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New rates of interest apply on tax and National Insurance contributions paid late and overpaid. The new rates take effect from 6 May 2001 whether or not interest has already started to run before then, and the main changes are shown in Facts and Figures on page 108. Other new rates are as follows.
The rate of interest for development land tax, petroleum revenue tax, and on advance corporation tax and income tax on company payments which became due on or before 13 October 1999 paid late or overpaid has decreased from 6.5 per cent to 5.75 per cent.
New rates of interest apply on tax and National Insurance contributions paid late and overpaid. The new rates take effect from 6 May 2001 whether or not interest has already started to run before then, and the main changes are shown in Facts and Figures on page 108. Other new rates are as follows.
The rate of interest for development land tax, petroleum revenue tax, and on advance corporation tax and income tax on company payments which became due on or before 13 October 1999 paid late or overpaid has decreased from 6.5 per cent to 5.75 per cent.
The rate of interest on late payment of income tax on company payments which became due on or after 14 October 1999 has decreased from 8.5 per cent to 7.5 per cent.
Corporation tax
The rate of interest for either late payments or repayment of corporation tax for accounting periods ended on or before 30 September 1993, has decreased from 6.5 per cent to 5.75 per cent.
(Source: Inland Revenue press release dated 24 April 2001.)
Recognised stock exchanges
The application of tax provisions to shares and securities is frequently determined by whether the shares and securities are 'listed on a recognised stock exchange'. Following the transfer of the United Kingdom Listing Authority role from the London Stock Exchange to the Financial Services Authority last year, this phrase and similar phrases have become harder to interpret. The Revenue has therefore reviewed the legislation and is proposing a revised interpretation of the listed terms. Before confirming the position, the Government is consulting on the interpretation; and on the measures that might be taken to ensure that taxpayers are not disadvantaged should the revised view be confirmed.
Comments are invited on the proposed interpretation and the suggested protective measures, and they should be sent by 18 July to: Bridget Micklem, Inland Revenue, Business Tax, Room S23, West Wing, Somerset House, Strand, London WC2R 1LB, e-mail: bridget.micklem@ir.gsi.gov.uk.
An outline of some of the proposed changes follows.
The Revenue has concluded that the phrases:
* listed on a recognised stock exchange;
* listed in the official list of a recognised stock exchange;
* officially listed on a recognised stock exchange;
can be interpreted in a way that both reflects the transfer, and makes sense consistently across the Taxes Acts in the light of the current definition of recognised stock exchange at section 841, Taxes Act 1988.
In European Union countries and members of the European Free Trade Association who have ratified the European Economic Area Agreement (Iceland, Liechtenstein and Norway), in the light of the Admissions Directive and domestic legislation to give effect to that directive, the phrases would denote listing by a competent authority and admission to trading on a recognised stock exchange (there is no stock exchange recognised by the Revenue in either Iceland or Liechtenstein).
Outside these countries, where there is no system directly analogous to the European listing régime, the phrases would denote admission to trading by a recognised stock exchange.
If this interpretation of the general listed terms were adopted, the Revenue considers that the phrase 'listed in the official list of the Stock Exchange' could then be construed as denoting listing by the Financial Services Authority and admission to trading on the London Stock Exchange.
Under the above interpretation, the status of shares and securities as listed or unlisted for tax purposes would be affected in only a limited range of cases. In particular, shares and securities admitted to trading on the Alternative Investment Market would continue to count as unlisted, since these are not shares and securities admitted to the official list by the Financial Services Authority.
The interpretation would, however, reverse the view that has been taken of shares and securities admitted to trading on European Union junior markets such as the Frankfurt Neuer Markt, and the Paris Nouveau Marche and the view of shares and securities admitted to trading on EASDAQ. This is because securities traded on these markets are not listed by the relevant competent authority. The potential change would be confined to European Union/European Economic Area exchanges: there would be no change for example, in relation to recognised stock exchanges such as NASDAQ.
If the revised interpretation were adopted, shares and securities on the markets that have no competent authority listing would become eligible, like Alternative Investment Market shares, for the unquoted company incentives and reliefs. Conversely, they would no longer qualify for provisions and reliefs restricted to listed securities.
For key reliefs and provisions, the proposals are as follows.
Unlisted (or unquoted) company reliefs (including the new business asset taper as it applies to unlisted companies)
* For the enterprise investment scheme and the corporate venturing scheme, companies which have issued shares that would qualify under the revised view, but not the existing view, should be allowed to apply for certification from the date of confirmation of the revised view if the normal time limit for them to do so is still running.
* For venture capital trusts, shares and securities which, from the date of confirmation of the revised view, would count as unlisted should be treated as qualifying holdings from the date of acquisition if all other conditions are met;
* For capital gains tax gifts hold-over relief taxpayers should be able to follow the revised view in making claims to the relief – including amendments to a claim or a return under self assessment – from the date of confirmation of the revised view for any open year of assessment.
* For capital gains tax business asset taper relief (where new rules apply from 6 April 2000), once the revised view is confirmed, whenever a disposal occurs taxpayers should be entitled to follow the revised view in deciding whether business asset taper applies in respect of any time from 6 April 2000.
Listed company provisions and reliefs
* For personal equity plans and individual savings accounts, shares and securities that would count as unlisted under the revised view would no longer be eligible as qualifying investments once the revised view was confirmed. But to protect existing investments, the rules would be changed so that any shares and securities held in a personal equity plan or individual savings account at the date the revised view took effect, and which would then become unlisted, would be able to remain qualifying investments.
* In relation to the stamp duty reserve tax (United Kingdom Depository Interests in Foreign Securities) Regulations 1999, the Revenue would amend the regulations to ensure that securities which under the revised view would count as unlisted continue to qualify as excluded from the definition of chargeable securities for the purposes of stamp duty reserve tax. The securities would continue to be regarded as excluded from the definition of chargeable securities until the regulations were amended.
* Under the rules for approved Revenue employee share schemes, subsidiaries of unlisted companies are required under the existing rules to use their parent's shares rather than their own. For any subsidiary running an approved scheme using its own shares, it is proposed that Revenue approval will not be withdrawn if the parent company becomes unlisted as a result of the revised view.
* Holders of insurance policies that were in force before 17 March 1998 which are not treated as personal portfolio bonds, should remove the link to those shares and securities that under the revised view would count as unlisted, if they wish the existing treatment of their policies to continue. The affected shares and securities should be removed as soon as is reasonably possible. The Government proposes that if a policy year ends within three months of the date of confirmation of the revised view, policyholders should have until the date three months after the end of the policy year to remove the link. A policy year is a period of, normally, 12 months that begins on the date on which the policy was effected or on the anniversary of that date.
(Source: Inland Revenue press release dated 25 April 2001.)
