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14 1982

FINANCE ACT, 1982

Chapter X

Anti-avoidance and Anti-evasion

Interest on unpaid taxes in cases of fraud or neglect.

59. —(1) This section applies to interest chargeable under—

(a) sections 20 (2) and 50 (2) of the Finance Act, 1971 , and

(b) section 145 (4) of the Corporation Tax Act, 1976 .

(2) Where any interest to which this section applies is chargeable for any month commencing on or after the 1st day of November, 1982, or any part of such a month, in respect of tax due to be paid or remitted whether before, on or after such date, such interest shall be chargeable at the rate of 2 per cent. for each month or part of a month instead of at the rate of 1.25 per cent. mentioned in section 46 (2) of the Finance Act, 1978 .

(3) In this section “tax” means income tax, sur-tax, capital gains tax, corporation profits tax or corporation tax, as may be appropriate.

Amendment of certain provisions of Tax Acts relating to penalties.

60. —(1) Where, after the passing of this Act (but with respect to any year of assessment, or, as the case may be, accounting period, whether ending before or ending after such passing), an act or omission occurs in respect of which a person would, but for this subsection, have incurred the penalty or penalties provided for in any provision of the Tax Acts specified in column (2) of the Table to this subsection at any reference number, the person shall, in lieu of the penalty or penalties so provided for, be liable to the penalty specified in column (3) of the said Table at that reference number and that provision shall be construed and have effect accordingly.

TABLE

Reference Number

Provision of the Tax Acts

Penalty

(1)

(2)

(3)

1.

Section 128 (1) of the Income Tax Act, 1967

£800

2.

Section 128 (1A) of the Income Tax Act, 1967

£500

3.

Section 173 (6) of the Income Tax Act, 1967

£800

4.

Section 426 (3) of the Income Tax Act, 1967

£500

5.

Section 500 (1) of the Income Tax Act, 1967

£500

6.

Section 500 (2) of the Income Tax Act, 1967

£800

7.

Section 6 (5) of the Finance Act, 1968

£800

8.

Section 64 (9) of the Corporation Tax Act, 1976

£800

9.

Section 34 (4) of the Finance Act, 1976

£800

10.

Section 31 (5) of the Finance Act, 1979

£800

11.

Section 45 (8) of the Finance Act, 1980

£800

(2) In relation to acts or omissions to which subsection (1) applies, the Income Tax Act, 1967 , is hereby amended—

(a) in section 128—

(i) in subsection (1), by the deletion of “, to gether with, in the case of a continuing non-compliance, a penalty of the like amount for every day on which the noncompliance is continued”, and

(ii) by the deletion of subsection (3),

(b) in section 173—

(i) in subsection (6), by the deletion of “, together with, in the case of a continuing non-compliance, a penalty of the like amount for every day on which the noncompliance is continued”, and

(ii) by the deletion of subsection (8),

(c) in section 426 (3), by the substitution for “forfeit a sum not exceeding” of “be liable to a penalty of”, and

(d) in section 500—

(i) in subsection (1), by the deletion of “and, if the failure continues after judgment has been given by the court before which proceedings for the penalty have been commenced, to a further penalty of £10 for each day on which the failure so continues”, and

(ii) in subsection (2), by the substitution for “first of the penalties” of “penalty”.

Purchase of shares by financial concerns and persons exempted from tax.

61. Section 371 of the Income Tax Act, 1967 , shall, as respects dividends paid on or after the 26th day of March, 1982, have effect as if, in subsections (1) and (2), “ten” were substituted for “six”, in each place where it occurs.

Amendment of section 9 (consideration) of Capital Gains Tax Act, 1975.

62. Section 9 of the Capital Gains Tax Act, 1975 , is hereby amended by the insertion after subsection (2) of the following subsections:

“(3) Notwithstanding subsection (1) and paragraph 2 (2) of Schedule 2, where, on or after the 24th day of June, 1982, a company, otherwise than by way of a bargain made at arm's length, allots shares in the company (hereafter in this subsection referred to as ‘the new shares’) to a person who is connected with the company, the consideration which the person gives or becomes liable to give for the new shares shall, for the purposes of the Capital Gains Tax Acts, be deemed to be an amount (including a nil amount) equal to the lesser of—

(a) the amount or value of the consideration given by him for the new shares, and

(b) the amount by which the market value of the shares in the company which he held immediately after the allotment of the new shares exceeds the market value of the shares in the company which he held immediately before the allotment or, if he held no such shares immediately before the allotment, the market value of the new shares immediately after the allotment.

(4) In subsection (3) ‘shares’ includes stock, debentures and any interests to which paragraph 5 (2) of Schedule 2 applies and also includes any option in relation to such shares, and references therein to an allotment of shares shall be construed accordingly.”.

Restriction of Schedule 2 (companies and shareholders) of Capital Gains Tax Act, 1975.

63. —(1) Neither paragraph 4 nor paragraph 5 of Schedule 2 to the Capital Gains Tax Act, 1975 , shall apply to the issue, on or after the 24th day of June, 1982, by a company of shares in the company—

(a) by way of such an exchange as is referred to in the said paragraph 4, or

(b) under such a scheme of reconstruction or amalgamation as is referred to in the said paragraph 5,

unless it is shown that the exchange, reconstruction or amalgamation is effected for bona fide commercial reasons and does not form part of any arrangement or scheme of which the main purpose, or one of the main purposes, is avoidance of liability to tax.

(2) In subsection (1)shares” has the same meaning as in section 62 .