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Finance Act 2003

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CONTENTS

Finance Act 2003

2003 CHAPTER 14

Part 1

Excise duties

Tobacco products duty

1. Rates of tobacco products duty

Alcoholic liquor duties

2. Rate of duty on beer

3. Rates of duty on wine and made-wine

Hydrocarbon oil duties

4. Rates of hydrocarbon oil duties

5. Rebates on hydrocarbon oil duties

Betting and gaming duties

6. General betting duty and pool betting duty: relief for losses

7. General betting duty: betting exchanges

8. General betting duty: restriction of exemption for on-course bets

9. Bingo duty

10. Amusement machines not operated by coins or tokens

11. Amusement machines: use of currencies other than sterling

12. Responsibility for unlicensed amusement machines

13. Rates of gaming duty

Vehicle excise duty

14. Vehicle excise duty: rates

15. Disclosure for exemptions: Northern Ireland

16. Duty at higher rate: exception for tractive units

Part 2

Value added tax

17. Requirement of evidence or security

18. Joint and several liability for unpaid VAT of another trader

19. Face-value vouchers

20. Supplies arising from prior grant of fee simple

21. Business gifts

22. Non-business use of business property

23. Supply of electronic services in member States: special accounting scheme

Part 3

Taxes and duties on importation and exportation: penalties

Preliminary

24. Introductory

The penalties

25. Penalty for evasion

26. Penalty for contravention of relevant rule

27. Exceptions from section 26

28. Liability of directors etc where body corporate liable to penalty for evasion

Reduction of amount of penalty

29. Reduction of penalty under section 25 or 26

Demand notices

30. Demands for penalties

31. Time limits for demands for penalties

32. No prosecution after demand notice for penalty under section 26

Reviews

33. Right to review of certain decisions

34. Time limit and right to further review

35. Powers of Commissioners on a review

Appeals

36. Appeals to a tribunal

37. Appeal tribunals

Evidence

38. Admissibility of certain statements and documents

Miscellaneous and supplementary

39. Service of notices

40. Penalties not to be deducted for income tax or corporation tax purposes

41. Regulations and orders

Part 4

Stamp duty land tax

Introduction

42. The tax

Land transactions

43. Land transactions

44. Contract and conveyance

45. Contract and conveyance: effect of transfer of rights

46. Options and rights of pre-emption

47. Exchanges

Chargeable interests, chargeable transactions and chargeable consideration

48. Chargeable interests

49. Chargeable transactions

50. Chargeable consideration

51. Contingent, uncertain or unascertained consideration

52. Annuities etc: chargeable consideration limited to twelve years' payments

53. Deemed market value where transaction involves connected company

54. Exceptions from deemed market value rule

Amount of tax chargeable

55. Amount of tax chargeable: general

56. Amount of tax chargeable: rent

Reliefs

57. Disadvantaged areas relief

58. Relief for certain exchanges of residential property

59. Relocation relief

60. Compulsory purchase facilitating development

61. Compliance with planning obligations

62. Group relief and reconstruction or acquisition relief

63. Demutualisation of insurance company

64. Demutualisation of building society

65. Incorporation of limited liability partnership

66. Transfers involving public bodies

67. Transfer in consequence of reorganisation of parliamentary constituencies

68. Charities relief

69. Acquisition by bodies established for national purposes

70. Right to buy transactions, shared ownership leases etc

71. Certain acquisitions by registered social landlord

72. Alternative property finance: land sold to financial institution and leased to individual

73. Alternative property finance: land sold to financial institution and re-sold to individual

74. Collective enfranchisement by leaseholders

75. Crofting community right to buy

Returns and other administrative matters

76. Duty to deliver land transaction return

77. Notifiable transactions

78. Returns, enquiries, assessments and related matters

79. Registration of land transactions etc

80. Adjustment where contingency ceases or consideration is ascertained

81. Further return where relief withdrawn

82. Loss or destruction of, or damage to, return etc

83. Formal requirements as to assessments, penalty determinations etc

84. Delivery and service of documents

Liability for and payment of tax

85. Liability for tax

86. Payment of tax

87. Interest on unpaid tax

88. Interest on penalties

89. Interest on repayment of tax overpaid etc

90. Application to defer payment in case of contingent or uncertain consideration

91. Collection and recovery of tax etc

92. Payment by cheque

Compliance

93. Information powers

94. Power to inspect premises

95. Offence of fraudulent evasion of tax

96. Penalty for assisting in preparation of incorrect return etc

97. Power to allow further time and reasonable excuse for failure

98. Admissibility of evidence not affected by offer of settlement etc

99. General provisions about penalties

Application of provisions

100. Companies

101. Unit trust schemes

102. Open-ended investment companies

103. Joint purchasers

104. Partnerships

105. Trustees

106. Persons acting in a representative capacity etc

107. Crown application

Supplementary provisions

108. Linked transactions

109. General power to vary this Part by regulations

110. Approval of regulations under general power

111. Claim for repayment if regulations under general power not approved

112. Power to amend certain provisions before implementation

113. Functions conferred on “the Inland Revenue”

114. Orders and regulations made by the Treasury or the Inland Revenue

115. General and Special Commissioners, appeals and other proceedings

Interpretation etc

116. Meaning of “residential property”

117. Meaning of “major interest” in land

118. Meaning of “market value”

119. Meaning of “effective date” of a transaction

120. Meaning of “lease” and other supplementary provisions

121. Minor definitions

122. Index of defined expressions

Final provisions

123. Consequential amendments

124. Commencement and transitional provisions

Part 5

Stamp duty

125. Abolition of stamp duty except on instruments relating to stock or marketable securities

126. Circumstances in which group relief withdrawn

127. Circumstances in which relief for company acquisitions withdrawn

128. Exemption of certain leases granted by registered social landlords

129. Relief for certain leases granted before section 128 has effect

130. Registered social landlords: treatment of certain leases granted between 1st January 1990 and 27 March 2000

Part 6

Income tax and corporation tax: charge and rate bands

Income tax

131. Charge and rates for 2003-04

132. Indexed rate bands for 2003-04: PAYE deductions etc

Corporation tax

133. Charge and main rate for financial year 2004

134. Small companies' rate and fraction for financial year 2003

135. Corporation tax starting rate and fraction for financial year 2003

Part 7

Income tax, corporation tax and capital gains tax: general

Employment income and related matters

136. Provision of services through intermediary

137. Exemption where homeworker’s additional expenses met by employer

138. Taxable benefits: lower threshold for cars with a CO2 emissions figure

139. Approved share plans and schemes

140. Employee securities and options

141. Corporation tax relief for employee share acquisitions

142. Ending of relief for contributions to QUESTS

143. Restriction of deductions for employee benefit contributions

144. PAYE on notional payments: reimbursement period

145. PAYE: regulations and notional payments

146. Payroll giving: extension of 10% supplement to 5th April 2004

147. Sub-contractor deductions etc: interest on late payment or repayment

Taxation of non-resident companies and related matters

148. Meaning of “permanent establishment”

149. Non-resident companies: basis of charge to corporation tax

150. Non-resident companies: assessment, collection and recovery of corporation tax

151. Non-resident companies: extent of charge to income tax

152. Non-resident companies: transactions carried out through broker, investment manager or Lloyd’s agent

153. General replacement of references to branch or agency of company

154. Double taxation relief: profits attributable to overseas permanent establishment

155. Consequential amendments

156. Overseas life insurance companies

Chargeable gains

157. Life insurance policies and deferred annuity contracts

158. Application of market value rule in case of exercise of option

159. Reporting limits and annual exempt amount

160. Taper relief: assets qualifying as business assets

161. Earn-out rights to be treated as securities unless contrary election

162. Deferred unascertainable consideration: election for treatment of loss

163. Transfers of value: attribution of gains to beneficiaries

Capital allowances and related matters

164. Avoidance affecting proceeds of balancing event

165. Extension of first-year allowances for ICT expenditure by small enterprises

166. Expenditure on software for sub-licensing

167. First-year allowances for expenditure on environmentally beneficial plant or machinery

168. Relief for research and development

169. Tonnage tax: extension of capital allowance restrictions on lessors of ships

Life insurance and pensions

170. Insurance companies

171. Policies of life insurance etc: miscellaneous amendments

172. Charges under life insurance policies for exceptional risk of disability

173. Gains on policies of life insurance etc: rate of tax

174. Personal pension arrangements: limit on contributions

Miscellaneous

175. Payments to adopters

176. Foster carers

177. Currency contracts and currency options

178. Loan relationships: amendments

179. Derivative contracts: transactions within groups

180. Contributions to urban regeneration companies

181. Repos etc

182. Relevant discounted securities: withdrawal of relief for costs and losses, etc

183. Court common investment funds

184. Intangible fixed assets: tax avoidance arrangements and related parties

Part 8

Other taxes

Inheritance tax

185. Gifts with reservation

186. Authorised unit trusts, OEICs and common investment funds

Landfill tax

187. Rate of landfill tax

Climate change levy

188. Exemption for fuel used in recycling processes

189. CHP exemption to be based on current efficiency

190. Supplies not known to be taxable when made, etc

191. Deemed supplies

192. Amendments about registration, payment etc

193. Electricity from renewable sources etc

Insurance premium tax

194. Higher rate of tax: divided companies

Part 9

Miscellaneous and supplementary provisions

Provisions consequential on changes to company law

195. Companies acquiring their own shares

196. Companies in administration

International matters

197. Exchange of information between tax authorities of member States

198. Arrangements for mutual exchange of tax information

199. Savings income: Community obligations and international arrangements

200. Controlled foreign companies: exempt activities

201. Application of CFC provisions to Hong Kong and Macao companies

Administrative matters

202. Deduction of tax from interest: recognised clearing houses etc

203. Authorised unit trusts: interest distributions paid gross

204. Mandatory electronic payment by large employers

205. Use of electronic means of payment under other provisions

206. Admissibility of evidence not affected by offer of settlement etc

207. Consequential claims etc

National Savings

208. Ordinary accounts and investment accounts

209. Abolition of accounting requirements relating to investment deposits

Other financial matters

210. Payments for service of national debt

211. Definition of liabilities and assets of National Loans Fund

212. Accounts of Consolidated Fund and National Loans Fund

213. Debt Management Account: abolition of borrowing cap

214. Payments in error from or to National Loans Fund

Supplementary

215. Interpretation

216. Repeals

217. Short title

Schedule 1: VAT: face-value vouchers

Schedule 2: Supply of electronic services in member States: VAT special accounting scheme

Schedule 3: Stamp duty land tax: transactions exempt from charge

Schedule 4: Stamp duty land tax: chargeable consideration

Schedule 5: Stamp duty land tax: amount of tax chargeable: rent

Schedule 6: Stamp duty land tax: disadvantaged areas relief

Part 1: Disadvantaged areas

Part 2: Land wholly situated in a disadvantaged area

Part 3: Land partly situated in a disadvantaged area

Part 4: Interpretation

Schedule 7: Stamp duty land tax: group relief and reconstruction and acquisition reliefs

Part 1: Group relief

Part 2: Reconstruction and acquisition reliefs

Schedule 8: Stamp duty land tax: charities relief

Schedule 9: Stamp duty land tax: right to buy, shared ownership leases etc

Schedule 10: Stamp duty land tax: returns, enquiries, assessments and appeals

Part 1: Land transaction returns

Part 2: Duty to keep and preserve records

Part 3: Enquiry into return

Part 4: Revenue determination if no return delivered

Part 5: Revenue assessments

Part 6: Relief in case of excessive assessment

Part 7: Appeals against Revenue decisions on tax

Schedule 11: Stamp duty land tax: self-certificates

Part 1: General

Part 2: Duty to keep and preserve records

Part 3: Enquiry into self-certificate

Schedule 12: Stamp duty land tax: collection and recovery of tax

Part 1: General

Part 2: Court proceedings

Schedule 13: Stamp duty land tax: information powers

Part 1: Power of authorised officer to call for documents or information from taxpayer

Part 2: Power of authorised officer to call for documents from third party

Part 3: Power to call for papers of tax accountant

Part 4: Restrictions on powers under Parts 1 to 3

Part 5: Powers of board to call for documents or information

Part 6: Order of judicial authority for the delivery of documents

Part 7: Entry with warrant to obtain evidence of offence

Part 8: Falsification etc of documents

Schedule 14: Stamp duty land tax: determination of penalties and related appeals

Schedule 15: Stamp duty land tax: partnerships

Part 1: General provisions

Part 2: Ordinary partnership transactions

Part 3: Transactions excluded from stamp duty land tax

Schedule 16: Stamp duty land tax: trusts and powers

Schedule 17: Stamp duty land tax: General and Special Commissioners, appeals and other proceedings

Schedule 18: Stamp duty land tax: consequential amendments

Schedule 19: Stamp duty land tax: commencement and transitional provisions

Schedule 20: Stamp duty: restriction to instruments relating to stock or marketable securities

Part 1: Supplementary provisions

Part 2: Consequential amendments and repeals

Schedule 21: Approved share plans and schemes

Part 1: Share incentive plans

Part 2: SAYE option schemes

Part 3: CSOP schemes

Schedule 22: Employee securities and options

Schedule 23: Corporation tax relief for employee share acquisition

Part 1: General provisions

Part 2: Award of shares

Part 3: Grant of option

Part 4: Provisions applying in case of shares subject to forfeiture

Part 5: Supplementary provisions

Part 6: Commencement and transitional provisions

Schedule 24: Restriction of deductions for employee benefit contributions

Schedule 25: Determination of profits attributable to permanent establishment: supplementary provisions

Schedule 26: Non-resident companies: transactions through broker, investment manager or Lloyd’s agent

Schedule 27: Permanent establishment etc: consequential amendments

Schedule 28: Capital gains tax: reporting limits and annual exempt amount

Part 1: Reporting limits

Part 2: Annual exempt amount

Part 3: Commencement

Schedule 29: Transfers of value: attribution of gains to beneficiaries

Schedule 30: First-year allowances for expenditure on environmentally beneficial plant or machinery

Schedule 31: Tax relief for expenditure on research and development

Part 1: Small and medium-sized enterprises: Schedule 20 to Finance Act 2000

Part 2: Large companies: Part 1 of Schedule 12 to Finance Act 2002

Part 3: Work sub-contracted to SMEs: Part 2 of Schedule 12 to Finance Act 2002

Part 4: Entitlement of SME to certain relief available to large companies

Part 5: Supplementary: amendments to Parts 3 to 6 of Schedule 12 to Finance Act 2002

Part 6: Expenditure on vaccine research etc: Schedule 13 to Finance Act 2002

Schedule 32: Tonnage tax: restrictions on capital allowances for lessors of ships

Schedule 33: Insurance companies

Schedule 34: Policies of life insurance etc: miscellaneous amendments

Part 1: Group life policies

Part 2: Charitable and non-charitable trusts

Part 3: Meaning of “life annuity”

Part 4: Rollover of gain on maturity into new policy

Schedule 35: Gains on policies of life insurance etc: rate of tax

Schedule 36: Foster carers

Part 1: Introduction

Part 2: The exemption and the alternative methods of calculation

Part 3: Capital allowances

Part 4: Supplementary

Schedule 37: Loan relationships: amendments

Part 1: Amendments to Schedule 9 to the Finance Act 1996

Part 2: Transitional provisions

Schedule 38: Sale and repurchase of securities etc

Schedule 39: Relevant discounted securities: withdrawal of relief for costs and losses, etc

Schedule 40: Acquisition by company of its own shares

Schedule 41: Companies in administration

Schedule 42: Controlled foreign companies: exempt activities

Schedule 43: Repeals

Part 1: Excise duties

Part 2: Value added tax

Part 3: Income tax, corporation tax and capital gains tax

Part 4: Other taxes

Part 5: Miscellaneous

 

An Act to grant certain duties, to alter other duties, and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with finance.

[10th July 2003]

Most Gracious Sovereign,

We, Your Majesty’s most dutiful and loyal subjects, the Commons of the United Kingdom in Parliament assembled, towards raising the necessary supplies to defray Your Majesty’s public expenses, and making an addition to the public revenue, have freely and voluntarily resolved to give and to grant unto Your Majesty the several duties hereinafter mentioned; and do therefore most humbly beseech Your Majesty that it may be enacted, and be it enacted by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—

Part 1

Excise duties

Tobacco products duty

1 Rates of tobacco products duty

(1) For the Table of rates of duty in Schedule 1 to the Tobacco Products Duty Act 1979 (c. 7) substitute—

“Table

1. Cigarettes An amount equal to 22 per cent of the retail price plus £96.88 per thousand cigarettes.
2. Cigars £141.10 per kilogram.
3. Hand-rolling tobacco £101.42 per kilogram.
4. Other smoking tobacco and chewing tobacco £62.03 per kilogram.”

(2) This section shall be deemed to have come into force at 6 o'clock in the evening of 9th April 2003.

Alcoholic liquor duties

2 Rate of duty on beer

(1) In section 36(1AA)(a) of the Alcoholic Liquor Duties Act 1979 (c. 4) (rate of duty on beer), for “£11.89” substitute “£12.22”.

(2) This section shall be deemed to have come into force at midnight on 13th April 2003.

3 Rates of duty on wine and made-wine

(1) For Part 1 of the Table of rates of duty in Schedule 1 to the Alcoholic Liquor Duties Act 1979 (rates of duty on wine and made-wine) substitute—

“Part 1

WINE AND MADE-WINE OF A STRENGTH NOT EXCEEDING 22 PER CENT

Description of wine or made-wine

Rates of duty per hectolitre

£

Wine or made-wine of a strength not exceeding 4 per cent 48.91
Wine or made-wine of a strength exceeding 4 per cent but not exceeding 5.5 per cent 67.25
Wine or made-wine of a strength exceeding 5.5 per cent but not exceeding 15 per cent and not sparkling 158.69
Sparkling wine or sparkling made-wine of a strength exceeding 5.5 per cent but less than 8.5 per cent
166.70
Sparkling wine or sparkling made-wine of a strength of 8.5 per cent or of a strength exceeding 8.5 per cent but not exceeding 15 per cent 220.54
Wine or made-wine of a strength exceeding 15 per cent but not exceeding 22 per cent
211.58”

(2) This section shall be deemed to have come into force at midnight on 13th April 2003.

Hydrocarbon oil duties

4 Rates of hydrocarbon oil duties

(1) In section 6(1A) of the Hydrocarbon Oil Duties Act 1979 (c. 5) (rates of duty)—

(a) in paragraph (a) (ultra low sulphur petrol) for “£0.4582” substitute “£0.4710”,

(b) in paragraph (b) (other light oil) for “£0.5468” substitute “£0.5620”,

(c) in paragraph (c) (ultra low sulphur diesel) for “£0.4582” substitute “£0.4710”, and

(d) in paragraph (d) (other heavy oil) for “£0.5182” substitute “£0.5327”.

(2) In section 6AA(3) of that Act (biodiesel duty) for “£0.2582” substitute “£0.2710”.

(3) In section 13A(1) of that Act (rebate on unleaded petrol) for “£0.0586” substitute “£0.0601”.

(4) This section shall come into force on 1st October 2003.

5 Rebates on hydrocarbon oil duties

(1) In section 11(1) of the Hydrocarbon Oil Duties Act 1979 (rebate on heavy oil)—

(a) in paragraph (a) (fuel oil) for “£0.0274” substitute “£0.0382”,

(b) in paragraph (b) (gas oil: general) for “£0.0313” substitute “£0.0422”, and

(c) in paragraph (ba) (ultra low sulphur diesel) for “£0.0313” substitute “£0.0422”.

(2) In section 14(1) of that Act (furnace fuel) for “£0.0274” substitute “£0.0382”.

(3) This section shall be deemed to have come into force at 6 o'clock in the evening of 9th April 2003.

Betting and gaming duties

6 General betting duty and pool betting duty: relief for losses

(1) Part 1 of the Betting and Gaming Duties Act 1981 (c. 63) (betting duties) is amended as follows.

(2) In section 5 (net stake receipts) at the end of subsection (3) (negative net stake receipts to be disregarded) insert “except as provided for by section 5AA”.

(3) After that section insert—

“5AA Relief for losses

(1) This section applies where the amount of a person’s net stake receipts for an accounting period in respect of a class of bets (calculated in accordance with section 5(1)) is a negative amount.

(2) That amount shall be carried forward to the following accounting period and, to the extent that it does not exceed it, deducted from the amount of the person’s net stake receipts in respect of the same class of bets for that period.

(3) If the amount of those net stake receipts for that following accounting period—

(a) is not a positive amount, or

(b) is less than the amount carried forward,

the amount carried forward or, as the case may be, the balance of it shall be treated for the purposes of this section as if it were a negative amount of net stake receipts for that period in respect of the same class of bets.”.

(4) Omit section 5A (multiple bets) (which becomes unnecessary as a result of the amendment made by subsection (3) above).

(5) After section 7 (duty charged on net pool betting receipts) insert—

“7ZA Relief for losses

(1) This section applies where the amount of a person’s net pool betting receipts for an accounting period is a negative amount.

(2) That amount shall be carried forward to the following accounting period and, to the extent that it does not exceed it, deducted from the amount of the person’s net pool betting receipts for that period.

(3) If the amount of the net pool betting receipts for that following accounting period—

(a) is not a positive amount, or

(b) is less than the amount carried forward,

the amount carried forward or, as the case may be, the balance of it shall be treated for the purposes of this section as if it were a negative amount of net pool betting receipts for that period.”.

(6) The amendments made by this section apply in relation to any accounting period beginning on or after 1st September 2003 for which the net stake receipts in respect of a particular class of bets, or (as the case may be) the net pool betting receipts, is a negative amount.

7 General betting duty: betting exchanges

(1) Part 1 of the Betting and Gaming Duties Act 1981 (c. 63) (betting duties) is amended as follows.

(2) After section 5AA (inserted by section 6 above) insert—

“5AB Betting exchanges

(1) This section applies where—

(a) one person makes a bet with another person using facilities provided by a third person in the course of a business, and

(b) that business is one that does not involve the provision of premises for use by persons making or taking bets.

(2) General betting duty shall be charged on the amounts (“commission charges”) that the parties to the bet are charged, whether by deduction from winnings or otherwise, for using those facilities.

(3) No deductions shall be allowed from commission charges.

(4) The amount of duty charged under this section in respect of bets determined in an accounting period shall be 15 per cent of the commission charges relating to those bets.

(5) For the purposes of this section, and section 5B(4) so far as relating to this section, a person who arranges for facilities relating to a bet to be provided by another person shall be treated as providing them himself (and the other person shall not).”.

(3) In section 5B (liability to pay)—

(a) for subsection (1) substitute—

“(1) All general betting duty chargeable in respect of—

(a) bets made in an accounting period, or

(b) in the case of duty chargeable under section 5AB, bets determined in an accounting period,

shall become due at the end of that period.”;

(b) in subsection (4), after “section 4(1) to (3)” insert “or 5AB”.

(4) In section 5C (bet-brokers)—

(a) in paragraph (a) of subsection (1) (application of section) after “in the course of a business” insert “, other than a betting-exchange business,”;

(b) at the end of that subsection insert—

“In paragraph (a) “betting-exchange business” means a business such as is mentioned in section 5AB(1).”;

(c) omit subsections (2) (bet treated as made between bettor and bet-broker) and (3) (subsection (2) not to apply to off-course bets where bet-taker is a bookmaker);

(d) in subsection (4) omit the words “In the case of a bet which is excluded from subsection (2) by virtue of subsection (3),”.

(5) The amendments made by this section apply in relation to any accounting period beginning on or after 1st June 2003.

(6) Those amendments do not apply in relation to a bet (a “straddling bet”) that is—

(a) made, using facilities provided by a person (“the broker”), in an accounting period of the broker beginning before 1st June 2003, but

(b) not determined until an accounting period of the broker beginning on or after that date.

(7) Any winnings paid in respect of a straddling bet to which section 5AB of the Betting and Gaming Duties Act 1981 (c. 63) would apply but for subsection (6) above shall be treated for the purposes of that Act as paid in the broker’s accounting period in which the bet was made (“the earlier accounting period”).

(8) Subsection (7) shall not have effect to reduce the general betting duty payable by the broker for the earlier accounting period; but the amount of the reduction that would (but for this subsection) have been made for that period shall be set against any liability of the broker to general betting duty for accounting periods in the following three years, taking earlier periods before later ones until the amount is exhausted.

8 General betting duty: restriction of exemption for on-course bets

(1) In section 12(4) of the Betting and Gaming Duties Act 1981 (general betting duty: supplementary provisions), in the definition of “on-course bet” for “a meeting” substitute “a horse or dog race meeting”.

(2) This section applies to bets made on or after 1st September 2003.

9 Bingo duty

(1) For sections 17 to 20 of the Betting and Gaming Duties Act 1981 (bingo duty) substitute—

“17 Bingo duty

(1) A duty of excise, to be known as bingo duty, shall be charged—

(a) on the playing of bingo in the United Kingdom, and

(b) at the rate of 15 per cent of a person’s bingo promotion profits for an accounting period.

(2) Subsection (1) is subject to the exemptions specified in Part 1 of Schedule 3 to this Act.

(3) The amount of a person’s bingo promotion profits for an accounting period is—

(a) the amount of the person’s bingo receipts for the period (calculated in accordance with section 19), minus

(b) the amount of his expenditure on bingo winnings for the period (calculated in accordance with section 20).

(4) Bingo duty charged in respect of a person’s bingo promotion profits shall be paid by him.

(5) Where the amount that would be charged in respect of a person’s bingo promotion profits for an accounting period is less than £1, no duty shall be charged.

18 Accounting period

(1) For the purposes of section 17 an accounting period ends, and another begins, at the end of the last Sunday in each calendar month.

(2) But regulations under paragraph 9 of Schedule 3 to this Act may make provision in place of subsection (1) for the purposes of the application of section 17 to specified persons or in specified circumstances.

(3) Regulations made by virtue of subsection (2) may make transitional provision.

19 Bingo receipts

(1) A person has bingo receipts for an accounting period if payments fall due in the period in respect of entitlement to participate in bingo promoted by him.

(2) The amount of the person’s bingo receipts for the accounting period is the aggregate of those payments.

(3) For the purposes of subsections (1) and (2)—

(a) an amount in respect of entitlement to participate in a game of bingo is to be treated as falling due in the accounting period in which the game is played,

(b) where a payment relates to a supply of services on which value added tax is chargeable, the amount of value added tax chargeable shall be disregarded (irrespective of whether or not that amount is paid by way of value added tax),

(c) it is immaterial whether an amount falls due to be paid to the promoter or to another person,

(d) it is immaterial whether an amount is described as a fee for participation, as a stake, or partly as one and partly as the other, and

(e) where a sum is paid partly in respect of entitlement to participate in a game of bingo and partly in respect of another matter—

(i) such part of the sum as is applied to, or properly attributable to, entitlement to participate in the game shall be treated as an amount falling due in respect of entitlement to participate in the game, and

(ii) the remainder shall be disregarded.

20 Expenditure on bingo winnings

(1) A person’s expenditure on bingo winnings for an accounting period is the aggregate of the values of prizes provided by him in that period by way of winnings at bingo promoted by him.

(2) Where a prize is obtained by the promoter from a person not connected with him, the cost to the promoter shall be treated as the value of the prize for the purpose of subsection (1).

(3) Where a prize is a voucher which—

(a) may be used in place of money as whole or partial payment for benefits of a specified kind obtained from a specified person,

(b) specifies an amount as the sum or maximum sum in place of which the voucher may be used, and

(c) does not fall within subsection (2),

the specified amount is the value of the voucher for the purpose of subsection (1).

(4) Where a prize is a voucher (whether or not it falls within subsection (2)) it shall be treated as having no value for the purpose of subsection (1) if—

(a) it does not satisfy subsection (3)(a) and (b), or

(b) its use as described in subsection (3)(a) is subject to a specified restriction, condition or limitation which may make the value of the voucher to the recipient significantly less than the amount mentioned in subsection (3)(b).

(5) In the case of a prize which—

(a) is neither money nor a voucher, and

(b) does not fall within subsection (2),

the value of the prize for the purpose of subsection (1) is—

(i) the amount which the prize would cost the promoter if obtained from a person not connected with him, or

(ii) where no amount can reasonably be determined in accordance with sub-paragraph (i), nil.

(6) For the purpose of this section—

(a) a reference to connection between two persons shall be construed in accordance with section 839 of the Income and Corporation Taxes Act 1988 (connected persons), and

(b) an amount paid by way of value added tax on the acquisition of a thing shall be treated as part of its cost (irrespective of whether or not the amount is taken into account for the purpose of a credit or refund).

20A Combined bingo

(1) A game of bingo is “combined bingo” if—

(a) it is multiple bingo within the meaning of section 1 of the Gaming (Bingo) Act 1985, or

(b) it is played in more than one place and promoted by more than one person.

(2) Payments made in respect of entitlement to participate in combined bingo shall be treated for the purposes of section 19(1) as bingo receipts only of the first promoter to whom (or at whose direction) they are paid.

(3) Where money representing stakes hazarded at combined bingo is paid in an accounting period by one promoter of the bingo (“the first promoter”) to another (“the second promoter”)—

(a) the money shall not be treated as a bingo receipt of the second promoter for the purposes of section 19(1),

(b) the payment shall be treated as expenditure of the first promoter on bingo winnings for the accounting period for the purposes of section 20(1), and

(c) no subsequent payment of all or part of the money shall be treated as expenditure on bingo winnings for the purposes of section 20(1) (whether paid by the second promoter to another person, by the first promoter having received it from the second promoter, or otherwise).

(4) Subsections (2) and (3) shall apply only where the combined bingo is played entirely in the United Kingdom.

20B Carrying losses forward

(1) Where the calculation of a person’s bingo promotion profits for an accounting period results in a negative amount (“the loss”)—

(a) no bingo duty shall be chargeable in respect of that accounting period, and

(b) for the purpose of section 17(3), the amount of the person’s expenditure on bingo winnings for the next accounting period shall be increased by the amount of the loss.

(2) Subsection (1) applies to an accounting period whether or not the loss results wholly or partly from the previous application of that subsection.

20C Supplementary

(1) Part 2 of Schedule 3 to this Act (bingo duty: supplementary) shall have effect.

(2) In sections 17 to 20B above, this section and Schedule 3—

“bingo” includes any version of that game, whatever name it is called,

“licensed bingo” means bingo played at premises licensed under—

(a)the Gaming Act 1968, or

(b)Chapter II of Part III of the Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985,

“prize” means anything won at bingo, and

“United Kingdom” includes the territorial sea of the United Kingdom.

(3) For the purposes of those provisions, except in relation to combined bingo, the promoter of a game of bingo is—

(a) in the case of licensed bingo, the holder of the licence, and

(b) in the case of non-licensed bingo, the person who provides the facilities for the game.

(4) For the purposes of those provisions in relation to combined bingo a person promotes a game of bingo if he is wholly or partly responsible for organising it or for providing facilities for it.

(5) In those provisions a reference to entitlement to participate in a game of bingo includes a reference to an opportunity to participate in a game of bingo in respect of which a charge is made (whether by way of a fee for participation, a stake, or both).

(6) In proceedings relating to bingo duty under the customs and excise Acts an averment in any process that a particular game is a version of bingo shall, until the contrary is proved, be sufficient evidence that it is.”.

(2) In paragraph 1 of Schedule 3 to the Betting and Gaming Duties Act 1981 (c. 63) (bingo duty: exemptions: domestic bingo) for “Bingo duty shall not be charged in respect of” substitute “In calculating liability to bingo duty no account shall be taken of”.

(3) For paragraph 2 of Schedule 3 to the Betting and Gaming Duties Act 1981 (bingo duty: exemptions: small-scale bingo) substitute—

“Small-scale bingo

2 (1) This paragraph applies where entitlement to participate in non-licensed bingo depends on a person’s being—

(a) a member of a group or organisation,

(b) a guest of a member of a group or organisation, or

(c) a guest of a group or organisation.

(2) Payments in respect of entitlement to participate in the non-licensed bingo shall not be brought into account in relation to any person for the purpose of section 19.

(3) Winnings at the non-licensed bingo shall not be brought into account in relation to any person for the purpose of section 20.

2A (1) In the case of non-licensed bingo to which paragraph 2 does not apply—

(a) payments in respect of entitlement to participate in the non-licensed bingo shall not be brought into account in relation to any person for the purpose of section 19 (subject to sub-paragraphs (2) to (5) below), and

(b) winnings at the non-licensed bingo shall not be brought into account in relation to any person for the purpose of section 20 (subject to sub-paragraphs (2) to (5) below).

(2) If on a day winnings at non-licensed bingo promoted by a person exceed £500, sub-paragraph (1) shall not apply in relation to the person in respect of the accounting period in which that day falls and the next two accounting periods.

(3) If stakes exceeding in aggregate £500 are hazarded on a day at non-licensed bingo promoted by a person, sub-paragraph (1) shall not apply in relation to the person in respect of the accounting period in which that day falls and the next two accounting periods.

(4) If in an accounting period winnings at non-licensed bingo promoted by a person exceed £7,500, sub-paragraph (1) shall not apply in relation to the person in respect of that accounting period and the next two accounting periods.

(5) If stakes exceeding in aggregate £7,500 are hazarded in an accounting period at non-licensed bingo promoted by a person, sub-paragraph (1) shall not apply in relation to the person in respect of that accounting period and the next two accounting periods.

(6) For the purposes of this paragraph winnings at bingo shall be valued in accordance with section 20(2) to (6).”.

(4) After paragraph 2A of Schedule 3 to the Betting and Gaming Duties Act 1981 (c. 63) insert—

“Non-profit-making bingo

2B In calculating liability to bingo duty no account shall be taken of bingo to which there apply (without any exception or modification by virtue of regulations) both—

(a) section 3 of the Gaming Act 1968 or Article 56 of the Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985 (prohibition on charging for participation), and

(b) section 4 of that Act or Article 57 of that Order (prohibition of levy on stakes or winnings).”.

(5) In paragraph 5(1) of Schedule 3 to the Betting and Gaming Duties Act 1981 (c. 63) (bingo duty: exemptions: commercial amusements) for “Bingo duty shall not be charged in respect of” substitute “In calculating liability to bingo duty no account shall be taken of”.

(6) In paragraph 6 of Schedule 3 to that Act (bingo duty: exemptions: machine bingo) for “Bingo duty shall not be charged in respect of” substitute “In calculating liability to bingo duty no account shall be taken of”.

(7) In paragraph 10(1) of Schedule 3 to that Act (notification and registration of bingo-promoters) for “which will, or may, be chargeable with bingo duty” substitute “in connection with which bingo duty may be chargeable”.

(8) The following paragraphs of Schedule 3 to that Act shall cease to have effect—

(a) paragraph 11 (announcement of prizes),

(b) paragraph 12 (records), and

(c) paragraph 15 (disputes).

(9) In paragraph 16(2) of Schedule 3 to that Act (enforcement)—

(a) for “(being bingo which is or may be chargeable with bingo duty)” substitute “(being bingo in connection with which bingo duty may be chargeable)”, and

(b) paragraph (b) (and the word “or” immediately before it) shall cease to have effect.

(10) This section shall have effect in relation to bingo played on or after 27th October 2003 (with which day the first accounting period for the purposes of section 17 of the Betting and Gaming Duties Act 1981 shall begin).

10 Amusement machines not operated by coins or tokens

(1) In section 21 of the Betting and Gaming Duties Act 1981 (amusement machine licences), for subsections (3B) to (3D) (meaning of “fifty-penny machine”) substitute—

“(3B) For the purposes of this section an amusement machine is a “fifty-penny machine” if, and only if—

(a) where it is a machine on which a game can be played solo, the cost for each time the game is played on it solo—

(i) does not exceed 50p, or

(ii) where the machine provides differing numbers of games in different circumstances, cannot exceed 50p;

and

(b) where it is a machine on which a game can be played by more than one person at a time, the cost per player for each time the game is played on it simultaneously by more than one player—

(i) does not exceed 50p, or

(ii) where the machine provides differing numbers of games in different circumstances, cannot exceed 50p.”.

(2) In section 25(1) of that Act (definition of “amusement machine”), in paragraph (c) for “coin or token” substitute “coin, token or other thing”.

(3) In section 26(2) of that Act (interpretation), for the definitions of “two-penny machine”, “five-penny machine” and “ten-penny machine” substitute—

““two-penny machine” means an amusement machine in relation to which the cost for each time a game is played on it—

(a) does not exceed 2p, or

(b) where the machine provides differing numbers of games in different circumstances, cannot exceed 2p,

and “five-penny machine” and “ten-penny machine” have a corresponding meaning;”.

(4) In the following provisions of the Value Added Tax Act 1994 (c. 23)—

(a) the definition of “gaming machine” in section 23(4), and

(b) Note (3) (definition of “gaming machine”) to Group 4 of Schedule 9,

for “coin or token” substitute “coin, token or other thing”.

11 Amusement machines: use of currencies other than sterling

(1) In section 26 of the Betting and Gaming Duties Act 1981 (c. 63) (interpretation etc), omit the definition of “coin” in subsection (2).

(2) After that section insert—

“26A Amounts in currencies other than sterling

(1) Any reference in this Part of this Act to a amount in sterling, in the context of—

(a) the cost of playing a game, or

(b) the amount of the prize for a game,

includes a reference to the equivalent amount in another currency.

(2) The equivalent amount in another currency, in relation to any day, shall be determined by reference to the London closing exchange rate for the previous day.

(3) For the purposes of determining what duty is payable on an amusement machine licence in a case where this section applies, the equivalent in another currency of an amount in sterling shall be taken to be its equivalent on the day on which the application for the licence is received by the Commissioners, or the due date in the case of a default licence.

(4) In subsection (3) above—

“default licence” means a licence granted under paragraph 3(1) of Schedule 4A to this Act;

“due date” has the meaning given by paragraph 2(4) of that Schedule.”.

(3) This section does not apply in relation to any amusement machine licence granted before the day on which this Act is passed or to anything done under such a licence.

 
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