Finance Act 1995 (c. 4)

(The document as of February, 2008)

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(b) the amount of the gross income of the fund does not exceed 1 per cent. of the average value of the fund's assets held during the account period, " .

(5) Section 212 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (annual deemed disposal of certain holdings, including holdings consisting of a relevant interest in an offshore fund) shall be amended as mentioned in subsections (6) and (7) below.

(6) In subsection (5) (meaning of "relevant interest in an offshore fund") for paragraph (b) there shall be substituted--

" (b) it would be such an interest if either or both of the assumptions mentioned in subsection (6A) below were made. "

(7) Immediately before subsection (7) there shall be inserted--

" (6A) The assumptions referred to in subsection (5)(b) above are--

(a) that the companies, unit trust schemes and arrangements referred to in paragraphs (a) to (c) of subsection (1) of section 759 of the Taxes Act are not limited to those which are also collective investment schemes;

(b) that the shares and interests excluded by subsections (6) and (8) of that section are limited to shares or interests in trading companies. "

(8) Subsections (1) to (3) above shall apply where it falls to be decided--

(a) whether a material interest is, at any time on or after 29th November 1994, a material interest in an offshore fund;

(b) whether a company, unit trust scheme or arrangements in which any person has an interest which is a material interest is, at any time on or after that day, an offshore fund.

(9) Subsection (4) above shall apply in relation to account periods ending on or after 29th November 1994.

(10) Subsections (5) to (7) above shall apply where it falls to be decided whether an interest is, at any time on or after 29th November 1994, a relevant interest in an offshore fund.

Miscellaneous

135 Change in ownership of investment company: deductions

Schedule 26 to this Act (which makes provision for the purposes of corporation tax about deductions following a change in the ownership of an investment company) shall have effect.

136 Profit-related pay

(1) In Schedule 8 to the Taxes Act 1988 (profit-related pay schemes) paragraph 19 (ascertainment of profits) shall be amended in accordance with subsections (2) to (4) below.

(2) In sub-paragraph (6) (cases where scheme may provide for departure from requirements applicable to profit and loss account) paragraphs (g) to (k) (extraordinary items) shall be omitted.

(3) After paragraph (ff) of sub-paragraph (6) there shall be inserted--

" (l) any exceptional items which fall within sub-paragraph (6A) below and should in accordance with any accounting practices regarded as standard be shown separately on the face of the profit and loss account. "

(4) After sub-paragraph (6) there shall be inserted--

" (6A) The items are--

(a) profits or losses on the sale or termination of an operation;

(b) costs of a fundamental reorganisation or restructuring having a material effect on the nature and focus of the employment unit's operations;

(d) the effect on tax of any of the items mentioned in paragraphs (a) to (c) above. "

(5) Subject to subsections (6) to (10) below, subsections (2) to (4) above shall have effect in relation to the preparation, for the purposes of a scheme, of a profit and loss account in respect of a period beginning on or after the day on which this Act is passed.

(6) Subsections (2) to (4) above shall not have effect in relation to an existing scheme unless, before the end of the period of 6 months beginning with the day on which this Act is passed, the scheme is altered to take account of the amendments made by those subsections.

(7) Subsections (8) to (10) below apply where, before the end of the period mentioned in subsection (6) above, an existing scheme is altered as mentioned in that subsection.

(8) The provision made by the scheme in compliance with paragraph 20(1) of Schedule 8 to the Taxes Act 1988 shall not prevent a profit and loss account being prepared in accordance with the alteration.

(9) Where the distributable pool would but for this subsection be determined by reference--

(a) to an amount shown in a profit and loss account prepared in accordance with the altered scheme, and

(b) to an amount shown in a profit and loss account ("an earlier account") prepared in accordance with the scheme in a form in which it stood before the alteration,

then, for the purposes of the determination of the pool, the amount shown in the earlier account shall be recalculated using the same method as that used to calculate the amount mentioned in paragraph (a) above.

(10) The alteration of the existing scheme shall be treated as being within subsection (8) of section 177B of the Taxes Act 1988 (alterations which are registrable and which once registered cannot give rise to Board's power of cancellation).

(11) In subsections (6) to (10) above "an existing scheme" means a scheme which, immediately before the day on which this Act is passed, is registered under Chapter III of Part V of the Taxes Act 1988.

(12) After paragraph 19 of Schedule 8 to the Taxes Act 1988 there shall be inserted--

" 19A (1) The Treasury may by order amend paragraph 19 above so as to add to, delete or vary any of the items mentioned in sub-paragraph (6) of that paragraph.

(2) In this paragraph references to an order are references to an order under sub-paragraph (1) above.

(3) Subject to sub-paragraphs (4) to (8) below, any amendment or amendments made by virtue of an order shall have effect in relation to the preparation, for the purposes of a scheme, of a profit and loss account in respect of a period beginning on or after the day on which the order comes into force.

(4) Any amendment or amendments made by virtue of an order shall not have effect in relation to an existing scheme unless, before the end of the period of 6 months beginning with the day on which the order comes into force, the scheme is altered to take account of the amendment or amendments.

(5) Sub-paragraphs (6) to (8) below apply where, before the end of the period mentioned in sub-paragraph (4) above, an existing scheme is altered as mentioned in that sub-paragraph.

(6) The provision made by the scheme in compliance with paragraph 20(1) below shall not prevent a profit and loss account being prepared in accordance with the alteration.

(7) Where the distributable pool would but for this sub-paragraph be determined by reference--

(a) to an amount shown in a profit and loss account prepared in accordance with the altered scheme, and

(b) to an amount shown in a profit and loss account ("an earlier account") prepared in accordance with the scheme in a form in which it stood before the alteration,

(8) The alteration of the existing scheme shall be treated as being within subsection (8) of section 177B.

(9) An order may include such supplementary, incidental or consequential provisions as appear to the Treasury to be necessary or expedient.

(10) In this paragraph "an existing scheme", in relation to an order, means a scheme which, immediately before the day on which the order comes into force, is a registered scheme. "

137 Part-time workers: miscellaneous provisions

(1) In Schedule 8 to the Taxes Act 1988 (profit-related pay schemes) paragraph 8(a) (employees working less than 20 hours a week excluded by scheme from receiving profit-related pay) shall be omitted.

(2) In Part III of Schedule 9 to the Taxes Act 1988 (savings-related share option schemes) in paragraph 26(1)(a) (certain full-time employees and directors must be eligible to participate in scheme) for the words "a full-time employee" there shall be substituted "an employee".

(3) In Part IV of Schedule 9 to the Taxes Act 1988 (share option schemes other than savings-related share option schemes) in paragraph 27(4) (qualifying employee defined as employee required to work at least 20 hours a week) the words from "who is required" to the end shall be omitted.

(4) In Part V of Schedule 9 to the Taxes Act 1988 (profit sharing schemes) in paragraph 36(1)(a) (certain full-time employees and directors must be eligible to participate in scheme on similar terms) for the words "a full-time employee" there shall be substituted "an employee".

(5) In Schedule 5 to the [1989 c. 26.] Finance Act 1989 (employee share ownership trusts) in paragraph 4(2)(c) (trust deed must provide that certain persons are beneficiaries if they work at rate of at least 20 hours a week) for the words "at that given time he worked as an employee or" there shall be substituted "in the case of a director, at that given time he worked as a".

(6) Subsection (1) above shall apply in relation to any scheme not registered before the day on which this Act is passed.

(7) Subsections (2) to (4) above shall apply in relation to any scheme not approved before the day on which this Act is passed.

(8) In a case where--

(a) a scheme is approved before the day on which this Act is passed, and

(b) on or after that day the scheme is altered in such a way that paragraph 27 of Schedule 9 to the Taxes Act 1988 would be fulfilled if subsection (3) above applied in relation to the scheme,

subsection (3) above shall apply in relation to the scheme with effect from the time the alteration is made.

(9) Subsection (5) above shall apply in relation to trusts established on or after the day on which this Act is passed; and for this purpose a trust is established when the deed under which it is established is executed.

138 Charities, etc.: lotteries

(1) In section 505 of the Taxes Act 1988 (charities: general) in subsection (1) (exemptions) after paragraph (e) there shall be inserted--

" (f) exemption from tax under Schedule D in respect of profits accruing to a charity from a lottery if--

(i) the lottery is promoted and conducted in accordance with section 3 or 5 of the [1976 c. 32.] Lotteries and Amusements Act 1976 or Article 133 or 135 of the [S.I. 1985/1204 (N.I.11).] Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985; and

(ii) the profits are applied solely to the charity's purposes. "

(2) Subsection (1) above shall apply to chargeable periods beginning--

(a) in the case of a company, after 31st March 1995; and

(b) in any other case, after 5th April 1995.

139 Sub-contractors in the construction industry

(1) Subsection (4) of section 559 of the Taxes Act 1988 (which requires deductions to be made from payments to certain sub-contractors in the construction industry) shall have effect in relation to payments made on or after the appointed day with the substitution for "25 per cent." of "the relevant percentage"; and after that subsection there shall be inserted the following subsection--

" (4A) In subsection (4) above "the relevant percentage", in relation to a payment, means such percentage (not exceeding the percentage which is the basic rate for the year of assessment in which the payment is made) as the Treasury may by order determine. "

(2) Chapter IV of Part XIII of the Taxes Act 1988 (sub-contractors in the construction industry) shall be further amended in accordance with Schedule 27 to this Act.

(3) In this section and that Schedule "the appointed day" means such day, not being a day before 1st August 1998, as the Treasury may by order made by statutory instrument appoint; and different days may be appointed under this subsection for different purposes. [1986 c. 60.]

140 Valuation of trading stock on discontinuance of trade

(1) In section 100 of the Taxes Act 1988 (valuation of trading stock on discontinuance of trade), in paragraph (a) of subsection (1), for the words from "realised" to the end of the paragraph there shall be substituted "determined in accordance with subsections (1A) to (1C) below; and"; and after that subsection there shall be inserted the following subsections--

" (1A) Subject to subsections (1B) and (1C) below and to paragraph 2 of Schedule 12 to the [1988 c. 39.] Finance Act 1988 (gilt-edged securities and other financial trading stock), the value of any trading stock falling to be valued under paragraph (a) of subsection (1) above shall be taken--

(a) except where the person to whom it is sold or transferred is connected with the person who makes the sale or transfer, to be the amount ("the price actually received for it") which is in fact realised on the sale or, as the case may be, which is in fact the value of the consideration given for the transfer; and

(b) if those persons are connected with each other, to be what would have been the price actually received for it had the sale or transfer been a transaction between independent persons dealing at arm's length.

(1B) In a case falling within subsection (1)(a) above--

(a) stock consisting of debts to which section 88A(2) applies shall have the value for which paragraph (a) of subsection (1A) above provides even where the persons in question are connected with each other; and

(b) stock sold in circumstances in which the amount realised on the sale would be taken to be an amount determined in accordance with paragraph 5 of Schedule 5 shall be taken to have the value so determined, instead of the value for which subsection (1A)(a) or (b) above provides.

(1C) If--

(a) trading stock is sold or transferred to a person in circumstances where paragraph (b) of subsection (1A) above would apply (apart from this subsection) for determining the value of the stock so sold or transferred,

(b) the amount which would be taken in accordance with that paragraph to be the value of all of the stock sold or transferred to that person is more than the acquisition value of that stock and also more than the price actually received for it, and

(c) both parties to the sale or transfer, by notice signed by them and sent to the inspector no later than two years after the end of the chargeable period in which the trade is discontinued, elect that this subsection shall apply,

then the stock sold or transferred to that person shall be taken to have a value equal to whichever is the greater (taking all the stock so sold or transferred together) of its acquisition value and the price actually received for it or, in a case where they are the same, to either of them.

(1D) In subsection (1C) above "acquisition value", in relation to any trading stock, means the amount which, in computing for any tax purposes the profits or gains of the discontinued trade, would have been deductible as representing the acquisition value of that stock if--

(a) the stock had, immediately before the discontinuance, been sold in the course of the trade for a price equal to whatever would be its value in accordance with subsection (1A)(b) above; and

(b) the period for which those profits or gains were to be computed began immediately before the sale.

(1E) Where any trading stock falls to be valued under subsection (1)(a) above, the amount determined in accordance with subsections (1A) to (1C) above to be the amount to be brought into account as the value of that stock in computing profits or gains of the discontinued trade shall also be taken, for the purpose of making any deduction in computing the profits or gains of any trade carried on by the purchaser, to be the cost of that stock to the purchaser.

(1F) For the purposes of this section two persons are connected with each other if--

(a) they are connected with each other within the meaning of section 839;

(b) one of them is a partnership and the other has a right to a share in the partnership;

(d) both of them are partnerships and some other person has a right to a share in each of them; or

(e) both of them are bodies corporate or one of them is a partnership and the other is a body corporate and, in either case, some other person has control over both of them;

and in this subsection the references to a right to a share in a partnership are references to a right to a share of the assets or income of the partnership and "control" has the meaning given by section 840.

(1G) In this section "purchaser", in relation to a transfer otherwise than by sale, means the person to whom the transfer is made. "

(2) This section applies in relation to any case in which a trade is discontinued at a time on or after 29th November 1994.

141 Incapacity benefit

(1) Section 139 of the [1994 c. 9.] Finance Act 1994 (taxation of incapacity benefit) shall have effect, and be deemed always to have had effect, with the following amendments.

(2) In subsection (5), for the definition of "initial period of incapacity" there shall be substituted--

" "initial period of incapacity", in relation to incapacity benefit, means any period for which short-term incapacity benefit is payable otherwise than at the higher rate; and " .

(3) After that subsection there shall be inserted the following subsection--

" (6) The reference in subsection (5) above to short-term incapacity benefit payable at the higher rate shall be construed in accordance with sections 30B(5), 40(8) and 41(7) of the [1992 c. 4.] Social Security Contributions and Benefits Act 1992 and the corresponding provisions of the [1992 c. 7.] Social Security Contributions and Benefits (Northern Ireland) Act 1992. "

142 Annuities purchased where certain claims or actions are settled

The following sections shall be inserted after section 329 of the Taxes Act 1988--

" 329A Annuities purchased for certain persons

(1) In a case where--

(a) an agreement is made settling a claim or action for damages for personal injury,

(b) under the agreement the damages are to consist wholly or partly of periodical payments, and

(c) under the agreement the person entitled to the payments is to receive them as the annuitant under one or more annuities purchased for him by the person against whom the claim or action is brought or, if he is insured against the claim concerned, by his insurer,

the agreement is for the purposes of this section a qualifying agreement.

(2) In a case where--

(a) an agreement is made settling a claim or action for damages for personal injury,

(b) under the agreement the damages are to consist wholly or partly of periodical payments, and

(c) a later agreement is made under which the person entitled to the payments is from a future date to receive them as the annuitant under one or more annuities purchased for him by the person against whom the claim or action is brought or, if he is insured against the claim concerned, by his insurer,

the agreement mentioned in paragraph (c) above is for the purposes of this section a qualifying agreement.

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

(a) a person receives a sum as the annuitant under an annuity purchased for him pursuant to a qualifying agreement, or

(b) a person receives a sum on behalf of the annuitant under an annuity purchased for the annuitant pursuant to a qualifying agreement.

(4) Where this subsection applies the sum shall not be regarded as the recipient's or annuitant's income for any purposes of income tax and accordingly shall be paid without any deduction under section 349(1).

(5) Subsections (6) to (10) below apply for the purposes of subsection (1) above.

(6) The periodical payments may be for the life of the claimant, for a specified period or of a specified number or minimum number or include payments of more than one of those descriptions.

(7) The amounts of the periodical payments (which need not be at a uniform rate or payable at uniform intervals) may be--

(a) specified in the agreement, with or without provision for increases of specified amounts or percentages,

(b) subject to adjustment in a specified manner so as to preserve their real value, or

(8) The annuity or annuities must be such as to provide sums which as to amount and time of payment correspond to the periodical payments described in the agreement.

(9) Personal injury includes any disease and any impairment of a person's physical or mental condition.

(10) A claim or action for personal injury includes--

(a) such a claim or action brought by virtue of the [1934 c. 41.] Law Reform (Miscellaneous Provisions) Act 1934;

(b) such a claim or action brought by virtue of the [1937 c. 9 (N.I.).] Law Reform (Miscellaneous Provisions) Act (Northern Ireland) 1937;

(d) a claim or action brought by virtue of the [1976 c. 30.] Fatal Accidents Act 1976;

(e) a claim or action brought by virtue of the [S.I. 1977/1251 (N.I. 18).] Fatal Accidents (Northern Ireland) Order 1977.

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

(a) subsections (6), (9) and (10) above apply;

(b) subsection (7) above applies as if the reference to the agreement were to that mentioned in subsection (2)(a) above;

(c) subsection (8) above applies as if the reference to periodical payments described in the agreement were to periodical payments described in the agreement mentioned in subsection (2)(a) above and falling to be made after the later agreement takes effect.

(12) This section does not apply unless the sum concerned is received after the day on which the Finance Act 1995 is passed, but it is immaterial when--

(a) the agreement mentioned in subsection (1) above is made or takes effect, or

(b) either of the agreements mentioned in subsection (2) above is made or takes effect.

329B Annuities assigned in favour of certain persons

(1) In a case where--

(a) an agreement is made settling a claim or action for damages for personal injury,

(b) under the agreement the damages are to consist wholly or partly of periodical payments,

(c) the person against whom the claim or action is brought (or, if he is insured against the claim concerned, his insurer) purchases one or more annuities, and

(d) a later agreement is made under which the annuity is, or the annuities are, assigned in favour of the person entitled to the payments so as to secure that from a future date he receives the payments as the annuitant under the annuity or annuities,

the agreement mentioned in paragraph (d) above is for the purposes of this section a qualifying agreement.

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

(a) a person receives a sum as the annuitant under an annuity assigned in his favour pursuant to a qualifying agreement, or

(b) a person receives a sum on behalf of the annuitant under an annuity assigned in the annuitant's favour pursuant to a qualifying agreement.

(3) Where this subsection applies the sum shall not be regarded as the recipient's or annuitant's income for any purposes of income tax and accordingly shall be paid without any deduction under section 349(1).

(4) For the purposes of subsection (1) above--

(a) subsections (6), (9) and (10) of section 329A apply;

(b) subsections (7) and (8) of section 329A apply as if references to the agreement were to that mentioned in subsection (1)(a) above.

(5) This section does not apply unless the sum concerned is received after the day on which the Finance Act 1995 is passed, but it is immaterial when either of the agreements mentioned in subsection (1) above is made or takes effect. "

143 Lloyd's underwriters: new-style special reserve funds

(1) In Schedule 20 to the [1993 c. 34.] Finance Act 1993 (Lloyd's underwriters: special reserve funds) paragraph 2 (general requirements about special reserve funds) shall be deemed to have been enacted with the modification in subsection (2) below.

(2) For sub-paragraphs (2) and (3) there shall be substituted--

" (2) The arrangements must be such as to secure that--

(a) any income arising to the trustee or trustees of the special reserve fund shall be added to the capital of the fund and held on the same trusts as the fund; and

(b) except as required or permitted by this Schedule, no payments shall be made into or out of the special reserve fund. "

144 Local government residuary body

(1) In section 842A of the Taxes Act 1988 (meaning of "local authority" in the Tax Acts) in subsection (2) (England and Wales) after paragraph (g) insert--

" (h) a residuary body established by order under section 22(1) of the [1992 c. 19.] Local Government Act 1992; " .

(2) This section shall be deemed to have come into force on 29th November 1994.

145 Payment of rent &c., under deduction of tax

(1) In section 119(1) of the Taxes Act 1988 (rent, &c., payable in connection with mines, quarries and similar concerns), the words from "and, subject to subsection (2) below, shall be subject to deduction of income tax" to the end shall cease to have effect.

(2) In section 121 of that Act (management expenses of owner of mineral rights), for subsections (1) and (2) (right to repayment where tax paid by deduction, &c.) substitute--

" (1) Where for any year of assessment rights to work minerals in the United Kingdom are let, the lessor shall be entitled to deduct, in determining the amount chargeable to income tax in respect of the rents or royalties for that year, any sums wholly, exclusively and necessarily disbursed by him as expenses of management or supervision of those minerals in that year. " .

(3) The provisions of this section have effect in relation to payments made after the passing of this Act.

Part IV Petroleum Revenue Tax

146 Restriction of unrelievable field losses

(1) In section 6 of the [1975 c. 22.] Oil Taxation Act 1975 (allowance of unrelievable loss from abandoned field), in subsection (1) after the words "Subject to" there shall be inserted "subsections (5) to (9) below and".

(2) After subsection (1) of that section there shall be inserted--

" (1A) In this section, in relation to an unrelievable field loss,--

(a) "the abandoned field" means the oil field from which the winning of oil has permanently ceased; and

(b) "the person to whom the loss accrued" means the person to whom, as a participator in the abandoned field, the loss accrued (whether or not he is the participator in another oil field who makes the claim for the allowance of the unrelievable field loss). "

(3) After subsection (4) of that section there shall be inserted--

" (5) Subsections (6) to (9) below apply if--

(a) a claim is made for the allowance of an unrelievable field loss; and

(b) the person to whom the loss accrued made a claim or election for the allowance of any expenditure unrelated to that field; and

(d) the whole or a part of the expenditure to which the claim or election relates is allowed and, accordingly, falls to be taken into account under section 2(8)(a) of this Act for a chargeable period (whether beginning before or after 29th November 1994).

(6) Subject to subsection (7) below, where this subsection applies, from the amount which, apart from this subsection, would be the amount of the unrelievable field loss referred to in paragraph (a) of subsection (5) above there shall be deducted an amount equal to so much of any expenditure unrelated to the field as is allowed on a claim or election as mentioned in paragraph (d) of that subsection.

(7) If--

(a) claims are made for the allowance of more than one unrelievable field loss derived from the same abandoned field, and

(b) the person to whom the loss accrued is the same in respect of each of the unrelievable field losses,

subsection (6) above shall have effect as if the deduction referred to in that subsection fell to be made from the aggregate amount of those losses.

(8) Where subsection (7) above applies, the deduction shall be set against the unrelievable field losses in the order in which the claims for the allowance of each of those losses were received by the Board.

(9) In subsections (5) and (6) above, "expenditure unrelated to the field" means--

(a) expenditure allowable under any of sections 5, 5A and 5B of this Act;

(b) expenditure allowable under this section (derived from a different abandoned field); or

(c) expenditure falling within section 65 of the [1987 c. 16.] Finance Act 1987 which is accepted by the Board as allowable in accordance with Schedule 14 to that Act;

and, in relation to expenditure falling within section 65 of the [1987 c. 16.] Finance Act 1987, "election" means an election under Part I of Schedule 14 to that Act. "

147 Removal of time limits for claims for unrelievable field losses

(1) In Schedule 8 to the [1975 c. 22.] Oil Taxation Act 1975 (procedural provisions as to allowance of unrelievable field losses), in paragraph 4 (claims)--

(a) in sub-paragraph (1) (which requires a participator to make a claim to the Board within a time limit), for the words from "and must be made" to "that is to say" there shall be substituted "at any time after" and the words from "and the date" to the end of the sub-paragraph shall be omitted; and

(b) in sub-paragraph (2) the words "within the time allowed for making the original claim" shall be omitted.

(2) This section applies to claims made on or after the day on which this Act is passed.

148 Transfer of interests in fields: restriction of transferred losses

(1) In Schedule 17 to the [1980 c. 48.] Finance Act 1980 (transfer of interests in oil fields) paragraph 7 (transfer of unused losses from the old to the new participator) shall be amended as follows.

(2) At the beginning of sub-paragraph (2) there shall be inserted "Subject to the following provisions of this paragraph".

(3) After sub-paragraph (2) there shall be inserted the following sub-paragraphs--

" (3) If, in the case of a transfer of the whole or part of an interest on or after 29th November 1994,--

(a) the old participator made a claim or election for the allowance of any expenditure unrelated to the field, and

(b) the claim or election was received by the Board on or after that date, and

(c) the expenditure allowed on the claim or election fell to be taken into account in computing the assessable profit or allowable loss of the old participator for the transfer period or any earlier chargeable period,

then, from the sum which, apart from this sub-paragraph, would be the aggregate of all the losses transferred to the new participator under this paragraph there shall be deducted (subject to sub-paragraphs (5) and (6) below) so much of the expenditure referred to in paragraph (a) above as is allowed on the claim or election (and, accordingly, the amount so deducted shall not fall to be transferred to the new participator under this paragraph).

(4) In this paragraph "expenditure unrelated to the field" means expenditure allowable under any of the following provisions--

(a) section 5 (abortive exploration expenditure);

(b) section 5A (exploration and appraisal expenditure);

(d) section 6 (unrelievable loss from abandoned field); and

(e) section 65 of the [1987 c. 16.] Finance Act 1987 (cross-field allowance of certain expenditure incurred on new fields);

and, in relation to any such expenditure, "claim" means a claim under Schedule 7 or Schedule 8 and "election" means an election under Part I of Schedule 14 to the [1987 c. 16.] Finance Act 1987 and, in relation to such an election, expenditure shall be regarded as allowed if it is accepted by the Board as allowable in accordance with that Schedule.

(5) Where, in accordance with sub-paragraph (1) above, only a part of a loss (corresponding to the part of the interest transferred) falls to be transferred under this paragraph, only a corresponding part of the expenditure referred to in sub-paragraph (3) above shall be deducted under that sub-paragraph.

(6) Where the amount of the deduction under sub-paragraph (3) above equals or exceeds the sum from which it is to be deducted, no part of any loss shall be transferred to the new participator under this paragraph. "

Part V Stamp Duty

149 Transfer: associated bodies

(1) Section 42 of the [1930 c. 28.] Finance Act 1930 (relief from transfer stamp duty in case of transfer of property as between associated bodies corporate) shall be amended as mentioned in subsections (2) to (5) below.

(2) In subsection (2) (as substituted by section 27(2) of the [1967 c. 54.] Finance Act 1967) for the words from "that the effect" to the end of the subsection there shall be substituted " that--

(a) the effect of the instrument is to convey or transfer a beneficial interest in property from one body corporate to another, and

(b) the bodies in question are associated at the time the instrument is executed. "

(3) The following subsections shall be inserted after subsection (2) (as so substituted)--

" (2A) For the purposes of this section bodies corporate are associated at a particular time if at that time one is the parent of the other or another body corporate is the parent of each.

(2B) For the purposes of this section one body corporate is the parent of another at a particular time if at that time the first body is beneficial owner of not less than 75 per cent. of the ordinary share capital of the second body. "

(4) In subsection (3) (as so substituted) for "(2)" there shall be substituted "(2B)", and the words from "with the substitution" to the end shall be omitted.

(5) The following subsection shall be inserted after subsection (3) (as so substituted)--

" (4) In this section "ordinary share capital", in relation to a body corporate, means all the issued share capital (by whatever name called) of the body corporate, other than capital the holders of which have a right to a dividend at a fixed rate but have no other right to share in the profits of the body corporate. "

(6) In section 27 of the [1967 c. 54.] Finance Act 1967 (which relates to section 42 of the [1930 c. 28.] Finance Act 1930) in subsection (3)(c) for the words from "a change" to "third body corporate" there shall be substituted "the transferor or a third body corporate ceasing to be the transferee's parent (within the meaning of the said section 42)".

(7) This section shall apply in relation to instruments executed on or after the day on which this Act is passed.

150 Northern Ireland transfer: associated bodies

(1) Section 11 of the [1954 c. 23 (N.I.).] Finance Act (Northern Ireland) 1954 (relief from stamp duty in case of transfer of property between associated bodies corporate) shall be amended as follows.

(2) In subsection (2)(c)(iii) for the words from "a change" to "third body corporate" there shall be substituted "the transferor or a third body corporate ceasing to be the transferee's parent".

(3) The following subsections shall be substituted for subsection (3)--

" (3) For the purposes of this section a body corporate is associated with another body corporate at a particular time if at that time one is the parent of the other or another body corporate is the parent of each.

(3AA) For the purposes of this section one body corporate is the parent of another at a particular time if at that time the first body is beneficial owner of not less than 75 per cent. of the ordinary share capital of the second body. "

(4) In subsection (3A) for the words "paragraphs (i) and (ii) of subsection (3)" there shall be substituted "subsection (3AA)", and the words from "with the substitution" to the end shall be omitted.

(5) The following subsection shall be inserted after subsection (3A)--

" (3AB) In this section "ordinary share capital", in relation to a body corporate, means all the issued share capital (by whatever name called) of the body corporate, other than capital the holders of which have a right to a dividend at a fixed rate but have no other right to share in the profits of the body corporate. "

(6) This section shall apply in relation to instruments executed on or after the day on which this Act is passed.

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