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Mr. Jack: To err occasionally is a human failing, but Report stage offers us the opportunity to put human failings right. We have duly taken advantage of that on this occasion. I am always the first to apologise if anyone has made a mistake, because I make mistakes and I realise that I am a human being with that frailty.
The hon. Gentleman misunderstood the purpose of the amendment. It is not a question of having made a mistake; it is just that, when drafting the clause, we based the whole test of what is a qualifying asset for the business property relief on one of two two-year tests. Having
realised that we had restricted the basis on which assets can qualify for this 100 per cent. relief, as defined in clause 174, we sought not just to return to the status quo ante but to go a stage further, to enable those affected by the clause to have two two-year tests. So, we have improved the legislation. I take what the hon. Gentleman said in the spirit in which he delivered his remarks. While even we Conservatives remain human beings, we shall do our best to try to get it right in future.
Amendment agreed to.
Amendments made: No. 7, in page 155, line 47, at end insert--
'(4A) Paragraph 1 of Schedule 2 to the Agriculture Act 1993 (tax continuity with successor bodies) shall have effect, and be deemed to have had effect, in relation to any relevant transfer after 31st December 1995 to a society registered under the Industrial and Provident Societies Act 1965 of--
(a) a trade, or part of a trade, of a milk marketing board, or
(b) any property, rights or liabilities of such a board,
as it has effect in relation to any transfer under section 11 of that Act to a qualifying body.'.
No. 8, in page 156, line 6, leave out from first 'of' to 'is' in line 7 and insert
'subsections (4A) and (5) above a transfer of anything to a society registered under the Industrial and Provident Societies Act 1965'.
No. 9, in page 156, line 10, leave out 'the board' and insert 'a milk marketing board'.
No. 10, in page 156, line 16, leave out from 'transfer' to end of line 18.--[Mr. Jack.]
Amendments made: No. 50, a new schedule--
The following is the Schedule which shall be inserted after Schedule 2 to the Hydrocarbon Oil Duties Act 1979--
"SCHEDULE 2A
Mixing of rebated oil
Part I
Light oil
Converting unleaded petrol into leaded petrol
1.--(1) A mixture which is leaded petrol is produced in contravention of this paragraph if such a mixture is produced by--
(a) adding lead to unleaded petrol in respect of which a rebate has been allowed under subsection (1) of section 13A(1) of this Act at the rate given by subsection (1A)(a) of that section;
(b) adding lead to unleaded petrol in respect of which a rebate has been allowed under subsection (1) of that section at the rate given by subsection (1A)(b) of that section; or
(c) adding lead to a mixture of unleaded petrol of a description mentioned in paragraph (a) above and unleaded petrol of a description mentioned in paragraph (b) above.
(2) In sub-paragraph (1) above the reference to adding lead to unleaded petrol includes a reference to adding leaded petrol to unleaded petrol.
(3) This paragraph is subject to any direction given under paragraph 3 below.
Adding octane enhancers to low octane unleaded petrol
2.--(1) A mixture which is super-unleaded petrol is produced in contravention of this paragraph if such a mixture is produced by adding an octane enhancer to unleaded petrol in respect of which a rebate has been allowed under subsection (1) of section 13A of this Act at the rate given by subsection (1A)(b) of that section.
(2) For the purposes of sub-paragraph (1) above 'super-unleaded petrol' means unleaded petrol--
(a) whose research octane number is not less than 96; and
(b) whose motor octane number is not less than 86.
(3) Subsection (1C) of section 13A applies for the purposes of this paragraph as it applies for the purposes of that section.
(4) This paragraph is subject to any direction given under paragraph 3 below.
Power to create exceptions
3. The Commissioners may give a direction that, in such description of circumstances as may be specified in the direction, a mixture is not produced in contravention of paragraph 1 above or (as the case may be) paragraph 2 above.
Part II
Heavy oil
Mixing partially rebated heavy oil with unrebated heavy oil
4. A mixture of heavy oils is produced in contravention of this paragraph if such a mixture is produced by mixing--
(a) gas oil in respect of which a rebate has been allowed under section 11(1)(b) of this Act; and
(b) heavy oil in respect of which, on its delivery for home use, a declaration was made that it was intended for use as fuel for a road vehicle.
Mixing fully rebated heavy oil with unrebated heavy oil
5. A mixture of heavy oils is produced in contravention of this paragraph if such a mixture is produced by mixing--
(a) heavy oil which is neither fuel oil nor gas oil and in respect of which a rebate has been allowed under section 11(1)(c) of this Act; and
(b) heavy oil in respect of which, on its delivery for home use, a declaration was made that it was intended for use as fuel for a road vehicle.
Mixing fully rebated heavy oil with partially rebated heavy oil
6. A mixture of heavy oils is produced in contravention of this paragraph if such a mixture is produced by mixing--
(a) heavy oil which is neither fuel oil nor gas oil and in respect of which a rebate has been allowed under section 11(1)(c) of this Act; and
(b) gas oil in respect of which a rebate has been allowed under section 11(1)(b) of this Act with heavy oil.
Complex mixtures of heavy oils
7. A mixture of heavy oils is produced in contravention of this paragraph if such a mixture is produced in contravention of more than one paragraph of paragraphs 4 to 6 above.
Part III
Rates of duty, etc.
Rate for mixtures of light oil
8.--(1) Subject to paragraph 10 below, duty under section 20AAA(1) of this Act shall be charged at the following rates.
(2) In the case of a mixture produced in contravention of paragraph 1 above, the rate is the rate for light oil in force at the time that the mixture is produced.
(3) In the case of a mixture produced in contravention of paragraph 2 above, the rate is the rate produced by deducting from the rate for light oil in force at the time the mixture is produced the rate of rebate which at that time is in force under section 13A(1A)(a) of this Act.
(4) In this paragraph 'the rate for light oil' means the rate given in the case of light oil by section 6(1) of this Act.
Rate for mixtures of heavy oil
9.--(1) Subject to paragraph 10 below, duty charged under subsection (2) of section 20AAA of this Act shall be charged at the rate for heavy oil in force at the time when the mixture is supplied as mentioned in that subsection.
(2) In this paragraph 'the rate for heavy oil' means the rate given in the case of heavy oil by section 6(1) of this Act.
Credit for duty paid on ingredients of mixture
10. Where duty is charged under section 20AAA of this Act in respect of any mixture, the amount of duty produced by applying paragraph 8 or 9 above shall be reduced by the amount of any duty under section 6 of this Act which the Commissioners are satisfied has been paid in respect of any ingredient of the mixture.
Interpretation
11. In this Schedule--
'fuel oil' and 'gas oil' have the same meanings as in section 11 of this Act;
'leaded petrol' and 'unleaded petrol' shall be construed in accordance with section 13A of this Act."'--[Mr. Jack.]
Brought up, read the First and Second time, and added to the Bill.
No. 65, a new schedule--
1. In section 76 of the Taxes Act 1988 (expenses of management: insurance companies) in subsection (1) (which applies section 75 of that Act with specified exceptions) before paragraph (a) there shall be inserted--
"(aa) where the whole or any part of a loss arising to the company in respect of its life assurance business in an accounting period is set off under section 393A or 403(1), there shall be deducted from the amount treated as the expenses of management for that period an amount equal to so much of the loss as, in the aggregate, is so set off, reduced by the amounts by which any losses for that period under section 436, 439B or 441 fall to be reduced under section 434A(2)(b); and
(ab) section 75(1) shall have effect with the substitution for "in computing profits apart from this section" of--
"(a) in computing income for the purposes of Schedule A, or
(b) by virtue of section 121(3) in computing income from the letting of rights to work minerals in the United Kingdom"; and".
2.--(1) In relation to accounting periods beginning on or after 1st January 1996 and ending after 31st March 1996, section 434A of the Taxes Act 1988 (life assurance business: computation of losses and limitation on relief) shall be amended as follows--
(a) for subsection (2) there shall be substituted the subsection (2) set out in sub-paragraph (2) below; and
(b) in subsection (2A) (which is inserted by paragraph 23(2) of Schedule 13 to this Act) for "(2)(c)" there shall be substituted "(2)(a)(ii)".
(2) The subsection (2) set out in this sub-paragraph is as follows--
"(2) Where for any accounting period the loss arising to an insurance company from its life assurance business falls to be computed in accordance with the provisions of this Act applicable to Case I of Schedule D--
(a) the loss resulting from the computation shall be reduced (but not below nil) by the aggregate of--
(i) the aggregate amount treated as a charge on income in computing for the period, otherwise than in accordance with those provisions, the profits or losses of the company's life assurance business; and
(ii) any relevant non-trading deficit for that period on the company's debtor relationships; and
(b) if the whole or any part of that loss as so reduced is set off--
(i) under section 393A, or
(ii) under section 403(1),
any losses for that period under section 436, 439B or 441 shall be reduced to nil, unless the aggregate of those losses exceeds the total of the amounts set off as mentioned in sub-paragraphs (i) and (ii) above, in which case each of those losses shall be reduced by an amount which bears to that total the proportion which the loss in question bears to that aggregate."
(3) In relation to accounting periods beginning on or after 1st January 1996 and ending on or before 31st March 1996, for subsection (2) of section 434A of the Taxes Act 1988 there shall be substituted the subsection (2) set out in sub-paragraph (2) above, but with the following amendments to paragraph (a), that is to say--
(a) in the words preceding sub-paragraph (i), the words "the aggregate of" shall be omitted;
(b) in sub-paragraph (i), for "aggregate amount treated as a charge on income" there shall be substituted "amount of interest and annuities treated as charges on income"; and
(c) sub-paragraph (ii) shall be omitted.
3.--(1) In section 86 of the Finance Act 1989 (spreading of relief for acquisition expenses) in subsection (1), for the words from "less any such repayments" to the end there shall be substituted--
"reduced by the items specified in subsection (1A) below."
(2) After that subsection there shall be inserted--
"(1A) Those items are--
(a) the appropriate portion of any deduction falling to be made under paragraph (aa) of subsection (1) of section 76 of the Taxes Act 1988 for the period in question;
(b) any such repayments or refunds falling within paragraph (c) of that subsection as are received in that period;
(c) any reinsurance commissions falling within paragraph (ca) of that subsection.
(1B) For the purposes of paragraph (a) of subsection (1A) above, "the appropriate portion" of the deduction there mentioned is the amount which bears to the whole of that deduction the proportion which the acquisition expenses, without making the reduction required by subsection (1) above, would bear to the whole of the expenses of management, without making the deductions required by paragraphs (aa), (a), (c) and (ca) of section 76(1) of the Taxes Act 1988."
4. In section 83 of the Finance Act 1989 (receipts to be brought into account) for subsection (3) (ascertainment of losses) there shall be substituted--
"(3) In ascertaining whether or to what extent a company has incurred a loss in respect of that business in a case where an amount is added to the company's long term business fund as part of or in connection with--
(a) a transfer of business to the company, or
(b) a demutualisation of the company not involving a transfer of business,
that amount shall (subject to subsection (4) below) be taken into account, for the period for which it is brought into account, as an increase in value of the assets of that fund within subsection (2)(b) above.
(4) Subsection (3) above does not apply where, or to the extent that, the amount concerned--
(a) would fall to be taken into account as a receipt apart from this section,
(b) is taken into account under subsection (2) above otherwise than by virtue of subsection (3) above, or
(c) is specifically exempted from tax.
(5) Any amount which is to be taken into account pursuant to subsection (3) above for a period of account shall be so taken into account--
(a) after the making of any reduction under subsection(6) of section 83AA below in relation to that period, but
(b) before the making of any reduction under subsection (3) of that section in relation to an accounting period of the company ending in or with that period.
(6) In subsection (3) above "transfer of business" means--
(a) a transfer of the whole or part of the long term business of an insurance company in accordance with a scheme sanctioned by a court under Part I of Schedule 2C to the Insurance Companies Act 1982;
(b) a qualifying overseas transfer, within the meaning of paragraph 4A of Schedule 19AC to the Taxes Act 1988; or
(c) the making of a contract of reinsurance which, in whole or in part, constitutes or forms part of a total reinsurance by the reinsured, unless the reinsurer under the contract falls within section 439A of the Taxes Act 1988 (pure reinsurance).
(7) For the purposes of subsection (3)(a) above, a transfer of business falling within subsection (6)(c) above shall be treated as a transfer of business to the company which is the reinsurer under the contract of reinsurance.
(8) In this section--
"add", in relation to an amount and a company's long term business fund, includes transfer (whether from other assets of the company or otherwise);
"demutualisation" means the conversion, under the law of any territory, of a company which has been carrying on insurance business without having a share capital into a company with a share capital, without any change of legal personality;
"total reinsurance" means the reinsurance (whether effected by a single contract of reinsurance or by two or more such contracts, taken together, whether or not made with the same reinsurer) of the whole, or substantially the whole, of the reinsured's risk--
(a) under policies of a particular description issued in respect of insurances made in the course of carrying on life assurance business before the making of the contract of reinsurance (or, in a case where there are two or more contracts of reinsurance, the last of them); or
(b) under contracts of a particular description so made."
5. After section 83 of the Finance Act 1989 there shall be inserted--
"Amounts added to long term business fund of a company in excess of that company's loss
83AA.--(1) If one or more relevant amounts are brought into account for a period of account of a company and either--
(a) the aggregate of those amounts exceeds the loss which, after the making of any reduction under subsection (6) below but before any application of section 83(3) above in relation to that period, would have arisen to the company in that period in respect of its life assurance business, or
(b) no such loss would have so arisen,
the surplus for that period shall be applied in accordance with the following provisions of this section and section 83AB below.
(2) In this section--
"relevant amount" means so much of any amount which is added to the long term business fund of a company as mentioned in subsection (3) of section 83 above as does not fall within any of the paragraphs of subsection (4) of that section;
"surplus", in relation to a period of account of a company, means (subject to section 83AB(2) below)--
(a) if the aggregate of the relevant amounts brought into account for that period exceeds the amount of any loss which, after the making of any reduction under subsection (6) below but before any application of section 83(3) above in relation to that period, would have arisen to the company in that period in respect of its life assurance business, the amount of the excess; or
(b) if no such loss would have so arisen, the aggregate of the relevant amounts brought into account for that period.
(3) Where, apart from section 83AB(2) below, there is a surplus for a period of account of a company for which there are brought into account one or more relevant amounts which were added to the company's long term business fund as part of, or in connection with, a particular transfer of business, the appropriate portion of the surplus for that period shall be treated as reducing (but not below nil) so much of any loss arising to the transferor company in the relevant accounting period as, on a just and reasonable apportionment of the loss, is referable to the business which is the subject of that particular transfer.
(4) For the purposes of subsection (3) above, the appropriate portion of the surplus for a period of account of a company is, in the case of any particular transfer of business, the amount which bears to that surplus (apart from any additions by virtue of section 83AB(2) below) the proportion which A bears to B, where--
A is the aggregate of such of the relevant amounts added to the company's long term business fund as part of, or in connection with, that particular transfer of business as are brought into account for that period, and
B is the aggregate of the relevant amounts brought into account for that period.
(5) Any reduction pursuant to subsection (3) above of the loss arising to the transferor company in the relevant accounting period shall be made after--
(a) the making of any reduction under subsection (6) below, and
(b) any application of section 83(3) above,
in relation to the period of account of that company in which falls the date of the particular transfer of business in question.
(6) Any loss arising to a company in respect of its life assurance business in a period of account subsequent to one for which there is a surplus shall be reduced (but not below nil) by so much of that surplus as cannot be applied--
(a) under subsection (3) above;
(b) under this subsection, in the reduction of a loss arising to the company in an earlier period of account; or
(c) under section 83AB below, in relation to a transfer of business from the company in that or any earlier period of account.
(7) Any reduction pursuant to subsection (6) above of a loss arising to a company in a period of account shall be made--
(a) before any application of section 83(3) above in relation to that period, and
(b) if the company is also the transferor company in relation to a particular transfer of business, before the making of any reduction under subsection (3) above in
(8) A surplus in respect of an earlier period of account shall be applied under subsection (6) above before a surplus in respect of a later period of account.
(9) All such adjustments to the liability to tax of any person shall be made, whether by assessment or otherwise, as may be required to give effect to this section.
(10) In this section--
"add" has the same meaning as in section 83 above;
"the relevant accounting period" means the accounting period of the transferor company which--
(a) ends on the date of the transfer of business mentioned in subsection (3) above, or
(b) if that transfer of business falls within section 83(6)(c) above and no accounting period of the transferor company ends on that date, ends next after that date;
"transfer of business" has the same meaning as in section 83(3) above;
"the transferor company" means the company from which the transfer of business mentioned in subsection (3) above is effected.
(11) A transfer of business falling within section 83(6)(c) above shall be treated for the purposes of this section as a transfer of business from the company which is the reinsured under the contract of reinsurance.
Treatment of surplus where there is a subsequent transfer of business from the company etc
83AB.--(1) If an amount is added to the long term business fund of a company as part of or in connection with a transfer of business to the company, or a demutualisation of the company not involving a transfer of business, and--
(a) there is a surplus for the period of account of the company for which that amount is brought into account,
(b) at any time after the transfer of business or demutualisation, there is a transfer of business from the company (the "subsequent transfer"), and
(c) at the end of the relevant period of account there remains at least some of the surplus mentioned in paragraph (a) above which cannot be applied--
(i) under subsection (3) of section 83AA above,
(ii) under subsection (6) of that section, in the reduction of a loss arising to the company in an earlier period of account, or
(iii) under this section, in relation to an earlier subsequent transfer,
so much of the surplus falling within paragraph (c) above as, on a just and reasonable apportionment, is referable to business which is the subject of the subsequent transfer shall be applied under this section.
(2) An amount of surplus which is to be applied under this section shall be so applied by being treated as an amount of surplus (additional to any other amounts of surplus) for the period of account of the transferee company which last precedes the period of account of that company in which the subsequent transfer is effected, whether or not there is in fact any such preceding period of account.
(3) If, in a case where an amount is treated under subsection (2) above as an amount of surplus for a period of account of a company, the period is not one for which there is brought into account an amount added to the company's long term business fund in connection with the subsequent transfer, subsection (1) above shall have effect in relation to any transfer of business from the company subsequent to that transfer as if an amount had been so added and had been brought into account for that period.
28 Mar 1996 : Column 1204
(4) Any question as to what is a just and reasonable apportionment in any case for the purposes of subsection (1) above shall be determined by the Special Commissioners who shall determine the question in the same manner as they determine appeals; but any person affected by the apportionment shall be entitled to appear and be heard or make representations in writing.
(5) A surplus in respect of an earlier period of account shall be applied under this section before a surplus in respect of a later period of account.
(6) All such adjustments to the liability to tax of any person shall be made, whether by assessment or otherwise, as may be required to give effect to this section.
(7) In this section--
"add" has the same meaning as in section 83 above;
"demutualisation" has the same meaning as in section 83 above;
"the relevant period of account" means the period of account of the company from which the subsequent transfer is effected which consists of or includes the accounting period of that company which--
(a) ends with the day on which the subsequent transfer is effected; or
(b) if the subsequent transfer is a transfer of business falling within section 83(6)(c) above and no accounting period of the company ends on that day, ends next after that day;
"surplus" has the same meaning as in section 83AA above;
"transfer of business" has the same meaning as in section 83(3) above;
"transferee company" means the company to which the subsequent transfer of business is effected.
(8) Where it is necessary for any purpose of this section to identify the time at which a demutualisation of a company takes place, that time shall be taken to be the time when the company first issues shares.
(9) A transfer of business falling within section 83(6)(c) above shall be treated for the purposes of this section as a transfer of business from the company which is the reinsured under the contract of reinsurance to the company which is the reinsurer under that contract."
6.--(1) In section 83A of the Finance Act 1989, in subsection (1) (meaning of "brought into account" in section 83)--
(a) for "In section 83" there shall be substituted "In sections 83 to 83AB"; and
(b) for "that section" there shall be substituted "those sections".
(2) In subsection (2) of that section (the accounts which are recognised for the purposes of that section) for "that section" there shall be substituted "those sections".
7.--(1) The following provisions of the Taxes Act 1988 (each of which provides for section 83(3) of the Finance Act 1989 not to apply in certain cases) shall cease to have effect--
(a) section 436(3)(aa);
(b) section 439B(3)(b); and
(c) section 441(4)(aa).
(2) In consequence of sub-paragraph (1)(b) and (c) above, the word "and" shall be added at the end of section 439B(3)(a) and section 441(4)(a) of the Taxes Act 1988.
8.--(1) Schedule 8A to the Finance Act 1989 (modifications of sections 83 and 89 in relation to overseas life insurance companies) shall be amended in accordance with the following provisions of this paragraph.
(2) In the Heading "Modifications of sections 83 and 89 in relation to overseas life insurance companies" after "83" there shall be inserted "to 83A".
(3) In paragraph 1(1), for "sections 83 and 83A" there shall be substituted "sections 83 to 83A".
(4) In paragraph 1A, in sub-paragraph (4)--
(a) for the words from "being transferred" to "added to that fund" there shall be substituted "being added to the company's long term business fund"; and
(b) in the second sentence, for "a transfer" and "transferred" there shall be substituted respectively "an addition" and "added".
(5) After that sub-paragraph there shall be added--
"(5) Any reference in section 83AA(2), (3) or (4) or 83AB(1) or (3) to an amount being added to the relevant company's long term business fund shall be construed in accordance with sub-paragraph (4) above."
(6) In paragraph 1C(4), for "transfer" there shall be substituted "addition".
9.--(1) In the application of section 83AA or 83AB of the Finance Act 1989 in a case where one or more relevant amounts added to a company's long term business fund on or before25th March 1996 are brought into account for a period of account beginning on or after 1st January 1996--
(a) the amount of any loss which, before any application of section 83(3) of that Act in relation to that period, would have arisen to the company in that period shall be treated as reduced (but not below nil) by the aggregate of those relevant amounts; and
(b) except as provided by paragraph (a) above, those relevant amounts shall be disregarded.
(2) In the application of sub-paragraph (1) above in relation to an overseas life insurance company, any reference to an amount added to a company's long term business fund shall be taken as a reference to any assets which became assets of the long term business fund of an overseas life insurance company used or held for the purposes of the company's United Kingdom branch or agency, having immediately previously been--
(a) held by the company otherwise than as assets of that fund, or
(b) used or held otherwise than for those purposes.
(3) If the relevant accounting period mentioned in subsection (3) of section 83AA of the Finance Act 1989 is a period beginning before 1st January 1996, only the appropriate portion of the eligible loss shall be reduced pursuant to that subsection; and for the purposes of this sub-paragraph--
(a) "the eligible loss" means so much of the loss arising to the transferor company in the relevant accounting period as, on a just and reasonable apportionment of the loss for the purposes of that subsection, is referable to the business which is the subject of the particular transfer of business in question; and
(b) "the appropriate portion" of the eligible loss is the amount which bears to the eligible loss the proportion which A bears to B where--
A is the number of days in the relevant accounting period which fall on or after 1st January 1996; and
B is the total number of days in the relevant accounting period.
(4) Paragraph 10(2) below shall not prevent--
(a) an amount of surplus for a period of account of a company beginning on or after 1st January 1996, or
(b) an amount of surplus for any period of account of a company which, by virtue of the operation of this sub-paragraph, derives from an amount of surplus falling within paragraph (a) above,
from being treated by virtue of section 83AB of the Finance Act 1989 as an amount of surplus for the period of account of another company last preceding its earliest period of account ending on or after 1st January 1996 (whenever beginning) or from being applied accordingly under section 83AA(6) or 83AB of that Act.
(5) In this paragraph--
"add" has the same meaning as in section 83 of the Finance Act 1989;
"brought into account" has the same meaning as it has in sections 83 to 83AB of that Act by virtue of section 83A of that Act;
"relevant amount" has the same meaning as in section 83AA of that Act;
"surplus" has the same meaning as in sections 83AA and 83AB of that Act.
10.--(1) Subject to paragraph 2(1) and (3) above, paragraphs1 to 3 above have effect in relation to accounting periods beginning on or after 1st January 1996.
(2) Subject to paragraph 9 above, paragraphs 4 to 8 above have effect in relation to periods of account beginning on or after1st January 1996.'.--[Mr. Jack.]
Brought up, read the First and Second time, and added to the Bill.
No. 63, a new schedule--
1. The Capital Allowances Act 1990 shall be amended as follows.
2.--(1) In subsection (3) of section 33A (relief limited to expenditure on new shipping incurred or to be incurred by the shipowner), for paragraph (b) there shall be substituted the following paragraph--
"(b) the amount of any expenditure incurred or to be incurred by qualifying persons in the period of six years beginning with the day on which the event mentioned in subsection (1)(b) above occurs, so far as that expenditure is, or (when incurred) will be, expenditure to which an addition made under this section in respect of that event may be attributed in accordance with subsection (5) below;".
(2) In subsection (4) of that section (relief not to apply where expenditure on new shipping not incurred by the shipowner within six years), for the words from the beginning of paragraph (b) onwards there shall be substituted the following--
"(b) circumstances arise in which the whole or any part of the addition ceases (otherwise than by being attributed) to be an amount that may be attributed, in accordance with subsection (5) below, to expenditure on new shipping incurred by qualifying persons in the period of six years mentioned in subsection (3)(b) above,
the shipowner shall be assumed not to have been entitled to so much of the addition as will not be so attributed."
(3) For subsection (5) of that section (attribution of relief to expenditure on new shipping) there shall be substituted the following subsections--
"(5) Subject to subsection (5A) below and to section 33D(6), where--
(a) an addition is made under this section to the shipowner's qualifying expenditure for the relevant period in respect of his actual trade, and
(b) expenditure on new shipping is incurred by a qualifying person in the period of six years mentioned in subsection (3)(b) above,
the shipowner may, by notice to an officer of the Board, attribute to that expenditure so much of the addition as is equal to so much of the expenditure as is not already the subject of an attribution under this subsection.
(5A) A notice under subsection (5) above shall not have effect in a case where the shipowner and the qualifying person to whose expenditure the notice relates are not the same person unless that person joins with the shipowner in the giving of that notice."
(4) After subsection (7) of that section there shall be inserted the following subsection--
"(8) In this section and the following provisions of this Chapter references to a qualifying person, in relation to any expenditure, are references to--
(a) the shipowner; and
(b) where the shipowner is a company, any company which, at the time when the expenditure is or is to be incurred, is or (as the case may be) would be a member of the same group of companies as the shipowner;
and for the purposes of this subsection two companies are members of the same group of companies at any time if, at that time, they are treated as members of the same group of companies for the purposes of Chapter IV of Part X of the principal Act (group relief)."
3.--(1) In subsection (1) of section 33C (re-imposition of deferred charge)--
(a) in paragraph (b), for "the shipowner" there shall be substituted "a qualifying person"; and
(b) for paragraph (c) there shall be substituted the following paragraph--
"(c) the expenditure is expenditure the whole or any part of which is expenditure to which the whole or any part of the addition is attributed in accordance with section 33A(5)."
(2) In subsection (2) of that section--
(a) the words "to be", in the first place where they occur, shall be omitted; and
(b) in paragraph (b), for "the shipowner" there shall be substituted "the qualifying person in question".
4.--(1) In section 33D (definition of expenditure on new shipping), in subsection (1)--
(a) in paragraph (a), for "the shipowner's actual trade" there shall be substituted "a trade carried on by the person who incurs that expenditure"; and
(b) in paragraph (b), for "the shipowner" there shall be substituted "that person".
(2) In subsection (2) of that section--
(a) in paragraph (a), for "the shipowner" there shall be substituted "the person who incurred the expenditure"; and
(b) in paragraph (c)(ii), for "the shipowner" there shall be substituted "the person who incurred the expenditure".
(3) After subsection (2) of that section there shall be inserted the following subsections--
"(2A) Subject to subsection (2B) below, expenditure incurred by a qualifying person other than the shipowner on the provision of a ship shall not be, and shall be deemed never to have been, expenditure on new shipping if--
(a) at any time after the time when the ship first belongs to that person in consequence of that expenditure, it ceases to belong to that person without having been brought into use for the purposes of a trade of that person;
(b) the ship is brought into use for the purposes of a trade of that person and an event falling within section 24(6)(c) occurs with respect to the ship before the end of the period of three years beginning with the time when it is first so brought into use; or
28 Mar 1996 : Column 1208
(c) there is a time falling--
(i) after the expenditure is incurred, and
(ii) where the ship is brought into use for the purposes of a trade of that person, before the end of the period of three years beginning with the time when it is first so brought into use,
when the shipowner and that person do not fall to be treated as members of the same group of companies for the purposes of Chapter IV of Part X of the principal Act (group relief).
(2B) Subsection (2A) above shall not apply by virtue of paragraph (a) or (b) of that subsection in any case if the event by virtue of which the case falls within that paragraph is, or is the result of--
(a) the total loss of the ship; or
(b) damage to the ship that puts it in a condition in which it is impossible, or not commercially worthwhile, for the repair required for restoring it to its previous use to be undertaken;
and that subsection shall have effect, where anything falling within paragraph (a) or (b) above occurs, as if times falling after the occurrence of the total loss or, as the case may be, after the occurrence of the damage were to be disregarded for the purposes of paragraph (c) of that subsection."
(4) In subsection (4) of that section--
(a) in paragraphs (a) and (b), for the words "the shipowner", in each place where they occur, there shall be substituted "the person who incurred the expenditure"; and
(b) in paragraph (c)(i), for "the shipowner's actual trade" there shall be substituted "a trade carried on by the person who incurred that expenditure".
(5) In subsection (6) of that section, for "by the shipowner" there shall be substituted "by a qualifying person".
(6) In subsection (7) of that section--
(a) for "any trade previously carried on by the shipowner" there shall be substituted "the shipowner's actual trade"; and
(b) in paragraph (a), for the words "by the persons for the time being carrying on that trade" there shall be substituted "for the purposes of that trade by the persons for the time being carrying it on".
(7) For subsection (8) of that section there shall be substituted the following subsection--
"(8) For the purposes of this section a person is connected with another person at any time if, at that time--
(a) he is, within the terms of section 839 of the principal Act, connected either with that other person or with a person who is connected with that other person by virtue of paragraph (b) below; or
(b) he is carrying on a trade previously carried on by that other person in a case in which the only changes in the persons engaged in carrying on that trade between--
(i) the time when it was previously carried on by that other person, and
(ii) the time in question,
are changes in respect of which the trade is to be treated by virtue of section 113(2) or 343(2) of the principal Act as not having been discontinued;
and the persons who shall be taken for the purposes of this section, in relation to expenditure incurred by a person who is not the shipowner, to be connected at any time with the person by whom the expenditure is or has been incurred shall include every person who at that time is connected (in accordance with the preceding provisions of this subsection) with the shipowner."
5.--(1) In section 33E (definition of a qualifying ship), after subsection (8) there shall be inserted the following subsection--
"(9) Subsections (5), (6) and (8) above shall have effect for the purposes of section 33D in relation to any ship on the provision of which expenditure is incurred on or after the
28 Mar 1996 : Column 1209 passing of the Finance Act 1996 as if the references in those subsections to the shipowner included references to the person incurring that expenditure."
6.--(1) In section 33F (procedural provisions), in subsection (4)--
(a) for "An attribution made for the purposes of section 33A(5) or 33C" there shall be substituted "Subject to subsection (4A) below, an attribution in accordance with section 33A(5)"; and
(b) for "the person giving the notice" there shall be substituted "the shipowner".
(2) After that subsection there shall be inserted the following subsection--
"(4A) A notice by the shipowner under subsection (4) above shall not have effect in a case where the shipowner and the qualifying person to whose expenditure the notice relates are not the same person unless that person joins with the shipowner in the giving of that notice."
7.--(1) Subject to sub-paragraph (2) below this Schedule shall have effect in relation to any case in which the event mentioned in section 33A(1)(b) occurs on or after the day on which this Act is passed.
(2) Subject to sub-paragraph (3) below, this sub-paragraph shall not apply for the purposes of claims, assessments and adjustments made on or after the day on which this Act is passed but before such day as the Treasury may by order appoint.
(3) Sub-paragraph (2) above shall not prevent the making on or after the day appointed under that sub-paragraph of any claims, assessments or adjustments in respect of the application of this Schedule, in accordance with sub-paragraph (1) above, in relation to times before that day; and nothing in any provision relating to the period within which any claim or assessment must be made shall prevent any such claim, assessment or adjustment from being made by reference to this Schedule if it is made no more than twelve months after the day so appointed.'.--[Mr. Jack.]
Brought up, read the First and Second time, and added to the Bill.
Schedule 5
Amendment proposed: No. 1, in page 209, line 24, leave out 'or'.--[Mr. Jack.]
Mr. Deputy Speaker: With this, it will be convenient to discuss Government amendments Nos. 2 and 3.
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