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| Treatment of premiums as rent. |
40. - (1) Section 34 of the Taxes Act 1988 (treatment of premiums, etc. as rent) is amended as follows.
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(2) In subsection (1) for "becoming entitled when the lease is granted to" substitute "receiving when the lease is granted".
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(3) In subsection (4)-
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(a) in paragraph (a), for the words from "in computing" to "in lieu of rent" substitute "in computing the profits of the Schedule A business of which the sum payable in lieu of rent is by virtue of this subsection to be treated as a receipt"; and |
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(b) in paragraph (b), for "deemed to become due" substitute "deemed to be received". |
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(4) In subsection (5)-
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(a) in paragraph (a), for "tax chargeable by virtue of this subsection" substitute "the profits of the Schedule A business of which that sum is by virtue of this subsection to be treated as a receipt"; and |
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(b) in paragraph (b), for "deemed to become due" substitute "deemed to be received". |
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(5) The above amendments have effect in relation to amounts treated as received under section 34 of the Taxes Act 1988 on or after 17th March 1998.
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| Tied premises: receipts and expenses treated as those of trade. |
41. - (1) For section 98 of the Taxes Act 1988 (tied premises) substitute-
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| "Tied premises: receipts and expenses treated as those of trade. |
98. - (1) This section applies where a person ("the trader")-
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(b) in the course of the trade supplies, or is concerned in the supply of, goods sold or used on premises occupied by another person, |
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(c) has an estate or interest in those premises, and |
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(d) deals with that estate or interest as property employed for the purposes of the trade. |
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(2) Where this section applies the receipts and expenses in connection with the premises that would otherwise fall to be brought into account in computing the profits of a Schedule A business carried on by the trader shall instead be brought into account in computing the profits of the trade.
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(3) Any necessary apportionment shall be made on a just and reasonable basis of receipts or expenses-
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(a) which do not relate only to the premises concerned, or |
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(b) where the conditions in subsection (1) are met only in relation to part of the premises. |
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(4) This section applies to premises outside the United Kingdom as if the premises were in the United Kingdom.".
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(2) In section 156 of the Taxation of Chargeable Gains Act 1992 (replacement of business assets: buildings and land), for subsection (4) substitute-
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"(4) Where section 98 of the Taxes Act applies (tied premises: receipts and expenses treated as those of trade) the trader shall be treated, to the extent that the conditions in subsection (1) of that section are met in relation to premises, as occupying as well as using the premises for the purposes of the trade.".
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(3) The above amendments have effect on and after 17th March 1998, subject to the following transitional provisions.
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In those provisions-
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"before commencement" and "after commencement" mean, respectively, before 17th March 1998 and on or after that date; and |
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"the new section 98" means the section as substituted by subsection (1) above. |
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(4) To the extent that receipts or expenses have been taken into account before commencement, they shall not be taken into account again under the new section 98 after commencement.
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(5) To the extent that receipts or expenses would under the new section 98 have been brought into account before commencement, and were not so brought into account, they shall be brought into account immediately after commencement.
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(6) If any estate, interest or rights in or over land is or are transferred from one person to another, the references in subsections (4) and (5) above to receipts or expenses being taken into account shall be construed as references to their being taken into account in relation to either of those persons.
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(7) For the purposes of those subsections an amount is "taken into account" if-
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(a) it is brought into account for tax purposes, or |
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(b) it would have been so brought into account if the person concerned were chargeable to tax. |
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Computation of profits of trade, profession or vocation |
| Computation of profits of trade, profession or vocation. |
42. - (1) For the purposes of Case I or II of Schedule D the profits of a trade, profession or vocation must be computed on an accounting basis which gives a true and fair view, subject to any adjustment required or authorised by law in computing profits for those purposes.
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(2) This does not-
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(a) require a person to comply with the requirements of the Companies Act 1985 or the Companies (Northern Ireland) Order 1986 except as to the basis of computation, or |
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(b) impose any requirements as to audit or disclosure. |
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(3) This section applies to periods of account beginning after 6th April 1999.
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A period of account beginning on or before 6th April 1999 which is still current on 7th April 2000 shall be treated for the purposes of this section as having ended on 6th April 1999 and a new period as having begun on 7th April 1999.
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(4) This section is subject to the exemption in section 43 below (barristers and advocates in early years of practice).
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(5) This section does not affect provisions of the Tax Acts relating to the computation of the profits of Lloyd's underwriters or companies carrying on life insurance, or otherwise laying down special rules for the computation of the profits of a particular description of business.
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| Barristers and advocates in early years of practice. |
43. - (1) The profits of a barrister or advocate in actual practice for a period of account ending not more than seven years after the commencement of such practice may be computed in accordance with this section.
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(2) For this purpose barristers and advocates are regarded as commencing in actual practice when they first hold themselves out as available for fee-earning work.
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(3) The profits of a barrister or advocate for a period of account to which this section applies may be computed-
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(b) by reference to fees earned whose amount has been agreed or in respect of which a fee note has been delivered. |
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Once a particular basis has been adopted it must be applied consistently.
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(4) The exemption given by this section ceases if for any period of account an accounting basis is adopted that complies with section 42 above.
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In that case, that section applies to all subsequent periods of account.
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| Change of accounting basis. |
44. - (1) The provisions of Schedule 6 to this Act apply where there is a change, from one period of account to the next of a trade, profession or vocation, of the accounting basis on which profits are computed for tax purposes.
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(2) The Schedule only applies if the old basis accords with the law and practice applicable immediately before the change and the new basis accords with the law and practice applicable immediately after the change.
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(3) The provisions of the Schedule replace section 104(4) of the Taxes Act 1988 and any rule of law as to the adjustments necessary for tax purposes in those circumstances.
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(4) They apply to any change of accounting basis taking effect on or after 6th April 1999.
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