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Finance Act 2004

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CONTENTS

Finance Act 2004

2004 CHAPTER 12

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

4. Duty stamps for spirits etc

Hydrocarbon oil etc duties

5. Rates

6. Road fuel gas

7. Sulphur-free fuel

8. Definition of “fuel oil”

9. Mixing of rebated oil

10. Bioethanol

11. Biodiesel

12. Fuel substitutes

13. Warehousing

14. Treatment of certain energy products

Betting and gaming duties

15. General betting duty: pool betting

16. Rates of gaming duty

Amusement machine licence duty

17. Amusement machine licence duty: rates

Vehicle excise duty

18. Fee for payment of duty by credit card

PART 2

VALUE ADDED TAX

19. Disclosure of VAT avoidance schemes

20. Groups

21. Reverse charge on gas and electricity supplied by persons outside UK

22. Use of stock in trade cars for consideration less than market value

PART 3

INCOME TAX, CORPORATION TAX AND CAPITAL GAINS TAX

CHAPTER

INCOME TAX AND CORPORATION TAX CHARGE AND RATE BANDS

Income tax

23. Charge and rates for 2004-05

24. Personal allowances for those aged 65 or more

Corporation tax

25. Charge and main rate for financial year 2005

26. Small companies' rate and fraction for financial year 2004

27. Corporation tax starting rate and fraction for financial year 2004

28. The non-corporate distribution rate

Trusts

29. Special rates of tax applicable to trusts

CHAPTER 2

CORPORATION TAX: GENERAL

Transfer pricing

30. Provision not at arm’s length: transactions between UK taxpayers etc

31. Exemptions for dormant companies and small and medium-sized enterprises

32. Special applications of paragraph 6 of Schedule 28AA to the Taxes Act 1988

Penalties: temporary relaxation

33. Provision not at arm’s length: temporary relaxation of liability to penalty

Thin capitalisation

34. Payments of excessive interest etc

35. Elimination of double counting etc

36. Balancing payments and elections to pay tax instead

Transfer pricing and thin capitalisation: commencement

37. Commencement and transitional provisions

Expenses of companies with investment business and insurance companies

38. Expenses of management: companies with investment business

39. Accounting period to which expenses of management are referable

40. Expenses of insurance companies

41. Related amendments to other enactments

42. Commencement of sections 38 to 41

43. Companies with investment business: transitional provisions

44. Insurance companies: transitional provisions

Amounts reversing expenses of management deducted

45. Amounts reversing expenses of management deducted: charge to tax

Power to make consequential amendments

46. Power to make consequential amendments

Insurance companies: miscellaneous

47. Insurance companies etc.

Loan relationships and derivative contracts

48. Loan relationships: miscellaneous amendments

49. Derivative contracts: miscellaneous amendments

Accounting practice

50. Generally accepted accounting practice

51. Use of different accounting practices within a group of companies

52. Amendment of enactments that operate by reference to accounting practice

53. Treatment of expenditure on research and development

54. Trading profits etc. from securities: taxation of amounts taken to reserves

Miscellaneous

55. Duty of company to give notice of coming within charge to corporation tax

56. Relief for community amateur sports clubs

CHAPTER 3

CONSTRUCTION INDUSTRY SCHEME

Introduction

57. Introduction

58. Sub-contractors

59. Contractors

Deductions on account of tax from contract payments to sub-contractors

60. Contract payments

61. Deductions on account of tax from contract payments

62. Treatment of sums deducted

Registration of sub-contractors

63. Registration for gross payment or for payment under deduction

64. Requirements for registration for gross payment

65. Change in control of company registered for gross payment

66. Cancellation of registration for gross payment

67. Registration for gross payment: appeals

68. Registration for payment under deduction: cancellation and appeals

Verification, returns etc and penalties

69. Verification etc of registration status of sub-contractors

70. Periodic returns by contractors etc

71. Collection and recovery of sums to be deducted

72. Penalties

Supplementary

73. Regulations under this Chapter: supplementary

74. Meaning of “construction operations”

75. Meaning of “the Inland Revenue” etc and delegation of Board’s functions

76. Consequential amendments

77. Commencement and transitional provision

CHAPTER 4

PERSONAL TAXATION

Taxable benefits

78. Childcare and childcare vouchers

79. Exemption for loaned computer equipment

80. Vans

81. Emergency vehicles

82. European travel expenses of MPs and other representatives

Gift aid

83. Giving through the self-assessment return

Gifts with a reservation

84. Charge to income tax by reference to enjoyment of property previously owned

Employment-related securities and options

85. Relief where national insurance contributions met by employee

86. Shares in employee-controlled companies and unconnected companies

87. Restricted securities with artificially depressed value

88. Shares under approved plans and schemes

89. Shares acquired on public offer

90. Associated persons etc.

Miscellaneous

91. Income of spouses: jointly held property

92. Minor amendments of or connected with ITEPA 2003

CHAPTER 5

ENTERPRISE INCENTIVES

93. Enterprise investment scheme

94. Venture capital trusts

95. Corporate venturing scheme

96. Enterprise management incentives: subsidiaries

CHAPTER 6

EXEMPTION FROM INCOME TAX FOR CERTAIN INTEREST AND ROYALTY PAYMENTS

Introductory

97. Introductory

Exemption from income tax

98. Exemption from income tax for certain interest and royalty payments

99. Permanent establishments and “25% associates”

Exemption notices

100. Interest payments: exemption notices

Payment without deduction

101. Payment of royalties without deduction at source

102. Claim for tax deducted at source from exempt interest or royalty payments

Special relationships and anti-avoidance

103. Special relationships

104. Anti-avoidance

Supplementary

105. Consequential amendments

106. Transitional provision

CHAPTER 7

SAVINGS INCOME:DOUBLE TAXATION ARISING FROM WITHHOLDING TAX

Introductory

107. Introductory

Credit etc for special withholding tax

108. Income tax credit etc for special withholding tax

109. Capital gains tax credit etc for special withholding tax

110. Credit under Part 18 of Taxes Act 1988 to be allowed first

Computation of income etc

111. Computation of income etc subject to special withholding tax only

112. Computation of income etc subject to foreign tax and special withholding tax

Certificates to avoid levy of special withholding tax

113. Issue of certificate

114. Refusal to issue certificate and appeal against refusal

Supplementary

115. Supplementary

CHAPTER 8

CHARGEABLE GAINS

116. Restriction of gifts relief etc

117. Private residence relief

118. Authorised unit trusts: treatment of umbrella schemes

CHAPTER 9

AVOIDANCE INVOLVING LOSS RELIEF OF PARTNERSHIP

Individuals benefited by film relief

119. Individuals benefited by film relief

120. “Disposal of a right of the individual to profits arising from the trade”

121. “The losses claimed” and “the individual’s capital contribution to the trade”

122. Computing the chargeable amount

123. “Film-related losses” and “non-taxable consideration”

Individuals in partnership: restriction of relief

124. Restriction of relief: non-active partners

125. Partnerships exploiting films

Individuals in partnership: exit charge

126. Losses derived from exploiting licence: introductory

127. Charge to income tax

128. Definitions for purposes of section 127

129. Disposals to which section 126 applies

130. “A significant amount of time”

Companies in partnership

131. Companies in partnership

132. Companies in partnership: supplementary

133. Relationship with chargeable gains

CHAPTER 10

AVOIDANCE: MISCELLANEOUS

134. Finance leasebacks

135. Rent factoring of leases of plant or machinery

136. Manufactured dividends

137. Manufactured payments under arrangements having an unallowable purpose

138. Gilt strips

139. Gifts of shares, securities and real property to charities etc

140. Life policies etc.: restriction of corresponding deficiency relief

CHAPTER 11

MISCELLANEOUS

Reliefs for business

141. Relief for research and development: software and consumable items

142. Temporary increase in amount of first-year allowances for small enterprises

143. Deduction for expenditure by landlords on energy-saving items

144. Lloyd’s names: conversion to limited liability underwriting

Offshore matters

145. Offshore funds

146. Meaning of “offshore installation”

Health

147. Immediate needs annuities

148. Corporation tax: health service bodies

PART 4

PENSION SCHEMES ETC

CHAPTER 1

INTRODUCTION

Introductory

149. Overview of Part 4

Main concepts

150. Meaning of “pension scheme”

151. Meaning of “member”

152. Meaning of “arrangement”

CHAPTER 2

REGISTRATION OF PENSION SCHEMES

Registration

153. Registration of pension schemes

154. Persons by whom registered pension scheme may be established

155. Persons by whom scheme may be established: supplementary

156. Appeal against decision not to register

De-registration

157. De-registration

158. Grounds for de-registration

159. Appeal against decision to de-register

CHAPTER 3

PAYMENTS BY REGISTERED PENSION SCHEMES

Introductory

160. Payments by registered pension schemes

161. Meaning of “payment” etc

162. Meaning of “loan”

163. Meaning of “borrowing” etc

Authorised member payments

164. Authorised member payments

165. Pension rules

166. Lump sum rule

167. Pension death benefit rules

168. Lump sum death benefit rule

169. Recognised transfers

170. Appeal against decision to exclude recognised overseas pension scheme

171. Scheme administration member payments

Unauthorised member payments

172. Assignment

173. Benefits

174. Value shifting

Authorised employer payments

175. Authorised employer payments

176. Public service scheme payment

177. Authorised surplus payment

178. Compensation payments

179. Authorised employer loan

180. Scheme administration employer payments

Unauthorised employer payments

181. Value shifting

Borrowing

182. Unauthorised borrowing: money purchase arrangements

183. Effect of unauthorised borrowing: money purchase arrangements

184. Unauthorised borrowing: other arrangements

185. Effect of unauthorised borrowing: other arrangements

Chapter 4

REGISTERED PENSION SCHEMES: TAX RELIEFS AND EXEMPTIONS

Scheme investments

186. Income

187. Chargeable gains

Members' contributions

188. Relief for contributions

189. Relevant UK individual

190. Annual limit for relief

191. Methods of giving relief

192. Relief at source

193. Relief under net pay arrangements

194. Relief on making of claim

195. Transfer of certain shares to be treated as payment of contribution

Employers' contributions

196. Relief for employers in respect of contributions paid

197. Spreading of relief

198. Spreading of relief: cessation of business

199. Deemed contributions

200. No other relief for employers in connection with contributions

201. Relief for employees

Inland Revenue contributions

202. Minimum contributions under pensions legislation

Inheritance tax exemptions

203. Inheritance tax exemptions

Chapter 5

REGISTERED PENSION SCHEMES: TAX CHARGES

Charges on authorised payments

204. Authorised pensions and lump sums

205. Short service refund lump sum charge

206. Special lump sum death benefits charge

207. Authorised surplus payments charge

Unauthorised payments charge

208. Unauthorised payments charge

209. Unauthorised payments surcharge

210. Surchargeable unauthorised member payments

211. Valuation of crystallised rights for purposes of section 210

212. Valuation of uncrystallised rights for purposes of section 210

213. Surchargeable unauthorised employer payments

Lifetime allowance charge

214. Lifetime allowance charge

215. Amount of charge

216. Benefit crystallisation events and amounts crystallised

217. Persons liable to charge

218. Individual’s lifetime allowance and standard lifetime allowance

219. Availability of individual’s lifetime allowance

220. Pension credits from previously crystallised rights

221. Non-residence: general

222. Non-residence: money purchase arrangements

223. Non-residence: other arrangements

224. Transfers from recognised overseas pension scheme: general

225. Overseas scheme transfers: money purchase arrangements

226. Overseas scheme transfers: other arrangements

Annual allowance charge

227. Annual allowance charge

228. Annual allowance

229. Total pension input amount

230. Cash balance arrangements

231. Cash balance arrangements: uprating of opening value

232. Cash balance arrangements: adjustments of closing value

233. Other money purchase arrangements

234. Defined benefits arrangements

235. Defined benefits arrangements: uprating of opening value

236. Defined benefits arrangements: adjustments of closing value

237. Hybrid arrangements

238. Pension input period

Scheme sanction charge

239. Scheme sanction charge

240. Amount of charge

241. Scheme chargeable payment

De-registration charge

242. De-registration charge

Chapter 6

SCHEMES THAT ARE NOT REGISTERED PENSION SCHEMES

Non-UK schemes

243. Overseas pension schemes: migrant member relief

244. Non-UK schemes: application of certain charges

Employer-financed retirement benefit schemes

245. Restriction of deduction for contributions by employer

246. Restriction of deduction for non-contributory provision

247. Abolition of income tax charge in respect of employer payments

248. Employer’s cost of insuring against non-payment of benefit

249. Taxation of non-pension benefits

Chapter 7

COMPLIANCE

Information

250. Registered pension scheme return

251. Information: general requirements

252. Notices requiring documents or particulars

253. Appeal against notices

Accounting and assessment

254. Accounting for tax by scheme administrators

255. Assessments under this Part

Registration regulations

256. Enhanced lifetime allowance regulations

Penalties

257. Registered pension scheme return

258. Information required by regulations

259. Documents and particulars required by notice

260. Accounting return

261. Enhanced lifetime allowance regulations: documents and information

262. Enhanced lifetime allowance regulations: failures to comply

263. Lifetime allowance enhanced protection: benefit accrual

264. False statements etc

265. Winding-up to facilitate payment of lump sums

266. Transfers to insured schemes

Discharge of tax liability: good faith

267. Lifetime allowance charge

268. Unauthorised payments surcharge and scheme sanction charge

269. Appeal against decision on discharge of liability

Scheme administrator

270. Meaning of “scheme administrator”

271. Liability of scheme administrator

272. Trustees etc. liable as scheme administrator

273. Members liable as scheme administrator

274. Supplementary

CHAPTER 8

SUPPLEMENTARY

Interpretation

275. Insurance company

276. Relevant valuation factor

277. Valuation assumptions

278. Market value

279. Other definitions

280. Abbreviations and general index

Other supplementary provisions

281. Minor and consequential amendments

282. Orders and regulations

283. Transitionals and savings

284. Commencement

PART 5

OIL

285. Certain receipts not to be tariff receipts

286. Petroleum extraction activities: exploration expenditure supplement

287. Restrictions on expenditure allowable

288. Terminal losses

PART 6

OTHER TAXES

Climate change levy

289. Supplies to producers of commodities

Aggregates levy

290. Transitional tax credit in Northern Ireland: changes to existing scheme

291. Transitional tax credit in Northern Ireland: new scheme

Lorry road-user charge

292. Lorry road-user charge

Inheritance tax

293. Delivery of accounts etc

294. Grant of probate

295. Amendments to penalty regime

Stamp duty land tax and stamp duty

296. Miscellaneous amendments

Stamp duty land tax

297. Leases

298. Notification, registration and penalties

299. Claims not included in returns

300. Assents and appropriations by personal representatives

301. Chargeable consideration

302. Charities relief

303. Shared ownership leases

304. Application to certain partnership transactions

305. Liability of partners

PART 7

DISCLOSURE OF TAX AVOIDANCE SCHEMES

306. Meaning of “notifiable arrangements” and “notifiable proposal”

307. Meaning of “promoter”

308. Duties of promoter

309. Duty of person dealing with promoter outside United Kingdom

310. Duty of parties to notifiable arrangements not involving promoter

311. Arrangements to be given reference number

312. Duty of promoter to notify client of number

313. Duty of parties to notifiable arrangements to notify Board of number, etc.

314. Legal professional privilege

315. Penalties

316. Information to be provided in form and manner specified by Board

317. Regulations under Part 7

318. Interpretation of Part 7

319. Part 7: commencement and savings

PART 8

MISCELLANEOUS MATTERS

320. Exclusion of extended limitation period in England, Wales and Northern Ireland

321. Exclusion of extended prescriptive period in Scotland

322. Mutual assistance: customs union with the Principality of Andorra

323. Ending of shipbuilders' relief

324. Government borrowing: preparations for possible adoption of Euro

325. Premium bonds

PART 9

SUPPLEMENTARY PROVISIONS

326. Repeals

327. Interpretation

328. Short title

Schedule 1: New Schedule 2A to the Alcoholic Liquor Duties Act 1979

Schedule 2: Disclosure of value added tax avoidance schemes

Part 1: Principal amendments of Value Added Tax Act 1994

Part 2: Consequential amendments

Schedule 3: Corporation tax: the non-corporate distribution rate: supplementary provisions

Part 1: General provisions

Part 2: Allocation of excess NCDs to other companies

Part 3: Other supplementary provisions

Schedule 4: Amendments relating to the rate applicable to trusts

Schedule 5: Provision not at arm’s length: related amendments

Schedule 6: Expenses of companies with investment business and insurance companies

Schedule 7: Insurance companies etc

Schedule 8: Loan relationships: miscellaneous amendments

Schedule 9: Derivative contracts: miscellaneous amendments

Schedule 10: Amendment of enactments that operate by reference to accounting practice

Part 1: Loan relationships

Part 2: Derivative contracts

Part 3: Intangible fixed assets

Part 4: Foreign currency accounting

Schedule 11: Conditions for registration for gross payment

Part 1: Conditions to be satisfied by individuals

Part 2: Conditions to be satisfied by firms

Part 3: Conditions to be satisfied by companies

Part 4: Supplementary provisions

Schedule 12: Construction industry scheme: consequential amendments

Schedule 13: Childcare and childcare vouchers

Schedule 14: Vans

Schedule 15: Charge to income tax on benefits received by former owner of property

Schedule 16: Relief where national insurance contributions met by employee

Schedule 17: Minor amendments of or connected with the Income Tax (Earnings and Pensions) Act 2003

Schedule 18: Enterprise investment scheme

Part 1: Income tax relief

Part 2: Deferral relief

Part 3: Commencement

Schedule 19: Venture capital trusts

Part 1: Increase in relief on investments and distributions

Part 2: Abolition of deferral relief

Part 3: Miscellaneous

Schedule 20: Corporate venturing scheme

Schedule 21:Chargeable gains: restriction of gifts relief etc

Schedule 22: Chargeable gains: private residence relief

Schedule 23: Finance leasebacks: transitional provision

Schedule 24: Manufactured dividends

Schedule 25: Lloyd’s names: conversion to limited liability underwriting

Schedule 26: Offshore funds

Schedule 27: Meaning of “offshore installation”

Part 1: The new definition

Part 2: Minor and consequential amendments

Schedule 28: Registered pension schemes: authorised pensions—supplementary

Part 1: Pension rules

Part 2: Pension death benefit rules

Schedule 29: Registered pension schemes: authorised lump sums—supplementary

Part 1: Lump sum rule

Part 2: Lump sum death benefit rule

Schedule 30: Registered pension schemes: employer loans

Schedule 31: Taxation of benefits under registered pension schemes

Schedule 32: Registered pension schemes: benefit crystallisation events—supplementary

Schedule 33: Overseas pension schemes: migrant member relief

Schedule 34: Non-UK schemes: application of certain charges

Schedule 35: Pension schemes etc: minor and consequential amendments

Schedule 36: Pension schemes etc: transitional provisions and savings

Part 1: Pre-commencement pension schemes

Part 2: Pre-commencement rights: lifetime allowance charge

Part 3: Pre-commencement benefit rights

Part 4: Other provisions

Schedule 37: Oil taxation: tax-exempt tariffing receipts and assets producing them

Part 1: Amendments of the Oil Taxation Act 1983 relating to allowable expenditure and disposal receipts

Part 2: Transitional provision

Part 3: Amendments of the Taxes Act 1988

Part 4: Amendments of other enactments

Schedule 38: Schedule to be inserted as Schedule 19B to the Taxes Act 1988

Schedule 39: Stamp duty land tax and stamp duty

Part 1: Amendments to Part 4 of the Finance Act 2003: general

Part 2: Re-enactment, with changes, of amendments made by section 109 regulations

Schedule 40: Stamp duty land tax: claims not included in returns

Schedule 41: Stamp duty land tax: application to certain partnership transactions

Schedule 42: Repeals

Part 1: Excise duties

Part 2: Income tax, corporation tax and capital gains tax

Part 3: Pension schemes etc

Part 4: Other taxes

Part 5: Miscellaneous matters

 

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.

[22nd July 2004]

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 £99.80 per thousand cigarettes.
2.  Cigars £145.35 per kilogram.
3.  Hand-rolling tobacco £104.47 per kilogram.
4.  Other smoking tobacco and chewing tobacco 
  £63.90 per kilogram.

(2) This section shall be deemed to have come into force at 6 o'clock in the evening of 17th March 2004.

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 “£12.22” substitute “£12.59”.

(2) This section shall be deemed to have come into force at midnight on 21st March 2004.

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 STREGTH 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  50.38
Wine or made-wine of a strength exceeding 4 per cent but not exceeding 5.5 per cent 69.27
Wine or made-wine of a strength exceeding 5.5 per cent but not exceeding15 per cent and not sparkling 163.47
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

 

217.95”

 

(2) This section shall be deemed to have come into force at midnight on 21st March 2004.

4 Duty stamps for spirits etc

(1) At the beginning of Part 6 of the Alcoholic Liquor Duties Act 1979 (c. 4) (general control provisions) under the heading “Sale of dutiable alcoholic liquors” insert—

“64A Retail containers of certain alcoholic liquors to be stamped

Schedule 2A to this Act (duty stamps) has effect.”.

(2) Before Schedule 3 to that Act insert the Schedule 2A set out in Schedule 1 to this Act.

(3) In section 12(2) of the Finance Act 1994 (c. 9) (defaults engaging Commissioners' power to assess excise duty to the best of their judgement) after paragraph (c) insert—

“(ca) any failure by any person to comply with a requirement to which he is made subject by or under Schedule 2A to the Alcoholic Liquor Duties Act 1979 (duty stamps);”.

(4) In section 14(1) of that Act (reviewable decisions) after paragraph (bc) insert—

“(bd) any decision by the Commissioners as to whether or not any person is entitled to any repayment or credit by virtue of regulations under paragraph 4(2)(h) of Schedule 2A to the Alcoholic Liquor Duties Act 1979 (duty stamps), or the amount of the repayment or credit to which any person is so entitled;

(be) any decision by the Commissioners made by virtue of regulations under paragraph 4(2)(i) of that Schedule that some or all of a payment made, or security provided, is forfeit, or the amount which is so forfeit;”.

(5) The amendments made by this section have effect in relation to retail containers containing alcoholic liquor if the excise duty point for the alcoholic liquor falls on or after such day as the Treasury may by order made by statutory instrument appoint.

(6) An order under subsection (5) may contain such supplemental and transitional provision and savings as the Treasury think fit in connection with the coming into effect of those amendments.

(7) In subsection (5) “excise duty point” has the meaning given by section 1 of the Finance (No. 2) Act 1992 (c. 48).

Hydrocarbon oil etc duties

5 Rates

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

(a) in subsection (1A)(a) (ultra low sulphur petrol) for “£0.4710” substitute “£0.4902”,

(b) in subsection (1A)(b) (other light oil) for “£0.5620” substitute “£0.5790”,

(c) in subsection (1A)(c) (ultra low sulphur diesel) for “£0.4710” substitute “£0.4902”, and

(d) in subsection (1A)(d) (other heavy oil) for “£0.5327” substitute “£0.5487”.

(2) In section 6AA(3) of that Act (biodiesel: rate of duty) for “£0.2710” substitute “£0.2852”.

(3) In section 11(1) of that Act (rebate on heavy oil)—

(a) in paragraph (a) (fuel oil) for “£0.0382” substitute “£0.0624”,

(b) in paragraph (b) (gas oil: general) for “£0.0422” substitute “£0.0664”, and

(c) in paragraph (ba) (ultra low sulphur diesel) for “£0.0422” substitute “£0.0664”.

(4) In section 13A(1) of that Act (rebate on unleaded petrol) for “£0.0601” substitute “£0.0620”.

(5) In section 14(1) of that Act (rebate on light oil for use as furnace fuel) for “£0.0382” substitute “£0.0624”.

(6) This section shall come into force on 1st September 2004.

6 Road fuel gas

(1) At the end of section 5 of the Hydrocarbon Oil Duties Act 1979 (road fuel gas) (which becomes subsection (1)) add—

“(2) In this Act “natural road fuel gas” is road fuel gas with a methane content of not less than 80%.”

(2) For section 8(3) of that Act (rate of duty on road fuel gas) substitute—

“(3) The rate of the duty under this section shall be—

(a) in the case of natural road fuel gas, £0.1110 a kilogram, and

(b) in any other case, £0.1303 a kilogram.”

(3) After section 21(2) of that Act (regulations) insert—

“(2A) In the case of regulations made for the purposes mentioned in subsection (1)(c) above, different regulations may be made for different classes of road fuel gas.”

(4) This section shall come into force on 1st September 2004.

7 Sulphur-free fuel

(1) For section 1(3A) and (3B) of the Hydrocarbon Oil Duties Act 1979 (descriptions of hydrocarbon oil: ultra low sulphur petrol and unleaded petrol) substitute—

“(3A) “Ultra low sulphur petrol” means unleaded petrol—

(a) the sulphur content of which does not exceed 0.005 per cent. by weight,

(b) the aromatics content of which does not exceed 35 per cent. by volume, and

(c) which is not sulphur-free petrol.

(3B) “Sulphur-free petrol” means unleaded petrol the sulphur content of which does not exceed 0.001 per cent. by weight (or is nil).

(3C) “Unleaded petrol” means petrol that contains not more than 0.013 grams of lead per litre of petrol; and petrol is “leaded petrol” if it is not unleaded petrol.”

(2) For section 1(6) of that Act (ultra low sulphur diesel) substitute—

“(6) “Ultra low sulphur diesel” means gas oil—

(a) the sulphur content of which does not exceed 0.005 per cent. by weight,

(b) the density of which does not exceed 835 kilograms per cubic metre at a temperature of 15°C,

(c) of which not less than 95 per cent. by volume distils at a temperature not exceeding 345°C, and

(d) which is not sulphur-free diesel.

(7) “Sulphur-free diesel” means gas oil the sulphur content of which does not exceed 0.001 per cent. by weight (or is nil).”

(3) In section 1(1) of that Act for “Subsections (2) to (6)” substitute “Subsections (2) to (7)”.

(4) For section 2A(1) of that Act (power to amend definitions) substitute—

“(1) The Treasury may by order made by statutory instrument amend the definition for the purposes of this Act of—

(a) sulphur-free diesel;

(b) sulphur-free petrol;

(c) ultra low sulphur diesel;

(d) ultra low sulphur petrol;

(e) unleaded petrol and leaded petrol.”

(5) In section 6(1A) of that Act (rates of duty)—

(a) after paragraph (a) insert—

“(aa) £0.4852 a litre in the case of sulphur-free petrol;”,

(b) in paragraph (b) after “other than ultra low sulphur petrol” insert “and sulphur-free petrol”,

(c) after paragraph (c) insert—

“(ca) £0.4852 a litre in the case of sulphur-free diesel;”, and

(d) in paragraph (d) after “other than ultra low sulphur diesel” insert “and sulphur-free diesel”.

(6) In section 13AA(6) of that Act (restrictions on use of rebated kerosene) after “which is not ultra low sulphur diesel” insert “or sulphur-free diesel”.

(7) In section 13A(1) of that Act (rebate on unleaded petrol) after “, other than ultra low sulphur petrol” insert “and sulphur-free petrol”.

(8) In section 27 of that Act (interpretation)—

(a) after the definition of “road vehicle” insert—

““sulphur-free diesel” has the meaning given by section 1(7) above;

“sulphur-free petrol” has the meaning given by section 1(3B) above;”, and

(b) in the definition of “unleaded petrol” and “leaded petrol” for “section 1(3B) above.” substitute “section 1(3C) above.”

(9) This section shall come into force on 1st September 2004.

8 Definition of “fuel oil”

Before section 2A(2) of the Hydrocarbon Oil Duties Act 1979 (c. 5) (power to amend definitions) insert—

“(1C) The Treasury may by order made by statutory instrument amend the definition for the purposes of section 11 of “fuel oil”.”

9 Mixing of rebated oil

(1) For section 20AAA of the Hydrocarbon Oil Duties Act 1979 (mixing of rebated oil) substitute—

“20AAA Mixing of rebated oil

(1) A duty of excise shall be charged on a mixture which is—

(a) produced by mixing fully rebated heavy oil with heavy oil which is not fully rebated, and

(b) supplied for use as fuel for any engine, motor or other machinery.

(2) A duty of excise shall be charged on a mixture which is—

(a) produced by mixing partially rebated heavy oil with heavy oil which is not partially rebated, and

(b) supplied for use as fuel for any engine, motor or other machinery;

but a mixture on which duty is charged under subsection (1) shall not be charged under this subsection.

(3) A duty of excise shall be charged on a mixture which is produced by mixing—

(a) fully or partially rebated heavy oil, with

(b) biodiesel or a substance containing biodiesel.

(4) The rate of duty on a mixture under subsection (1) or (2) shall be—

(a) in the case of a mixture supplied for use as fuel for a road vehicle, the rate of duty specified in section 6(1A)(d) (general rate for heavy oil), and

(b) in any other case, equivalent to the rate of rebate specified in section 11(1)(b) (general rate for gas oil).

(5) The rate of duty on a mixture under subsection (3) shall be the rate of duty specified in section 6(1A)(d).

(6) For the purposes of this section—

(a) oil is fully rebated if a rebate has been allowed in respect of it under section 11(1)(c) (general rebate for heavy oil),

(b) oil is partially rebated if a rebate has been allowed in respect of it under any other provision of section 11 or under section 13AA, and

(c) a reference to mixing is a reference to non-approved mixing (within the meaning given by section 20A(5)).

(7) The person liable to pay duty charged under this section on supply or production of a mixture is the person supplying or producing the mixture.

(8) Where duty under a provision of this Act has been paid on an ingredient of a mixture, the duty charged under this section shall be reduced by the amount of any duty that the Commissioners are satisfied has been paid on the ingredient (but not to a negative amount).

(9) The Commissioners may exempt a person from liability to pay duty under any provision of this Act in respect of production or supply of a mixture of a kind described in subsection (1)(a), (2)(a) or (3) if satisfied that—

(a) the liability was incurred accidentally, and

(b) in the circumstances the person should be exempted.”

(2) In section 20AAB of that Act (mixing of rebated oil: supplementary)—

(a) for subsections (1) and (2) substitute—

“(1) A person who supplies or produces a mixture on which duty is charged under section 20AAA above must notify the Commissioners of the supply or production—

(a) in advance, or

(b) within the period of seven days beginning with the date of supply or production.”, and

(b) in subsection (3) omit “or (2)”.

(3) Schedule 2A to that Act shall cease to have effect.

(4) This section—

(a) in so far as it imposes or relates to the charge specified in section 20AAA(1) or (2) of that Act (as substituted by subsection (1) above), shall have effect in relation to anything supplied on or after the date on which this Act is passed,

(b) in so far as it imposes or relates to the charge specified in section 20AAA(3) of that Act (as substituted by subsection (1) above), shall have effect in relation to anything produced on or after the date on which this Act is passed, and

(c) in so far as it causes sections 20AAA and 20AAB(1) and (2) of, and Schedule 2A to, that Act to cease to have effect in their present form, shall come into force on the day on which this Act is passed.

(5) But no duty shall be charged on the supply of a mixture under section 20AAA(1) or (2) of that Act (as substituted by subsection (1) above) if duty was charged on the production of the mixture under section 20AAA as it had effect before the date on which this Act is passed.

10 Bioethanol

(1) After section 2AA of the Hydrocarbon Oil Duties Act 1979 (c. 5) (biodiesel) insert—

“2AB Bioethanol

(1) In this Act “bioethanol” means a liquid fuel—

(a) consisting of ethanol produced from biomass, and

(b) capable of being used for the same purposes as light oil.

(2) In subsection (1)—

(a) “liquid” does not include any substance that is gaseous at a temperature of 15°C and under a pressure of 1013.25 millibars, and

(b) “biomass” means vegetable and animal substances constituting the biodegradable fraction of—

(i) products, wastes and residues from agriculture, forestry and related activities, or

(ii) industrial and municipal waste.

(3) A substance shall be treated as falling within subsection (1)(a) if it—

(a) is denatured alcohol for the purposes of section 5 of the Finance Act 1995 (c. 4), and

(b) would fall within subsection (1)(a) above (without reliance on this subsection) but for the presence of a component introduced—

(i) for the purpose of rendering the substance denatured alcohol, and

(ii) in the minimum proportion necessary for that purpose.”

(2) After section 2A(1A) of that Act (power to amend definitions: biodiesel) insert—

“(1B) The Treasury may by order made by statutory instrument amend the definition for the purposes of this Act of “bioethanol”.”

(3) After section 6AC of that Act (biodiesel: application of provisions relating to hydrocarbon oil) insert—

“6AD Excise duty on bioethanol

(1) A duty of excise shall be charged on the setting aside for a chargeable use by any person, or (where it has not already been charged under this section) on the chargeable use by any person, of bioethanol.

(2) In subsection (1) “chargeable use” means use—

(a) as fuel for any engine, motor or other machinery,

(b) as an additive or extender in any substance so used, or

(c) for the production of bioethanol blend.

(3) The rate of duty under this section shall be £0.2852 a litre.

6AE Excise duty on blends of bioethanol and hydrocarbon oil

(1) A duty of excise shall be charged on bioethanol blend—

(a) imported into the United Kingdom, or

(b) produced in the United Kingdom and delivered for home use from a refinery or other premises used for the production of hydrocarbon oil or from any bonded storage for hydrocarbon oil, not being bioethanol blend chargeable with duty under paragraph (a) above.

(2) In this Act “bioethanol blend” means any mixture that is produced by mixing—

(a) bioethanol, and

(b) hydrocarbon oil not charged with excise duty.

(3) The rate at which the duty shall be charged on any bioethanol blend shall be a composite rate representing—

(a) in respect of the proportion of the blend that is hydrocarbon oil, the rate that would be applicable to the blend if it consisted entirely of hydrocarbon oil of the description that went into producing the blend, and

(b) in respect of the proportion of the blend that is bioethanol, the rate that would be applicable to the blend if it consisted entirely of bioethanol.

(4) A reference in subsection (3) to a proportion is to a proportion by volume to the nearest 0.001%.

(5) If the Commissioners are not satisfied as to the proportion of bioethanol in any bioethanol blend, the rate of duty chargeable shall be the rate that would be applicable to the blend if it consisted entirely of hydrocarbon oil of the description that went into producing the blend.

(6) Where imported bioethanol blend is removed to a refinery, the duty chargeable under subsection (1) above shall, instead of being charged at the time of the importation of the blend, be charged on the delivery of any goods from the refinery for home use and shall be the same as that which would be payable on the importation of like goods.

6AF Application to bioethanol and bioethanol blend of provisions relating to hydrocarbon oil

(1) The Commissioners may by regulations provide for—

(a) references in this Act, or specified references in this Act, to hydrocarbon oil to be construed as including references to—

(i) bioethanol;

(ii) bioethanol blend;

(b) references in this Act, or specified references in this Act, to duty on hydrocarbon oil to be construed as including references to duty under—

(i) section 6AD above;

(ii) section 6AE above;

(c) bioethanol, or bioethanol blend, to be treated for the purposes of such of the following provisions of this Act as may be specified as if it fell within a specified description of hydrocarbon oil.

(2) Where the effect of provision made under subsection (1) above is to extend any power to make regulations, provision made in exercise of the power as extended may be contained in the same statutory instrument as the provision extending the power.

(3) In this section “specified” means specified by regulations under this section.

(4) Regulations under this section may make different provision for different cases.

(5) Paragraph (b) of subsection (1) above shall not be taken as prejudicing the generality of paragraph (a) of that subsection.”

(4) In section 6A(1) of that Act (fuel substitutes) for “which is not hydrocarbon oil, biodiesel or bioblend” substitute “which is not—

(a) hydrocarbon oil,

(b) biodiesel,

(c) bioblend,

(d) bioethanol, or

(e) bioethanol blend.”

(5) At the end of section 11(6) of that Act (rebate on heavy oil: exception) add “or bioethanol blend”.

(6) At the end of section 13AA of that Act (restrictions on use of rebated kerosene) add—

“(7) Nothing in this section has the effect of allowing a rebate on bioblend or bioethanol blend.”

(7) In section 14 of that Act (rebate on light oil for use as furnace fuel) after subsection (1) insert—

“(1A) No rebate shall be allowed under this section in respect of bioethanol blend.”

(8) In section 22 of that Act (prohibition on use of petrol substitutes on which duty has not been paid)—

(a) after subsection (1AA) insert—

“(1AB) Where any person—

(a) puts any bioethanol to a chargeable use (within the meaning of section 6AD above), and

(b) knows or has reasonable cause to believe that there is duty charged under section 6AD above on that bioethanol which has not been paid and is not lawfully deferred,

his putting the bioethanol to that use shall attract a penalty under section 9 of the Finance Act 1994 (c. 9) (civil penalties), and any goods in respect of which a person contravenes this section shall be liable to forfeiture.”, and

(b) in subsection (1A) for “subsection (1) or (1AA) above.” substitute “subsection (1), (1AA) or (1AB) above.”

(9) In section 27(1) of that Act (interpretation) after the definition of “biodiesel” insert—

““bioethanol” has the meaning given by section 2AB above;

“bioethanol blend” has the meaning given by section 6AE(2) above;”.

(10) This section shall come into force on 1st January 2005.

(11) But no duty shall be charged under section 6AD or 6AE of that Act (inserted by subsection (3) above) in respect of the chargeable use of any goods, or the setting aside of any goods for a chargeable use, if before 1st January 2005—

(a) the goods were used or set aside for a chargeable use within the meaning of section 6A of that Act, and

(b) a duty of excise was charged under that section on that use or setting aside.

11 Biodiesel

(1) In section 6AA(2) of the Hydrocarbon Oil Duties Act 1979 (c. 5) (excise duty on biodiesel) after paragraph (b) add—

“(c) for the production of bioblend.”

(2) This section shall come into force on 1st January 2005.

12 Fuel substitutes

(1) For section 6A(2)(b) of the Hydrocarbon Oil Duties Act 1979 (fuel substitutes: additives and extenders) substitute—

“(b) as an additive or extender in any substance so used.”

(2) This section shall have effect in relation to anything done on or after the date on which this Act is passed.

13 Warehousing

After section 23B of the Hydrocarbon Oil Duties Act 1979 (regulation of traders in controlled oil) insert—

“23C Warehousing

(1) For the purposes of Part VIII of the Customs and Excise Management Act 1979 (c. 2) (warehousing) the substances specified in subsection (4) shall be treated as if they were chargeable with duty (and therefore within the scope of section 92(1)(a) or (c) of that Act) whether or not duty is in fact chargeable.

(2) The Commissioners may make regulations under section 93 of that Act (warehousing regulations) that relate to a substance specified in subsection (4).

(3) In respect of a substance specified in subsection (4) which has been or is to be deposited in an excise warehouse by virtue of subsection (2), the Commissioners may—

(a) treat the substance, or make provision by regulations for treating the substance, as if duty were chargeable in relation to it by virtue of a specified enactment;

(b) make any regulations, or do any other thing, of a kind that they could make or do (whether or not by virtue of a provision of Part VIII of that Act) in respect of a substance deposited in an excise warehouse under Part VIII of that Act.

(4) The substances referred to in subsection (1) are—

(a) petroleum gas,

(b) animal fat set aside for use as motor fuel or heating fuel,

(c) vegetable fat set aside for use as motor fuel or heating fuel,

(d) non-synthetic methanol set aside for use as motor fuel or heating fuel,

(e) biodiesel,

(f) a mixture of two or more substances specified in paragraphs (a) to (e), and

(g) any other substance specified for the purposes of this section in regulations made by the Commissioners.

 
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