Finance Bill

House of Commons

Session 2003 - 04
Internet Publications
Other Bills before Parliament

Finance Bill

Finance Bill
Part 1 — Excise duties
15

Part of gross gaming yield
Rate

The remainder
40 per cent.

(2)
This section has effect in relation to accounting periods beginning on or after
1st April 2004.
Amusement machine licence duty
5
17
Amusement machine licence duty: rates
(1)
In section 23 of the Betting and Gaming Duties Act 1981 (c. 63) (amount of duty
payable on amusement machine licence) for the Table in subsection (2)
substitute—
Table
10

(1)
(2)
(3)
(4)
(5)
(6)

Period (in
Category
Category
Category
Category
Category

months) for

which licence
A
B
C
D
E

granted

15

£
£
£
£
£

1
30
80
85
170
230

2
50
155
165
330
445

3
75
225
245
480
650

4
95
295
315
625
845

20

5
120
355
380
755
1,020

6
140
410
445
875
1,185

7
160
465
500
990
1,340

8
185
515
555
1,095
1,480

9
205
560
600
1,190
1,610

25

10
225
600
645
1,275
1,725

11
240
635
680
1,350
1,825

12
250
665
715
1,415
1,915

(2)
This section has effect in relation to any amusement machine licence for which
an application is received by the Commissioners of Customs and Excise on or
30
after 22nd March 2004.
Vehicle excise duty
18
Fee for payment of duty by credit card
(1)
The Vehicle Excise and Registration Act 1994 (c. 22) is amended as follows.

Finance Bill
Part 2 — Value added tax
16

(2)
After section 19B insert—
“19C
Fee for payment of duty by credit card
(1)
This section applies where—
(a)
a person applies for a vehicle licence or a trade licence, and
(b)
the Secretary of State, or an authorised body, accepts a credit
5
card payment in respect of the duty payable on the licence.
(2)
Before issuing the licence, the Secretary of State, or the authorised body,
shall require—
(a)
the applicant, or
(b)
a person acting on behalf of the applicant,
10

to pay to him, or it, such fee (if any) in respect of the acceptance of the
credit card payment as may be prescribed by, or determined in
accordance with, regulations.
(3)
In cases of such descriptions as the Secretary of State may, with the
consent of the Treasury, determine, the whole or a part of a fee paid
15
under this section may be refunded.
(4)
In this section—

“authorised body” means a body (other than a Northern Ireland
department) which is authorised by the Secretary of State to act
as his agent for the purpose of issuing licences;
20

“credit card” has such meaning as may be prescribed by
regulations;

“regulations” means regulations made by the Secretary of State.”.
(3)
In section 58 (fees prescribed by regulations) in subsection (1) (fees prescribed
by regulations under certain provisions to be of amount approved by
25
Treasury) for “or 14(4)(b)” substitute “, 14(4)(b) or 19C(2)”.
(4)
This section has effect in relation to licences issued on or after such day as the
Secretary of State may by order made by statutory instrument appoint.
Part 2
Value added tax
30
19
Disclosure of VAT avoidance schemes
(1)
Schedule 2 (which relates to the disclosure of schemes for the avoidance of
value added tax) has effect.
(2)
Subsection (1) and that Schedule—
(a)
come into force on the passing of this Act, so far as is necessary for
35
enabling the making of any orders or regulations by virtue of that
Schedule, and
(b)
otherwise, come into force on such day as the Treasury may by order
made by statutory instrument appoint.
20
Groups
40
(1)
After section 43A of the Value Added Tax Act 1994 (c. 23) (groups: eligibility)

Finance Bill
Part 2 — Value added tax
17

insert—
“43AA  Power to alter eligibility for grouping
(1)
The Treasury may by order provide for section 43A to have effect with
specified modifications in relation to a specified class of person.
(2)
An order under subsection (1) may, in particular—
5
(a)
make provision by reference to generally accepted accounting
practice;
(b)
define generally accepted accounting practice for that purpose
by reference to a specified document or instrument (and may
provide for the reference to be read as including a reference to
10
any later document or instrument that amends or replaces the
first);
(c)
adopt any statutory or other definition of generally accepted
accounting practice (with or without modification);
(d)
make provision by reference to what would be required or
15
permitted by generally accepted accounting practice if
accounts, or accounts of a specified kind, were prepared for a
person.
(3)
An order under subsection (1) may also, in particular, make provision
by reference to—
20
(a)
the nature of a person;
(b)
past or intended future activities of a person;
(c)
the relationship between a number of persons;
(d)
the effect of including a person within a group or of excluding
a person from a group.
25
(4)
An order under subsection (1) may—
(a)
make provision which applies generally or only in specified
circumstances;
(b)
make different provision for different circumstances;
(c)
include supplementary, incidental, consequential or
30
transitional provision.”
(2)
After section 43C of that Act insert—
“43D
    Groups: duplication
(1)
A body corporate may not be treated as a member of more than one
group at a time.
35
(2)
A body which is a member of one group is not eligible by virtue of
section 43A to be treated as a member of another group.
(3)
If—
(a)
an application under section 43B(1) would have effect from a
time in accordance with section 43B(4), but
40
(b)
at that time one or more of the bodies specified in the
application is a member of a group (other than that to which the
application relates),

the application shall have effect from that time, but with the exclusion
of the body or bodies mentioned in paragraph (b).
45

Finance Bill
Part 2 — Value added tax
18

(4)
If—
(a)
an application under section 43B(2)(a) would have effect from a
time in accordance with section 43B(4), but
(b)
at that time the body specified in the application is a member of
a group (other than that to which the application relates),
5

the application shall have no effect.
(5)
Where a body is a subject of two or more applications under section
43B(1) or (2)(a) that have not been granted or refused, the applications
shall have no effect.”
(3)
In section 43(1) of that Act (effect of treatment as group) for “sections 43A to
10
43C” substitute “sections 43A to 43D”.
(4)
In section 43B(1), (2)(a), (5)(a) and (5)(b) and section 43C(3)(b) of that Act
(groups: applications for membership and termination of membership) for
“under section 43A(1)” substitute “by virtue of section 43A”.
(5)
In section 97(4) of that Act (orders, &c.: affirmative resolution) after paragraph
15
(c) insert—
“(ca)
an order under section 43AA(1) if as a result of the order any
bodies would cease to be eligible to be treated as members of a
group;”.
21
Reverse charge on gas and electricity supplied by persons outside UK
20
(1)
After section 9 of the Value Added Tax Act 1994 (c. 23) insert—
“9A
Reverse charge on gas and electricity supplied by persons outside the
United Kingdom
(1)
This section applies if relevant goods are supplied—
(a)
by a person who is outside the United Kingdom,
25
(b)
to a person who is registered under this Act,

for the purposes of any business carried on by the recipient.
(2)
The same consequences follow under this Act (and particularly so
much as charges VAT on a supply and entitles a taxable person to credit
for input tax) as if—
30
(a)
the recipient had himself supplied the relevant goods in the
course or furtherance of his business, and
(b)
that supply were a taxable supply.
(3)
But supplies which are treated as made by the recipient under
subsection (2) are not to be taken into account as supplies made by him
35
when determining any allowance of input tax in his case under section
26(1).
(4)
In applying subsection (2) the supply of relevant goods treated as made
by the recipient shall be assumed to have been made at a time to be
determined in accordance with regulations prescribing rules for
40
attributing a time of supply in cases to which this section applies.
(5)
“Relevant goods” means gas supplied through the natural gas
distribution network, and electricity.

Finance Bill
Part 2 — Value added tax
19

(6)
Whether a person is outside the United Kingdom is to be determined in
accordance with an order made by the Treasury.”
(2)
This section has effect in relation to supplies made on or after 1st January 2005.
22
Use of stock in trade cars for consideration less than market value
(1)
The Value Added Tax Act 1994 is amended as follows.
5
(2)
In Schedule 6 (valuation: special cases) after paragraph 1 (supply to connected
person at less than market value etc) insert—
“1A   (1)
Where—
(a)
the value of a supply made by a taxable person for a
consideration is (apart from this sub-paragraph) less than its
10
open market value,
(b)
the taxable person is a motor manufacturer or motor dealer,
(c)
the person to whom the supply is made is—
(i)
an employee of the taxable person,
(ii)
a person who, under the terms of his employment,
15
provides services to the taxable person, or
(iii)
a relative of a person falling within sub-paragraph (i)
or (ii) above,
(d)
the supply is a supply of services by virtue of sub-paragraph
(4) of paragraph 5 of Schedule 4 (business goods put to
20
private use etc),
(e)
the goods mentioned in that sub-paragraph consist of a
motor car (whether or not any particular motor car) that
forms part of the stock in trade of the taxable person, and
(f)
the supply is not one to which paragraph 1 above applies,
25

the Commissioners may direct that the value of the supply shall be
taken to be its open market value.
      (2)
A direction under this paragraph shall be given by notice in writing
to the person making the supply, but no direction may be given more
than 3 years after the time of the supply.
30
      (3)
A direction given to a person under this paragraph in respect of a
supply made by him may include a direction that the value of any
supply—
(a)
which is made by him after the giving of the notice, or after
such later date as may be specified in the notice, and
35
(b)
as to which the conditions in paragraphs (a) to (f) of sub-
paragraph (1) above are satisfied,

shall be taken to be its open market value.
      (4)
In this paragraph—
“motor car” means any motor vehicle of a kind normally used
40
on public roads which has three or more wheels and
either—
(a)
is constructed or adapted solely or mainly for the
carriage of passengers, or
(b)
has to the rear of the driver’s seat roofed
45
accommodation which is fitted with side windows

Finance Bill
Part 2 — Value added tax
20

or which is constructed or adapted for the fitting of
side windows,
but does not include any vehicle excluded by sub-
paragraph (5) below;
“motor dealer” means a person whose business consists in
5
whole or in part of obtaining supplies of, or acquiring from
another member State or importing, new or second-hand
motor cars for resale with a view to making an overall profit
on the sale of them (whether or not a profit is made on each
sale);
10
“motor manufacturer” means a person whose business
consists in whole or part of producing motor cars including
producing motor cars by conversion of a vehicle (whether a
motor car or not);
“relative” means husband, wife, brother, sister, ancestor or
15
lineal descendant;
“stock in trade” means new or second-hand motor cars (other
than second-hand motor cars which are not qualifying
motor cars within sub-paragraph (6) below) which are—
(a)
produced by a motor manufacturer or, as the case
20
may require, supplied to or acquired from another
member State or imported by a motor dealer, for the
purpose of resale, and
(b)
are intended to be sold—
(i)
by a motor manufacturer within 12
25
months of their production, or
(ii)
by a motor dealer within 12 months of
their supply, acquisition from another member
State or importation, as the case may require,
and such motor cars shall not cease to be stock in trade
30
where they are temporarily put to a use in the motor
manufacturer’s or, as the case may be, the motor dealer’s
business which involves making them available for private
use.
      (5)
The vehicles excluded by this sub-paragraph are—
35
(a)
vehicles capable of accommodating only one person;
(b)
vehicles which meet the requirements of Schedule 6 to the
Road Vehicles (Construction and Use) Regulations 1986 and
are capable of carrying twelve or more seated persons;
(c)
vehicles of not less than three tonnes unladen weight (as
40
defined in the Table to regulation 3(2) of the Road Vehicles
(Construction and Use) Regulations 1986);
(d)
vehicles constructed to carry a payload (the difference
between—
(i)
a vehicle’s kerb weight (as defined in the Table to
45
regulation 3(2) of the Road Vehicles (Construction
and Use) Regulations 1986), and
(ii)
its maximum gross weight (as defined in that Table)),

of one tonne or more;
(e)
caravans, ambulances and prison vans;
50

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 1 — Income tax and corporation tax charge and rate bands
21

(f)
vehicles constructed for a special purpose other than the
carriage of persons and having no other accommodation for
carrying persons than such as is incidental to that purpose.
      (6)
For the purposes of this paragraph a motor car is a “qualifying motor
car” if—
5
(a)
it has never been supplied, acquired from another member
State, or imported in circumstances in which the VAT on that
supply, acquisition or importation was wholly excluded
from credit as input tax by virtue of an order under section
25(7) (as at 17th March 2004 see article 7 of the Value Added
10
Tax (Input Tax) Order 1992); or
(b)
a taxable person has elected under such an order for it to be
treated as such.
      (7)
The Treasury may by order amend any of the definitions in this
paragraph.”.
15
(3)
In section 83(v) (appeal to tribunal with respect to any direction under
paragraph 1 or 2 of Schedule 6 etc) after “paragraph 1” insert “, 1A”.
(4)
In section 97 (orders, rules and regulations) in subsection (4) (orders to which
the House of Commons affirmative procedure in subsection (3) applies) after
paragraph (e) insert—
20
“(f)
an order under paragraph 1A(7) of Schedule 6;”.
(5)
The amendment made by subsection (2) applies in relation to any use or
availability for use on or after the appointed day (whatever the date of the
directions mentioned in paragraph 5(4) of Schedule 4 to the Value Added Tax
Act 1994 (c. 23)).
25
(6)
In subsection (5) “the appointed day” means such day as the Treasury may by
order made by statutory instrument appoint.
Part 3
Income tax, corporation tax and capital gains tax
Chapter 1
30
Income tax and corporation tax charge and rate bands
Income tax
23
Charge and rates for 2004-05
Income tax shall be charged for the year 2004-05, and for that year—
(a)
the starting rate shall be 10%;
35
(b)
the basic rate shall be 22%;
(c)
the higher rate shall be 40%.
24
Personal allowances for those aged 65 or more
(1)
For the year 2004-05—
(a)
the amount specified in section 257(2) of the Taxes Act 1988 (claimant
40
aged 65 or more) shall be £6,830; and