Finance (No.2) Bill

House of Commons

Session 2005 - 06
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Other Bills before Parliament

Finance (No.2) Bill

Finance (No.2) Bill
Part 4 — Real Estate Investment Trusts
117

140
Penalties for failure to give notice, etc
At the end of the second column of the Table in section 98(5) of TMA 1970
(penalties) add—
“Section 106 of FA 2006 as modified by Schedule 17 to that Act.
Section 116 of FA 2006.
5
Regulations under section 116 of FA 2006.
Regulations under section 122 of FA 2006.
Section 130 of FA 2006.”
141
Effect of deemed disposal and re-acquisition
A deemed disposal and re-acquisition of an asset under this Part shall have
10
effect for the purposes of any subsequent disposal of the asset (whether actual
or deemed).
142
Interpretation
In this Part—
(a)
a reference to an asset includes a reference to—
15
(i)
part of an asset, and
(ii)
an interest in, or right in relation to, an asset,
(b)
a reference to assets used in business of a company includes a reference
to assets—
(i)
which were acquired for the purpose of that business and which
20
are not being used in another business,
(ii)
which are available for use in that business, or
(iii)
which are in any other way held in respect of, or associated or
connected with, that business,
(c)
“company” has the meaning given by section 170(9) of TCGA 1992,
25
(d)
“international accounting standards” has the meaning given by section
50(2) of FA 2004,
(e)
“market value” has the same meaning as in TCGA 1992 (see sections
272 and 273 and Schedule 11), and
(f)
“profits” means income (except where the context otherwise requires).
30
143
Housing investment trusts: repeal
Section 160 of, and Schedule 30 to, FA 1996 (housing investment trusts) shall
cease to have effect (and accordingly—
(a)
sections 508A and 508B of ICTA shall cease to have effect,
(b)
the amendments of section 842(1)(a) and (e) of ICTA effected by
35
paragraph 2(2) of Schedule 30 shall cease to have effect, and
(c)
section 842(1AA) of ICTA shall cease to have effect).
General
144
Regulations
Regulations under this Part—
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Finance (No.2) Bill
Part 5 — Oil
118

(a)
may make provision which applies generally or only in specified cases
or circumstances,
(b)
may make different provision for different cases or circumstances, and
(c)
may include incidental, consequential or transitional provision.
145
Commencement
5
(1)
A notice under section 109 may be given in respect of an accounting period
beginning on or after 1st January 2007.
(2)
Section 143 shall have effect in relation to accounting periods beginning on or
after the day on which this Act is passed.
Part 5
10
Oil
New basis for determining market value
146
New basis for determining the market value of oil
(1)
In OTA 1975, in Schedule 3 (petroleum revenue tax: miscellaneous provisions)
before paragraph 2 (definition of market value of oil) insert—
15
“Determination of market value: the notional delivery day for a quantity of oil
1A    (1)
This paragraph has effect for determining, for the purposes of this
Schedule, the day which is the “notional delivery day” in the case of
any particular quantity of oil of any particular kind whose market
value falls to be determined in accordance with the provisions of this
20
Schedule in the case of any chargeable period.
      (2)
The notional delivery day need not be a day in the chargeable period.
      (3)
In the case of a quantity of oil which, at the end of the chargeable
period,—
(a)
has neither been disposed of nor relevantly appropriated in
25
the period, or
(b)
has been disposed of but not delivered in the period,

the notional delivery day is the last business day of the chargeable
period.
      (4)
In the case of—
30
(a)
a quantity of oil won and disposed of which is delivered on a
day in the chargeable period, or
(b)
a quantity of oil—
(i)
relevantly appropriated on a day in the chargeable
period, but
35
(ii)
not disposed of in the chargeable period,

the notional delivery day is to be determined in accordance with sub-
paragraphs (5) to (7) below.
      (5)
If that oil is—

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Part 5 — Oil
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(a)
oil transported by ship from the place of extraction to a place
in the United Kingdom or elsewhere, or
(b)
oil transported by pipeline to a place in the United Kingdom
and loaded on to a ship there,

and there is a loading slot for it (see sub-paragraph (8)), the notional
5
delivery day is the middle day of the loading slot.
      (6)
If sub-paragraph (5) above does not apply to that oil, then—
(a)
if it is oil delivered on a day in the chargeable period, the
notional delivery day is the date of the delivery, or
(b)
if it is oil relevantly appropriated on a day in the chargeable
10
period, the notional delivery day is the date of the
appropriation.
      (7)
The Treasury may by regulations make provision for or in
connection with substituting as the notional delivery day in such
circumstances as may be prescribed—
15
(a)
in the case of oil transported by ship from the place of
extraction to a place in the United Kingdom or elsewhere, the
date of completion of load, or
(b)
in the case of oil transported by pipeline to a place in the
United Kingdom and loaded on to a ship there, the date of the
20
bill of lading.
      (8)
The “loading slot” for any oil is the period of three days within which
the loading of the oil on to the ship is or was to take place—
(a)
as duly published by the operator of the facility at which that
loading is or was to take place (unless paragraph (b) below
25
applies), or
(b)
as subsequently finally duly varied to give effect to any
modifications duly notified to that operator by the
participator concerned.
      (9)
In sub-paragraph (8) above, “duly” means in accordance with the
30
arrangements for the time being governing the time and manner of—
(a)
publication, or variation, of the final loading schedule for the
calendar month in which loading is or was to take place, or
(b)
notification of modifications to that schedule,

and, in any case, before the end of the calendar month immediately
35
preceding that in which loading is to take place.
     (10)
If the Treasury consider that, for the purpose of defining “loading
slot”, any period of days for the time being specified by or under this
Act as the period of days within which loading of oil on to a ship is
to take place is, or is to be, no longer appropriate, they may by
40
regulations make provision for, or in connection with,—
(a)
varying the number of days in the period,
(b)
determining the day that is to be the notional delivery day if
the number, as varied, is an even number.

The power conferred by this sub-paragraph includes power to make
45
amendments to, or modifications of, this Schedule.”.
(2)
Paragraph 2 of that Schedule (definition of market value of oil) is amended as
follows.

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(3)
In sub-paragraph (1) (market value of oil in any calendar month to be
determined in accordance with the paragraph) for “any oil in any calendar
month” substitute “any particular quantity of oil of any kind on any day”.
(4)
After sub-paragraph (1) insert—
   “(1A)
This paragraph makes different provision according to whether the
5
oil is—
(a)
Category 1 oil of any kind, or
(b)
Category 2 oil of any kind.
     (1B)
For the purposes of this Act—
(a)
Category 1 oil is oil of any of one or more kinds specified as
10
such in regulations made for the purpose by the Board;
(b)
Category 2 oil is oil of any other kind.
     (1C)
The Board may specify oil of any particular kind as Category 1 oil
only if they are satisfied that reports of prices for sales of oil of that
kind are published and widely available (whether or not on payment
15
of a fee).”.
(5)
For sub-paragraph (2) substitute—
    “(2)
The market value of any particular quantity of Category 1 oil of any
kind is the price for which that quantity of oil of that kind might
reasonably have been expected to be sold under a contract of sale
20
that meets the following conditions—
(a)
the contract is for the sale of the oil at arm’s length to a willing
buyer;
(b)
the contract is for delivery of a single standard cargo of the
oil;
25
(c)
the contract specifies a period of three days within which
loading of the oil is to take place and that period includes the
notional delivery day for the actual oil;
(d)
the contract requires the oil to have been subjected to
appropriate initial treatment before delivery;
30
(e)
the contract requires the oil to be delivered—
(i)
in the case of oil extracted in the United Kingdom, at
the place of extraction; or
(ii)
in the case of oil extracted from strata in the sea bed
and subsoil of the territorial sea of the United
35
Kingdom or of a designated area, at the place in the
United Kingdom or another country at which the
seller could reasonably be expected to deliver it or, if
there is more than one such place, the one nearest to
the place of extraction.
40

The terms as to payment which are to be implied in the contract are
those which are customarily contained in contracts for the sale at
arm’s length of oil of the kind in question.
    (2AA)
The market value of any particular quantity of Category 2 oil of any
kind is the price for which that quantity of oil of that kind might
45
reasonably have been expected to be sold under a contract of sale
that meets the following conditions—

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Part 5 — Oil
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(a)
the contract is for the sale of the oil at arm’s length to a willing
buyer;
(b)
the contract provides for delivery of the oil on the notional
delivery day for the actual oil or within such period that
includes that day as is normal under a contract at arm’s
5
length for the sale of oil of that kind (or, if there is more than
one such period, the shortest of them);
(c)
the contract is made on a date such that the period between
that date and the notional delivery day for the actual oil is the
normal period between contract and delivery in the case of a
10
contract at arm’s length for the sale of oil of that kind (or, if
there is more than one such period, the shortest of them);
(d)
the contract requires the oil to have been subjected to
appropriate initial treatment before delivery;
(e)
the contract requires the oil to be delivered—
15
(i)
in the case of oil extracted in the United Kingdom, at
the place of extraction; or
(ii)
in the case of oil extracted from strata in the sea bed
and subsoil of the territorial sea of the United
Kingdom or of a designated area, at the place in the
20
United Kingdom or another country at which the
seller could reasonably be expected to deliver it or, if
there is more than one such place, the one nearest to
the place of extraction.

The terms as to payment which are to be implied in the contract are
25
those which are customarily contained in contracts for the sale at
arm’s length of oil of the kind in question.”.
(6)
For sub-paragraphs (2A) to (2D) substitute—
   “(2E)
For the purposes of sub-paragraph (2) or (2AA) above, the price of
any quantity of Category 1 or Category 2 oil of any kind shall be
30
determined in such manner, on the basis of such information, and by
reference to such factors, as may be prescribed for oil of that
Category and kind in regulations made by the Board.
     (2F)
The provision that may be made by regulations under subsection
(2E) above includes provision for or in connection with any or all of
35
the following—
(a)
determining the price by reference to prices, or an average of
prices, for sales of oil (whether or not oil of the Category or
kind in question, and whether the prices are prices under
actual contracts, prices that are published and widely
40
available (whether on payment of a fee or otherwise) or
prices ascertained or determined in some other way);
(b)
the prices to be taken into account;
(c)
the descriptions of contracts to be taken into account;
(d)
the method to be used for determining an average of prices;
45
(e)
the day or days, or period or periods, by reference to which
prices, or any average of prices, is to be determined;
(f)
the application of a prescribed price differential, in cases
where the price of oil of one kind falls to be determined in
whole or in part by reference to prices for oil of some other
50
kind.

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Part 5 — Oil
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     (2G)
Sub-paragraph (2I) below has effect if, or in so far as, the Board are
satisfied that it is impracticable or inappropriate to determine for the
purposes of sub-paragraph (2) or (2AA) above the price of any oil in
accordance with the provisions of regulations for the time being in
force under sub-paragraph (2E) above.
5
     (2H)
For that purpose it is immaterial whether the impracticability or
inappropriateness is by virtue of—
(a)
an insufficiency of contracts or published prices that satisfy
the conditions,
(b)
an insufficiency of information relating to such contracts or
10
published prices, or
(c)
the nature of the market for oil of the kind in question,

or for any other reason.
     (2I)
Where this sub-paragraph has effect, the price is to be determined—
(a)
so far as it is practicable and appropriate to do so by reference
15
to other contracts or published prices (whether or not relating
to oil of the same kind) and in accordance with the principles
set out in the regulations for determining an average of
prices; and
(b)
so far as it is not practicable or appropriate to determine it as
20
mentioned in paragraph (a) above, in such other manner as
appears to the Board to be appropriate in the circumstances.”.
(7)
Omit sub-paragraph (3) (which relates to the market value of disposals in a
calendar month).
(8)
In sub-paragraph (3A) (oil that has been subjected to initial treatment)—
25
(a)
for “sub-paragraphs (1) and (2) above” substitute “sub-paragraph (1)
and sub-paragraph (2) or (2AA) above”, and
(b)
for “sub-paragraph (2)(a) above” substitute “sub-paragraph (2)(d) or
(2AA)(d) above”.
(9)
In sub-paragraph (4) (application of sub-paragraphs (2) and (3) in relation to
30
paragraph 2(2) of Schedule 2) for “sub-paragraphs (2) and (3)” substitute “sub-
paragraphs (2) and (2AA)”.
(10)
After paragraph (4) insert—
    “(5)
In this paragraph “prescribed” means specified in, or determined in
accordance with, regulations.”.
35
(11)
Schedule 18 (which makes minor and consequential amendments) has effect.
147
Section 146: commencement and transitional provisions
(1)
The amendments made by section 146 and Schedule 18 have effect in relation
to oil delivered or appropriated on or after 1st July 2006 (disregarding section
12A of that Act).
40
(2)
Those amendments also have effect for the purpose of determining for any
chargeable period ending on or after 31st December 2006—
(a)
the value to be brought into account under section 2(4)(b) of OTA 1975
by reference to a previous chargeable period ending on or after 30th
June 2006, and
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Finance (No.2) Bill
Part 5 — Oil
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(b)
the value to be brought into account under section 2(5)(d) of that Act.
(3)
Subsections (1) and (2) are subject to any express provision in Schedule 18 as to
the commencement or application of any provision of that Schedule.
(4)
In the following provisions of this section—
(a)
“the last old period” means the chargeable period that ends on 30th
5
June 2006, and
(b)
“the first new period” means the chargeable period that ends on 31st
December 2006.
(5)
Subsection (6) applies in relation to oil which was won from an oil field before
1st July 2006 and which—
10
(a)
was loaded on to a ship before 1st July 2006 and transported from the
place of extraction to a place in the United Kingdom or elsewhere, or
(b)
was transported by pipeline from the place of extraction to a place in
the United Kingdom and there loaded on to a ship before that date.
(6)
If the oil is or was disposed of crude by a participator in sales otherwise than
15
at arm’s length, but the market value of the oil—
(a)
does not fall to be brought into account for the purposes of section
2(5)(b) of OTA 1975 for the last old period by reason only that the oil
was not delivered in that period, and
(b)
would not (apart from this subsection) fall to be brought into account
20
for the purposes of that provision in the first new period by reason only
that the date on which the oil is to be regarded by virtue of section 12A
of that Act as delivered falls in the last old period,

the date on which the oil is to be taken for the purposes of section 2(5)(b) of that
Act to have been delivered is instead to be the first business day of the first new
25
period.
(7)
Any power to make regulations that is conferred under or by virtue of any of
the amendments made by section 146 or Schedule 18 includes power to make
regulations having effect for, or in relation to,—
(a)
the first new period, or
30
(b)
for the purpose mentioned in subsection (2), the last old period,

notwithstanding that the period in question has begun or ended before the
making of the regulations.
(8)
Any regulations made by virtue of subsection (7) must be made before 31st
December 2006.
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Attribution of blended crude oil
148
Crude oil: power to make regulations
(1)
In section 2(5) of OTA 1975 (profits from oil field) for “subsection (5A)”
substitute “subsections (5A) and (5B)”.
(2)
After section 2(5A) of that Act insert—
40
“(5B)
The Board may by regulations make provision for the purposes of
subsection (5)(a) to (c) for determining to which fields and in what
proportions blended oil to which subsection (5C) applies is attributable.