Finance Bill

House of Commons

Session 2008 - 09
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Finance Bill

Finance Bill
Schedule 37 — Stock lending: stamp taxes in the event of insolvency
Part 2 — Stamp duty reserve tax
306

3     (1)
In consequence of the amendment made by paragraph 2, section 88(1C)
(disregard of certain instruments falling within section 80C(1)) is amended
as follows.
      (2)
At the beginning of the words after paragraph (c) insert “then, if section 80D
does not apply,”.
5
Part 2
Stamp duty reserve tax
4
Part 4 of FA 1986 (stamp duty reserve tax) is amended as follows.
5
After section 89AA insert—
“89AB
Section 87: exception for repurchases and stock lending in case of
10
insolvency
(1)
This section applies where—
(a)
P and Q have entered into an arrangement falling within
section 89AA(1),
(b)
the only reason that the conditions in subsection (2A) or (3) of
15
that section are not met is that chargeable securities of the
same kind and amount as those transferred to P or P’s
nominee are not transferred to Q or Q’s nominee, and
(c)
the conditions in subsection (2) below are met.
(2)
The conditions in this subsection are that—
20
(a)
P and Q are not connected persons within the meaning of
section 839 of the Taxes Act 1988,
(b)
after Q has transferred securities under the arrangement,
either P or Q becomes insolvent,
(c)
it becomes apparent (whether before or after the insolvency
25
occurs) that, as a result of the insolvency, securities will not
be transferred to Q or Q’s nominee in accordance with the
arrangement.
(3)
Section 87 does not apply as regards an agreement to transfer
chargeable securities to P or P’s nominee, or Q or Q’s nominee, in
30
accordance with the arrangement.
(4)
Subsections (5) and (4) apply if—
(a)
the party who does not become insolvent (“the solvent
party”) or the solvent party’s nominee acquires replacement
securities, and
35
(b)
the replacement securities are acquired before the end of the
period of 30 days beginning with the day on which the
insolvency occurs (“the insolvency date”).
(5)
Where collateral is provided under the arrangement (or under
arrangements of which that arrangement forms part), section 87 does
40
not apply as regards any agreement to transfer to the solvent party
or the solvent party’s nominee—
(a)
replacement securities acquired using the collateral (whether
directly or indirectly), or

Finance Bill
Schedule 37 — Stock lending: stamp taxes in the event of insolvency
Part 2 — Stamp duty reserve tax
307

(b)
where the solvent party uses the whole of the value of the
collateral to acquire replacement securities, any further
replacement securities.
(6)
Where no collateral is provided as mentioned in subsection (5),
section 87 does not apply as regards any agreement to transfer
5
replacement securities to the solvent party or the solvent party’s
nominee.
(7)
Subsections (5) and (4) may apply as regards more than one
agreement (and where those subsections apply as regards more than
one agreement, the agreements may be with different persons).
10
(8)
But those subsections apply only as regards replacement securities
up to the amount of securities which will not be transferred as a
result of the insolvency.
(9)
For the purposes of this section, a person becomes insolvent—
(a)
if a company voluntary arrangement takes effect under Part
15
1 of the Insolvency Act 1986,
(b)
if an administration application (within the meaning of
Schedule B1 to that Act) is made or a receiver or manager, or
an administrative receiver, is appointed,
(c)
on the commencement of a creditor’s voluntary winding up
20
(within the meaning of Part 4 of that Act) or a winding up by
the court under Chapter 6 of that Part,
(d)
if an individual voluntary arrangement takes effect under
Part 8 of that Act,
(e)
on the presentation of a bankruptcy petition (within the
25
meaning of Part 9 of that Act),
(f)
if a compromise or arrangement takes effect under Part 26 of
the Companies Act 2006,
(g)
if a bank insolvency order takes effect under Part 2 of the
Banking Act 2009,
30
(h)
if a bank administration order takes effect under Part 3 of that
Act, or
(i)
on the occurrence of any corresponding event which has
effect under or as a result of the law of Scotland or Northern
Ireland or a country or territory outside the United Kingdom.
35
(10)
In this section—
“collateral” means an amount of money or other property
which is payable to or made available for the benefit of a
party to an arrangement or that party’s nominee for the
purpose of securing the discharge of the requirement to
40
transfer securities to that party or the nominee;
“replacement securities”, in the event of a party to an
arrangement becoming insolvent, are chargeable securities of
the same kind as the securities which will not be transferred
to the other party or that party’s nominee as a result of the
45
insolvency.”

Finance Bill
Schedule 38 — Capital allowances for oil decommissioning expenditure
308

Schedule 38
Section 83

Capital allowances for oil decommissioning expenditure
1
CAA 2001 is amended as follows.
2     (1)
Section 163 (meaning of “general decommissioning expenditure”) is
amended as follows.
5
      (2)
In subsection (1), for “(3) and (4)” substitute “(3) to (4)”.
      (3)
After subsection (3) insert—
“(3A)
The expenditure must have been incurred wholly or substantially in
complying with—
(a)
an approved abandonment programme,
10
(b)
a condition to which the approval of an abandonment
programme is subject, or
(c)
a condition imposed by the Secretary of State, or an
agreement made with the Secretary of State—
(i)
before the approval of an abandonment programme,
15
and
(ii)
in relation to the decommissioning of the plant or
machinery.”
      (4)
In subsection (5)(b), insert at the beginning ““abandonment programme”,
“approval” and “approved” (in relation to an abandonment programme),”.
20
3     (1)
Section 164 (general decommissioning expenditure incurred before
cessation of ring fence trade) is amended as follows.
      (2)
For subsection (1) substitute—
“(1)
A person (“R”) carrying on a ring fence trade may elect to have a
special allowance made to R for a chargeable period (the “relevant
25
chargeable period”) if conditions A and B are met.
(1A)
Condition A is that one or more of these paragraphs applies—
(a)
R incurs general decommissioning expenditure in the
relevant chargeable period in respect of decommissioning
carried out in that period;
30
(b)
R incurs general decommissioning expenditure in the
relevant chargeable period in respect of decommissioning
carried out in a previous chargeable period;
(c)
R incurred general decommissioning expenditure in a
previous chargeable period in respect of decommissioning
35
that has not been carried out until the relevant chargeable
period.
(1B)
Condition B is that the plant or machinery concerned has been
brought into use for the purposes of the ring fence trade.”
      (3)
In subsection (2)(a), for the words from “the chargeable period” to the end
40
substitute “the relevant chargeable period, and”.
      (4)
In subsection (3)—
(a)
in paragraph (a), omit the “and” at the end, and

Finance Bill
Schedule 38 — Capital allowances for oil decommissioning expenditure
309

(b)
after that paragraph insert—
“(aa)
the chargeable period in which the expenditure was
incurred,
(ab)
the decommissioning to which the expenditure
relates,
5
(ac)
the chargeable period in which the decommissioning
was carried out, and”.
      (5)
In subsection (4)(a), for the words from “the chargeable period” to the end
substitute “the relevant chargeable period, and”.
      (6)
In subsection (5), for the words from “a chargeable period” to the end,
10
substitute “the relevant chargeable period is equal to the amount of the
general decommissioning expenditure to which the election relates.”
      (7)
After that subsection insert—
“(5A)
But subsection (5) is subject to subsections (5B) and (6).
(5B)
If an amount of general decommissioning expenditure to which the
15
election relates is disproportionate to the relevant decommissioning
carried out in the specified decommissioning period then, for the
purposes of this section, the election is to be taken to specify only the
allowable expenditure.
(5C)
The application of subsection (5B) to an amount of general
20
decommissioning expenditure does not prevent a person from
making an election under this section for a subsequent chargeable
period specifying the non-allowable expenditure.
(5D)
In subsections (5B) and (5C)—
“allowable expenditure”, in relation to general
25
decommissioning expenditure, means the amount of the
expenditure that is proportionate to the relevant
decommissioning carried out in the specified
decommissioning period;
“non-allowable expenditure”, in relation to general
30
decommissioning expenditure, means so much of that
expenditure as is not allowable expenditure;
“relevant decommissioning”, in relation to general
decommissioning expenditure, means the decommissioning
to which the expenditure relates;
35
“specified decommissioning period”, in relation to relevant
decommissioning, means the chargeable period specified in
the election as the period in which the decommissioning was
carried out;
“specified expenditure period”, in relation to general
40
decommissioning expenditure, means the chargeable period
specified in the election as the period in which the
expenditure was incurred.”
4     (1)
Section 165 (general decommissioning expenditure after ceasing ring fence
trade) is amended as follows.
45
      (2)
In subsection (1), for paragraph (b) substitute—
“(b)
the decommissioning condition is met in relation to a
notional accounting period, and”.

Finance Bill
Schedule 38 — Capital allowances for oil decommissioning expenditure
310

      (3)
After that subsection insert—
“(1A)
The decommissioning condition is met in relation to a notional
accounting period (the “relevant period”) if one or more of these
paragraphs applies—
(a)
the former trader incurs general decommissioning
5
expenditure in the relevant period in respect of
decommissioning carried out in that period,
(b)
the former trader incurs general decommissioning
expenditure in the relevant period in respect of
decommissioning carried out in—
10
(i)
a previous notional accounting period, or
(ii)
a chargeable period falling before the first notional
accounting period, and
(c)
the former trader incurred general decommissioning
expenditure in—
15
(i)
a previous notional accounting period, or
(ii)
a chargeable period falling before the first notional
accounting period,

in respect of decommissioning that has not been carried out
until the relevant period.
20
(1B)
“Notional accounting period” means each of the following periods—
(a)
the period that—
(i)
begins with the day following the last day on which
the former trader carried on the ring fence trade, and
(ii)
ends with the day on which the first termination
25
event subsequently occurs, and
(b)
each period that—
(i)
begins with the day following the last day of a period
determined under paragraph (a) or this paragraph,
and
30
(ii)
ends with the day on which the first termination
event subsequently occurs;

but there are to be no notional accounting periods after the end of the
post-cessation period.
(1C)
“Termination event”, in relation to a notional accounting period,
35
means each of the following—
(a)
the end of the period of 12 months beginning with the first
day of the notional accounting period,
(b)
the occurrence of an accounting date of the former trader or,
if there is a period for which the former trader does not make
40
up accounts, the end of that period (but see subsections (6A)
and (6B)), and
(c)
the end of the post-cessation period.”
      (4)
In subsection (3)—
(a)
after “applies” insert “in relation to a notional accounting period”,
45
and
(b)
in paragraph (a), after “relevant decommissioning cost” insert “for
that period, or the aggregate of all the relevant decommissioning
costs for that period,”.

Finance Bill
Schedule 38 — Capital allowances for oil decommissioning expenditure
311

      (5)
In subsection (4), for the definition of “the relevant decommissioning cost”
substitute—
““relevant decommissioning cost”, for a notional accounting
period, means the amount by which general
decommissioning expenditure falling within paragraph (a),
5
(b) or (c) of subsection (1A) in relation to that period exceeds
any amounts received before or during that period for the
remains of any plant or machinery on whose demolition any
of the general decommissioning expenditure was incurred.”
      (6)
After subsection (4A) insert—
10
“(4B)
If an amount of general decommissioning expenditure is
disproportionate to the relevant decommissioning carried out in the
decommissioning period then, for the purposes of this section, only
the allowable expenditure is to be taken to have been incurred in the
expenditure period.
15
(4C)
The application of subsection (4B) to an amount of general
decommissioning expenditure does not prevent the non-allowable
expenditure from being taken into account under this section in
relation to a subsequent notional accounting period.
(4D)
In subsections (4B) and (4C)—
20
“allowable expenditure”, in relation to general
decommissioning expenditure, means the amount of the
expenditure that is proportionate to the relevant
decommissioning carried out in the decommissioning
period;
25
“decommissioning period”, in relation to relevant
decommissioning, means the notional accounting period or
chargeable period in which the decommissioning was carried
out;
“expenditure period”, in relation to general decommissioning
30
expenditure, means the notional accounting period or
chargeable period in which the expenditure was incurred;
“non-allowable expenditure”, in relation to general
decommissioning expenditure, means so much of that
expenditure as is not allowable expenditure;
35
“relevant decommissioning”, in relation to general
decommissioning expenditure, means the decommissioning
to which the expenditure relates.”
      (7)
After subsection (6) insert—
“(6A)
If the former trader—
40
(a)
carries on more than one trade,
(b)
makes up accounts of any of them to different dates, and
(c)
does not make up general accounts for the whole of the
company’s activities,

subsection (1C)(b) applies with reference to the accounting date of
45
such one of the trades as the former trader may determine.
(6B)
If the Commissioners for Her Majesty’s Revenue and Customs are of
the opinion, on reasonable grounds, that a date determined by the
former trader for the purposes of subsection (6A) is inappropriate,

Finance Bill
Schedule 39 — PRT: blended oil
312

the Commissioners may by notice direct that the accounting date of
such other of the trades referred to in that subsection as appears to
the Commissioners to be appropriate is to be used instead.”
5
The amendments made by this Schedule have effect in relation to
expenditure incurred on or after 22 April 2009.
5
Schedule 39
Section 84

PRT: blended oil
1
Part 5 of FA 1987 (oil taxation) is amended as follows.
2
For section 63 (blends of oil from two or more fields) substitute—
“63
Blends of oil from two or more fields
10
(1)
This section applies if, at any time before its disposal or relevant
appropriation, oil won from an oil field (“the relevant field”) in a
chargeable period (“the relevant period”) is mixed with oil won from
one or more other oil fields.
(2)
A relevant participator’s share of oil won from the relevant field in
15
the relevant period is to be taken to be the amount of the blended oil
that it is just and reasonable (for the purposes of the oil taxation
legislation) to allocate to the participator in respect of the relevant
period.
(3)
In making the allocation regard must be had (in particular) to the
20
quantity and quality of the oil derived from each of the originating
fields.
(4)
If the participators in the originating fields select a method for
making the allocation, that method is to be used to determine that
allocation.
25
(5)
But that is subject to Schedule 12.
(6)
If the participators in the originating fields fail to select a method for
making the allocation, HMRC may select a method.
(7)
In a case where only some oil won from the relevant field in the
relevant period is, before its disposal or relevant appropriation,
30
mixed with oil won from one or more other fields, subsection (2) has
effect for the purpose of determining the amount of the blended oil
that is to be taken to be included in a relevant participator’s share of
oil won from the relevant field.
(8)
Schedule 12 contains provision supplementing this section.
35
(9)
In this section and Schedule 12—
“blended oil” means oil that consists of oil from two or more oil
fields that has been mixed;
“foreign field” means an area which is a foreign field for the
purposes of section 12 of the Oil Taxation Act 1983;
40