Finance Act 1994 (c. 9)

(The document as of February, 2008)

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(a) for an asset, are arrangements for the purpose of enabling the person to whom the asset is provided to obtain an amount similar to the expense incurred in the provision of the asset;

(b) for goods for which a non-cash voucher is capable of being exchanged, are arrangements for the purpose of enabling the person to whom the voucher is provided to obtain an amount similar to the expense incurred in the provision of the goods;

(c) for a non-cash voucher, are arrangements for the purpose of enabling the person to whom the voucher is provided to obtain an amount similar to the expense incurred as mentioned in section 141(1)(a);

(d) for goods obtained by the use of a credit-token, are arrangements for the purpose of enabling the person to whom the credit-token is provided to obtain an amount similar to the expense incurred in the provision of the goods.

(3) For the purposes of subsection (2) above--

(a) any reference to enabling a person to obtain an amount includes--

(i) a reference to enabling a class or description of persons which includes that person to obtain the amount; and

(ii) a reference to enabling an amount to be obtained by any means, including in particular by using an asset or goods as security for a loan or an advance; and

(b) an amount is similar to an expense incurred if it is greater than, equal to or not substantially less than that expense.

(4) PAYE regulations may exclude any description of arrangements from being trading arrangements for the purposes of sections 203F to 203H.

203L S.203B to s.203K: interpretation, etc

(1) In sections 203B to 203J "employee" means a person holding an office or employment under or with any other person, and (subject to section 203J(2)(b)) any reference to the employer is a reference to that other person.

(2) In sections 203B to 203J "assessable" means assessable to income tax under Schedule E.

(3) In sections 203B to 203K and this section "PAYE regulations" means regulations under section 203.

(4) PAYE regulations made by virtue of any of sections 203B to 203K may--

(a) make different provision for different classes of case;

(b) contain such incidental, consequential and supplementary provision as appears to the Board to be expedient. "

132 Payments etc. received free of tax

After section 144 of the Taxes Act 1988 there shall be inserted--

" 144A Payments etc. received free of tax

(1) In any case where--

(a) an employer is treated, by virtue of any of sections 203B to 203I, as having made a payment of income of an employee which is assessable to income tax under Schedule E,

(b) the employer is required, by virtue of section 203J(3), to account for an amount of income tax ("the due amount") in respect of that payment, and

(c) the employee does not, before the end of the period of thirty days from the date on which the employer is treated as making that payment, make good the due amount to the employer,

the due amount shall be treated as income of the employee which arises on the date mentioned in paragraph (c) above and is assessable to income tax under Schedule E.

(2) In this section any reference to an employer includes a reference to a person who is treated as making a payment by virtue of section 203C(2). "

133 PAYE regulations: past cases

(1) Regulation 4 of the 1993 Regulations (intermediate employers) is hereby revoked; but in relation to any time before its revocation it shall be deemed to have been validly made.

(2) Regulation 3 of the 1973 Regulations (intermediate employers) shall, in relation to any time before its revocation, be deemed to have been validly made.

(3) Where, at any time before the passing of this Act--

(a) a payment has been made of, or on account of, any income of an employee not resident or, if resident, not ordinarily resident in the United Kingdom,

(b) at the time when the payment was made it appeared that some of the income would be assessable to income tax under Case II of Schedule E, but that some of the income might prove not to be assessable to income tax under that Schedule, and

(c) the payment or any proportion of it was treated for the purposes of the 1993 Regulations or the 1973 Regulations as a payment to which the regulations applied,

then the treatment of that payment or that proportion of the payment as being a payment to which the regulations applied shall be deemed to have been lawful.

(4) In this section--

(a) "employee" means a person holding an office or employment under or with any other person;

(b) "the 1993 Regulations" means the [S.I. 1993/774.] Income Tax (Employments) Regulations 1993; and

Miscellaneous provisions about companies

134 Controlled foreign companies

(1) In Schedule 25 to the Taxes Act 1988, Part I (acceptable distribution policy) shall be amended as follows.

(2) In paragraph 2 (acceptable distribution policies for both trading and non-trading companies)--

(a) in sub-paragraph (1)--

(i) for "sub-paragraph (2)" there is substituted "paragraph 2A",

(ii) in paragraph (a), "or for some other period which, in whole or in part, falls within that accounting period" is omitted,

(iii) in paragraph (b), for "the period for which it is paid" there is substituted "that period",

(iv) in paragraph (d) for "proportion" there is substituted "amount" and for "represents at least" there is substituted "is not less than", and

(v) the words following paragraph (d) are omitted,

(b) sub-paragraph (2) is omitted, and

" (3) For the purposes of this paragraph and paragraph 2A below, a dividend which is not paid for the period or periods the profits of which are, in relation to the dividend, the relevant profits for the purposes of section 799 shall be treated (subject to sub-paragraph (3A) below) as so paid.

(3A) For the purposes of this paragraph and paragraph 2A below--

(a) where a dividend is paid for a period which is not an accounting period but falls wholly within an accounting period, it shall be treated as paid for that accounting period, and

(b) where a dividend ("the actual dividend") is paid for a period which falls within two or more accounting periods--

(i) it shall be treated as if it were a number of separate dividends each of which is paid for so much of the period as falls wholly within an accounting period, and

(ii) the nece contract as regardsssary apportionment of the amount of the actual dividend shall be made to determine the amount of the separate dividends. "

(3) After that paragraph there is inserted--

" 2A (1) Paragraph 2 above shall have effect in accordance with this paragraph to determine whether a controlled foreign company which is not a trading company pursues an acceptable distribution policy in respect of a particular accounting period ("the relevant accounting period").

(2) Subject to sub-paragraph (4) below, where the distribution condition is satisfied in relation to the relevant accounting period, then, in addition to any dividend which falls within paragraph 2(1)(a) above apart from this paragraph--

(a) any dividend which is paid for the accounting period ("the preceding period") which immediately precedes the relevant accounting period and is not an excluded period shall be treated as falling within that paragraph, and

(b) if the distribution condition is satisfied in relation to the preceding period, any dividend which is paid for the accounting period which immediately precedes the preceding period and is not an excluded period shall be treated as falling within that paragraph,

and so on; and in this sub-paragraph "dividend" means a dividend not paid out of specified profits.

(3) For the purposes of this paragraph, the distribution condition is satisfied in relation to any accounting period if--

(a) a dividend or dividends are paid for the period to persons resident in the United Kingdom,

(b) the amount or, as the case may be, aggregate amount of any dividends falling within paragraph (a) above is not less than--

(i) the relevant profits for that period, or

(ii) where paragraph 2(4) or (5) above applies (with the modifications of paragraph 2 made by sub-paragraph (5) below), the appropriate portion of those profits, and

(c) any dividends falling within that paragraph are paid not later than the time by which any dividend paid for the relevant accounting period is required by paragraph 2(1)(b) above to be paid;

or if there are no relevant profits for the period.

(4) Where, by reason only of the fact that a company pursued an acceptable distribution policy in respect of any accounting period ("the earlier period") earlier than the relevant accounting period, no direction could be given in respect of the earlier period under section 747(1), sub-paragraph (2) above shall apply to any dividend required to be taken into account for the purpose of showing that the company pursued an acceptable distribution policy in respect of the earlier period only to the extent (if any) to which that dividend was not required to be taken into account for that purpose.

(5) The modifications of paragraph 2 above referred to in sub-paragraph (3)(b) above are that--

(a) the references in sub-paragraphs (4) and (5) to the accounting period in question are to be read as references to the accounting period for which the dividend or dividends are paid,

(b) the references in those sub-paragraphs to sub-paragraph (1)(d) are to be read as references to sub-paragraph (3)(b) above, and

(c) the reference in the definition of "X" in sub-paragraph (6) to available profits is to be read as a reference to relevant profits.

(6) Paragraph 2(1)(d) above shall have effect as if for "50 per cent. of the company's available profits" there were substituted "90 per cent. of the company's net chargeable profits".

(7) In paragraph 2(6) above, the definition of "X" shall have effect as if the reference to available profits were a reference to net chargeable profits.

(8) For the purposes of this paragraph--

(a) a period is an excluded period if it is an accounting period in respect of which a direction is given under section 747(1), and

(b) relevant profits for any accounting period are the profits which would be the relevant profits of that period for the purposes of section 799 if a dividend were actually paid for that period. "

(4) In paragraph 3 of that Schedule (available profits)--

(a) after sub-paragraph (4) there is inserted--

" (4A) Subject to sub-paragraph (5) below, for the purposes of this Part of this Schedule, the net chargeable profits of a controlled foreign company for any accounting period are--

(a) its chargeable profits for that period, less

(b) the amount (if any) which, if a direction were given under section 747(1) in respect of the period, would be the company's unrestricted creditable tax for that period;

and for the purposes of this sub-paragraph "unrestricted creditable tax" in relation to a company's accounting period means the amount which would be its creditable tax for that period if the reference in section 751(6)(a) to Part XVIII did not include section 797 " , and

(b) in sub-paragraph (5), after "available profits" there is inserted "or, where the company is not a trading company, the chargeable profits".

(5) This section shall apply to determine whether a controlled foreign company pursues an acceptable distribution policy in respect of accounting periods ending on or after 30th November 1993.

135 Prevention of avoidance of corporation tax

(1) In the Taxes Act 1988, immediately before section 768 there shall be inserted--

" 767A Change in company ownership: corporation tax

(1) Where it appears to the Board that--

(a) there has been a change in the ownership of a company ("the tax-payer company"),

(b) any corporation tax assessed on the tax-payer company for an accounting period beginning before the change remains unpaid at any time after the relevant date, and

any person mentioned in subsection (2) below may be assessed by the Board and charged (in the name of the tax-payer company) to an amount of corporation tax in accordance with this section.

(2) The persons are--

(a) any person who at any time during the relevant period before the change in the ownership of the tax-payer company had control of it;

(b) any company of which the person mentioned in paragraph (a) above has at any time had control within the period of three years before that change.

(3) In subsection (2) above, "the relevant period" means--

(a) the period of three years before the change in the ownership of the tax-payer company; or

(b) if during the period of three years before that change ("the later change") there was a change in the ownership of the tax-payer company ("the earlier change"), the period elapsing between the earlier change and the later change.

(4) The first condition is that--

(a) at any time during the period of three years before the change in the ownership of the tax-payer company the activities of a trade or business of that company cease or the scale of those activities become small or negligible; and

(b) there is no significant revival of those activities before that change occurs.

(5) The second condition is that at any time after the change in the ownership of the tax-payer company, but under arrangements made before that change, the activities of a trade or business of that company cease or the scale of those activities become small or negligible.

(6) The third condition is that--

(a) at any time during the period of six years beginning three years before the change in the ownership of the tax-payer company there is a major change in the nature or conduct of a trade or business of that company;

(b) there is a transfer or there are transfers of assets of the tax-payer company to a person mentioned in subsection (7) below or to any person under arrangements which enable any of those assets or any assets representing those assets to be transferred to a person mentioned in subsection (7) below;

(c) that transfer occurs or those transfers occur during the period of three years before the change in the ownership of the tax-payer company or after that change but under arrangements made before that change; and

(d) the major change mentioned in paragraph (a) above is attributable to that transfer or those transfers.

(7) The persons are--

(a) any person mentioned in subsection (2)(a) above; and

(b) any person connected with him.

(8) The amount of tax charged in an assessment made under this section must not exceed the amount of the tax which, at the time of that assessment, remains unpaid by the tax-payer company.

(9) For the purposes of this section the relevant date is the date six months from the date on which the corporation tax is assessed as mentioned in subsection (1)(b) above.

(10) Any assessment made under this section shall not be out of time if made within three years from the date on which the liability of the tax-payer company to corporation tax for the accounting period mentioned in subsection (1)(b) above is finally determined.

767B Change of company ownership: supplementary

(1) In relation to corporation tax assessed under section 767A--

(a) section 86 of the Management Act (interest on overdue tax), in so far as it has effect in relation to accounting periods ending on or before 30th September 1993, and

(b) section 87A of that Act (corresponding provision for corporation tax due for accounting periods ending after that date),

shall have effect as if the references in section 86 to the reckonable date and in section 87A to the date when the tax becomes due and payable were, respectively, references to the date which is the reckonable date in relation to the tax-payer company and the date when the tax became due and payable by the tax-payer company.

(2) A payment in pursuance of an assessment under section 767A shall not be allowed as a deduction in computing any income, profits or losses for any tax purposes; but any person making such a payment shall be entitled to recover an amount equal to the payment from the tax-payer company.

(3) In subsection (2) above the reference to a payment in pursuance of an assessment includes a reference to a payment of interest under section 86 or 87A of the Management Act (as they have effect by virtue of subsection (1) above).

(4) For the purposes of section 767A, "control", in relation to a company, shall be construed in accordance with section 416 as modified by subsections (5) and (6) below.

(5) In subsection (2)(a) for "the greater part of" there shall be substituted "50 per cent. of".

(6) For subsection (3) there shall be substituted--

" (3) Where two or more persons together satisfy any of the conditions in subsection (2) above and do so by reason of having acted together to put themselves in a position where they will in fact satisfy the condition in question, each of those persons shall be treated as having control of the company. "

(7) In section 767A(6) "a major change in the nature or conduct of a trade or business" includes any change mentioned in any of paragraphs (a) to (d) of section 245(4); and also includes a change falling within any of those paragraphs which is achieved gradually as the result of a series of transfers.

(8) In section 767A(6) "transfer", in relation to an asset, includes any disposal, letting or hiring of it, and any grant or transfer of any right, interest or licence in or over it, or the giving of any business facilities with respect to it.

(9) Section 839 shall apply for the purposes of section 767A(7).

(10) Subsection (9) of section 768 shall apply for the purposes of section 767A as it applies for the purposes of section 768. "

(2) Section 769 (rules for ascertaining change of ownership of company) shall be amended as follows.

(3) In subsections (1), (2) and (5) for the words "sections 768", in each place where they occur, there shall be substituted "sections 767A, 768".

(4) After subsection (2) there shall be inserted--

" (2A) Where--

(a) persons, whether company members or not, possess extraordinary rights or powers under the articles of association or under any other document regulating the company, and

(b) because of that fact ownership of the ordinary share capital may not be an appropriate test of whether there has been a change in the ownership of the company,

then, in considering whether there has been a change in the ownership of the company for the purposes of section 767A, holdings of all kinds of share capital, including preference shares, or of any particular category of share capital, or voting power or any other kind of special power may be taken into account instead of ordinary share capital. "

(5) After subsection (8) there shall be inserted--

" (9) Subsection (8) above shall not apply in relation to section 767A. "

(6) The amendments made by this section shall have effect in relation to any change in ownership occurring on or after 30th November 1993 other than a change occurring in pursuance of a contract entered into before that day.

136 Parts of trades: computations in different currencies

(1) The following section shall be inserted after section 94 of the [1993 c. 34.] Finance Act 1993 (computations in different currencies for different parts of trades)--

" 94A Parts of trades: petroleum extraction companies

(1) If a trade carried on by a petroleum extraction company is a ring fence trade--

(a) subsection (1) of section 94 above shall not apply as regards the trade, but

(b) regulations may make provision under that section as regards a case where in an accounting period the company carries on the trade and the condition mentioned in subsection (2) below is fulfilled.

(2) The condition is that--

(a) part of the trade consists of activities which relate to oil and are carried on under the authority of a petroleum licence in the United Kingdom or a designated area, and

(b) part of the trade consists of activities which relate to gas and are carried on under the authority of a petroleum licence in the United Kingdom or a designated area.

(3) For the purposes of this section--

(a) a petroleum licence is a licence granted under the [1934 c. 36.] Petroleum (Production) Act 1934 or the [1964 c. 28(N.I.).] Petroleum (Production) Act (Northern Ireland) 1964;

(b) a petroleum extraction company is a company which carries on activities under the authority of such a licence;

(c) a designated area is an area designated by Order in Council under section 1(7) of the [1964 c. 29.] Continental Shelf Act 1964.

(4) For the purposes of this section "ring fence trade" means activities which--

(a) fall within any of paragraphs (a) to (c) of subsection (1) of section 492 of the Taxes Act 1988 (oil extraction etc.), and

(b) constitute a separate trade (whether by virtue of that subsection or otherwise).

(5) For the purposes of this section--

(a) "oil" means such substance as falls within the meaning of oil contained in section 502(1) of the Taxes Act 1988 and is not gas;

(b) "gas" means such substance as falls within the meaning of oil contained in section 502(1) of the Taxes Act 1988 and is gas of which the largest component by volume, measured at a temperature of 15 degrees centigrade and a pressure of one atmosphere, is methane or ethane or a combination of those gases. "

(2) In section 95(6) of the [1993 c. 34.] Finance Act 1993 (commencement of provisions about currency to be used for computations) for "94" there shall be substituted "94A".

Miscellaneous

137 Enterprise investment scheme

(1) Schedule 15 to this Act shall have effect to revive Chapter III of Part VII of the Taxes Act 1988 (relief for investment in corporate trades) in relation to shares issued on or after 1st January 1994.

(2) That Chapter shall have effect in relation to such shares with the amendments made by that Schedule; and, in relation to such shares, that Chapter as so amended shall apply for the year 1993-94 and subsequent years of assessment.

(3) The [1992 c. 12.] Taxation of Chargeable Gains Act 1992 shall have effect with the amendments made by that Schedule.

138 Foreign income dividends

Schedule 16 to this Act (which contains provisions about foreign income dividends) shall have effect.

139 Taxation of incapacity benefit

(1) For the year 1995-96 and subsequent years of assessment incapacity benefit, except--

(a) benefit payable for an initial period of incapacity, and

(b) so much of any benefit as is attributable in any case to an increase in respect of a child,

shall be treated as income for the purposes of the Income Tax Acts and charged to income tax under Schedule E.

(2) Subsection (1) above shall not apply to incapacity benefit to which a person is entitled for any day of incapacity for work falling in a period of incapacity for work which is treated for the purposes of that benefit as having begun before 13th April 1995 if the part of that period which is treated as having fallen before that date includes a day for which that person was entitled to invalidity benefit.

(3) Incapacity benefit shall for the purposes of this section be a benefit in relation to which section 41 of the [1989 c. 26.] Finance Act 1989 (year of assessment in which benefit to be charged) applies.

(4) Enactments relating to the payment of incapacity benefit shall have effect subject to such provision as may be contained for the purposes of this section in regulations under section 203 of the Taxes Act 1988 (PAYE regulations).

(5) In this section--

"incapacity benefit" means any benefit which by virtue of provisions contained in the Social Security (Incapacity for Work) Act 1994 or any corresponding provisions made for Northern Ireland is to be known as incapacity benefit;
"initial period of incapacity", in relation to incapacity benefit, means any period for which that benefit is payable as short-term incapacity benefit at the rate which (apart from any increase or addition) is the lower of the rates applicable to short-term incapacity benefit; and
"invalidity benefit" means invalidity benefit under Part II of the [1992 c. 4.] Social Security Contributions and Benefits Act 1992 or under Part II of the [1992 c. 7.] Social Security Contributions and Benefits (Northern Ireland) Act 1992.

140 Restriction on deduction from income

(1) Section 808 of the Taxes Act 1988 (restriction on deduction of interest or dividends from trading income) shall be amended as follows--

(a) for "a banking business, an insurance business or a business consisting wholly or partly in dealing in securities" there shall be substituted "a business";

(b) for "or dividend" there shall be substituted ", dividend or royalties";

(2) This section shall apply where it is sought to exclude receipts from income or profits of an accounting period beginning on or after 30th November 1993.

141 Expenditure involving crime

(1) Section 577A of the Taxes Act 1988 (certain expenditure involving crime not to be deducted and not to be included in expenses of management) shall be amended as follows.

(2) After subsection (1) there shall be inserted--

" (1A) In computing profits or gains chargeable to tax under Schedule A or Schedule D, no deduction shall be made for any expenditure incurred in making a payment induced by a demand constituting--

(a) the commission in England or Wales of the offence of blackmail under section 21 of the [1968 c. 60.] Theft Act 1968,

(b) the commission in Northern Ireland of the offence of blackmail under section 20 of the [1969 c. 16 (N.I.).] Theft Act (Northern Ireland) 1969, or

(3) In subsection (2) for "Such expenditure" there shall be substituted "Any expenditure mentioned in subsection (1) or (1A) above".

(4) This section shall apply in relation to expenditure incurred on or after 30th November 1993.

142 Mortgage interest payable under deduction of tax: qualifying lenders

(1) In section 376 of the Taxes Act 1988 (qualifying lenders)--

(a) in subsection (4)(p), for "prescribed under subsection (5) below" there shall be substituted "for the time being registered under section 376A below" and for "Treasury" there shall be substituted "Board"; and

(b) subsection (5) shall be omitted.

(2) The following section shall be inserted in the Taxes Act 1988 after section 376--

" 376A The register of qualifying lenders

(1) The Board shall maintain, and publish in such manner as they consider appropriate, a register for the purposes of section 376(4).

(2) If the Board are satisfied that an applicant for registration is entitled to be registered, they may register the applicant generally or in relation to any description of loan specified in the register, with effect from such date as may be so specified; and a body which is so registered shall become a qualifying lender in accordance with the terms of its registration.

(3) The registration of any body may be varied by the Board--

(a) where it is general, by providing for it to be in relation to a specified description of loan, or

(b) where it is in relation to a specified description of loan, by removing or varying the reference to that description of loan,

and where they do so, they shall give the body written notice of the variation and of the date from which it is to have effect.

(4) If it appears to the Board at any time that a body which is registered under this section would not be entitled to be registered if it applied for registration at that time, the Board may by written notice given to the body cancel its registration with effect from such date as may be specified in the notice.

(5) The date specified in a notice under subsection (3) or (4) above shall not be earlier than the end of the period of 30 days beginning with the date on which the notice is served.

(6) Any body which is aggrieved by the failure of the Board to register it under this section, or by the variation or cancellation of its registration, may, by notice given to the Board before the end of the period of 30 days beginning with the date on which the body is notified of the Board's decision, require the matter to be determined by the Special Commissioners; and the Special Commissioners shall thereupon hear and determine the matter in like manner as an appeal. "

(3) Any body which is, immediately before the date on which this Act is passed, a prescribed body for the purposes of section 376 of the Taxes Act 1988 (by virtue of an order made under subsection (5) of that section) shall be entitled to be entered in the register maintained under section 376A of that Act as a qualifying lender except that if it was, immediately before that date, a qualifying lender only in relation to such description of loan as was specified in the order, it shall be entitled to be entered in the register as a qualifying lender only in relation to that description of loan.

(4) Until such time as the Board enter any such body in the register, that body shall be deemed to have been registered in accordance with its entitlement.

143 Premiums referred to pension business

(1) The Taxes Act 1988 shall be amended as follows.

(2) In section 431(4) (insurance companies: premiums to be referred to pension business) in paragraph (d) (annuity contracts)--

(a) the words "approved by the Board and" shall be omitted;

(b) after "as defined by section 612(1)" there shall be inserted "and falling within section 431AA".

(3) In section 431(4) in paragraph (e) (annuity contracts entered into in substitution)--

(a) the words "approved by the Board" shall be omitted;

(b) after "paragraph (d) above" there shall be inserted "and by means of which relevant benefits as defined by section 612(1) and falling within section 431AA (but no other benefits) are secured".

(4) The following section shall be inserted after section 431--

" 431AA Relevant benefits for purposes of section 431(4)(d) and (e)

(1) Subsection (2) below applies where--

(a) section 431(4)(d)(i) applies, or

(b) section 431(4)(e) applies and the contract within section 431(4)(d) was entered into for the purposes of a scheme falling within section 431(4)(d)(i).

(2) In such a case, relevant benefits fall within this section if they correspond with benefits that could be provided by a scheme approved under Chapter I of Part XIV, and for this purpose--

(a) a hypothetical scheme (rather than any particular scheme) is to be taken, and

(b) benefits provided by a scheme directly (rather than by means of an annuity contract) are to be taken.

(3) Subsection (4) below applies where--

(a) subsection 431(4)(d)(ii) applies, or

(b) section 431(4)(e) applies and the contract within section 431(4)(d) was entered into for the purposes of a scheme falling within section 431(4)(d)(ii).

(4) In such a case, relevant benefits fall within this section if they correspond with benefits that could be provided by a scheme which is a relevant statutory scheme for the purposes of Chapter I of Part XIV, and for this purpose--

(a) a hypothetical scheme (rather than any particular scheme) is to be taken, and

(b) benefits provided by a scheme directly (rather than by means of an annuity contract) are to be taken.

(5) Subsection (6) below applies where--

(a) section 431(4)(d)(iii) applies, or

(b) section 431(4)(e) applies and the contract within section 431(4)(d) was entered into for the purposes of a fund falling within section 431(4)(d)(iii).

(6) In such a case, relevant benefits fall within this section if they correspond with benefits that could be provided by a fund to which section 608 applies, and for this purpose--

(a) a hypothetical fund (rather than any particular fund) is to be taken, and

(b) benefits provided by a fund directly (rather than by means of an annuity contract) are to be taken. "

(5) This section shall apply in relation to an annuity contract entered into on or after 1st July 1994; and in the case of an annuity contract entered into in substitution for another it is immaterial when that other was entered into.

144 Debts released in voluntary arrangement: relief from tax

(1) In the Taxes Act 1988, in section 74 (general rules as to deductions not allowable), for paragraph (j) (debts not allowable except in certain circumstances) there shall be substituted--

" (j) any debts except--

(i) a bad debt proved to be such;

(ii) a debt or part of a debt released by the creditor wholly and exclusively for the purposes of his trade, profession or vocation as part of a relevant arrangement or compromise; and

(iii) a doubtful debt to the extent estimated to be bad, meaning, in the case of the bankruptcy or insolvency of the debtor, the debt except to the extent that any amount may reasonably be expected to be received on the debt; " .

(2) The provisions of that section shall become subsection (1) of that section and after that subsection there shall be inserted--

" (2) In paragraph (j) of subsection (1) above "relevant arrangement or compromise" means--

(a) a voluntary arrangement which has taken effect under or by virtue of the [1986 c. 45.] Insolvency Act 1986 or the [S.I. 1989/2405 (N.I. 19).] Insolvency (Northern Ireland) Order 1989; or

(b) a compromise or arrangement which has taken effect under section 425 of the [1985 c. 6.] Companies Act 1985 or Article 418 of the [S.I. 1986/1032 (N.I. 6).] Companies (Northern Ireland) Order 1986. "

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