35.	The Finance Act 1981.	In Schedule 8, paragraph 8.
1981 c. 63.	The Betting and Gaming Duties Act 1981.	Sections 28 and 29.
1986 c. 41.	The Finance Act 1986.	In Schedule 4, paragraphs 8 and 9.
1987 c. 18.	The Debtors (Scotland) Act 1987.	In Schedule 6, paragraph 23.
1992 c. 48.	The Finance (No. 2) Act 1992.	In paragraph 5(a) of Schedule 2, the words "and (5)".
1994 c. 9.	The Finance Act 1994.	In section 18-- (a) in subsection (2), in paragraph (a), the words ", not being an amount in relation to which subsection (4) below applies," and the word "and"; (b) paragraph (b) of that subsection; and (c) subsection (4).
		In Schedule 7, paragraph 7(7) to (12).
1994 c. 23.	The Value Added Tax Act 1994.	In Schedule 11, paragraph 5(4) to (10).
1995 c. 4.	The Finance Act 1995.	In Schedule 5, paragraph 9.
1996 c. 8.	The Finance Act 1996.	In Schedule 5, paragraph 13.

These repeals come into force on such day as the Commissioners of Customs and Excise may by order made by statutory instrument appoint, and different days may be appointed for different purposes.

Part VI Income Tax, Corporation Tax and Capital Gains Tax

(1) Additional rate of income tax

Chapter	Short title	Extent of repeal
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In section 832(1), the definition of "additional rate".
1988 c. 39.	The Finance Act 1988.	Section 24(4).

These repeals have effect in relation to the year 1997-98 and subsequent years of assessment.

(2) Wayleaves

Chapter	Short title	Extent of repeal
1970 c. 9.	The Taxes Management Act 1970.	In section 42(7)(a) (as it has effect by virtue of section 196 of the Finance Act 1994), the words "120(2),".
1988 c. 1.	The Income and Corporation Taxes Act 1988.	In section 1A(2)(a)(ii), the words "or 120".
		In section 3, paragraph (c) and the word "or" immediately preceding it.
		Section 74(1)(q).
		In section 120-- (a) in subsection (1), the words from "and, subject to" onwards; (b) subsections (2) to (4); and (c) in subsection (5), paragraph (c) and the word "and" immediately preceding it.
		In section 348(2), paragraph (b) and the word "or" immediately preceding it.
		In section 349(1), paragraph (c) and the word "or" immediately preceding it.
		Section 387(3)(c).
		In section 821(3), paragraph (c) and the word "and" immediately preceding it.

These repeals have effect in relation to payments made on or after 6th April 1997.

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