38/01

30 March 2001

PUBLICATION OF THE FINANCE BILL

The Chancellor made his 2001 Budget statement against the backdrop of the best economic conditions for a generation, with inflation at its lowest level for 30 years, the lowest long-term interest rates for 35 years, and the lowest unemployment since 1975, with more people in work than ever. It is a Budget for growth and for stability.

Finance Bill 2001 is published today. Paymaster General Dawn Primarolo said:

?This Budget builds on our success in creating a solid foundation of macroeconomic stability and sound public finances. We will not abandon our commitment to stability. It is that stability that means Britain's economy grew at 3 per cent last year. It is that stability that means we have extra money to invest in schools and hospitals. And it is that stability that means we are able to give extra help where and when it is needed most.?

The attached background notes briefly describe the clauses and schedules in the Bill. More detailed explanatory notes on clauses are available from HM Treasury.

Further explanatory notes will be made available from HM Treasury for amendments to the Finance Bill as and when they are made during the passage of the Bill through Parliament. Also, where Ministers undertake to write to Members of Parliament with further detailed explanations regarding a particular measure, such letters will be publicised. This will be by way of the HM Treasury, Inland Revenue or Customs and Excise website, or by Press Release or Business Note as appropriate.

NOTES TO EDITORS

1. Copies of the Finance Bill are available today at all Stationery Office bookshops, price £10.

2. Explanatory Notes will be available for each clause and schedule of the Bill. The Notes are being deposited in Parliament, with the authority of Ministers, to provide Parliament with a better understanding of the purpose and effect of the Government's proposals during the passage of the Finance Bill.

3. The Explanatory Notes are available from the Public Enquiry Unit, HM Treasury, Parliament Street, London, SW1P 3AG on 020 7270 4558, price £10 per set. As HM Treasury Public Enquiry Unit does not have invoicing or credit card facilities, payment should be cash (exact sum only) or by cheque made payable to HM Treasury Votes Cash Account. Alternatively, click on the link below to see the Notes.

Internal links

4. Press copies of Explanatory Notes are available from 020 7270 5238.

FINANCE BILL 2001 LOBBY NOTES PART I EXCISE DUTIES

Hydrocarbon oil duties

Clause 1 reduces the rates of duty on ultra-low sulphur petrol, ultra-low sulphur diesel and gas used as road fuel. In addition, the clause provides for a temporary reduction in the rate of duty on unleaded petrol until 14 June 2001. The changes took effect from 6 pm on 7 March 2001. (HMT/DETR 1)

Clause 2 and Repeal Schedule 32 (I) (1) removes the separate, effective rate of duty for higher-octane unleaded petrol (also known as lead replacement petrol (LRP) or super unleaded petrol). This change took effect from 6 pm on 7 March 2001. (HMT/DETR 1)

Clause 3 provides that the Commissioners may allow reliefs as regards excise duty on fuel used by businesses within approved pilot projects connected with the technological development of more environment-friendly fuels. The provision will take effect from Royal Assent. (HMT/DETR 1)

Tobacco products duty

Clause 4 increases the rates of excise duties on tobacco products (cigarettes, cigars, hand-rolling tobacco, other smoking tobacco and chewing tobacco) with effect from 6 pm on 7 March 2001. (C&E 2)

Alcoholic liquor duties

Clause 5 provides for an amendment to the Alcoholic Liquor Duties Act 1979, which will give Customs & Excise the power to make regulations concerning the addition of substances, mixing or carrying out of operations on cider (and perry). This is an anti-avoidance measure aimed at prohibiting any operations performed after duty has become payable, which, if carried out earlier, would have resulted in a greater amount of duty being due. (C&E 2)

Betting and gaming duties

Clause 6, Schedule 1 and Repeal Schedule 32 (I) (2) make provision for changing the basis upon which the amount of general betting duty is calculated and expand the scope of the duty. The changes are intended to take effect no later than 1 January 2002. (C&E 1)

Clause 7 revises the duty bands for gaming duty for all accounting periods beginning on or after 1 April 2001. (C&E 1)

Vehicle excise duty

Clause 8 increases the engine size below which the lower rate of vehicle excise duty is paid for cars registered before 1 March 2001 and other vehicles paying the general rate from 1200cc to 1549cc. The change will take effect on 1 July 2001, and will be backdated to November 2000; it provides that rebates will be paid against licences taken out for vehicles between 1200cc and 1549cc during the period between 1 November 2000 and 30 July 2001. The rebates will be £55 for 12-month licences and £27.50 for six-month licences. (HMT/DETR 1)

Clause 9 and Schedule 2 provide for changes to vehicle excise duty rates for goods vehicles. It comes into effect on 1 December 2001 and sets out a simpler and more flexible system of taxation for goods vehicles. (HMT/DETR 1)

Clause 10 provides for changes to vehicle excise duty rates for goods vehicles used for moving unusually large or heavy indivisible loads. It comes into effect on 1 December 2001. (HMT/DETR 1)

Clause 11 changes the rates of excise duty payable for recovery vehicles, with effect from 1 December 2001. (HMT/DETR 1)

Clause 12 introduces a definition of ?mobile pumping vehicle? into the Special Vehicle group. The provision takes effect from Royal Assent.

Clause 13 provides for special concessionary and electric vehicles to be exempted from VED. The vehicles included are tractors, agricultural engines, light agricultural vehicles, mowing machines, snowploughs, gritters, steam and electrically propelled vehicles. Provision is also given for a rebate of duty to be paid to all eligible keepers. (HMT/DETR 1)

Clause 14 amends Section 19(1) of the Vehicle Excise and Registration Act 1994. It enables the Secretary of State to accept applications for refunds of VED refunds made by electronic means providing certain conditions are satisfied. The clause also repeals Section 19(3) of the Vehicle Excise and Registration Act, which provides a power to withhold refunds of VED from vehicle keepers who failed to make a Statutory Off Road Notification (SORN). (HMT/DETR 1)

General

Clause 15, Schedule 3 and Repeal Schedule 32 (I) (4) provides for the payment of compensatory interest where excise duty has been overpaid or under-claimed as a result of Customs error or where the repayment of a claim to excise duty has been unduly delayed. Provision is also made for the repayment of excise duty, and the payment of compensatory interest, to persons or businesses incorrectly refused authorisation or approval to obtain goods relieved of excise duty. The changes will take effect from a day to be appointed. (REV/C&E 2)

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PART II AGGREGATES LEVY

Charging provisions

Clause 16 makes the charging provision to aggregates levy.

Clause 17 defines aggregate and taxable aggregate.

Clause 18 sets out what shall and what shall not be considered aggregate for the purpose of the levy as a result of certain processes - ?exempt processes? - being applied to the aggregate.

Clause 19 sets out the circumstances under which aggregate is subjected to commercial exploitation and hence liable to aggregates levy.

Clause 20 defines the originating site of aggregate - referred to in Clause 19(2)(a).

Clause 21 defines the person who is the operator of a site for the purposes of the levy.

Clause 22 sets out who shall taken to be responsible for exploitation of aggregate under different circumstances and hence who shall be charged with the levy under those circumstances.

Clause 23 enables the Commissioners of Customs and Excise to make regulations to determine the weight of aggregate and sets out, in broad terms, the rules and conditions which the regulations may prescribe.

Administration and enforcement

Clause 24 and Schedule 4 set out the provisions for registering persons for aggregates levy.

Clause 25 enables the Commissioners of Customs and Excise to make regulations with respect to returns and payment of aggregates levy and sets out, in broad terms, the rules and conditions which the regulations may prescribe.

Clause 26 provides for the Commissioners to request security from any person where it is deemed necessary for the protection of the revenue.

Clause 27 gives effect to Schedule 5 to the Act, which makes provision for the recovery of amounts of aggregates levy due from any person and for the interest payable on such amounts

Clause 28 gives effect to Schedule 6 to the Act, which makes provision for and in connection with the imposition of criminal and civil penalties for the evasion of aggregates levy and for related misconduct.

Clause 29 gives effect to Schedule 7 to the Act, which provides for the supply of information to the Commissioners, the powers under which the Commissioners may collect information for enforcement purposes and about evidence.

Credits and repayments

Clause 30 enables the Commissioners of Customs and Excise to make regulations with respect to relief from aggregates levy by way of credit or repayment and sets out, in broad terms, the rules and conditions which the regulations may prescribe.

Clause 31 provides for repayment of overpaid levy and enables the Commissioners, by regulation, to prescribe the form and manner of any claim to repayment.

Clause 32 contains supplementary provisions about repayments of aggregates levy (time limit on claims and unjust enrichment) and gives effect to Schedule 8 (which contains further provision about payments and repayments by the Commissioners and about setting off).

Non-resident taxpayers

Clause 33 enables the Commissioners of Customs and Excise to make regulations with respect to the appointment of tax representatives for taxpayers who are resident overseas and sets out, in broad terms, the rules and conditions which the regulations may prescribe.

Clause 34 sets out the duties and obligations of the tax representative.

Other special cases

Clause 35 gives effect to Schedule 9 to the Act which makes provision for two or more companies to be treated as a group for the purposes of the levy.

Clause 36 enables the Commissioners of Customs and Excise to make regulations determining who is to fulfil the tax obligations of businesses that are partnerships or other unincorporated bodies. It also makes specific provision for such businesses regarding matters such as who is accountable for the levy and the extent of certain persons? liability.

Clause 37 enables the Commissioners of Customs and Excise to make various provisions by regulation for the application of the aggregates levy rules in cases where an insolvency procedure is applied to a person or a deceased person's estate.

Clause 38 enables the Commissioners of Customs and Excise to make regulations concerning certain relevant requirements which must be fulfilled by a person carrying on the business of an individual who has died or become incapacitated.

Clause 39 enables the Commissioners of Customs and Excise to make various provisions by regulations in order to secure continuity when a business is transferred from one person to another as a going concern.

Review and appeal

Clause 40 provides for a right of review of various decisions by the Commissioners and the procedures which shall apply to the review process.

Clause 41 provides that an appeal may be made to an appeal tribunal in respect of decisions confirmed on review by the Commissioners (or deemed to have been so confirmed) and sets out the conditions that must be fulfilled for an appeal to be entertained.

Clause 42 makes provision for supplementary matters relating to appeals - such as what may happen when a tribunal finds that an assessment should have been for a higher amount of tax, or that a liability to a penalty or interest arises.

Clause 43 provides that contracts entered into in certain circumstances before the introduction of aggregates levy may be adjusted to take account of the levy.

General provisions

Clause 44 provides for the destination of all monies collected or received for or on account of aggregates levy in Great Britain, and in Northern Ireland.

Clause 45 makes provision in respect of the Commissioners? powers to make regulations and orders relating to aggregates levy.

Clause 46 makes provision for civil penalties and gives effect to Schedule 10 to the Act, which makes provision about the assessment of civil penalties imposed and about interest on such penalties.

Clause 47 makes provision for the service of notices, notifications and requirements and for the withdrawal or variation of the same.

Clause 48 defines the various expressions used in the aggregates levy legislation.

Supplemental

Clause 49 makes a number of minor and consequential amendments to other enactments.

Part III INCOME TAX, CORPORATION TAX AND CAPITAL GAINS TAX
CHAPTER I
CHARGE AND RATES

Income Tax

Clause 50 imposes the income tax charge for 2001-02, and sets the starting, basic, and higher rates of tax at 10 per cent, 22 per cent, and 40 per cent, respectively. (REV/C&E 3)

Clause 51 specifies the amount of the starting rate limit for 2001-02. It has been has been set at £1,880, which is an increase of £300 above statutory indexation. (REV/C&E 3)

Clause 52 specifies the amount of children's tax credit in 2001-02 at £5,200, given at the rate of 10 per cent, instead of £4,420. (REV/C&E 3)

Clause 53 and Schedule 11 introduce an additional amount of children's tax credit from April 2002 for the year of a child's birth. The clause provides, from 2002?03, for an additional £5,200 of children's tax credit at the rate of 10 per cent. This additional credit will be added to the amount that would be available in respect of an older child. Schedule 11 sets out the consequential changes for the rules for allocation of the credit where the qualifying child or qualifying baby is resident with more than one adult during a year of assessment. (REV/C&E 3)

Corporation tax

Clause 54 charges corporation tax for the financial year beginning 1 April 2002 and sets the main rate at 30 per cent (the same as for the previous year). (REV 1)

Clause 55 provides for the small companies? rate of corporation tax for the financial year beginning 1 April 2001 to be 20 per cent, and for the fraction used in calculating marginal relief above the small companies? rate to be one fortieth (the same as for the previous year). (REV 1)

Clause 56 provides for the starting rate of corporation tax for the financial year beginning 1 April 2001 to be 10 per cent, and for the fraction used in calculating marginal relief above the starting rate to be one fortieth (the same as for the previous year). (REV 1)

CHAPTER II
OTHER PROVISIONS

Employment

Clause 57 and Schedule 12 introduce a new tax exemption for mileage allowance payments, up to the approved rate, paid by employers to their employees for undertaking qualifying business travel in their own vehicles. It also exempts payments of up to 5p per mile paid in respect of business passengers. Employees who do not receive any mileage allowance payments, or payments that are less than the approved rate, from their employers can claim tax relief up to that rate. The clause takes effect for tax years from 2002/03. Schedule 12 inserts schedule 12AA (definitions of terms relating mileage allowance) into Taxes Act 1988, and makes consequential amendments. (REV BN 2)

Clause 58. Nil liability notices, commonly known as dispensations, are issued to employers by Inspectors of Taxes in relation to expenses payments and benefits that will not create a tax liability. This saves unnecessary reporting. With the introduction of new approved mileage allowance payments that will be tax exempt, dispensations will no longer apply to payments to an employee for using their own vehicle for business travel. (REV BN 2)

Clause 59 removes the right for an employee to make a claim for capital allowance relief in relation to a car or other vehicle used for qualifying business travel. Under the existing rules an office holder or employee can claim capital allowances on expenditure incurred on a car or other vehicle used for qualifying business travel. From 2002/03 onwards, they will be entitled to claim statutory authorised mileage relief in respect of such travel. This clause prevents double relief being given by removing from 2002/03 the right to claim capital allowances as well. (REV BN 2)

Clause 60 This clause extends the existing tax exemption for employees travelling from home to work on an employer provided works bus. The minimum number of passenger seats is reduced from 12 to 9. This will make it easier for small employers to take advantage of this tax exemption. To ensure that minibuses are safe, the exemption will apply only to vehicles originally constructed to carry 9 passengers or more. (REV BN 1)

Clause 61 and Schedule 13 introduce amendments to the All-Employee Share Ownership plan (?AESOP?) to make it easier for companies to administer (REV 3).

Enterprise incentives

Clause 62 and Schedule 14 introduce amendments to Enterprise Management Incentives (?EMI?). These double the amount of share options that can be granted under EMI to £3 million and remove the limit on the number of employees in each company who can hold qualifying EMI options. They also introduce other changes, which make EMI easier to operate. (REV 3/REV BN 6)

Clause 63 and Schedule 15 make a number of amendments to the Enterprise Investment Scheme (EIS):

the time companies have to employ all the money raised through the scheme is extended from a 12 to a 24 month period, provided that 80% is employed within the first 12 month period;
rules withdrawing investors? tax reliefs when value is received are relaxed;
companies that float on a recognised stock exchange after the share issue will not now normally cease to qualify;

special provisions for repayment supplement and companies in the oil sector are repealed. (REV/C&E 1, REV BN 11)

Clause 64 and Schedule 16 amend the Venture Capital Trust (VCT) and Corporate Venturing Scheme (CVS) rules. The main change for VCTs is that the proportion of money a company invested in must use within 12 months is reduced from 100% to 80% with the remainder being employed within a further 12 months. A similar change is made to the CVS. In addition, the CVS rules which apply where value is received from an investee company are modified to keep them in line with changes made to the corresponding Enterprise Investment Scheme rules under Clause 63 and Schedule 15. (REV/C&E 1, REV BN 11)

Clause 65 and Schedule 17 provide for 100 per cent first year allowances for expenditure incurred on or after 1 April 2001 on designated energy-saving technologies and products. (REV BN 10)

Clause 66 and Schedule 18 extend the special rules for giving plant and machinery capital allowances on fixtures to expenditure on designated energy-saving equipment which a business is contracted to provide and operate under an energy services agreement. They apply in cases where the business does not hold an interest in the land to which the equipment is attached. (REV BN 10)

Clause 67 and Schedule 19 provide for 100 per cent capital allowances for expenditure incurred from Royal Assent on renovating or converting space above shops and other commercial premises into flats for letting. (REV BN 15)

Clause 68 and Schedule 20 extend the existing capital allowances for demolition of oil installations to the costs of preparation for reuse, and also the costs of removing and mothballing oil installations when their eventual fate has not been decided. 100 per cent capital allowances will be available where this takes place in connection with the closing down of a UK oilfield. Otherwise, they will be available on the 25 per cent reducing balance basis. (REV BN 20)

Clause 69 and Schedule 21 make minor amendments to the Capital Allowances Act 2001. These deal with small, technical points missed when the legislation was rewritten. They maintain what was the tax treatment in practice before the legislation was rewritten. The changes will apply, like the new Capital Allowances Act 2001, to chargeable periods ending on or after 1 April 2001 for corporation tax, and on or after 6 April 2001 for income tax. (REV BN 9)

Other relieving provisions

Clause 70 and Schedules 22 and 23 will enable companies that acquire contaminated land for the purposes of their trade or Schedule A business to claim an enhanced deduction of 150% for their clean up costs. The provisions increase the amount that a company can deduct for qualifying land remediation expenditure from 100% to 150%. Where that enhanced deduction results in a loss then the loss can be used in the normal way or it can be surrendered in return for a cash payment. The scheme will apply to qualifying remediation expenditure incurred on or after the date of Royal Assent of the Finance Bill. (REV BN 22)

Clause 71 and Schedule 24 replace the income spreading rules for authors and creative artists with a system of averaging profits over consecutive years (REV BN 12)

Clause 72 extends the expiry date of film tax relief for British qualifying films with budgets not exceeding £15million from by three years, from 1 July 2002 to 1 July 2005. (REV 4)

Clause 73 increases the de minimis limit for expenditure on business gifts from £10 to £50. (REV BN 17)

Pension funds

Clause 74 reduces to 35 per cent the tax charge on payments to employers out of funds held by approved occupational pension schemes, and provides for future variations to be by Treasury Order.

Chargeable gains

Clause 75 enhances the notional transfer provision for groups of companies introduced in Finance Act 2000. It ensures that a group gets full relief for incidental costs of disposal even though, as a result of an election under that provision, the company that bears those costs is a different one from the company that is treated as making the disposal for capital gains purposes. Additionally, the clause aligns the time limit for making an notional transfer election with other election time limits under the corporation tax self assessment regime. (REV BN 7)

Clause 76 and Schedule 25 extend the scope of business assets taper relief to include shares held by employees of non-trading companies in the company for which they work. Such employees, when they dispose of their shareholdings in their employing company, will qualify for the business assets rate of taper relief provided that they do not have a material interest of more than 10 per cent in the company. The change takes effect from 6 April 2000. Employees of trading companies are already eligible for business assets taper relief. (REV BN 4)

Clause 77 removes uncertainty about the application of transitional rules in Schedule 29 Finance Act 2000 when a company ceases to be a member of a group of companies. It ensures that the anti-avoidance rules governing asset transfers within a group cannot trigger a chargeable gain when a company is transferred from the old group but remains within the new group. (REV BN 7)

Clause 78 introduces limited relaxations to the rules that attribute gains of non-resident close companies to participators of those companies who are either resident in the United Kingdom or are non-resident trustees. The changes apply to gains accruing on or after 7 March 2001. (REV BN 5)

International matters

Clause 79 & Schedule 26 bring into effect a number of changes to the rules concerning claims to relief in respect of foreign tax in Part XVIII ICTA 1988 and amend some provisions in Schedule 30 FA 2000. The revisions affect claims made by multinational companies that receive dividends from overseas companies in which they hold at least 10% of the voting rights. (REV 2/REV BN 24)

Clause 80 protects the UK tax base by closing a loophole in the Controlled Foreign Company (CFC) rules that are designed to prevent UK multinationals from diverting profits to low tax regimes. It will put a stop to the use of artificial tax avoidance schemes to exploit one of the exemptions from the CFC rules. It also corrects a minor defect in the existing rules, which would otherwise prevent a large number of CFCs from benefiting from the exemption. (REV BN 21)

Miscellaneous

Clause 81 and Schedule 27. Part I of the Schedule deals with assignments of life policies or contracts for consideration by or to joint owners and ensures that in certain circumstances the assignment will be treated as a part assignment for the purpose of taxing chargeable event gains. It also provides that where a share of the rights under a policy or contract is assigned or surrendered any gain is attributed to the person whose interest is thereby reduced. Part I has effect for years beginning on or after 6 April 2001. Part II provides for life insurers to notify policyholders about the chargeable event gains they make and sets out the circumstances in which the life insurer will also have to report the gain to the Inland Revenue. It has effect for chargeable events happening, or treated as happening, on or after 6 April 2002. (REV BN 19)

Clause 82 amends existing anti-avoidance legislation concerning stock lending. It prevents a borrower of securities obtaining a tax deduction for a payment representing interest or dividends where the borrower does not incur actual expenditure on such a payment. The amendment also ensures that the borrower cannot surrender the amount as group relief. It applies in relation to interest or dividends arising on the borrowed securities on or after 3 October 2000.

Clause 83 lifts the withholding tax requirement on interest, royalties, annuities and other annual payments that are made between companies, where the recipient is within the charge to corporation tax as respects that income. The new rules will apply to payments made on or after 1 April 2001. (REV 2/ REV BN 13)

Clause 84 reproduces, with minor amendments, parts of section 247 of the Taxes Act 1988 (group elections) within the rules determining entitlement to the small companies? rate of Corporation Tax and marginal relief. These rules currently contain cross-references to section 247, which is being repealed as a result of the changes to withholding tax. (REV 2/REV BN 13)

Clause 85 brings to an end the provisional repayment rules in Schedule 19AB ICTA 1988. These currently set out a scheme for in-year repayments of income tax relating to pension business written by insurance companies and friendly societies. As a result of the removal by clause 83 of withholding tax from the vast majority of payments received by life assurance companies, these in year repayment rules become redundant. (REV 2/REV BN 13)

General

Clause 86 and Schedule 28 amends the legislation governing assessments, enquiries and appeals under Income Tax Self Assessment. The legislation is rewritten in a clearer form and some new provisions are introduced. It will become possible to resolve disputes about particular issues through litigation without having to wait until the whole enquiry is complete. The procedure for amending an assessment at the end of an enquiry is simplified. (REV BN 18)

Clause 87 makes some minor amendments to the Taxes Management Act to ensure that proceedings for recovery of tax in county court or sheriff court can be taken whether or not the tax is payable under an assessment, and that interest on penalties and on surcharge can be included in Revenue claims in Court proceedings. (REV BN 18)

Clause 88 provides for repayment supplement to be paid on repayments resulting from claims for relief in respect of the carry back of loss relief or pension contributions, and the averaging of profits of farming, creative artists, etc. (REV BN 18)

Clause 89 provides a statutory mechanism for reducing the amount of a penalty for a late tax return, where it is discovered that the original penalty exceeds the tax due. The reduction is already provided for by statute, but not the means of carrying it out.

PART IV OTHER TAXES

Stamp duty and stamp duty reserve tax

Clause 90 and Schedule 29 provide a stamp duty exemption for transfers and leases of property in the most disadvantaged areas of the UK, with effect from a date to be specified by Treasury Order. The areas that will benefit from the exemption will be specified in regulations.

Clause 91 provides an exemption from Stamp Duty Reserve Tax (SDRT) for transfers of units in unit trusts held within individual pension accounts (IPAs). Surrenders of such units will be left out of account in calculating the charge to SDRT provided that the trustees or managers of the unit trust have appropriate systems in place. (REV BN 8)

Clause 92 provides an exemption from Stamp Duty Reserve Tax for surrenders of shares in open-ended investment companies where the shares are in a share class which is restricted to holdings within individual pension accounts. (REV BN 8)

Clause 93 provides an exemption from Stamp Duty and Stamp Duty Reserve Tax when employees buy partnership or dividend shares from an AESOP trust (REV 3).

Value added tax

Clause 94 introduces a reduced rate of Value Added Tax of 5 per cent for children's car seats with effect from the day after Royal Assent. (REV/C&E 03/01)

Clause 95 introduces a reduced rate of VAT for the conversion of a property into a different number of dwellings; conversions of dwellings into residential communal homes; and the renovation of dwellings that have been empty for at least 3 years with effect from the day after Royal Assent. (HMT 1)

Clause 96 introduces a scheme that will allow designated national museums and galleries to be refunded VAT they incur on purchases of goods and services in relation to free entry. (C&E 3)

Clause 97, Schedule 30 and Repeal Schedule 32 (III) (1) consolidate and simplify the VAT reduced rates legislation and make it consistent with the existing Schedules 8 and 9 of VATA 1994 which provide for zero-rates and exemptions. This will come into effect 3 months after Royal Assent. (REV/C&E 2)

Clause 98 limits the Commissioners? powers to require businesses making supplies in the UK without having an establishment there to appoint a tax representative for VAT purposes. Non-established taxable persons will be able to choose, if they wish, to appoint a tax representative. Customs &Excise will only have the power to direct them to do so where they are based in countries which do not organise mutual assistance under arrangements laid down within the Community or other similar arrangements. The change comes into effect from 31 December 2001.

Petroleum revenue tax

Clause 99 and Schedule 31 amend the petroleum revenue tax (PRT) rules relating to the calculation of unrelievable field losses. Their purpose is to prevent oil companies from exploiting a loophole in the rules by transferring their field interests and as a result obtaining more relief than would have arisen had no transfer taken place. Where there is a transfer of an interest in an oil field from 7 March 2001, any unrelievable field losses, which can be claimed in another field, will be capped so that they do not exceed the amount that would have arisen had no transfer occurred. (REV BN 20)

Clause 100 provides that from 7 March 2001, the petroleum revenue tax (PRT) treatment of decommissioning expenditure incurred on oil and gas infrastructure, which has been shared between more than one oil field, will more fairly reflect the use to which that infrastructure has been put. (REV BN 20)

Clause 101 extends Petroleum Revenue Tax (PRT) relief for expenditure incurred on or after 7 March 2001 on decommissioning installations in oil fields which have produced gas that is exempt from PRT. In determining the amount of PRT relief on such expenditure, fairer account will be taken of the actual use of those installations, including any use by other fields in return for tariffs which are liable to PRT. (REV BN 20)

Landfill tax

Clause 102 increases the standard rate of landfill tax from £11 per tonne to £12 per tonne with effect from 1 April 2001. (HMT 1)

Climate change levy

Clause 103 and Repeal Schedule 32 (III) (3) provides for three amendments to the existing climate change levy provisions. The clause exempts from climate change levy gas supplied and consumed in Northern Ireland; allows for auto-generators and exempt unlicensed electricity suppliers who produce electricity to certify for excluded and exempt use; and extends the combined heat and power exemption to stations operated by third parties. The changes will come into effect on 1 April 2001.

Inheritance tax

Clause 104 aligns the IHT treatment of notional transfers within a group of companies with that of other intra-group transfers following the extension of the chargeable gains rules in Finance Act 2000. (REV BN 7)

PART V MISCELLANEOUS AND SUPPLEMENTARY PROVISIONS

Miscellaneous

Clause 105 amends section 2C of the Government Trading Funds Act 1973 by increasing the ceiling on the total amount which may, in aggregate, be borrowed by trading funds or issued to them by way of public dividend capital.

Supplementary

Clause 106 provides for the use of ?the Taxes Act 1988? as an abbreviation for the Income and Corporation Taxes Act 1988.

Clause 107 provides for the repeals contained in Schedule 32 of the Bill to have effect. It also gives effect to the Notes in the Schedule that set out the commencement provisions and savings applying to the repeals.

Clause 108 provides for the Bill to be known as ?the Finance Act 2001? on enactment.