Finance Bill

House of Commons

Session 2002 - 03
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Finance Bill

Finance Bill
Part 5 — Oil
239

(b)
the amount of the open market consideration for the
acquisition, bringing into existence, or enhancement of the
value, of the asset;
(c)
in a case where the other party to the transaction is a
participator in a taxable field and in the case of that participator
5
either—
(i)
an amount is brought into account under section 2 of
this Act in accordance with section 7(1) of the Oil
Taxation Act 1983 as disposal receipts in respect of the
transaction, or
10
(ii)
no amount is so brought into account by reason of
reductions falling to be made in the amount that would
have been so brought into account apart from those
reductions,

the amount so brought into account or, as the case may be, nil;
15
(d)
in a case where the other party to the transaction is not a
participator in a taxable field but—
(i)
the transaction is the latest in a series of transactions in
respect of the asset (or in respect of an asset or assets in
which the asset was comprised),
20
(ii)
those transactions are transactions to which this
paragraph applies,
(iii)
in the case of at least one of those transactions, there is a
party who is a participator in an oil field, and
(iv)
in the case of any such party, an amount either is
25
brought into account as mentioned in paragraph (c)(i)
above in respect of the transaction or would have been
so brought into account but for such reductions as are
mentioned in paragraph (c)(ii) above,

so much of the amount so brought into account in respect of that
30
transaction (or, where there are two or more such transactions,
the later or latest of them) as is justly and reasonably referable
to the asset mentioned in sub-paragraph (1) above (taking that
amount as being nil in the case of any transaction where no
amount is so brought into account by reason of any such
35
reductions).”.
(4)
In sub-paragraph (1B) (meaning of “loan expenditure” in sub-paragraph (1))
for “(1)” substitute “(1ZA)(a)”.
(5)
After sub-paragraph (1B) insert—
“(1C)
The reference in sub-paragraph (1ZA)(b) above to the open market
40
consideration for the acquisition, bringing into existence, or
enhancement of the value, of an asset is a reference to the consideration
which might reasonably have been given for the acquisition, bringing
into existence, or enhancement of the value, of the asset (whatever the
nature of the acquisition, bringing into existence or enhancement of the
45
value) had it been made in a transaction to which this paragraph does
not apply.”.
(6)
The amendments made by this section have effect in relation to expenditure
incurred on or after 17th March 2004.

Finance Bill
Part 5 — Oil
240

282
Terminal losses
(1)
Schedule 17 to the Finance Act 1980 (c. 48) (transfers of interests in oil fields) is
amended as follows.
(2)
For paragraph 15 (terminal losses) substitute—
“Terminal losses
5
15    (1)
This paragraph applies in any case where—
(a)
such an allowable loss as falls to be relieved under section
7(3) accrues to the new participator from the field in a
chargeable period ending after 17th March 2004, but
(b)
some or all of the loss cannot be relieved under section 7(3)
10
against assessable profits accruing to him from the field.
      (2)
So much of the loss as cannot be so relieved (“the remaining loss”)
shall be regarded as an allowable unrelievable field loss in relation to
the new participator (“the loss-maker”) only to the extent that—
(a)
so much of it as cannot be relieved in accordance with sub-
15
paragraphs (3) to (6) below,
  exceeds
(b)
the aggregate of any relevant previous participators’
expenditure unrelated to the field (see sub-paragraphs (10)
and (11) below).
20
      (3)
The remaining loss shall be treated as an allowable loss which falls to
be relieved under section 7(3) against so much of any assessable
profits accruing to the old participator from the field as is
attributable to his represented interest (see sub-paragraphs (9) and
(12) below).
25
      (4)
Where a person is the new participator in relation to two or more old
participators—
(a)
the remaining loss shall be apportioned between those old
participators in such manner as is just and reasonable having
regard to the interests respectively transferred by them to the
30
new participator,
(b)
sub-paragraph (3) above shall have effect separately in
relation to each of them (and the part of the remaining loss
apportioned to him).
      (5)
Any relief by virtue of sub-paragraph (3) above shall be given against
35
the assessable profits accruing to the old participator in an earlier
chargeable period only to the extent to which it cannot be given
against the assessable profits accruing to him in a later chargeable
period.
      (6)
If—
40
(a)
the old participator acquired some or all of his interest in the
field by a previous transfer in relation to which he was the
new participator,
(b)
Parts 2 and 3 of this Schedule applied in relation to that
previous transfer, and
45
(c)
some or all of the part of the remaining loss treated as an
allowable loss of his cannot be relieved in accordance with
sub-paragraph (3) above,

Finance Bill
Part 5 — Oil
241


sub-paragraphs (3) to (5) above shall apply in relation to so much of
that part of the remaining loss as cannot be so relieved as they apply
in relation to the remaining loss, but construing the references in
those sub-paragraphs to the new participator and the old
participator by reference to that previous transfer and the parties to
5
it, and then applying this sub-paragraph accordingly (and so on).
      (7)
But where—
(a)
the person who is the old participator in relation to a transfer
made before 17th March 2004 (“the later transfer”) is also the
new participator in relation to a previous transfer, and
10
(b)
Parts 2 and 3 of this Schedule applied in relation to both of
those transfers,

sub-paragraph (3) above shall not apply by virtue of sub-paragraph
(6) above in relation to so much of the assessable profits of the person
who is the old participator in relation to that previous transfer as is
15
attributable to so much of his interest as constitutes the whole or part
of his represented interest by virtue of the later transfer.
      (8)
Where losses accruing to each of two or more participators fall to be
relieved by virtue of sub-paragraph (3) above against the same
assessable profits, a loss accruing to the person who last had an
20
interest representing the whole or part of the transferred interest at
an earlier time shall be so relieved before one accruing to a person
who last had such an interest at a later time.

In this sub-paragraph “the transferred interest” means the interest
transferred by the person against whose assessable profits the losses
25
fall to be relieved.
      (9)
In determining for the purposes of this paragraph the assessable
profits of a participator that are attributable to his represented
interest, the assessable profits shall be apportioned between—
(a)
the represented interest, and
30
(b)
the remainder of the participator’s interest,

using such method as is just and reasonable, having regard to the
respective sizes of those interests.
     (10)
For the purposes of this paragraph “relevant previous participators’
expenditure unrelated to the field” means so much of each relevant
35
previous participator’s allowed expenditure unrelated to the field as
is referable to his represented interest, other than excepted old
expenditure.
     (11)
For the purposes of sub-paragraph (10) above—
“allowed expenditure unrelated to the field”, in relation to a
40
participator, is expenditure unrelated to the field which is
allowed on a claim or election made by the participator;
“excepted old expenditure” is expenditure which has been
allowed in pursuance of a claim or election for its allowance
received by the Board before 17th March 2004;
45
“relevant previous participator” means a participator against
any of whose assessable profits relief is given in accordance
with sub-paragraphs (3) to (6) above;

and sub-paragraph (9) above shall apply in relation to allowed
expenditure unrelated to the field as it applies in relation to
50
assessable profits.

Finance Bill
Part 6 — Other taxes
242

     (12)
In this paragraph—
“expenditure unrelated to the field” has the meaning given by
section 6(9);
“the loss-maker” shall be construed in accordance with sub-
paragraph (2) above;
5
“previous owner” means a person from whom the loss-maker
directly or indirectly derives his title to the whole or any
part of his interest;
“represented interest”, in the case of a previous owner, means
so much of the interest which that previous owner
10
transferred, by a transfer to which Parts 2 and 3 of this
Schedule apply, as is represented in the loss-maker’s
interest by virtue only of—
(a)
that transfer, or
(b)
that transfer and one or more subsequent transfers
15
to which those Parts apply,
making, for the purposes of paragraph (b) above, such
apportionments as are just and reasonable, having regard to
the interests transferred by each of the transferors.”.
(3)
The amendment made by this section has effect in relation to losses accruing in
20
chargeable periods ending after 17th March 2004.
Part 6
Other taxes
Climate change levy
283
Supplies to producers of commodities
25
(1)
Schedule 6 to the Finance Act 2000 (c. 17) (climate change levy) is amended as
set out in subsections (2) to (5).
(2)
In paragraph 13 (exemption for supplies to producers of commodities), in
paragraph (b), after sub-paragraph (ii) insert—
“(iia)
in producing biodiesel for chargeable use within the
30
meaning of section 6AA of the Hydrocarbon Oil
Duties Act 1979 (excise duty on biodiesel),
(iib)
in producing bioblend for delivery for home use from
any place mentioned in section 6AB(1)(b) of that Act
(excise duty on bioblend),
35
(iic)
in producing bioethanol for chargeable use within the
meaning of section 6AD of that Act (excise duty on
bioethanol),
(iid)
in producing bioethanol blend for delivery for home
use from any place mentioned in section 6AE(1)(b) of
40
that Act (excise duty on bioethanol blend),”.
(3)
In paragraph 13(b)(iii), for “liquids that are not hydrocarbon oil” substitute
“liquids (within the meaning of that section) in respect of which a charge is
capable of arising under that section”.

Finance Bill
Part 6 — Other taxes
243

(4)
In paragraph 13, for the words from “For this purpose” to the end substitute—

“Expressions which are used in this paragraph and the Hydrocarbon
Oil Duties Act 1979 have the same meaning in this paragraph as they
have in that Act.”
(5)
After paragraph 13 insert—
5
“13A  (1)
The Commissioners may by regulations make provision amending
paragraph 13 for the purpose of—
(a)
extending the circumstances in which a supply of a taxable
commodity is exempt from the levy, or
(b)
restricting the circumstances in which a supply of a taxable
10
commodity is exempt from the levy.
      (2)
Regulations under this paragraph that include provision made for
the purpose mentioned in sub-paragraph (1)(a) may provide for the
provision to have retrospective effect.
      (3)
A statutory instrument that contains (whether alone or with other
15
provisions) regulations under this paragraph made for the purpose
mentioned in sub-paragraph (1)(b) shall not be made unless a draft
of the instrument has been laid before Parliament and approved by
a resolution of the House of Commons.”
(6)
The amendments made by subsections (2) to (4) have effect—
20
(a)
as regards biodiesel and bioblend, in relation to supplies made on or
after the day on which this Act is passed;
(b)
as regards bioethanol and bioethanol blend, in relation to supplies
made on or after 1st January 2005.
Aggregates levy
25
284
Transitional tax credit in Northern Ireland: changes to existing scheme
(1)
In section 30A of the Finance Act 2001 (c. 9) (aggregates levy: transitional tax
credit in Northern Ireland) after subsection (3) insert—
“(4)
The Treasury may by order made by statutory instrument amend
subsection (2) above so as to—
30
(a)
change the period in relation to which the amount of a tax credit
is to be reduced;
(b)
change the amount by which a tax credit is to be reduced.
(5)
An order under subsection (4) above shall not be made unless a draft of
the order has been laid before Parliament and approved by a resolution
35
of the House of Commons.”
(2)
This section shall be deemed to have come into force on 1st April 2004.
285
Transitional tax credit in Northern Ireland: new scheme
(1)
Part 2 of the Finance Act 2001 (aggregates levy) is amended as set out in
subsections (2) and (3).
40

Finance Bill
Part 6 — Other taxes
244

(2)
For section 30A substitute—
“30A
Transitional tax credit in Northern Ireland
(1)
The Commissioners may by regulations make provision of the kind
described in section 30(2) above (entitlement to tax credit) in relation to
cases within subsection (2) below.
5
(2)
The cases are those where a charge to aggregates levy has arisen on a
quantity of aggregate which has been subjected to commercial
exploitation in Northern Ireland during a period—
(a)
starting on the prescribed date, and
(b)
ending on 31st March 2011.
10
(3)
The date prescribed for the purposes of subsection (2)(a) above may be
earlier than the date on which this section comes into force.
(4)
The amount of a tax credit to which a person is entitled under the
regulations must not be more than 80% of any aggregates levy charged
on the aggregate in question.
15
(5)
Regulations under this section may in particular make provision—
(a)
for a person operating a site to be entitled to a tax credit under
the regulations in respect of a period for which he holds an
aggregates levy credit certificate which has been issued in
respect of the site and which has not been withdrawn;
20
(b)
for an aggregates levy credit certificate to be issued to a person
in respect of a site only if an aggregates levy credit agreement is
in force in respect of the site;
(c)
for the withdrawal of an aggregates levy credit certificate where
the aggregates levy credit agreement in respect of which it was
25
issued is no longer in force;
(d)
for the form and content of aggregates levy credit certificates
and aggregates levy credit agreements.
(6)
Regulations under this section which make provision such as is
mentioned in subsection (5)(d) above may be framed by reference to
30
any provisions of a notice published by the Commissioners in
pursuance of the regulations and not withdrawn by a further notice.
(7)
If regulations under this section make provision such as is mentioned
in subsection (5) above, the Commissioners or the Northern Ireland
Department may—
35
(a)
enter into aggregates levy credit agreements;
(b)
issue and withdraw aggregates levy credit certificates;
(c)
take such other steps as the Commissioners or the Northern
Ireland Department consider appropriate in relation to
aggregates levy credit agreements and aggregates levy credit
40
certificates.
(8)
Regulations under this section which make provision such as is
mentioned in subsection (5) above must include provision requiring
the Northern Ireland Department to inform the Commissioners if the
Northern Ireland Department issues or withdraws an aggregates levy
45
credit certificate.

Finance Bill
Part 6 — Other taxes
245

(9)
Subsections (3) to (5) of section 30 above apply to regulations under this
section as they apply to regulations under that section.
(10)
The Treasury may by order made by statutory instrument amend
subsection (4) above by substituting for the percentage for the time
being specified in that subsection a percentage lower than 80%.
5
(11)
An order under subsection (10) above shall not be made unless a draft
of the order has been laid before Parliament and approved by a
resolution of the House of Commons.
(12)
Any expenses of the Northern Ireland Department under this section
shall be charged on the Consolidated Fund of Northern Ireland.
10
(13)
In this section—

“aggregates levy credit agreement” means an agreement entered
into in respect of a site by the person operating the site and the
Commissioners or the Northern Ireland Department;

“aggregates levy credit certificate” means a certificate issued to the
15
person operating a site by the Commissioners or the Northern
Ireland Department as evidence of the fact that an aggregates
levy credit agreement has been entered into in respect of the
site;

“the Northern Ireland Department” means the Department of the
20
Environment in Northern Ireland.”
(3)
In section 48(1) (interpretation), in the definition of “tax credit regulations”
after “section 30” insert “or 30A”.
(4)
The preceding provisions of this section come into force on such day as the
Treasury may by order made by statutory instrument appoint.
25
(5)
An order under subsection (4) may—
(a)
make different provision for different purposes;
(b)
make incidental, consequential, supplemental or transitional provision
and savings.
Lorry road-user charge
30
286
Lorry road-user charge
(1)
Section 137 of the Finance Act 2002 (c. 23) (lorry road-user charge) is amended
as follows.
(2)
For subsection (4) substitute—
“(4)
Lorry road-user charge—
35
(a)
shall be under the care and management of the Commissioners
of Customs and Excise, and
(b)
shall be administered and enforced in accordance with such
provisions as Parliament may determine.”.
(3)
For subsections (5) and (6) substitute—
40
“(5)
All money and securities for money collected or received for or on
account of lorry road-user charge shall—