Tax-Dictionary v01 PDF

Leach’s tax dictionary as at 15 June 2011, page 1
LEACH’S TAX DICTIONARY: Free use

This tax dictionary is provided free by Robert Leach, chartered accountant, author and lecturer.
At present, the dictionary contains all common and most less common tax terms, but it is still not complete. Many more
terms will be added.
Any comments or suggestions on content will be welcome.
It is the intention that this dictionary will eventually be published as a book or become part of a subscription service. In
the meantime, I hope that you find this dictionary useful.
Robert Leach FCCA ACA FCIPP
Leach’s Tax Dictionary: preface

The tax dictionary lists terms that may be encountered by a tax practitioner. The book reflects tax
law as it stood on [1 June 2011], which is the operative date for this book.
The list includes ordinary words, such as car and water, where there are specific tax provisions.
As such, the dictionary includes terms for all taxes levied in the UK. It also includes some notes on
taxes levied in other countries where this may be useful to a UK tax practitioner. Some brief notes
are included on taxes that are no longer levied.
Because tax does not exist in isolation, the dictionary includes terms from adjacent disciplines
where this could assist the tax practitioner.
There have been several cases where taxpayers have been criticised for not complying with
accounting standards in producing the accounts from which tax has been computed. Accordingly,
many financial accounting terms have been included.
Terms have also been included, where appropriate, relevant to banking, investment, national
minimum wage, pensions and social security. Terms have also been included on company law,
Customs law and insolvency law. As tax is a branch of law, many general legal terms are also
included. A few terms have been included from commercial law, criminal law, economics,
employment law and management accounting where these may be of use to a tax practitioner.
This book is a dictionary and not a book of tax law. Its function is to define and, in some instances,
explain terms. Entries in this book should not be regarded as definitive or exhaustive explanations
of the law. Many definitions indicate sources where further information can be found.
The book does not list court cases, with the limited exception that some cases have assumed such
importance in tax that their names may be regarded as tax vocabulary. Those few cases are
therefore listed.
With over 500 tax cases each year, it is not possible to include every judicial comment on the
meaning of a term. Therefore comments from cases are restricted to where they provide definitive
guidance or usefully clarify a term.
© Robert Leach 2011. All rights reserved. Please contact www.robertleach.co.uk for any use beyond reasonable
quotation. No responsibility is accepted for any errors or omissions.
Most of the terms in the book relate to current taxes, including recently repealed provisions and old
provisions that can still apply in existing situations. There are a few historic notes on taxes repealed
some time ago.
Conventions used
Throughout the book, terms printed in bold type refer to other entries in the dictionary which may
assist the reader.
Terms printed in italics refer to parts of the entry which the author wishes to emphasise to the
reader.
Where there are statutory or other authoritative definitions, these are reproduced where this is
considered likely to assist the reader. However it should be realised that a book of this size cannot
be exhaustive, particularly in reproducing comments from judgments in tax cases.
Some terms in tax are of limited use in a particular area and have therefore been excluded. For
example, no value is seen in listing all the places where terms like “relevant amount” or “appointed
day” are used in tax law.
Terms are listed in alphabetical order, ignoring where words end. So accounting standards appears
before account of estate. Among other reasons, this avoids problems with terms like cashflow
which are variously used as one word and two words. Abbreviations are included in the main text
on the same basis. For alphabetical order, numbers and other signs are ignored, except that terms
starting with a number are listed at the end of the book after Z.
Authoritative sources
Verbatim quotes from authoritative sources are indicated by “speech marks”. Quotations within
quotations are indicated by ‘single speech marks’ regardless of how they were punctuated in the
original. In quotations, words in square brackets do not appear in the original text but have been
included so that the extract is grammatical and makes sense. This practice has been kept to a
minimum.
Acts of Parliament are quoted extensively, such as Income Tax Act 2007. This refers to statute law
passed in 2007. The main Act comprises sections indicated as Income Tax Act 2007 s14.
Numbers in brackets indicate sub-sections, such as Income Tax Act 2007 s504(1).
After the sections, Acts may have Schedules divided into paragraphs. These are indicated as Income
Tax Act 2007 Sch 2 para 89(1).
The inclusion of letter indicates that the section has been subsequently added by another Act. For
example. Income Tax Act 2007 s564M was added by Taxation (International and Other Provisions)
Act 2010 s365 and Sch 2 para 14.
A statutory instrument (SIs) is a form of secondary legislation but which has the same force of law
as an Act of Parliament. These are quoted in the form SI 2003 No 2682.
Where text is quoted from an Act or SI, it appears in the form as may have been amended by the
operative date of this book.
The tax authorities produce statements of practice in the form SP1/06. That means the first such
statement produced in 2006.
They also produce extra-statutory concessions in the form C16.
There are various tax notices and leaflets, Briefs that deal with short-term specific issues and other
forms of guidance which are included as appropriate.
Many details of tax are resolved in hearings in the courts or tribunals. These tax cases are indicated
by the names of the parties and the year the case was heard as in Furniss v Dawson [1984].
Tax cases can have one or more citation. For court cases, the citation is now standardised. The High
Court is EWHC; Court of Appeal EWCA and House of Lords UKHL. From 1 October 2009, the
Supreme Court replaces the House of Lords as the final court. Its citation is SC.
Traditionally the year of the law report is indicated in square brackets, such as [1932].
Before 1865, law reports were published as English Reports with the citation ER.
Between 1865 and 1975, they were published as Law Reports with the citation LR.
From
Accounting standards are produced by the Accounting Standards Board from 1990 in the form of
Financial Reporting Standards (FRS). Previously, from 1971, the Accounting Standards Committee
produced Statement of Standard Accounting Practices (SSAPs). These are still in effect except to
the extent that they have been replaced by an FRS.
A
A (1) First person in any explanation or legal guide, as in “if A buys from
B on behalf of C...”.
(2) National insurance contribution letter for an employee who is liable
to pay the full rate of class 1 national insurance.
(3) Suffix to a tax code used for only two years. In 2002/03 it meant the
taxpayer was entitled to half the children’s tax credit. In 2001/02, it
meant the taxpayer was entitled to the married couple's allowance and
was taxed at the higher rate.
(4) For council tax, the lowest band of property values:
• in England, up to £40,000 in 1993
• in Wales, up to £30,000 before 1 April 2005, or £36,000 after;
• in Scotland, up to £27,000 in 1993.
A band A property pays council tax at 2/3 of the rate for an average
band D property.
A1 form Form issued from 1 May 2010 to UK workers travelling to other EU

countries.
The form indicates that the worker is paying UK national insurance
and is therefore exempt from making equivalent payments in the host
country. The form is valid for 24 months. It replaces the E101 form
which was valid for 12 months but could be extended for a further 12
months using form E102.
A2 form Form issued by HMRC giving a decision notice about whether a person
is liable to pay national insurance in the UK or another EU country.
This form will replace the decision note previously issued on form 181.
A8 Abbreviation for eight of the accession states that joined the EU in

2004 and whose workers were subject to the Worker Registration
Scheme until 2011.
The states are Czech Republic, Estonia, Hungary, Latvia, Lithuania,
Poland, Slovakia, and Slovenia.
AA (1) Annual allowance.

(2) Automobile Association. This organisation mainly provides a
breakdown service for motorists, but also produces widely accepted AA
running costs of a car.
(3) Attendance allowance.
AAD Accompanying Administrative Document
AAG Anti-Avoidance Group, a department of HM Revenue and Customs.
AA running costs Tables of the cost of running a car as produced by the Automobile
Association. These are regarded as authoritative and are widely
accepted.
The table distinguishes between standing charges and running
costs. Standing charges relate to costs of ownership of a car rather to

using it. Such costs are MOT, insurance, cost of capital, depreciation
and road tax. Running costs are those which relate to using the car,
namely fuel, tyres, servicing, replacement parts and parking.
The AA further classifies cars into petrol and diesel engines, and
then into five vehicle groups based on their original price.
The standing charges are amortised as a mileage charge for different
bands of mileage, and added to the running costs, to give a cost per
mile.
AAT Association of Accounting Technicians
abandoned option When an option is not exercised by its expiry date. The option usually
then becomes worthless.
abandonment In law, the relinquishing of any right, claim or property, including

options.
This may be specific such as when a person makes it known that
something has been abandoned, or may arise by the passing of
sufficient time.
The term is used in Petroleum Act 1987 to mean the abandonment
of oil wells and similar installations.
For Customs, the term means either:
• a direction by the owner permitting goods to be kept or
destroyed as an alternative to paying duty; or
• direction to destroy counterfeit goods, as explained in
Customs notice 34.
abandonment cost Costs of abandoning plant, particularly oil wells. There have been
various proposals on such costs should be accounted.
The current method of accounting for abandonment costs was
adopted when FRS 12 was introduced. The liability for these costs
should be reflected in the accounts from when the entity first incurs the
obligation to rectify the environmental damage caused by the plant. In
practice this is likely to be at construction. The estimated costs are then
capitalised and charged as an expense during the plant’s useful
economic life, in effect making it a second depreciation charge.
abatable loan Any loan which may be reduced if a defined eventuality occurs.
The term is particularly used for payments made under an
exclusivity agreement. An example is where an oil company pays a
petrol station to buy only its petrol. The payment typically takes the
form of an abatable loan in that part of it becomes repayable if the
agreement ends early.
An abatable loan is treated as a grant for the purposes of income tax
and corporation tax. This means that it is taxed as trading income unless
the recipient can show that the loan was for capital expenditure. Such
an example would be buying display material in the logo of the oil
company.
abatement Any reduction from a full amount, such as a pro rata payment.
In tax, the term is used in various contexts.
A tax penalty may be abated for voluntary disclosure and co-
operation.
Under Inheritance Tax Act 1984 s29A, an exemption from
inheritance tax is abated to the extent that it is settled from
beneficiary’s own resources.
abattoir Place for slaughtering animals.

For VAT purposes, abattoir services are standard-rated but
carcasses for human consumption may be zero-rated as food.
abbreviated accounts Shortened form of accounts which small limited companies may file.
Details are given are given in Companies Act 2006 s445 and supporting
regulations. Companies that submit abbreviated accounts must also
submit a special auditor’s report.
ABCP Asset-backed commercial paper.
ABCP internal assessment approach

Method for calculating the risk weighted exposure amount for a
securitisation position in relation to an asset-backed commercial paper
programme (Financial Services Authority glossary).
ABDP Abbreviation used in Income and Corporation Taxes Act 1988

s444ABB to denote “the amount of profits to be taken into account as
profits under section 444ABD” in determining taxable profits of life
assurance business. It is an abbreviation of “ABD profits”.
Aberfan Welsh mining village where a tragedy on 21 October 1966 led to

changes in administration of charitable donations. More than £1.6
million was raised spontaneously by members of the public who wished
to show their concern even though there was no financial loss to the
victims’ families.
ab initio Latin: from the beginning.
ab intestato Latin: from an intestate.
abnormal Opposite to “normal”. A financial transaction which is abnormal may

need to be accounted for as exceptional or extraordinary.
abnormal dividend Dividend of abnormally large size whose payment can trigger the
provisions in Corporation Tax Act 2010 from s731 to cancel a
corporation tax advantage.
abnormal rent increase For stamp duty land tax, basically a rent increase of more than RPI plus
5% after the end of the fifth year.
It can trigger an additional liability to SDLT (Finance Act 2003 Sch
17A paras 14-15).
abode Where a person lives and sleeps at night. This was once a factor in
determining residence.
abolition date Date from which a defined contribution pension scheme ceases to
qualify for a contracting out rebate of national insurance (Pensions Act
2007 s15(2). The date is 6 April 2012.
abortion In law, the deliberate ending of a pregnancy.

In payroll, a woman who has an abortion is regarded as never
having been pregnant for the purposes of maternity rights and statutory
maternity pay. As pregnancy is not an illness, she is not entitled to
statutory sick pay for any related absence.
[In medical parlance, the word means any unexpected end of a
pregnancy, including from natural causes.]
abortive acquisition benefits and expenses

Costs incurred by an employee in unsuccessfully attempting to acquire
new accommodation on a relocation of workplace (Income Tax
(Earnings and Pensions) Act 2003 s278).
In general, an employer may provide a tax-free payment as
relocation expenses provided that the benefits and expenses would
have been allowable had the accommodation been acquired.
The failure must be for reasons beyond the employee’s control,
including a failure of the property seller to complete.
abortive cost Any cost incurred which does not lead to a return. Where it is not
known whether a cost which lead to a return, it is known as a
speculative cost.
For VAT, these terms are specifically used to mean the cost of
finding sites for possible building development. A speculative cost is
regarded as a genuine business expense on which input tax may be
reclaimed. If a developer later decides to proceed with an aborted
scheme, it may be necessary to apportion the abortive cost between
business and non-business use and disallow the latter.
abortive expenditure Expenditure incurred in the unsuccessful acquisition of an asset.

For the purposes of determining whether to regard such expenditure
as capital or revenue, the tax treatment is the same as if the expenditure
had not been abortive. A leading case is ECC Quarries Ltd v Watkis
[1975] 51TC153. The matter is discussed in the Inspectors’ Manual at
BIM35325 and from BIM38265.
above par Description of share which is more than its par value.
This increase in value usually derives from the profits it has earned
since it commenced trading, and the goodwill it owns.
above the line Theoretical line drawn in the profit and loss account. Items above it
are those that determine how the profit is calculated, as against those
below that indicate how the profit is distributed.
abrasion Loss of weight of coins from wear and tear.
abridged accounts Financial statements that a company may produce outside the scope of
the Companies Acts.
absence from employment

Tax term for periods when a UK employee is not at work, such as for
sickness or holidays.
The provision is that absence is included as employment. The term
is used in Income Tax (Earnings and Pensions) Act 2003 s38.
absence from UK This can establish non-residence for a tax year, meaning that the
taxpayer avoids UK income tax.
absence of records For national insurance, lack of records relating to earnings from
1987/88. Provisions are contained in Social Security Contributions and
Benefits Act 1992 s24.
absens haeres non erit Latin: the absent one will not be the heir.
absente reo Latin: the defendant being absent.
absent parent Term used until 18 January 2001 for the parent who does not live with a
child and who usually pays maintenance to the other parent, known as
the parent with care.
The term “absent parent” has now been replaced by non-resident
parent.
abse re Abbreviation of absente reo, Latin: the defendant being absent.
absolute assignment Assignment of an entire debt free of conditions but including an

assignment by way of a mortgage or a trust.
absolute entitlement When a person acquires rights to settled property (Taxation of Capital
Gains Act 1992 s71).
absolute entitlement to income

Term used in trust law to describe the right of a beneficiary to receive
income as it arises. In such a case, the trustees may deduct their
reasonable expenses, but cannot otherwise restrict the beneficiary’s
right to the income, as they can in a discretionary trust.
As a consequence, such income is taxed as the beneficiary’s income
for the tax year in which the income arises, even if it is paid in a
subsequent year.
absolute interest Full and complete ownership of property, or a vested right of property
which is liable to determined only by the failure of a successor in title.
In relation to a company’s absolute interest as a beneficiary in an
estate, the tax provisions are set out in Corporation Tax Act 2009 s943.
absolute interest in residue

The relationship that exists when a person has an absolute interest in the
residue of the estate of a deceased person. The tax provisions are set out
in Income Tax (Trading and Other Income) Act 2005 ss660 and 665.
absolute title Evidence of ownership of land. Under Land Registration Act 1925 s5,
there can be no-one with a better right to the land.
absorption costing In management accounting, a costing method that includes all

overheads as part of the cost of a finished unit of product.
absque hoc Latin: but for this.
abs re (or reo) Abbreviation of absente reo, Latin: the defendant being absent.
abstraction Process of obtaining water.

Charges for doing so are zero-rated for VAT under Value Added
Tax Act 1994 Sch 8 Group 2, as explained in VAT notice 701/16.
abus de droit French: abuse of right.

Concept in French and other European law that allows the tax
authorities to restate an agreement in terms that reflect its reality, and to
calculate tax according to that restatement.
abuse of position One of the three bases of the crime of fraud under Fraud Act 2006
s2(2).
A person is guilty of fraud by abuse of position “if he:
(a) occupies a position in which he is expected to safeguard, or
not to act against, the financial interests of another person,
(b) dishonestly abuses that position, and
(c) intends, by means of the abuse of that position:
(i) to make a gain for himself or another, or
(ii) to cause loss to another or to expose another to a risk of
loss” (Fraud Act 2006 s4(1)).
“A person may be regarded as having abused his position even
though his conduct consisted of an omission rather than an act” (ibid
s4(2)).
abusive practice For VAT, an abusive practice exists if:

(a) a transaction creates a tax advantage contrary to the
purpose of the law, even if it complies with the letter of the law; and
(b) the purpose of the transaction was tax avoidance.
This ruling was given by the European Court of Justice in the case
Halifax v Customs [2006].
abv Alcohol by volume.
a/c Account.
AC Since 1875, part of the citation for reported appeal cases heard in court.
ACA Designatory letters denoting an associate member of the Institute of

Chartered Accountants in England and Wales, or the Institute of
Chartered Accountants of Ireland. After a period of ten years,
Associates may become Fellows and take the letters FCA.
academic Person engaged in research or teaching at a university or similar place

of learning. The term is not usually applied to school teachers.
For tax purposes, academics are subject to income tax and national
insurance as employees; it is very difficult for an academic holding a
post to claim any payment for his work on a self-employed basis.
Academics can avoid a tax charge for accommodation provided, if it
is necessary or customary for the duties of the employment. An
academic may be able to claim a tax deduction for expenses for a
private study or similar.
academy Educational establishment, particularly one established under

Academies Act 2010.
academy agreement Arrangement made between the government and a school that becomes
an academy (Academies Act 2010 s1(3)).
academy financial assistance

Payment from the government to an academy (Academies Act 2010
s1(4)).
academy order Order made by the government to allow a school to become an

academy (Academies Act 2010 s4).
ACAS Advisory, Conciliation and Arbitration Service.

This is an arbitration body which exists under Trade Union and
Labour Relations (Consolidation) Act 1992 s247. It was formed in 1975
to promote the improvement of industrial relations.
ACAT Association of Church Accountants and Treasurers.
ACCA (1) Association of Chartered Certified Accountants. Previously the

initials of the same body stood for Association of Certified and
Corporate Accountants.
(2) As designatory letters, an Associate member of the above body.
After five years, Associates usually become Fellows and take the letters
FCCA.
accelerated cost recovery system (ACRS)

American term for a form of depreciation.
accelerated depreciation The depreciation of a fixed asset more quickly than would otherwise
be appropriate. The capital allowance for tax purposes is often seen as
a form of accelerated depreciation.
The term was also used for the former development areas where
accelerated depreciation produced a tax advantage.
acceptable distribution policy

In tax, a policy which a controlled foreign company (CFC) may adopt
to avoid a liability for UK corporation tax.
The basic provision is that the CFC must distribute at least 90% of
its profits as dividends within 18 months of the end of its accounting
period. To the extent that the dividends are paid to UK shareholders,
they come within the scope of UK tax.
Some further conditions were introduced from 12 March 2008 as
anti-avoidance provisions.
acceptance in lieu “This allows a person who is liable to pay inheritance tax, capital
transfer tax or estate duty to settle part, or all of the debt, by disposing
of a work of art or other object to [HM Revenue and Customs]” (VAT
notice 701/12).
acceptance sampling Where a customer accepts or rejects goods on the basis of testing a
sample.
access code In computing, a sequence of letters and numbers which must be keyed
in to use a program or access data.
Accession States Countries which have recently joined the European Union.
accession taxes Taxes on lifetime gifts and legacies. The term was particularly used in
early 20th century American tax literature. No such tax has been
imposed in the UK, though capital transfer tax was a similar tax from
the perspective of the donor.
accession treaty EU treaty which permits a state or states to join the European Union.
accession worker Worker who has come to the UK from a country which has recently
joined the European Union.
accession worker card Document given to an accession worker to show that the holder may
legally work in the UK.
accessories Additional products which may be sold to provide further functions for
a product, such as attachments to do different types of stitching on a
sewing machine.
Spare parts and consumable parts are often also regarded as
accessories. Many manufacturers make more profit on accessories,
spare parts and consumables than on the main product.
access provider In computing, company which gives access to Internet and e-mail
facilities.
accident Unforeseen event which happens by chance or design. The term is

particularly used for an adverse event.
Compensation for an accident is usually tax-free but may be
adjusted for tax according to the Gourley principle.
accidentally destroyed Term used for beer duty in relation to liquor accidentally lost, such as
spillage in a road accident.
If the loss is “significant” (not defined) it must be separately
reported for duty not to be payable (Customs notice 226).
accident insurance Commercial arrangement whereby an insurer will pay a sum to

someone who suffers loss from an unintended event.
It is defined as “providing fixed pecuniary benefits or benefits in the
nature of indemnity (or a combination of both) against risks of the
person insured... :
(a) sustaining injury as the result of an accident of a specified
class;
(b) dying as a result of an accident of a specified class; or
(c) becoming incapacitated in consequence of disease... of a
specified class.....” (FSA handbook: glossary).
accident insurance fund Fund maintained by a business to meet its own insurance claims up to a
limit.
accidental death benefit A provision that may be added to a life insurance policy which provides
payment of an additional benefit in the case of death resulting from an
accident.
accommodation (1) General name for any property used for residence.
The provision of such property for an employee can create a tax
liability for the employee. Provision of accommodation can also count
towards the national minimum wage.
If an employee is provided with accommodation, this will usually
create a taxable benefit unless the accommodation is traditional for the
work done (eg clergy), necessary for the job (eg caretaker) or needed
for the security of the employee.
Certain expenses in relation to accommodation are also exempt
from tax (Income Tax (Earnings and Pensions) Act 2003 s313).
Where accommodation is taxable, the employee is liable to pay
income tax on two elements: the notional rent according to the
property’s rateable value, and an additional charge where the property
is above a certain value.
The extent to which accommodation is tax-deductible is discussed
in the Inspectors’ Manual at BIM37928.
The position for MPs is given in Income Tax (Earnings and
Pensions) Act 2003 s292.
(2) Arrangement whereby money is lent for a short period.
accommodation offset Value which may be attributed to employer-provided accommodation

in determining whether a worker has been paid the national minimum
wage (NMW).
The NMW rules require workers to be paid a gross wage in cash at
a minimum hourly rate. Generally, the value of any non-cash benefits is
ignored. The sole exception to this rule is that accommodation may be
given a value towards the NMW. From 1 October 2003, this is
calculated at a daily rate. Previously there was also an hourly rate.
accommodation outgoings
Expenses that may be free of income tax when reimbursed to a minister
of religion.
The expenses are heating, lighting, cleaning and gardening. The
exemption is contained in Income Tax (Earnings and Pensions) Act
2003 ss290A-290B as inserted by SI 2010 No 157 with effect from 1
April 2010. Previously this was exempted by extra-statutory
concession A16.
Accompanying Administrative Document (AAD)

For Customs purposes, a control document required for movements of
excise goods in duty suspension within the European Union (EU) and
for export.
account (1) Category of income or expenditure, asset or liability, or any other

item in the financial records.
(2) Period for trading stock.
(3) In law, an equitable remedy whereby one person must provide
funds to another.
account activity Term used on bank statements to summarise transactions.
accountancy The work or study of an accountant. The practice of an accountant is

better described as “accounting”.
accountancy bodies Professional associations for accountants.

In the UK there are six accounting bodies which hold a royal
charter:
(a) Institute of Chartered Accountants in England and Wales;
(b) Institute of Chartered Accountants of Scotland;
(c) Institute of Chartered Accountants of Ireland;
(d) Association of Chartered Certified Accountants;
(e) Chartered Institute of Management Accountants; and
(f) Chartered Institute of Public Finance and Administration.
These bodies are commonly known by the abbreviations ICAEW,
ICAS, ICAI, ACCA, CIMA and CIPFA.
Members of the first three bodies are called chartered accountants,
of the fourth are known as either chartered certified accountants or just
certified accountants, of the fifth are known as chartered management
accountants.
There are also second-tier bodies, predominantly the Association
of Accounting Technicians.
There are also more specialist bodies, such as Chartered Institute of
Taxation, Institute of Payroll Professionals and Institute of Chartered
Secretaries and Administrators.
accountancy conventions Those accounting principles that are so widely accepted, it may be
assumed that accounts comply with them unless explicitly stated
otherwise. Conventions have now been superseded by accounting

concepts.
accountancy evidence Evidence from the practice adopted in the accounts of a taxpayer.
HMRC will “consider accountancy evidence to be informative but not
determinative”, particularly in regard to whether an item is capital or
revenue (Inspectors’ Manual at BIM35210).
accountancy fees Fees paid for accountancy work.

The extent to which such fees are tax-deductible depends on the
purpose of the work done. The matter is discussed in the Inspectors’
Manual at BIM37850.
accountancy firm A business partnership (or possibly a limited company) in which the
partners are qualified accountants. The firm undertakes work for clients
in respect of audit, accounts preparation, tax and similar activities.
accountancy profession The collective body of persons qualified in accounting, and working in
accounting-related areas. Usually they are members of a professional
accountancy body.
accountancy service provider (ASP)

Person or business who provides the services of auditing, accounting or
tax advice and who is not a member of a professional body or otherwise
regulated. If an ASP has a sufficiently large turnover, it must, from 1
April 2008, register with HMRC under laws on money laundering.
accountancy services Services of an accountant or accounting firm. Such a service is a supply

which is usually standard-rated for VAT.
accountant Person who is qualified or experienced in accountancy. There is no

requirement for a person to have a formal qualification to be so
described.
Accountant and Controller General (A&CG)

A division within HMRC, responsible for managing the department's
accounting systems, financial information and cash.
Accountant General of the Supreme Court

Person to whom cheques are made payable in the High Court.
The term usually includes the Accountant General of the Supreme
Court of Judicature of Northern Ireland (eg Taxation of Capital Gains
Act 1992 s61(3)).
Accountant in Bankruptcy
Scottish official who oversees bankruptcies in Scotland.
accountant’s opinion Term sometimes used for audit opinion.
accountants’ papers Documents which an accountant creates in the preparation of accounts,

tax returns and similar. They are working papers. Those which explain
how figures in a tax return relate to figures in accounts are known as

link papers.
Every paper must have three headings:
● name of client or entity to which it relates;
● accounting period or tax year to which it relates;
● and nature of the document, such as calculation of
depreciation or bank reconciliation.
While accountants’ papers do not enjoy the same privileged status
as lawyers’ papers, they have some protection. Inland Revenue
Statement of Practice SP 5/90 identifies three types of paper which
cannot be required by HMRC:
● papers creating for the purpose of a tax appeal;
● audit papers; and
● tax advice.
This protection is lost if the papers are essential to understand
figures in a tax return, or where the accountant is convicted of a tax
offence.
accountants’ working papers

Another name for accountants’ papers.
account code Indication of an account in a business’s accounting system. Typically

this comprises a code of letters, numbers or both, which the business
has devised for its own use.
account end The end of an accounting period.
account-holder rights Term used in Income Tax Act 2007 s285(5) in relation to venture
capital trust tax relief.
The rights are broadly to direct a company to make payments of
dividends or equivalent to a nominated person.
accounting Recording financial transactions so as to reveal the financial position.

Accounting is now divided into financial accounting and
management accounting, in addition to other related disciplines.
Financial accounting is the record-keeping allowing a business to report
its overall profit and value. Management accounting is the analysis of
finance for the purposes of making management decisions.
Accounting exists when one person must account to another, such
as a company to its shareholders or a treasurer to a society. However,
the principle of accounting may be beneficially be used by individuals
in connection with their own finances.
accounting basis One of the ways in which an accounting concept may be applied to a
transaction. An example is the period over which a fixed asset is
depreciated.
accounting concept One of five principles which accountants assume have been followed
unless specifically stated otherwise.
The five are:
● going concern: the business will continue for the
foreseeable future;
● accruals: income and expenditure are matched;
● consistency: transactions are accounted the same way in
successive accounting periods;
● prudence: accounts are prepared on a conservative basis;
● separate entity: accounts only refer to the named entity.
The first four are contained in the EU Fourth Directive on Company
Law and were listed in SSAP 2. All five are contained in Companies
Act 2006.
There are other accounting concepts which in practice are followed
though not expressly stated, such as materiality and substance over
form.
accounting cost Cost to which a financial value may be ascribed, such as materials,
labour and overheads.
The term therefore excludes other costs which are discernable but
not quantifiable, such as convenience and contentment.
accounting date Date to which accounts are made up, also known as balance sheet
date.
There are special tax provisions for a change of accounting date.
accounting elements American term for the five matters that must be recorded in all
accounts, namely assets, liabilities, equity, income, and expenses.
accounting entity Body for whom accounts are prepared. This may not always be a legal
entity, such as in group accounts.
accounting equation The fundamental principle which lies behind double-entry

bookkeeping. It is usually expressed as:
assets + expenses = liabilities + capital + revenue.
accounting event Something which triggers a financial transaction which needs to be

recorded in the accounts.
accounting fees Amount payable to an accountant for his work.
accounting graduate Person who has completed all the exams of an accountancy body but
who has not yet been admitted as a member. This last stage usually
requires references and a formal acceptance by the governing body.
accounting information Factual information presented in financial statements.

Statement of Principles imposes four requirements:
• relevance
• reliability
• comparability
• understandability.
accounting manual Handbook or other set of procedures produced by an entity to set out its
financial procedures.
accounting period Period, usually of one year, for which financial statements are prepared.
For pool betting duty, an accounting period is “a four of five-week
period ending on the last Saturday in each calendar month”. From 26
September 2010, a pools promoter may choose to pay quarterly
provided the aggregate of pools bets for the previous 12 months did not
exceed £660,000, and certain other conditions are met (as explained in
Customs notice 147).
accounting policies Accounting methods which have been judged by business enterprises to
be most appropriate to their circumstances and adopted by them for the
purpose of preparing their financial statements.
FRS 18 para 6 defines them as “those principles, bases,
conventions, rules and practices applied by an entity that specify how
the effects of transactions and other events are to be reflected in its
financial statements through
(a) recognising
(b) selecting measurement bases for, and
(c) presenting
assets, liabilities, gains, losses and changes to shareholders’ funds.
Accounting policies do not include estimation techniques.”
The text adds “accounting policies define the process whereby
transactions and other events are reflected in financial statements. For
example, an accounting policy for a particular type of expenditure may
specify whether an asset or a loss is to be recognised; the basis on
which it is to be measured; and where in the profit and loss account or
balance sheet it is to be presented.”
FRS 18 para 14 states, “an entity should adopt accounting policies
that enable its financial statements to give a true and fair view. Those
accounting policies should be consistent with the requirements of
accounting standards, Urgent Issues Task Force (UITF) Abstracts and
companies legislation”.
Para 15 states that “in exceptional circumstances” it may be
necessary to depart from accounting standards to give a true and fair
view. In such a case, the accounts must disclose full details of this (as
explained in para 62).
Para 17 states that where there is a choice of accounting policies
that satisfy the conditions of para 14, the one that should be adopted is
the one “judged by the entity to be most appropriate to its particular
circumstances for the purpose of giving a true and fair view”.
accounting policy The accounting basis which a body decided to adopt for its financial
statements.
The requirement to depreciated a fixed asset is an accounting basis,
deciding to depreciate assets over, say, four years is an accounting
policy.
accounting principles Basic principles with which it is assumed all accounts comply with
unless otherwise stated.
Accounting Principles Board

Body which set out accounting principles in the USA, until this role
was taken over by the Financial Accounting Standards Board

(FASB) in 1973.
accounting rate of return (ARR)

Method of valuing shares in a company. It involves dividing the
company’s estimated future profits by the rate of return required by
investors.
accounting records Written documentation of the finances of an individual or organisation.

Such records include books, ledgers, documents, bank statements,
invoices, vouchers, working papers and all other documentation.
A company duty has a duty to keep such records under Companies
Act 2006 s386.
accounting reference date

For a company incorporated in Great Britain after 31 March 1996 (or in
Northern Ireland after 21 August 1997), the last day of the month in
which the company was incorporated (Companies Act 2006 s391).
A company may alter its accounting reference date by notice to the
registrar (ibid s392).
For collective investment prospectuses, FSA defines it as “the date
stipulated in the prospectus on which the annual accounting period of
an authorised fund ends.”
accounting reference period

Period determined by reference to the company’s accounting reference
date (Companies Act 2006 s391(1)).
The first accounting period is a period of between 6 and 18 months
from the date of incorporation to the accounting reference date.
Subsequent accounting periods are periods of 12 months from the end
of the previous accounting reference period.
accounting reference period

Another term for accounting period.
Accounting Regulatory Committee (ARC)

Body established by the European Union which decides whether to
endorse an international accounting standard.
In the UK, an international accounting standard may only be used if
it has been so endorsed.
accounting standards Statements on how accounts must be prepared. These standards are now
issued by Accounting Standards Board.
A limited company is obliged to comply with accounting standards
as defined in Companies Act 2006 s464. Accounts used as a basis for a
tax computation must comply with standards from 6 April 1999 under
Finance Act 1998 s42.
There have been several cases that have held that the accounts must
comply with true and fair when used to compute a tax liability. A
leading example is Odeon Associated Theatres v Jones [1971] 1 WLR
442. The judge said “subject to any express or implied statutory rule, of
which there is none here, the ordinary way to ascertain profits or losses
of a business is to apply accepted principles of commercial
accountancy”.
In the case Balloon Promotions Ltd v Wilson [2006], the judge
upheld the duty to comply with accounting standards (SSAP 22 in this
case).
The matter is discussed in the Inspectors’ Manual at BIM31003.
Accounting Standards Board (ASB)

Body which issues accounting standards in the UK. It was formed in
1990 when it took over the work of the Accounting Standards
Committee.
Accounting Standards Committee (ASC)

Body which produced accounting standards in the UK between 1971
and 1990 when its work was taken over by the Accounting Standards
Board (ASB).
The ASC produced Statements of Standard Accounting Practice
(SSAPs) whereas the ASB produces Financial Reporting Standards
(FRSs). SSAPs remain in force until repealed or replaced by FRSs.
accounting technician Person who holds an accounting qualification but who is not a qualified
accountant. The main body for such technicians is Association of
Accounting Technicians.
account maintenance Bank charge, usually made each month, for providing a bank account.
Transaction charges are additional.
account monitoring order Order which may be made under Proceeds of Crime Act 2002 s370 to
investigate bank and similar accounts held by suspected criminals.
account of estate Account which a personal representative of a deceased person is

generally expected to provide to HMRC within 12 months of the death
(Inheritance Tax Act 1984 s216). Such an account need not be provided
for an excepted estate below a de minimis size.
A provisional valuation may be given for property where a full
valuation cannot be completed in time. Any inheritance tax must
generally be paid before or when the account is submitted.
account of profits Claim which it is sometimes possible to make in civil proceedings,

whereby the defendant must pay over profits earned from an unlawful
act, such as for breach of copyright.
account on the footing of wilful default

In law, an account whereby the accountable party must not only pay
over sums of money received, but must pay further sums which would
have been received but for wilful default of the accountable party.
Such an action is most commonly brought against trustees who
should have collected rent or other sums owed.
account payable An amount due for payment to a supplier of goods or services. It is also
described as a trade creditor.
account payee only (a/c payee only)

These words when written on a cheque mean that it must be paid into
an account in the payee’s name and cannot be indorsed to another payee
(Bills of Exchange Act 1882 s81A).
account receivable An amount due from a customer, also described as a trade debtor.
account sale Term now mainly used when goods imported on consignment are
valued for customs purposes by reference to the price they achieve
when sold in the European Union (EU). Account sales commonly apply
to importations of perishable goods.
The term was once widely used in consignment accounts.
accounts book Bound book ruled up with cash columns for manuscript entry of
financial transactions.
accounts meeting In company law, “the general meeting of the company before which the
company’s annual accounts are to be laid” (Companies Act 2006
s439(6)).
accounts payable Money owed by a person or business, otherwise known as its creditors.
accounts receivable Money owed to a person or business, otherwise known as its debtors.
account stated (1) An admission of a sum owed from one person to another, such as in
an IOU. In law, such an account stated is evidence but not conclusive
evidence, as the account stated may have been provided by error or
fraud or the supporting consideration may have been illegal.
(2) An account which has entries on both sides and where the parties
agree these entries may be offset. This means that the smaller figure is
subtracted from the larger and an appropriate single payment is made.
This provides good consideration for all items included in the account.
accredited investor Term used in USA for high-value individual investor.
accredited training rate One of the original rates for the national minimum wage.
It was later renamed the development rate, before being replaced
by the reduced rate.
accrual (1) Amount paid in one accounting period but which belongs to
another.
The term is most commonly used when payment is made in the later
period. The opposite to this is a prepayment.
For example, a company’s year-end is 31 March. On 1 June it
receives a quarterly telephone bill for £300 worth of telephone calls.
One third of those calls belong to the previous period, so there is an
accrual of £100 to the previous accounting period.
The double entry is to debit the relevant account in profit and loss,
and to credit accruals. These appear on the balance sheet as a credit

balance representing a current liability
(2) In law, the process by which a right is acquired by a person without
his active involvement, such as by time lapsing or by someone else
losing a claim.
accrual rate Rate at which a financial figure increases over time.

The term is most commonly used for defined benefit pensions
where the accrual rate is expressed as a fraction of final earnings. So
an accrual rate of 1/60 per year means that a member will receive a
pension of 40/60 (two-thirds) after 40 years’ service. In general, the
maximum accrual rate permitted under UK tax law is 1/60 per year,
though higher rates may be permitted for those who joined a scheme
before 17 March 1987.
The term is also used for the rate at which an entitlement to State
Second Pension is earned by payments of class 1 national insurance.
This was 20% of band earnings under SERPS. Under State Second
Pension, the accrual rate is stratified.
accruals basis Basis of preparing accounts where income and expenditure is adjusted
to reflect amounts owing and due for a defined period.
This differs from the cash basis where income and expenditure is
recorded only when cash changes hands.
The accruals basis is used for all accounting and taxation purposes
unless the business comes within the scope of an exemption for the cash
basis.
accruals concept Accounting principle that income and expenditure must be matched in
the same accounting period.
accrue (1) Gradually increase in amount from the normal course of events,
such as when a principal accrues by earning interest. It should be
remembered that something only accrues if it increases in small steps.
(2) Make an accrual in the accounts.
accrued benefits In pensions, the benefits which a member has so far acquired.
accrued dividend The amount of dividend which has been earned since the previous
dividend was paid.
accrued expense Amount of expense which has been incurred so far in an accounting
period but which has yet to be paid by the person or organisation.
accrued income Amount of revenue which has been earned so far in an accounting
period but which has yet to be paid to the person or organisation.
accrued income scheme Tax arrangement that applies on the disposal of interest-bearing
securities (Income Tax Act 2007 s616).
Broadly, the income that has accrued since the last payment is taxed
as the transferor’s income. The transferee may deduct this sum from his
taxable income. There are some exemptions.
The capital gains tax implications for transfers of affected securities

are given in Taxation of Chargeable Gains Act 1992 s119.
accrued interest Interest which has been earned since the previous payment.
The term is widely used for valuing bonds, where accrued interest is
traditionally excluded. The value without accrued interest is a clean
price; with accrued interest, it is a dirty price.
accrued liabilities Amount of liabilities which have been incurred so far in an accounting
period though payment has not been made.
Examples include such areas as rent, rates, electricity and water.
The existence of accrued liabilities usually requires a journal entry at
the year-end to create a figure for accruals. This is shown as a current
liability.
accrued pension Another term for accrued benefits.
accrued uncommitted service charges

Term used in Commonhold and Leasehold Reform Act 2002 s94 in
respect of the amount a landlord must pay to an RTM company when
the right to manage a leasehold property is acquired by the company.
acct Account.
accumulate Heap up or pile on. In finance, the term usually applies to a fund which
keeps growing by having amounts added.
accumulated depreciation The amount of depreciation so far charged against the book value of a
fixed asset.
For example if a fixed asset has a book value of £1,000 and is being
depreciated over five years on the straight line basis, after two years the
accumulated depreciation is £400. This is subtracted from the book
value to give the net book value of £600.
accumulated dividend Dividend which has not been paid to a holder of a cumulative
preference share or similar security and which is carried forward to be
paid in a future period with the dividend for that period.
accumulated earnings and profits

American term for profits from previous years which were not
distributed as dividends. The UK equivalent is retained profit.
accumulated earnings tax

Tax charged in the USA on business earnings which are unreasonably
retained to avoid the owners paying higher rates of personal tax.
accumulated points Sales promotion scheme which works by awarding points according to
the value of sales. These points can then be redeemed for cash or goods.
The VAT implications of such schemes have been tested in the
courts. In the case Kuwait Petroleum Ltd [1999], it was held that the
issue of the vouchers was for no consideration. No part of the price paid
for the petrol could be regarded as a prepayment for the goods to be

acquired. When the points are redeemed, the goods are sold for no
charge and so the VAT is payable on the market value of the goods
under the rules which apply to gifts.
accumulated profit Profit which is not paid as a dividend but is taken into the accounts of
the following accounting period.
accumulated reserves The reserves of a business which have been collected over several
years.
accumulating shares Ordinary shares issued instead of a dividend. This has the effect of
replacing income with capital growth.
accumulating with-profits policy

“A with-profits insurance contract which has a readily identifiable
current benefit, whether or not this benefit is currently realisable, which
is adjusted by an amount explicitly related to the amount of any
premium payment and to which additional benefits are added in respect
of participation in profits by additions directly related to the current
benefit of a policy with similar characteristics” (FSA Handbook)
accumulation (1) Process of an amount growing bigger by having payments, interest

and similar items added.
(2) For trusts and estates, the continual increase in a principal through
the reinvestment of the interest. There are rules against excessive
accumulations to stop the abuse of trustees increasing capital and
defeating the object of a trust or estate in providing for a beneficiary.
The need for such a law was prompted by the case Thellusson v
Woodford [1799] where the testator tied up his property for many
generations to come, so that none of his living descendants received any
benefit.
Perpetuities and Accumulations Act 2009 generally abolishes
restrictions on accumulations, except for charitable trusts. It retains and
modifies the restriction on perpetuities. The 2009 Act applies for trusts
and estates created from 6 April 2010.
Older estates and trusts are governed by Law of Property Act 1925
s164. This generally restricts the period when funds may accumulate to
the life of the settlor and 21 years thereafter. See also perpetuities.
When the end of the accumulation period is reached, all
undistributed income must be distributed, and all future income must be
distributed.
accumulation and maintenance trust (AMT or A&M trust)

Type of trust which could be created for the benefit of people under the
age of 25, including for children not yet born (Inheritance Tax Act 1984
s71). So an AMT could be created for one’s grandchildren.
The funds are either accumulated during the beneficiaries’ lifetime
or may be applied to their maintenance. The beneficiaries must become
entitled to receive the capital no later than the age of 25. Such trusts
avoid the tax charge for other types of discretionary trust.
No new AMTs may be created from 22 March 2006. Instead, it may

be possible to set up an 18-25 trust.
For income tax and capital gains tax, an AMT is taxed on the same
basis as a discretionary trust. Its advantage is for inheritance tax
where an AMT avoids the exit charge and ten-yearly charge.
AMTs, strictly, cease to exist from 6 April 2008, but transitional
provisions allow the inheritance tax advantages to continue after that
date for AMTs which existed on 21 March 2006, but only if the
beneficiaries become absolutely entitled to the capital at the age of 18.
accumulation trust Form of discretionary trust where the trustees’ discretion includes the
right not to pay any beneficiary but to carry forward all income and
profit.
accumulation units Units added to a unit trust or other collective investment in lieu of
interest.
Their capital gains tax treatment is given in Taxation of Chargeable
Gains Act 1992 s99A.
accumulator In computing, a register in the central processing unit which collects

calculations until the task is finished.
accuracy State of being correct with sufficient precision. It is one of the basic
requirements of accounting.
acescence Process of souring, as in milk, which leads to a loss of value.
A&CG Accountant and Controller General
ACH Automated Clearing House.
achievement motivation In psychology and business management, one of three sets of personal
needs. The other two are power and affiliation.
acid test In accountancy, another name for liquidity ratio. It is a simple quick
test that determines whether a company appears to be solvent.
The term comes from the California Gold Rush around 1845 when
prospectors had difficulty distinguishing valuable gold from worthless
iron pyrites. A simple test was to pour on readily available nitric acid
which fizzed on pyrites but not on gold.
ACIE Association of Charity Independent Examiners.
ACIS Associate member of the Chartered Institute of Secretaries.
acknowledgment Any statement or equivalent which accepts a position as stated by

someone else. It particularly refers to accepting that a debt is owed.
Under Limitation Act 1980, a written acknowledgment of a debt starts
the limitation period again.
acknowledgment and undertaking

In law, acknowledgment is confirmation in a title deed that a person
may see and have copies of relevant deeds in his possession.
Undertaking is a promise to keep the documents safely.
acknowledgment of debt An admission, in writing and signed, by a person that he owes money to
another. This revives a debt which is otherwise statute-barred.
acknowledgment of service
Process in legal proceedings where the defendants states that the writ or
originating summons has been served on him.
ACLC Australian Company Law Cases, published from 1982.
a coelo usque ad centrum Latin: from heaven to the centre of the earth.
Legal term for the right of owners of a freehold property.
ACP African Caribbean and Pacific States.

The term is used for Customs duty purposes.
a/c payee only Words written on a cheque, which means that it must be paid into an
account in the payee’s name and cannot be indorsed to another payee
(Bills of Exchange Act 1882 s81A).
acpt Acceptance.
acquired corporation American term for a business which has been taken over.
acquired gender Sex of a person to whom a gender recognition certificate has been
issued or to a person who has applied for such a certificate and is
already living as a person of that sex (Gender Recognition Act 2004
s1(2)).
Such a person is treated as being of the new sex for all purposes,
including tax and social security, from the date of the certificate.
acquired goodwill Amount paid for a business above the value of net assets.
This is commonly used as a means of drawing tax-free funds from a
business. A sole trader or partnership may be acquired by a limited
company for a sum greater than its net assets. This difference is
goodwill. This may then be “repaid” without deduction of tax.
acquired rights Rights an employee acquires when his employer’s business is taken
over (Transfer of Undertakings (Protection of Employment)
Regulations 1981).
Acquired Rights Directive

European Union directive which is given effect in English law as
Transfer of Undertakings (Protection of Employment) Regulations
1981.
acquiree Company that becomes controlled by another.
acquirer Person or company who has acquired something, particularly a

business.
acquiring corporation American term for a business which is taking over another.
acquiring institution A financially secure bank or similar body that acquires all or some of
the liabilities of a failed institution in a purchase and assumption
transaction.
acquis communautaire Body of EU legislation which is binding on all member states.
acquisition (1) Term now used for goods brought into the UK from another
member state of the European Union. Goods going to another state are
called removals. Such goods are no longer regarded as imports and
exports, as the EU is a single market. Details are given in VAT notice
725.
An acquisition in the UK is subject to the rate of VAT as goods
produced in the UK.
(2) For stamp duty land tax, this means:
• a transfer of an existing chargeable interest;
• a creation of a new interest;
• the surrender or release of an interest; or
• the variation of an interest.
(Finance Act 2003 s43).
(3) In accounting, process by which ownership of a business is
obtained.
“A business combination that is accounted for by using the
acquisition method accounting” (FRS 7 para 2).
“A business combination that is not a merger” (FRS 6 para 2).
acquisition accounting One of the two methods by which a business may account for a newly
purchased subsidiary. The other method is merger accounting.
Acquisition accounting involves including the assets of the new
subsidiary with those of the parent company and writing off the
goodwill paid.
acquisition benefit Benefits provide by an employer in respect of a new residence acquired

by an employee on relocating (Income Tax (Earnings and Pensions) Act
2003 s277).
acquisition cost Amount paid to acquire something, including costs of delivery and
installation.
It is used in the calculation of capital gains tax.
acquisition expenses Expenses incurred by an employee in relocating on a change of

workplace (Income Tax (Earnings and Pensions) Act 2003 s277). An
employer may provide tax-free relocation expenses to pay for these.
acquisition method Production of consolidated financial statements for an acquisition.

acquisition of business This term has a specific tax meaning in relation to life assurance
business, as set out in Finance Act 1989 s86(4).
acquisitions “Operations of the reporting entity that are acquired in the period” (FRS
3 para 3).
acquisition tax For VAT, tax payable by a UK business on acquisitions from another
EU state.
acquisitive growth Expansion of a business by acquiring other businesses.
acquittance Written acknowledgment of the payment of money or of a due debt. It

has more legal authority than a receipt.
acrd Accrued.
acre Unit of measure of land equal to 4,840 square yards or 43,560 square
feet. It was traditionally the amount of land an ox could plough in one
day. There are 640 acres to a square mile.
An acre equals 0.405 hectares or 4,005 square metres.
Acrobat Software developed by Adobe Systems. It allows documents produced

by almost software to be produced in a form which can be read on
almost any computer.
It works by putting an additional option in the facilities for printing
to allow the computer to “print” a PDF file which can then be sent as a
fixed document, like a photograph, to other computers.
ACT (1) Advance corporation tax

(2) Association of Corporate Treasurers
act (1) An action or omission of action which can have legal consequences.
(2) Law passed by Parliament. The term “means an Act of Parliament”
(Interpretation Act 1978 Sch 1) and “includes a local and personal or
private Act” (Interpretation Act 1978 s21).
acta Latin: deeds. Old term for official minutes of proceedings.
actg Acting.
act in law An action of a party which has a legal effect, such as making a contract.
acting partner “Partner who habitually acts in the partnership business” (Partnership
Act 1890 s16). A notice to such a partner constitutes a notice to the
whole partnership.
actio Legal action, particularly under American or Roman law.
actio non Latin: no action. In USA, this may be pleaded by a defendant.
action (1) Civil proceedings commenced by writ. Sometimes the term “legal
action” is used to distinguish this from other meanings of the word.
(2) Industrial action
actionable Capable of justifying a legal action.
actionable per quod Actionable only when external factors are considered, unlike being
actionable per se. An example is defamation whereby the words are
only libellous on the basis of what else is known.
actionable per se Actionable without considering external factors; actionable on its own
merits. The opposite is actionable per quod.
actionable tort A civil wrong which entitles the injured party to sue.
action at law American term for legal proceedings.
action of account Obsolete common law offence of not keeping proper accounting
records, such as within a partnership. It is now replaced by the equitable
remedy of an account.
action research Business term for a process of managed change that is problem-
oriented. Typically it follows a five-stage sequence of problem
diagnosis, data gathering and analysis, group feedback, action and
evaluation.
action short of a strike Form of industrial action that imposes pressure on an employer without
calling a strike. Examples include work to rule, go-slow and overtime
ban. Such action is about twice as common as strikes.
actio personalis moritur cum persona

Latin: a personal action dies with the person.
Legal principle that a personal representative may not sue or
continue a legal action for a personal claim of the deceased. Since 1934,
this restriction only generally applies to defamation.
activate (1) In computing, processes to get software working. This typically

includes such functions as loading and entering security codes. This
includes using on-line tax services.
(2) In banking, process for validating a credit card, usually by calling a
telephone number. This is designed to prevent someone using the card
should it not be delivered to the correct user.
activation PIN Code number which is used to activate an online service or computer
software. The number is only used once.
active Description of an account which has many transactions, such as an

active bank account.
active account Any account, particularly with a bank, which is being used, as against a
dormant account.
Sometimes the term is restricted to an account which is used

frequently.
active circulation Value of a denomination of banknotes or coins which are in circulation

at a particular time, rather than being held by banks or hoarded by
dealers or collectors.
active investing Investing in a manner which studies markets and companies with a
view to outperforming the market.
active lien of carrier The lien of a carrier which is supplemented by a contractual provision
allowing a customer’s goods to be sold.
Under common law, every carrier has the right to exercise a passive
lien of carrier. This means that a carrier may hold a customer’s goods
until the carriage has been paid. A carrier and customer may agree a
further provision by contract that such goods may be sold if payment is
not made within a reasonable time.
active list List of people available for service. The term was originally for military
officers on full pay.
actively at work A clause in a group insurance policy that requires a new member or one
with an increase in cover, to be at work (or on holiday i.e. not absent
due to sickness, industrial action, etc.) on the day of joining or day of
increase.
active member Member of an occupational pension scheme who is accruing benefits,

usually a current employee.
“An individual who has benefits currently accruing for or in respect
of that person under one or more arrangements in the pension scheme”
(HMRC manual RPSM glossary).
Being an active member is one of the conditions for receiving tax
relief on pension contributions.
The other categories of member are deferred member, pension
credit member and pensioner member.
active membership period

Period for which a person is regarded as an active member of a
pension scheme by HMRC.
The period begins with the later of:
● the date on which benefits starts to accrue; and
● 6 April 2006.
The period ends immediately before the crystallisation event.
active partner Member of a partnership who is involved in its day-to-day

management, as opposed to a sleeping partner.
active service Service in the military which involves actual fighting as against
preparation, training etc. There are some special concessions for active
service, such as exemption from inheritance tax if killed on active
service (Inheritance Tax Act 1984 s154).
active stocks Stocks, shares and other securities which are being actively traded.
active trust Trust which requires the trustees to do something, such as to maintain a
property.
active underwriter Managing agent in Lloyd’s who underwrites on behalf of a syndicate.
activities of daily living (ADL)

Everyday living functions and activities performed by individuals
without assistance. These functions include walking, dressing, washing,
toilet, shopping, cooking and eating.
The inability to undertake such activities may be used to define
disability in insurance contracts.
activity A In the context of EIS relief, this means carrying on a qualifying activity
either by the company itself or by a 90% subsidiary (Income Tax Act
2007 s179(2)).
activity B In the context of EIS relief, research and development which is related
to the main activity of the company (Income Tax Act 2007 s179(3)).
act of bankruptcy Obsolete provision of law. It was an action which justifies making a
person bankrupt as contained in Bankruptcy Act 1914 s1. These
provisions have been replaced by Insolvency Act 1985.
act of God Accident or event which happens without human cause, such as a storm
or earthquake, which no human foresight can provide against and where
human prudence is not obliged to recognise the possibility. Normal
weather conditions such as rain and wind are not acts of God.
There is no liability in tort for an act of God. It is possible to have
insurance against an act of God.
act of law The effect of the operation of the law, such as succeeding to property
under a will.
Act of Parliament Legislative decree; a statute.

An Act becomes law when it receives Royal Assent, having been
passed by the House of Commons and (usually) the House of Lords
which make up Parliament.
The Court cannot declare an Act of Parliament illegal. This was
established in the tax case Cheney v Conn [1968] when the taxpayer
appealed against a tax assessment under Finance Act 1964 on the
grounds that the government was illegally spending money on nuclear
weapons contrary to the Geneva Conventions Act 1957. The court held
that, even if there was a conflict between the Acts (and it did not say
there was), the 1964 Act superseded the 1957 Act to the extent that
there was a conflict.
Another case holds that a statute remains effective until specifically
repealed (Prince of Hanover v Attorney General [1957]). This upheld a
claim under an Act passed in 1705 whose purpose (naturalising

Princess Sophie, Electress of Hanover) had passed. To avoid problems,
various State Law Revision Acts are periodically passed to remove
obsolete laws. They frequently contain tax provisions.
It should be noted that the House of Lords did once suspend the
provisions of an Act (Merchant Shipping Act 1988) when the European
Court of Justice stated that it did not comply with EU law (Factortame
Ltd v Secretary of State for Transport (No 2) [1991]).
actor An actor is taxed as an entertainer.

Most actors are treated as either employed or self-employed for
both income tax and national insurance purposes, with some exceptions.
The main exception is that actors engaged under Equity contracts
are treated as employed for national insurance but self-employed for
income tax. The relevant regulations are SI 1978 No 1689. The HMRC
position has been confirmed in HMRC Brief 10/11.
actual Amounts of expenditure incurred or income received, as against the

budgeted figure. The difference between them is known as the
variance.
actual basis Method for determining the basis period for calculating income tax on
trades.
The actual basis is used for the first and last years of a business,
subject to overlap relief. All the years in between are taxed on the
current year basis.
actual birth Date a baby is born, as against the expected birth which is the date on
which a doctor or midwife expected the baby to be born.
For the purposes of statutory maternity pay, care must be taken as
to which birth date is used for determining entitlement.
actual charge For the purposes of spirits duty, this “is normally based on the litres of
alcohol contained in the spirits and any feints produced less the litres of
alcohol in any feints brought forward from the previous period”
(Customs notice 39).
actual consideration For stamp duty land tax, amount paid in respect of a transfer of land
into or from a partnership (Finance Act 2003 Sch 15).
actual price Amount payable for immediate delivery of a commodity.
actual tax point Date when VAT is charged on a supply.

This is when an invoice is issued up to 14 days after a supply has
been made or when payment has been received before the supply was
made. Otherwise the tax point is the basic tax point, namely the date
on which the supply was made.
If the actual tax point occurs before the basic tax point and the tax
points fall in periods where different VAT rates apply, the supply may
be caught by anti-forestalling provisions.
actual value Alternative term for market value.
actuals (1) Commodities on hand, ready for shipment, storage or manufacture.

Commodities not on hand are usually known as futures.
(2) Real figures in financial statements, compared with budgeted or
forecast figures.
actuarial gain (loss) Changes in a pension fund’s deficits or surpluses that arise because:
● events have not coincided with the assumption used by the
actuary when carrying out the previous triennial valuation of the fund or
● the actuary changed the assumptions used in previous
valuations.
actuarial method Means of calculating depreciation of a fixed asset, particularly where

the asset is acquired by a finance lease.
Basically the depreciation is linked to the finance charge.
actuarial surplus Surplus which results from overfunding a pension scheme.
actuarial tables Tables indicating how long people are expected to live according to
their sex and current age. They are also known as life expectancy
tables or mortality tables.
actuary Person who is professionally qualified in the mathematics and statistical

methods used by the pension and insurance industries.
In certain circumstances insurance companies, pension schemes etc.
are required to have documents, calculations etc. certified by an
actuary. In this and other legal contexts the word means a qualified
Fellow of the Institute or Faculty of Actuaries. For general insurance
business, it also means a Fellow of the Casualty Actuarial Society who
is also a member of an actuarial body.
actuating purpose “Purpose which motivates or incites a person to act” (FSA handbook).
actus curiae neminem gravabit

Latin: an act of the court shall prejudice no-one.
actus legis nemini facit injuriam

Latin: the act of the law injures no-one.
actus non facit reum, nisi mens sit rea

Latin: the act itself does not constitute guilt unless done with a guilty
intent.
actus reus Latin: act of the defendant.

The term means the guilty act of a crime. It is one of the two pre-
conditions for most crimes, the other is the mens rea or intention.
This means that a crime is usually committed only when a person
has evil intent (mens rea) and guilty act (actus reus).
actus reus non facit reum nisi mens sit rea

Latin: an act does not make that person guilty of his crime unless his
mind be also guilty.
acv Actual cash value.
ACWA Associate Cost Works Accountant. This is an old designation whose

modern equivalent is ACMA.
ad Latin: to
AD (1) Approved distributor.

(2) Anno Domini, Latin: in the year of our Lord. Standard system for
numbering calendar years from 1 AD.
ad arbitrum Latin: at will.
ad avizandum Latin: to be deliberated upon. Description of something to be

considered further.
A-day The date of 6 April 2006 when the tax regime for pensions radically
changed.
The main changes were:
● the maximum amount which may be saved in a pension
scheme is determined by both an annual limit and a lifetime limit,
rather than as a percentage of earnings;
● the retirement age must generally fall between 55 and 75;
● a person may belong to any number of pension schemes of
any type;
● there are additional options on the types of annuity by which
a pension may be paid.
ADB Accidental death benefit.
ad colligenda bona Latin: to collect the goods.

This is a form of administration of an estate where the estate is
perishable or precarious and cannot await the normal procedure.
ad crumenam Latin: to the purse.
ADD (1) Accidental death and dismemberment, a form of insurance

policy.
(2) Anti-dumping duty, a Customs duty.
add Join or put with something. The term is used in mathematics for the
simplest function of producing a total from two numbers, as explained
in addition.
ad damnum Latin: to the damage. This usually refers to the amount of damages
demanded in legal proceedings.
add back Part of a tax computation in calculating the adjusted profit for income
tax or corporation tax.
The tax computation starts with the net profit as shown in the profit
and loss account. Items which are not allowable for tax must be added
back. This increases the taxable profit, or reduces a loss (or even turn a
loss into a profit).
Items are added back because they are not tax-deductible or because
they are dealt with for tax in other ways.
Items commonly added back in accounts include:
• depreciation
• personal expenditure
• fines, bribes, penalties and similar
• salaries paid to partners or sole traders
• travel between home and place of work.
ad diem Latin: to the day appointed.

Used to indicate a postponed court case.
added to loan In banking, term used by lenders when additional charges are added to
the amount lent. Such additional charges typically may include an
arrangement fee, administration fee and mortgage indemnity fee.
added value Amount of increased worth from when something is received to when it
is passed on. In management accounting, profit can be seen as the
added value minus the overheads (such as wages and tax) incurred in
the process.
addend In addition, a number which is added to another number (the augend)

to give a total.
adding machine Machine which is used for simple arithmetical functions.

On adding machine till rolls, a total is indicated by an asterisk * ,
while a sub-total is indicated by a diamond ◊ .
Auditing a till roll requires checking that the list of numbers is
preceded by an asterisk.
addition Process of combining two numbers to give a total or sum. The first
number is known as the augend and the latter as the addend, so in the
equation:
2 + 3 = 5,
2 is the augend, 3 is the addend, and 5 is the total.
A total to which further numbers are to be added is called a sub-
total.
On calculators, total is indicated by an asterisk * , while sub-total is
indicated by a diamond ◊ .
additional borrowing In banking, extra money a person or business may borrow in addition to
existing borrowing.
additional class 3 contributions

A past year for which a person may pay class 3 national insurance
contributions to maintain their national insurance record (Social

Security Contributions and Benefits Act 1992 s13A).
There are restrictions on the number of years for which
contributions may be paid and when they must be paid.
additional class 4 percentage

Rate of class 4 national insurance payable by the self-employed on the
amount of their income which exceeds the class 4 upper limit.
The term was introduced by National Insurance Contributions Act
2002. The rate is 2% from 6 April 2011, and 1% previously.
additional disagreement factor

Amount by which disagreement is expanded when a person is added to
a group.
The formula is ADF = n/(n-2)
where n is the number of the person added.
So if a sixth person is added to a group of five, the ADF is 6/4 or
1.5. The chances of disagreement have been increased by 50%.
The factor is based on the assumption that the only element
necessary for a disagreement is two people. The ADF therefore
measures the increase in combinations of 2.
additional duties Additional work undertaken by an employee for additional pay.

Such payment is normally taxed as employment income. This is
explained in the inspectors’ manual at EIM00730. The matter was
tested in the case Mudd v Collins [1925] 9TC297. This was where a
director was paid a commission for selling a branch. The judge said, “if
an officer is willing to do something outside the duties of his office..
and his employer gives him something in that respect, that is a profit’ it
becomes a profit of his officer which is enlarged a little so as to receive
it”.
This does not apply if the payment is not for services. An example
is Donnelly v Williamson [1981] 54TC636 where a teacher was
reimbursed a mileage allowance for attending parents’ evenings. This
was not payment of earnings as attending such evenings was not part of
her duties.
additional expense For taxation of assets provided to an employee, the term is defined in
Income Tax (Earnings and Pensions) Act 2003 s205(4).
additional expenses rules Term used by HMRC for expenses incurred when an employee is sent
overseas. Such expenses may not be taxable (HMRC leaflet 480).
additional maternity leave

A period which extends a woman’s total maternity leave to 52 weeks
after she has finished her ordinary maternity leave (Employment
Rights Act 1996 s73).
She is not entitled to any pay or statutory maternity pay during this
period, but is entitled to all other benefits under the contract of
employment.
additional paid-in capital In USA, amount paid by stockholders above the par value of the stock.
additional payments Part of the alternative finance returns achieved under investment
bond arrangements (Taxation of Chargeable Gains Act 1992 s151N
and 151S).
additional pension Government-backed pension scheme whereby employees pay more

national insurance to receive an addition to the state retirement
pension in retirement.
There have been three additional pension schemes:
● graduated pension (1961-1975);
● SERPS (1978-2002); and
● state second pension (from 2002).
additional personal allowance

Additional tax allowance which could be claimed by a single parent, or
by a married parent whose partner was disabled. This allowance was
abolished from 6 April 2000, having been restricted in amount from
1994.
additional premium Further payment which be made to an insurance policy to provide

additional cover.
additional primary percentage

Rate of class 1 national insurance payable by an employee on earnings
above the upper earnings limit. This rate was introduced at 1% on 6
April 2002 and increased to 2% from 6 April 2011.
additional rate Rate of 50% income tax introduced from 6 April 2010.
additional relief Term used for the additional tax relief which could be claimed for
children. This is abolished from 6 April 2000 (Finance Act 1999
s33(2)).
additional school School that is not an academy nor a replacement for a discontinued
maintained school (Academies Act 2010 s9(3)).
additional secondary percentage

Rate of class 1 national insurance payable by an employer on an
employee’s earnings above the upper earnings limit. It was introduced
on 6 April 2002 at 1% and was increased to 2% from 6 April 2011.
additional security fee An additional charge made to a loan when the security does not meet a
particular standard.
Typically such a fee is imposed if a mortgage is for more than 75%
of the value of the property. The fee may pay the premium for a
mortgage indemnity policy.
additional statutory paternity pay (ASPP)

From 6 April 2011, further payment of statutory paternity pay after
ordinary statutory paternity pay.
Broadly, a woman who returns to work before the end of her

maternity pay period may transfer the balance of the period to her
partner (not necessarily male) for a period of up to six months. The law
is contained in Social Security Contributions and Benefits Act 1992
s171ZEB.
additional tax An extra amount which must be added to the income tax otherwise
payable for such things as unauthorised payments from a pension fund
(Income Tax Act 2007 s30).
additional voluntary contributions (AVCs)

Payments an employee could make to an occupational pension scheme
before 6 April 2006 in addition to regular payments to increase the
amount of pension entitlement.
Typically tax law allowed an employee to invest up to 15% of
salary (depending on age) in a scheme, yet few schemes ever took more
than 5%. AVCs allowed some of the spare allowance to be utilised.
AVCs attracted the same tax relief as the main contribution.
There were two types of AVC: .
● in-house AVC; and
● free-standing AVC.
additional yearly rent Notional amount of benefit in kind on which an employee is assessed to
income tax if provided with accommodation by an employer if the
accommodation cost more than £75,000.
The amount of benefit is calculated by subtracting £75,000 from the
cost and multiplying the difference by the official rate of interest.
The tax provisions are contained in Income Tax (Earnings and
additur Latin: it is added. The term is sometime used for an addition to the
damages requested or awarded.
add-lister Term sometimes used for an adding machine with a print-out facility.
address for service Address which must be provided in legal proceedings for
communications to be sent.
adeem Process of losing through ademption.
ademption Process whereby a legacy totally or partly fails for a reason relating to a
legacy.
The commonest reason for ademption is that the item bequeathed no
longer exists, as when a legacy is for a painting which the testator sold.
adequate In contract law, a condition that must be met by a consideration to

establish a legal contract. In practice this must mean that the
consideration must have some economic value, however small.
A case on the matter was Chappell v Nestlé Co Ltd [1959] where
part of the consideration was used chocolate wrappers that were thrown
away. The judge said, “a peppercorn does not cease to be good
consideration if it is established that the promise does not like pepper

and will throw away the corn”.
adequate public disclosure

Requirement in connection with take-overs and buy-backs.
The law is contained in Buy-back and Stabilisation Regulations and
Consolidated Admissions and Reporting Directive.
ad eundem Latin: to the same.
ad eundem gradum Latin: to the same degree.
ad finem Latin: to the end.
adhesion contract American term for a contract whose terms are so heavily biased in
favour of one party that there is serious doubt as to whether the other
party really entered into the contract voluntarily.
adhesive stamp Stamp which is stuck to a document to indicate that duty or a fee has
been paid, as against a stamp made by an impression from a die.
There are provisions in Stamp Act 1891 s9 for fraudulent use.
ad hoc Latin: for this purpose.
ad hoc settlement Very rare form of trust for sale of land under Law of Property Act 1925.
ad hoc trust for sale Trust for sale of land where the trustees are two individuals approved
by a court, their successors or a trust corporation. Under Law of
Property Act 1925 a sale of land subject to this type of trust overreaches
all other equitable interests that would not be overreached for other
types of trust sale.
ad idem Latin: towards the same.

Two parties to a contract must be ad idem for the contract to be
legally enforceable.
ad infinitum Latin: to infinity.
ad inquirendum Writ requiring something to be investigated.
ad interim Latin: in the meanwhile.
adjacent premises For beer duty, premises within five kilometres of a brewery that may
be registered on the same licence (Customs notice 226).
adjective law Those aspects of the law which relate to practice and procedure.
adjourn Postpone to a later time, particularly of a meeting or court case.
adjourned meeting Meeting which resumes the business of a meeting started at an earlier
occasion.
In company law, a resolution passed at an adjourned meeting is

regarded as being passed on the date of that meeting and not on the date
of the original meeting (Companies Act 2006 s332).
adjudicating authority For social security, person or body allowed to determine an issue
(Social Security Act 1998 s27(7)).
adjudication Process of an independent third party giving a ruling to settle a dispute.

This should be distinguished from mediation where an attempt is made
to help the parties reach their own agreement.
The term is also used for HMRC determining the amount of stamp
duty payable on a document.
adjudication fee Fee charged in connection with obtaining an adjudication stamp. It is

abolished from 1 January 1871.
adjudication order Term formerly used for the court document which formally made a
person bankrupt.
adjudication stamp For stamp duty, stamp representing the value as adjudicated (Stamp Act
1891 s12).
adjustable rate mortgage (ARM)

Mortgage where the rate payable fluctuates according to current market
rates. This is the most common form of mortgage. Usually the rate
moves in line with a predetermined index such as Treasury Bill rates.
adjustable rate preferred stock (ARPS)

Preference shares where the rate of interest is determined by reference
to a published rate, such as the base rate.
adjusted age Age of a person adjusted upwards or (occasionally) downwards to

reflect their medical condition. So a person aged 80 in poor health may
be given an adjusted age of 90. The adjusted age is used to calculate life
assurance rates, and can therefore be relevant for inheritance tax of the
person has taken out a bond under the discounted gift scheme.
Adjusted age is sometimes called weighted age.
adjusted gross income (AGI)

In the USA, amount of a person’s income subject to federal income tax.
It comprises their annual earnings less expenses, pension contributions,
capital losses and other allowable deductions.
adjusted life assurance trade profits

Term that is defined in Finance Act 1989 s85A(3).
adjusted net gains In capital gains tax, the total of taxable amounts of chargeable gains
less any deductions for reliefs and allowable losses, plus allowable
losses in the current year (Taxation of Chargeable Gains Act 1992
s3(5B)-(5C)).
If the gains have accrued to others but may be attributed to the
taxpayer (for example, if the taxpayer is a beneficiary under certain

types of trust), the adjusted net gains is the chargeable gains less any
deductions for reliefs and allowable losses, plus the lower of the
amount of the gain attributable to him and the amount of the annual
exemption.
adjusted net income Amount of a person’s net income as adjusted to the amount subject to
income tax (Income Tax Act 2007 s58).
This broadly comprises taxable income less allowable payments to
pension funds and Gift Aid donations. If a taxpayer is entitled to an age
allowance, this is reduced by £1 for every £2 by which adjusted net
income exceeds a stated figure until the personal allowance is reached.
From 6 April 2010, adjusted net income is also used to reduce the
personal allowance for taxpayers who earn more than £100,000 a year.
adjusted present value Calculation of the all-equity net present value of an investment or
project after adjustments for other factors, such as taxation.
adjusted profit Net profit, as taken from the profit and loss account and amended to
give the figure which is subject to income tax or corporation tax.
The usual steps in calculating adjusted profit are:
● add back depreciation;
● add back deductions for items which are not tax-deductible
such as personal expenditure and most entertainment.
There are also some items where the methods of valuation may
differ, such as personal use of stock under the Sharkey v Werner rules,
the extent to which a loss may be reflected in long-term work in
progress, and methods of stock valuation.
A business may be able to claim capital allowances in lieu of
depreciation.
adjusted strike price An exercise price which requires adjustment for an unexpected reason,
such as a share split.
adjusting entry An entry made in the accounts to correct a mistake in a previous entry.
It is good practice to do this by making two entries: one which
reverse the incorrect entry and one which is what the entry should have
been.
adjustment (1) Process of changing an amount to bring it into line which the figure
calculated using different rules, such as adjusting accounts prepared
under one accounting convention to those prepared under another
convention.
(2) Process of settling an insurance claim.
adjustment bond Bond issued in exchange for other bonds during financial reconstruction
of a business.
adjustment income Income which may be added to taxable income when there is a change
of accounting date.
ad libitum Latin: at pleasure
ad litem Latin: for the suit.

The term is most commonly used for a guardian ad litem when a
legal action is brought on behalf of a child.
ADLs Activities of daily living.
ad manum Latin: at hand.
ad medium filum aquae Latin: to the middle line of the stream.

This is the normal boundary of land separated by a river or stream
ad medium filum viae Latin: to the middle line of the road.

This is the normal boundary of land separated by a road.
adminicle Something which supports or corroborates, such as corroboratory

evidence in law.
administer Govern or manage.
administering a home finance transaction

Administering a regulated mortgage contract, a home purchase plan or a
home reversion plan.
It is an activity regulated by the Financial Services Authority.
administering a home purchase plan

From 6 April 2007, where this is done in the course of a business, it is
regulated by the Financial Services Authority.
administering a home reversion plan

From 6 April 2007, where this is done in the course of a business, it is
regulated by the Financial Services Authority.
administering a regulated mortgage contract

For contracts from 31 October 2004, this is regulated by the Financial
Services Authority.
administration (1) General running of a business, as opposed to performing the

functions of the business.
(2) Administering the estate of a person who died without making a
will, known as intestacy.
(3) Arrangement where an insolvent company has its management
replaced.
administration (1) General management of a business.

(2) Insolvency procedure whereby the directors of a company are
replaced.
(3) Procedure for dealing with the estate of someone who died
intestate.
Administration Act In social security legislation, Social Security Administration Act 1992.
administration action Proceedings in court started by a personal representative to gain a

grant of representation.
administration bond Guarantee by a third party, usually an insurance company, to make

good any loss if a personal representative fails to deal with an estate
properly.
administration fee A fee charged for administering something, such as an arrangement

fee.
The term is commonly used for mortgage applications to cover the
costs of finding funds at appropriate terms. The administration fee is
not usually refunded if the mortgage does not proceed.
administration levy Amount which the Pension Protection Fund may levy on pension
funds under Pensions Act 2004 s117.
administration of estates Looking after someone else’s property – one of the duties of an
executor.
administration order Court-overseen debt management plan when indebtedness does not
exceed £5,000. The order usually requires payments in instalments.
administration pending suit

Administration of the estate of a deceased person while their will is
being challenged in the High Court.
administrative agency American term for a regulatory body.
administrative cost Expense incurred in the general control and direction of an

organisation, but which is not directly related to either its financing nor
to the products or services it provides.
Examples include heating, audit and general insurance.
administrative expenses (1) Costs of managing and running a business.

(2) Expense of an administration, particularly in administering an
insolvent business. These rank before all other claims in insolvency.
For insurance, there is a special meaning set out in insurance
accounts rules.
administrative receiver Receiver appointed under a debenture secured by a floating charge

which gives him control over all or most of the company’s assets. Such
a person displaces the directors of the company.
administrative tribunal Body established under an Act of Parliament to hear claims arising
from the administration of legislative schemes, particularly relating to
welfare.
administrator (1) Anyone whose work is general administration, such as an office

manager or clerk.
(2) Person who administers the state of someone who died without
leaving a valid will.
administratrix Female administrator of an intestate estate. This word is not used for
other meanings of “administrator”. The plural is “administratrices”.
ad misericordiam Latin: to pity. Description of an argument which appeals to a sense of

pity rather than on legal or logical grounds.
admissible asset This term has specific meanings in relation to solvency of insurance
businesses and to members of Lloyd’s.
admissible value Figure used to determine the tax liability of a non-profit insurance
company. The term is defined in Finance Act 1989 s83YA.
admissibility of evidence Extent to which evidence may be used in court.

The general rule is that all relevant evidence is admissible unless it
is excluded under a specific provision of legal procedure.
admissibility of records Rules about what records may be admitted as evidence in civil
proceedings in court. This is largely determined by Civil Evidence Act
1968, amended in 1995.
admissible Description of evidence which may legally be used in a court case.
admission (1) Charge for entering premises.

(2) Statement where a person acknowledges his wrongdoing.
(3) Process by which a person becomes a member of a partnership
(Partnership Act 1890 s15).
admission to trading Process by which a person is allowed to trade, particularly on a stock

exchange.
ad modum Latin: after the manner of.
Adobe Computer company which developed Photoshop, Acrobat, typefaces

and much other software for illustration and typesetting purposes.
ad nauseam Latin: to the point of producing disgust. The term is commonly used for
a point which is tediously repeated.
adolescent State or period of passing from childhood to adulthood.
adopted child Person who has been brought by adoptive parents rather than their
natural parents.
adoption Legal process by which a person or couple assumes parental rights and
duties for a child. The natural mother and father then lose their parental
rights. Adoption is now governed by Adoption Act 2002 or for Scotland
Adoption and Children (Scotland) Act 2007.
A child may be offered for adoption from the age of six weeks,
though the child may live with the prospective adopters before then.
The adoption takes place when the adoption order is granted, which is
at least three months after being requested.
The UK recognises overseas adoptions which are in accordance
with the Hague Convention. This requires the adoption to be in a
country on a list of designated countries.
Adoption first became legal in the UK under Adoption of Children
Act 1926. An adopted child now has the same rights as a natural child
and can inherit property on the same basis, except that an adopted child
cannot inherit a hereditary title.
An employee who adopts may be entitled to adoption leave and to
statutory adoption pay.
It should be noted that the natural mother of an adopted child is still
entitled to claim statutory maternity pay and maternity leave if she
meets the other conditions, even though another person claims statutory
adoption pay and adoption leave in respect of the same child. A woman
does not have to disclose to an employer that she has given up her child
for adoption.
adoption agency Organisation which deals with arrangements for adopting children.
Such an agency must be either a local authority or an approved body.
adoption allowance Sum which may be paid by an adoption agency to assist new parents
looking after their adopted children. Generally adoptive parents are
expected to pay for the costs of the children on the same basis as natural
parents, so allowances tend to be restricted to special cases.
Adoption allowances are not subject to income tax (Income Tax
(Trading and Other Income) Act 2005 ss744-747). They are also
disregarded for some social security benefits, such as income support.
adoption by arms Ancient practice of giving arms to a person to make them your
champion and defender.
Adoption Contact Register

Register of all adopted children over the age of 18 who have
expressed a wish to meet their natural parents.
adoption leave Time off on adopting a child.
adoption order Order from a court whereby parental rights pass to adoptive parents
from the natural parents. The date of this order can be important to
establish entitlement to adoption leave and statutory adoption pay.
adoption pay period Period for which statutory adoption pay is payable (Social Security
Contributions and Benefits Act 1992 s171ZN(2)).
adoption rights Rights of individuals who adopt children.
adoption service Local authority service for arranging adoption of children.
adoption society Society which arranges adoption of children.
adoptive act Act of Parliament which only takes effect when adopted by another
body or by sufficient votes.
adoptive parent Individual or one of a couple who have legally adopted a child.
adoptive relationship Legal relationship created by an adoption order.
ADP Automatic data processing.
ad patres Latin: to the fathers. Euphemism which means dead.
ad quod damnum Latin: “to what damage”.

The term was once used for a writ to enquire into the consequences
of something before permitting it, such as what inconvenience would be
caused by closing a road.
ADR (1) Alternative dispute resolution

(2) American depositary receipt.
ad referendum Latin: for further consideration.
ad rem Latin: to the point.
adscriptus glebae Latin: attached to the soil.
ad sectam Latin: to the suit of.
adsum Latin: I am present.
ad summam Latin: in conclusion
ad testificandum Latin: for testifying. It is a description of a writ requiring a person to

attend court, particularly in the USA.
ad unguem Latin: to the nail. The expression means “to a nicety”.
ad unum omnes Latin: all to a man.
adult Person of full age, namely 18.
adult at risk Adult in Scotland who is unable to safeguard his or her own well-being,
us at risk of home and are more at risk than other adults because of
disability, mental disorder, illness or physical or mental infirmity (Adult
Support and Protection (Scotland) Act 2007 s3(1). There are certain
powers to intervene in such a person’s affairs when this is necessary for
the person’s welfare.
adult dependency increase

An addition to the state retirement pension that could be paid before 6
April 2010.
adult gaming centre “Premises in respect of which an adult gaming centre premises
licence has effect” (Gambling Act 2005 s237).
adult gaming centre premises licence

Licence issued by a local authority which allows the holder to operate
any number of Category C or Category D machines, and up to four
Category B machines (Gambling Act 2005 s172(1)).
adult placement A scheme similar to fostering but for adults. It is now known as shared
lives caring.
Adult Protection Committee

Body which every Scottish authority must establish to oversee
provisions regarding adults at risk (Adult Support and Protection
(Scotland) Act 2007 s42.
adults’ barred list List kept by the Independent Barring Board of people not allowed to
work with vulnerable adults (Safeguarding Vulnerable Groups Act
2006 s2(1)).
adult’s nearest relative Person in Scotland who may authorise the removal of any organs from
a deceased adult for transplant when the deceased has left no
authorisation (Human Tissue (Scotland) Act 2006 s7).
ad utrumque paratus Latin: prepared for either case.
ad valorem According to value.

The term is particularly used for those stamp duties which are
charged according to the underlying value of the transaction, as
opposed to fixed duties.
ad valorem duty Duty expressed as a percentage based on the customs value of the
goods, eg 10% ad valorem means that the duty payable is 10% of the
customs value of the goods.
advance Any provision of funds from one party to another on the assumption
that the funds will be repaid or otherwise accounted for. The term is
commonly used:
(a) for an advance on salary paid to an employee, such as an
employee who is about to incur expenses. is changing from weekly to
monthly paid, or who is in financial difficulties; or
(b) the process by which a lender passes funds to the borrower.
The usual payroll treatment is to ignore the advance when paid and
when repaid, so income tax and national insurance is calculated on the
normal pay. In other words, advances are made to and repaid from net
pay.
If the advance is for more than £5,000 and is not for necessary
expenses, it may be taxable as an employment-related loan (Income
Tax (Earnings and Pensions) Act 2003 s179).
advance clearance Procedure by which a taxpayer can establish in advance how a

transaction will be regarded for tax purposes. An example relates to
exempt distributions where advance clearance is permitted under
Income and Corporation Taxes Act 1988 s215.
advance corporation tax (ACT)

A prepayment of corporation tax payable when a company paid a
dividend or other distribution. It was charged between 6 April 1973 and
5 April 1999.
For the company, ACT was a prepayment of corporation tax, the
balance of which was known as mainstream corporation tax. To the
shareholder, the amount of ACT was a tax credit.
At abolition, the rate of ACT was 25%. This means that if a
shareholder received a dividend of £40 he also received a tax credit of
£10. This is regarded as both part of the dividend and the tax payable on
it. So a basic rate taxpayer was regarded as having received £50 on
which £10 tax is due at the dividend rate of 20%, of which he is
regarded as having paid £10 tax, so no further tax is due unless the
taxpayer is a higher rate taxpayer. Thus ACT ensured that the tax
payable in respect of a dividend was the higher of the company’s and
the shareholder’s marginal tax rate.
There were restrictions on the amount of ACT which a company
could offset against its corporation tax. Any excess was known as
surplus ACT and could be carried forward for offset in future years.
Although ACT has been abolished, some unrelieved ACT may still be
carried forward. It is known as shadow ACT and is relieved in the
same manner under Finance Act 1998 s32.
Advance Fixing Certificate

Form of export licence for Common Agricultural Policy goods. AFCs
set the rate at which export refund which will be paid on exported
products. Because AFCs must be applied for in advance of export, both
the exporter and the Rural Payments Agency will know how much
money will be paid in export refund over the life of the certificate.
advance freight Charge made by a ship owner for carrying goods from port to port. This
charge is collected before the goods are delivered. They are intended to
cover the loading costs of the ship.
advancement on capital Arrangement whereby a trustee may advance capital to a beneficiary

before the normal entitlement date.
Trustee Act 2000 provides a general right allowing trustees to
advance up to half the eventual entitlement of a beneficiary. This is
often done to fund a business or to buy property. The sum advanced is
deducted from the eventual payment of the entitlement. If there is a life
tenant whose income is reduced by such advancement, his or her
consent must be obtained. A trust deed may give trustees power to
advance more than half.
advance on salary Prepayment of part of a person’s salary or wages.

Such a payment is made without any deduction of tax or national
insurance (which is deducted on the whole payment at the usual time).
advance payment Payment for goods or services before they are received.
In VAT, an advance payment creates a tax point which triggers the
liability to VAT.
The advance need not be for the whole amount; it is sufficient that a
part-payment is made. So where a deposit is paid, such as for building
work, that triggers the VAT liability for the whole of the work.
However if it is intended that the deposit be repaid in full, such as when
a deposit is taken to be repaid when hired goods are returned in good
condition, the deposit dos not create a tax point.
In banking, the term means a payment to uninsured depositors after
a bank fails to meet its obligations.
advance payment guarantee

Contractual right which allows a buyer to recover an advance payment
if the supplier fails to fulfil his contractual obligations.
advance pricing agreement (APA)

Agreement between a taxpayer and HMRC regarding transfer pricing.
The agreement is made under the provisions of Finance Act 1999
s85. The APA determines the method to be followed. Further details are
given in Statement of Practice SP 3/99.
advance refunding Technique once used by US Treasury whereby holders of bonds which
are about to expire are offered attractive terms to borrow again.
advance sheet American term for a law report which is produced in pamphlet form
before being bound in a reference book.
advance thin capitalisation agreement (ATCA)

Agreement between a taxpayer and HMRC regarding thin
capitalisation. An ATCA may only be made for trade with countries
where the UK has a double taxation agreement.
The agreement is made under the provisions of Finance Act 1999
s85. Further details are given in Statement of Practice SP 4/07.
advance underwriting Description of a system used for underwriting members of some group
pension schemes.
Once an underwritten member is accepted for insurance at 'ordinary
rates', they may increase their cover by a predetermined percentage in
any year without the need for further underwriting.
advanced education Education at a high level.

The term is relevant for claiming social security benefits. For
example, child benefit cannot be claimed for a young person in
advanced education, but may be claimable for a young person in non-
advanced education.
Advanced education includes a university degree, NVQ level 4,
Higher National Diploma, Diploma of Higher Education, a teaching

qualification and Scottish equivalents.
Advanced Financial Planning Certificate

A professional qualification for financial advisers obtained by
examination through the Chartered Insurance Institute. Holders are
eligible for membership of the Society of Financial Advisers.
advanced measurement approach (AMA)

A method for calculating the operational risk capital requirements in a
financial institution. The term is fully defined in the FSA handbook.
advance funding Payment from HMRC towards statutory sick pay where other PAYE
payments are insufficient to cover the cost under the percentage
threshold scheme. Application is made on-line to HMRC. This
provision is rarely used.
advancement (1) Progress of a career by accepting better positions.

(2) Granting money in circumstances which make it a prepayment of an
inheritance or other financial provision. This includes a payment of a
capital sum from a trust under defined circumstances.
advancement in the world

Term sometimes used in trust law to denote a payment from a trust fund
to assist a beneficiary in such matters as marriage or buying a house.
advancement of religion One of the bases for which an organisation may acquire the legal status
of a charity.
Under Charities Act 2005, the organisation must also demonstrate
public benefit.
advantage In relation to national insurance avoidance, “means

(a) the avoidance or reduction of a liability for that contribution, or
(b) the deferral of the payment of that contribution”
(Social Security Administration Act 1992 s132A(7)).
advantages of Revenue Method of recording revenue for accounting and tax purposes. The aim
is to produce consistent methods wherever possible to maintain
comparability and comprehensibility.
ad ventrum inspiciendum Latin: to inspect the belly (to see if a woman is pregnant).
adventure In finance, an activity of a trade. The incidence of such an adventure

triggers a liability to income tax or corporation tax as trading income.
The term was once restricted to sending goods abroad at the
owner’s risk in a ship to be sold at the best price the agent could obtain.
adventure in the nature of a trade

Term used to define what income is regarded as revenue rather than
capital. The term has been used in several court cases such as Edwards
v Bairstow and Harrison [1955].
adventure travel insurance

Travel insurance for higher-risk travel and activities, such as water-
boarding and exploration in remote areas.
ad verbum Latin: to a word, or word for word.
adversaria Miscellaneous notes, or a common book.
adversarial system System of law where each side is represented by an advocate. This is
the basis of the English and American system. The alternative is the
inquisitorial system where the court enquires into the truth. This is the
basis in much of Europe, and in Britain of the coroner’s court.
adversary procedure Another term for adversarial system.
adverse opinion An audit report which states that the records are not a true and fair
view of the company’s position, or that they do not comply with the
Companies Act.
adverse possession Occupation of land which is inconsistent with the rights of the true
owner.
adverse selection Tendency of customers to select products, particularly insurance, where

the disclosure requirements are minimal even though they pay a higher
premium as a result.
adverse variance Difference between a budgeted or forecast figure and the actual figure,
where the difference indicates a worse than desired result.
adverse witness Witness giving evidence against the person questioning him. The term
hostile witness is now more common.
advert Advertisement.
advertisement Any notice which is designed to encourage readers to buy the product
or service advertised.
advertisement hoarding For capital gains tax, the erection of such a hoarding is not in itself a
material development of land (Taxation of Chargeable Gains Act 1992
Sch 2 para 13(1)(d)).
advertising Cost of promoting goods or services with a view to persuading people

to use them. The term is also used more generally to indicate any notice
to which the public is invited to respond, such as a product recall,
public notice or campaign material.
Advertising is traditionally cost-justified if the profit from
additional sales pays for the advertisements. Advertising typically
accounts for at least 35% of the price for computers, patent medicines
and many luxury goods, and 10% of food.
There are many different types of advertising.
Some advertisements are banned. Any advertisement which seeks

the return of stolen property on the basis that no questions will be asked
is illegal under Theft Act 1968 s23.
Some advertisements are strictly regulated, such as offers of finance
which are regulated by Consumer Credit Act 1974.
There are no simple rules on what constitutes good advertising as
opinions vary and ideas change. One lasting principle is the mnemonic
AIDA: attention, interest, desire and attainment, as the four objectives
of any advertisement.
advertising agency An organization acting as an agent for a producer of goods or services

(an advertiser) devoted to developing and placing advertising in order
to further the acceptance of a brand product, service, or idea.
advertising elasticity Change in sales income which results from a change in spending on
advertising.
advertising launch costs The extent to which such expenditure is capital or revenue is discussed
in the Inspectors’ Manual at BIM 42551.
advertising objective Objective of a communication strategy. This is usually to inform of a

new development, to persuade or to remind.
advertising sponsorship Relationship between a commercial and a non-commercial venture for

the former to promote itself. Frequently the commercial business
derives direct benefits, such as tickets for a theatre or sporting event.
The extent to which such payment is tax-deductible is discussed in
the Inspectors’ Manual at BIM 42565.
advertorial Advertisement which is written to read like an article in a publication.
advice Any form of suggested action given by one person to another. Advice
differs from information in that the former is tailored to the person’s
circumstances.
In finance, this distinction can be important as only an authorised
adviser may give financial advice whereas anyone may provide
information.
In counselling, advice is usually avoided. A counsellor or mentor
usually tries to get the person to work out his or her own solution.
advice agency Body which dispenses advice, usually free legal and similar advice. The
Citizens Advice Bureau is a good example.
advice and consent Requirement of the American Constitution for the President to obtain
the advice and consent of two-thirds of the Senate before making
treaties or appointing senior judges.
advice note Document sent to confirm that goods have been shipped to the
customer. The advice note is often sent with the goods.
An advice note is not an accounting document as such, though it
may be used to check deliveries to allow an invoice to be paid.
advice of acceptance Acknowledgment from a collecting bank confirming that the funds
have been received. The advice also gives details of charges made.
advice on evidence Opinion of junior counsel after pleadings have been closed as to which
witness should be called and which documents should be submitted in
evidence.
ad views or impressions In marketing, the number of times a specific advertisement has been
displayed on a computer.
advise fate Request by a collecting bank as to whether a cheque will be paid by

the paying bank. The request usually requires an immediate answer.
advised line of credit Confirmation by a bank or other lender of what credit line is available
to a specific customer.
advised through Statement in a letter from an advising bank that funds have been
received from a customer on a letter of credit. The letter does not
guarantee that payment will be made.
adviser Person who gives advice of any type.
advising bank Bank in an exporter’s country that informs the exporters that a letter of
credit has been opened with a foreign bank.
advisory board Group which gives advice to a leader or leadership team but cannot
make decisions. A decision-making board is known as an executive
board.
advisory broker Broker who also provides clients with advice about investments.
advisory committee Committee which gives advice to management but has not executive
powers to make decisions itself, unlike an executive committee.
advisory funds Funds deposited by a client with a financial institution which may
invest the funds as it sees fit.
advisory opinion American term for a formal opinion given by a judge to a question
asked by a legislative body.
Advisory, Conciliation and Arbitration Service (ACAS)

Government sponsored body which is charged with improving
industrial relations. It is usually known by its acronym pronounced as
“ay-cass”.
ad vitam aut culpam Latin: to lifetime or fault.

The term is used in Scots law to describe the permanency of certain
appointments until the holder either dies or commits an offence.
ad vivum Latin: to the life; lifelike.
advocacy Skill in arguing a case to present it in its best light.
advocacy qualification Qualification authorising a person to act as an advocate in court under

Courts and Legal Services Act 1990. There are different rights for
different levels of the court.
advocate One who argues the case of another, such as a barrister.

In Scotland barristers are called advocates, and are appointed by the
Faculty of Advocates.
For the first seven years of practice, an advocate may prepare
accounts on the cash basis (Income Tax (Trading and Other Income)
Act 2005 s160). When this period has ended, the adjustment tax that
becomes payable may be spread over ten years under ibid s238.
Advocate General Member of the European Court of Justice whose function is to present
opinions on cases brought before it. In practice, the court usually
follows the Advocate General’s view.
A&E Admiralty and Ecclesiastical Cases, law reports published between

1865 and 1875.
[The term is more commonly used to mean Accident and Emergency.]
AEA Annual exempt amount (for capital gains tax).
AELE Association Européene de Libre Exchange, French: European Free

Trade Area.
AEO Attachment of earnings order.
aequitas Latin: equity.
aequitas est quasi aequalitas

Latin: equity is equality.
aequitas sequitur legem Latin: equity follows the law.
aequo animo Latin: with an equable mind.
AER Annual Equivalent Rate and usually specifies the interest paid from
current, deposit or savings accounts. This new term replaces CAR
(Compound Annual Rate) which denoted much the same thing.
aerial photograph For VAT, this is not regarded as a map and therefore is not zero-rated
under Value Added Tax Act 1994 Sch 8 Group 3, according to VAT
notice 701/10.
aerodrome “Any area of land or water designed, equipped, set apart or commonly
used for affording facilities for the landing and departure of aircraft”
(Customs and Excise Management Act 1979 s1(1)).
AESOP All employee share ownership plan.

It is now known as a share incentive plan (SIP).
AFA Általános Forgalmi Adó, Hungarian for “value added tax”.
AFC (1) Advance Fixing Certificate

(2) Automatic frequency control
AFDC Aid to Families with Dependent Children, a US welfare system.
Affärsvariden General Index

Index of security prices on the Stockholm Stock Exchange.
affiant American term for a person who subscribes to a statement in an

affidavit.
affidavit Statement which is written, signed and sworn of facts which the
deponent is generally able to prove from his own knowledge. An
affidavit accordingly carries more weight than a simple statement.
affiliated corporation American term for a corporation in a group of corporations under

common ownership.
affinity Relationship by marriage, as against kindred or consanguinity which

is relationship by blood.
affinity card Credit card or similar that is branded with the name of a business or
other organisation that usually receives a small commission on the
card’s use. The position for affinity cards provided by a charity are
explained in VAT notice 701/1.
affirmation An indication of agreement with a state or account. In law, this

“include[s] affirmation and declaration” (Interpretation Act 1978 Sch
1).
Affluent Worker studies Name given to studies conducted in the 1960s at Vauxhall Cars, La
Porte Chemicals and Skefco Engineering.
In general, the workers thought well of their employers in terms of
being paid fairly, but there was little job satisfaction.
affreightment Contract made either by charterparty or by a bill of lading by which a

shipowner agrees to carry goods in his ship for reward.
affreightment contract Another name for affreightment.
afghani Currency of Afghanistan.

For VAT, gold coins may be investment gold coins.
afloat (Description of goods which are on board ship to a specific destination.
afloats Commodities loaded on to a ship for delivery.
a fortiari Latin: with stronger reason.
African Caribbean and Pacific States (ACP)

Collective term for a large number of independent states which are
treated similarly for the purposes of trade preferences. A complete list
of the states included in the ACP group can be found in Volume 1 of
the Tariff.
African Development Bank

Bank set up in 1964 to promote economic and social development in
Africa.
It is exempt from tax under SI 1997 No 168.
after-hours trading Transactions on a market after it has officially closed. These

transactions are regarded as early bargains on the next trading day.
after market Another name for a secondary market. This is a market which sells
existing shares and other securities, rather than just new ones. The
London Stock Exchange and most stock exchanges are secondary
markets.
after sight Words added to a bill of exchange to indicate that the period for
payment is any time after the drawee is presented with it for acceptance.
after-tax basis Description of a calculation where figures used are after tax has been
deducted.
A-G Attorney-General
age Time which has passed since a person was born or something was
created. Sometimes this is referred to as chronological age to
distinguish it from other meanings.
A person’s age starts from the beginning of the anniversary of birth.
So someone born at 10am on 1 January 2000, celebrates their 18th
birthday at 0:00am of 1 January 2018. The law does not recognise parts
of a day.
The term age is sometimes multiplied by a factor to give an answer
which measures an equivalent to chronological age. For example,
reading age and mental age multiply the chronological age by a factor
to say that an individual has the relevant ability of an average person of
that chronological age.
age allowance Additional tax allowance for older taxpayers.

From 1990, there is an additional relief for taxpayers born before 6
April 1935. This increases if the taxpayer is 75 during the year. The
allowance is also increased if the taxpayer is married. The allowance is
restricted by half of the excess above an upper earnings figure, though it
cannot reduce below zero.
age discrimination Discriminating against a person because of their age. Generally

unlawful from 1 October 2006.
In the USA, age discrimination law was enacted in 1967 and
amended in 1978 to protect employees up to the age of 70.
age exemption Additional allowance for older taxpayers which applied before 1973
when it was replaced by age allowance.
age fraud Deliberate misrepresentation of a person’s age to secure a financial

advantage.
age of consent Age when a person may agree to something, particularly to marry or
have sexual relations. In the UK, the age is 16 (though with parents’
permission for marriage under 18).
age of majority Age at which a person may vote. Since 1970 this has been 18 in the
UK.
age relief Another term for age allowance for income tax.
age-related Condition which is related to a person’s age, such as rebates for

national insurance in contracted out pensions.
age-related payment Single payment made only in 2004 to people aged over 65 to assist
them with payment of their rates (Age-Related Payments Act 2004).
aged debt analysis Analysis of one’s debtors according to the age of the debt. The older the
debt, the less likely it is that it will become paid.
Typically the analysis is for current month, one month, two months,
three months, and more than three months. The credit control action
depends on the age of the debt.
In companies where customers enjoy significantly different
settlement terms, it is more helpful to age the debts according to how
far they have exceeded their terms.
ageing report Another name for an ageing schedule.
ageing schedule Breakdown of debtors according to when they should have been paid. It
is also known as an aged debt analysis.
agency When a person is allowed to act on behalf of someone else. An

employee is an agent of the employer.
agency agreement Agreement which creates an agency, particularly between a customer

and a bank which allows the customer to cash cheques at another
branch.
agency bank Bank which does not accept deposits but acts as an agent for another
bank, usually a foreign bank.
agency bill Bill of exchange drawn on the local branch of a foreign bank.
agency broker A dealer who works as agent for an investor, usually in return for
receiving a commission from the businesses in which he invests.
agency contract “A contract made between the worker and the agency under the terms
of which the worker is obliged to personally provide services to the
client” (Income Tax (Earnings and Pensions) Act 2003 s47(1)).
agency labour Workforce provided by an employment agency or similar body. Such

workers are often known as temps. A supply over a long period is
known as insourcing.
agency law Law which regulates the conduct of agents, those who act on someone
else’s behalf, known as the principal.
The main elements of agency law are:
● the agent binds his principal;
● someone who purports to act as agent without authority is
regarded as the principal and becomes personally liable;
● the agent may only act within such authority as granted by
the principal;
● the agent must perform those duties himself (except that
incidental duties, such as typing, may be delegated);
● the agent may not make a secret profit.
Once an agent has performed the duties of the agency, the principal
resumes his position and may sue or be sued on whatever has been
concluded by the agent.
The main types of agency are universal agents who may act for the
principal in all matters, general agents who may act for particular types
of transaction, and special agents who may act only for a specific
transaction.
In some cases, a person may act as agent of necessity without
explicit instructions from the principal.
agency loan Loan available for local authorities, particularly from the European
Investment Bank.
agency worker Someone who is supplied by an employment agency to work for a

business without becoming an employee of that business.
An agency is obliged to provide details of such workers to HMRC
under Taxes Management Act 1970 s16A.
From 27 October 2008, an agency worker is entitled to statutory
sick pay after three months’ service with one employer, the agency’s
customer.
agent Someone who acts on behalf of another in accordance with agency law.
agent authorisation In tax, the process by which an agent is authorised to deal with HMRC
in respect of another person’s tax affairs. This is most easily addressed
by completing a form using the online service, or completing form 64-
8.
Agent Dedicated Line Telephone number provided by HMRC which is restricted to agents
who deal with clients’ tax affairs.
agent of necessity Person who pledges the credit of a principal out of simple necessity,
such as when a ship’s captain sells cargo to buy needed fuel.
age-related rebate The minimum contribution as determined according to the member’s

age.
This is the amount of class 1 national insurance that HMRC refunds
to an approved personal pension scheme. The requirement is set out
in Pension Schemes Act 1993 from s45A.
aggregate (1) Total of separate items. For example, incomes may be aggregated
for income tax purpose, or to see if class 1 national insurance should be
deferred.
(2) Rock, stones and similar on which aggregates levy is payable.
aggregate chargeable transfer

Figure used to calculate inheritance tax.
It is the total of:
• the deceased’s estate
• any interest in possession trust where the deceased had a
beneficial interest
• gifts with reservation
• deceased’s share of any joint property
• chargeable transfers made in the seven years before death
• value of any alternatively secured pension to which the
deceased was entitled to benefit as the original scheme member.
This figure is also used for the ten-yearly charge for inheritance
tax payable by some trusts. The figure is broadly the total amount of
property transferred plus the special cumulation.
aggregate depreciation Same as accumulated depreciation.
aggregate earnings for a year from all the employments concerned

Defined in Income Tax (Earnings and Pensions) Act 2003 s24(3) as all
the chargeable overseas earnings from all employments.
aggregates levy A tax on the commercial exploitation in the UK of rock, sand and
gravel, including the spoil, waste and by-products from certain
industrial processes.
It was introduced by Finance Act 2001 with effect from 1 April
2002.
aggregation Process of bringing together figures or activities to produce a total.

In economics, the term is used for preparing statistics when figures
such as productivity are aggregated to give a national aggregate.
In value added tax when HMRC directs that two businesses should
be regarded as one, often when a business has been artificially split to
avoid reaching the registration threshold.
For life assurance relief, there are aggregation provisions in Income

and Corporation Taxes Act 1988 s274(2).
aggressive accounting Accounting where the figures are manipulated to achieve a desired
result. The figures are usually produced within the letter of accounting
rules.
aggressive tax avoidance Informal term for artificial tax avoidance that defies HMRC
interpretation of tax law. Such avoidance is likely to be challenged by
HMRC. Even if the challenge is unsuccessful, it is likely that an
artificial scheme will be legislated against in anti-avoidance provisions.
AGI Adjusted gross income.

Term used in USA in calculating tax.
aging American spelling of ageing.
agio This term, now rarely used, refers to a difference between two charges
or a charge made for conversion.
In particular it means either the turn, the difference in rates charged
by a bank in lending and borrowing, or a charge made for converting
money from one currency to another.
agio theory Another name for abstinence theory.
agist Take in (an animal) to allow it to graze on land for payment.
agister Person who looks after cattle or horses on his own land for payment.
agistment Looking after cattle or horses on one’s own land for payment.
AGM Annual general meeting.
agnate Related on the father’s side.
agora One hundredth of a shekel, currency of Israel.
agreed-value policy Insurance policy where the sum payable is stated in the policy
agreement.
agreement Concurrence of two people with regard to a fact or position.

In law, agreement is one of the elements for a valid contract. The
term can also be used to mean a binding settlement of any issue
between them.
Tax disputes may be settled by agreement with HMRC under Taxes
Management Act 1970 s54.
agreement corporation In USA, a corporation that enters into an agreement with a state
authority to engage in specific acts. Such corporations are common in
USA. See also Edge Act Corporation.
agreement for a lease Contract to lease property, for which there are some special legal
provisions.
Since 27 September 1998, a contract for a lease of up to three years
may be made orally or in any written form. A contract for a longer
period must be formally in writing, failing which the contract is void
and cannot be evidenced by part performance.
For stamp duty land tax, a contract for the grant of a lease (Finance
Act 2003 Sch 17A paras 12A-12B).
agricultural component Customs charge applicable to imposed goods processed from certain
basic agricultural products.
agricultural co-operative Organisation established by farmers, market gardeners and fisherman

for some common purpose, such as storage, selling or bulk-buying.
They are usually treated as mutual trading as is discussed in the
Inspectors’ Manual at BIM24705.
agricultural estate “Land:

(a) which is managed as one estate, and
(b) which consists of or includes land occupied wholly or mainly for
the purposes of husbandry”
(Income Tax Act 2007 s123(4)). This definition is used in terms of
claiming loss relief for tax from farming.
Agricultural Flat Rate Scheme

An alternative to VAT registration for farmers and other traders
involved in agricultural activities.
Those on the scheme do not account for VAT or submit returns and
consequently cannot reclaim input tax. However, they can charge a flat
rate addition to the sale price of qualifying goods or goods and services
sold to VAT registered customers even where these sales would be
zero-rated for VAT.
agricultural buildings allowance (APA)

Capital allowance available for agricultural property (Capital
Allowances Act 2001 s361). It is phased out by 6 April 2011.
agricultural co-operative There are special tax provisions in Corporation Tax Act 2009 from
s499. In particular distributions are not taxed as dividends.
agricultural estate Estate largely comprising agricultural property. Such an estate may
attract agricultural property relief from inheritance tax.
agricultural holding “The aggregate of the land (whether agricultural or not) comprised in a
contract of tenancy which is a contract for an agricultural tenancy”
(Agricultural Holdings Act 1986 s1(1)).
The inheritance tax implications are discussed in the Inspectors’
Manual at IHTM 24220.
agricultural land Land used for agriculture, as set out in Agricultural Holdings Act s1(4).
It includes arable meadows, pasture, cottage gardens, orchards,
allotments, livestock buildings and bee-keeping buildings. It excludes

parks, racecourses and pleasure grounds.
agricultural products There are special tax provisions for marketing authorities and similar
bodies that supply such products in Corporation Tax Act 2009 from
s153.
agricultural property Property used for farming. It comprises land used for growing crops or
intensive rearing of animals for food consumption. It includes farm
buildings, including farmhouses and farm cottages.
The grant of a tenancy of agricultural property in the UK, Channel
Islands or Isle of Man is not a transfer of value for inheritance tax
purposes (Inheritance Tax Act 1984 s16). Finance Act 2009 s122
extends the relief to property anywhere in the European Economic
Area.
agricultural property relief

Relief from inheritance tax for disposals of agricultural property.
Since 10 March 1992, the relief has generally been 100% for property
with vacant possession, and 50% otherwise. Before 10 March 1992, the
reliefs were 50% and 30% respectively.
agricultural relief Another name for agricultural property relief.
agricultural society “Any society or institution established for the purpose of promoting the
interests of —
(a) agriculture,
(b) horticulture,
(c) forestry, or
(d) the breeding of any kind of animal”
(Corporation Tax Act 2010 s989(2)).
The profits of such a society are exempt from corporation tax (ibid
s989(1)).
agricultural subsidy Payment made by the government to encourage home production of

foodstuffs which could be sold to consumers at reasonable prices. The
subsidies were paid under Agricultural Acts of 1947 and 1957.
About two-thirds of the payments were deficiency payments for
produce sold on the home market at less than the guaranteed prices
negotiated annually between farmers and the government. This policy
was supported by imposing import levies on imported produce.
This policy has now been replaced by the European Union
Common Agricultural Policy. Other countries still offer systems of
agricultural subsidy.
agricultural tenancy A tenancy granted for agricultural purposes for full monetary
consideration in the UK, Channel Islands or Isle of Man.
The implications for inheritance tax are discussed in the Inspectors’
Manual at IHTM 04230.
The tax provisions for compensation to quit such a tenancy are
discussed in IR Interpretation 138.
agricultural tractor Category of road vehicle indicated as category F on the driving licence.
agricultural value The value of a property if it could only be used for farming.
agricultural workers Those who work on farms. Agricultural workers must be paid the
minimum wage set by the Agricultural Wages Board. This is the last of
many wages boards established in the 20th century. The Board also sets
minimum working conditions.
Agricultural workers must also be paid the national minimum
wage.
Ahmedabad principle Principle that a prior year adjustment must make the same adjustment
to the prior year and the subsequent year. The name comes from the
case Ahmedabad Bombay Commissioners of Income Tax v Ahmedabad
New Cotton Milles Company Ltd [1929] 8ATC574. The matter is
discussed in the Inspectors’ Manual at BIM34030.
AIA Annual investment allowance
AIB Accountant in Bankruptcy, Scottish law officer.
aid Assistance or help of almost any kind, including giving money or other
financial help.
aid tying Practice whereby a donor country provides aid to a poor country to buy
goods from the donor country.
aide pur fille marier A form of scutage levied in 1167 and 1245 to marry off the king’s
daughter.
aids Payment once made by a feudal tenant for a specific purpose such as
marrying the lord’s eldest daughter.
aiel Latin: grandfather.
AIF (1) Authorised investment funds.

(2) Approved investment fund.
AIFTA Anglo-Irish Free Trade Area. This has been replaced by the EU.
AIIT Associate of the Institute of Indirect Taxation.
AIM Alternative Investment Market.
AIM shares Shares that are traded on the Alternative Investment Market.
AIR Alcohol Ingredients Relief
air Mixture of gases which provide the atmosphere over the earth, and
which include oxygen which sustains life.
In law, the enjoyment of air is regarded as a natural right which

cannot generally be secured by possession. The right to enjoy a
particular current of air may be secured by an easement.
There are various laws to prevent pollution of air, or the release into
the air into environmentally damaging material.
air consignment note The equivalent of a bill of lading when goods are sent by air.
The note is not a document relating to the title of the goods, but a
copy of the consignment contract.
air cooling For capital allowance purposes, is treated as an integral feature, which
means that it is included in the special rate pool and is subject to
capital allowance at 10% on the writing down basis, and not the usual
20% for plant and machinery.
aircraft Vehicle which transports goods or passengers by air.

“Any machine capable of flight (whether or not propelled by
mechanical means), including any description of balloon” (Armed
Forces Act 2006 s374).
Goods may only be imported to the UK at an approved airport.
The first cross-Channel flight was in 1909 when Customs classified
the aeroplane as a boat.
For VAT, an aircraft is zero-rated if it weighs 8,000 kg and is not
primarily for recreation or pleasure under Value Added Tax Act 1994
Sch 8 Group 8.
For corporation tax and income tax, aircraft are plant and attract teh
capital allowance as such. The provisions for an aircraft let on charter
are given in Capital Allowances Act 2001 s123.
There are special provisions relating to derivatives contracts based
on aircraft SI 2004 No 3256 reg 4(3).
A provision in the accounts to allow for future overhaul of aircraft
was held to be an allowable deduction from taxable profits in Johnston
v Britannia Airways Ltd Ch D [1994] 67 TC 99.
aircraft manifest Full list of items on board an aircraft.
aircraft spare parts depot (ASPD)

For Customs purposes, a location at which imported spare parts for
certain aircraft can be stored without payment of customs duty or
import VAT. Only spare parts for civil aircraft may benefit from the
ASPD regime.
To be considered eligible, an aircraft must be:
(a) registered outside the UK or
(b) owned and operated by a person whose main place of
business is outside the UK; or
(c) used in international air transport services.
air fares If between the UK and another country, they are zero-rated under Value
Added Tax Act 1994 Sch 8 Group 8.
airline pilot A pilot operating from the UK is generally regarded as performing

those duties in the UK (Income Tax (Earnings and Pensions) Act 2003
s40).
A single landing and take-off from the UK in a year by an overseas
pilot is ignored in terms of establishing residence (Statement of Practice
A10 of 28 October 1975). A more general application is contained in
Income Tax (Earnings and Pensions) Act 2003 s39.
air passenger duty A tax on air flights first imposed in 1994.
air purification For capital allowance purposes, this is treated as an integral feature,
which means that it is included in the special rate pool and is subject to
airport Place where aircraft land to collect and deliver goods or passengers.
For Customs purposes, goods may only be imported at an approved
airport. It is an offence to import goods elsewhere.
airside The strictly controlled area of an airport from which goods may not be
removed without Customs authority.
airspace Right to use the air above land. Under English law, this right belongs to
the freeholder of the land. An unsuccessful attempt to divorce this right
from the land was made in the case Rolfe v Wimpey Waste Management
Ltd [1989] 62TC399. The case is discussed in the Inspectors’ Manual at
BIM35605.
air transfer When a person arrives in the UK to transfer to another flight to take
them to another destination in the UK or EU. Such a person only needs
to declare goods in hand language to Customs.
AL13 A figure that appears in line 13 of Form 14 completed by life assurance

companies. It is referred to in Income and Corporation Taxes Act 1988
s444ABB.
ALAP As late as possible, business jargon.
alcohol One of a series of organic compounds of carbon, hydrogen and oxygen.

In particular, the term is used for ethyl alcohol (also known as
ethanol). This product occurs naturally in drinks made from
fermentation of organic matter, particularly from the action of yeast on
sugar. The amount of alcohol may be increased by distillation.
Alcoholic liquor is subject to a special excise duty known as
alcoholic liquor duty. This is payable in addition to VAT.
For this purpose, alcohol “means ethyl alcohol” (Alcoholic Liquor
Duties Act 1979 s2(2)).
Historically, alcoholic drink could only be made by someone who
held an excise licence. These were abolished from 19 March 1986.
Anyone may now brew beer or make wine for their own non-
commercial use without a licence. It is still illegal to distil spirits
without a licence.
The strength of alcohol is now measured by the system known as
alcohol by volume (abv) which states how much of the volume of
liquid is pure alcohol. This replaces the old measure of proof spirit.
For licensing purposes alcohol includes all spirits, wine, beer, cider
and similar with exceptions for alcohol below 0.5% strength, meths,
Angostura bitters etc (Licensing Act 2003 s191(1)).
alcohol allowance Amount of alcoholic drink an individual may personally import from a
non-EU country without having to pay any additional taxes. From 1
January 2010, it is basically either one litre of spirits or two bottles of
wine, plus 16 litres of beer and 4 litres of still wine.
alcohol by volume (abv) Method of measuring the strength of alcoholic liquor to determine how
much excise duty is payable. It replaced proof spirit in 1993.
It simply states how much of the liquid is pure ethyl alcohol
according to the volume of liquid. This is a lower percentage than the
volume by weight as alcohol as a lower density than water.
alcohol ingredients relief (AIR)

Relief of certain liquors from alcoholic liquor duty when they are used
as ingredients for food products, such as sherry trifle.
alcoholic ingredients Spirits, beer, cider, perry, wine and made-wine used in the manufacture
of certain products, such as vinegar, beverages of low alcoholic strength
and some chocolates and foodstuffs.
If the finished product is eligible, the excise duty paid on the
alcoholic ingredients can be reclaimed by the manufacturer.
alcoholic liquor Any potable liquid which contains sufficient quantity of ethyl alcohol
(also known as ethanol). The drink usually requires a strength of at least
1.2% abv. Lower amounts, as sometimes found in shandy or ginger
beer, are not regarded as alcoholic liquor.
Alcoholic liquor is subject to the excise duty known as alcoholic
liquor duty. This duty was first imposed in 1660. It is also subject to
VAT at the standard rate.
Non-potable liquids containing ethyl alcohol (such as industrial
alcohol or methylated spirits) are not subject to this duty but may be
subject to Customs procedures to ensure that duty is not avoided.
The duty is collected according to whether the drink is spirits,
wine, beer or cider. Before 15 March 1988, there was another category
known as made-wine.
alco-pops Alcoholic drink made from spirits which are flavoured and sweetened
by fruit juices. They first went on sale in 1996. They are officially
known as flavoured alcoholic beverages (FABs).
Between 1 January 1997 and 26 April 2002, alco-pops were subject
to excise duty for alcoholic liquor as a made-wine. From 27 April
2002, alco-pops are excised as spirits.
ALDA The Alcoholic Liquor Duties Act 1979.
Alderney One of the Channel Islands.
ale A drink produced by brewing using yeast. If hopes are used, the drink is
beer. If the alcoholic strength is more than 0.5%, ale is subject to beer
duty.
alert box In computing, a window which appears to warn the user of an error or
potential error.
alia enormia Latin: other wrongs.
alias False name.

Note that the word means a name used for the purpose of
concealing someone’s real identity. It therefore excludes nicknames, pet
names, stage names and similar.
alias dictus Latin: otherwise called.
alibi Latin: elsewhere.

A legal defence that a person could not commit the offence because
he was in another place at the time.
alien Foreigner who owes no allegiance to the British Crown, though this
term is now little use. The term is defined in British Nationality Act
1981 effective from 1 January 1983.
The law further divides aliens into enemy aliens and friendly
aliens.
alien poll tax A small additional poll tax on aliens levied between 1440 and 1443.
alignment Process of bringing two things together. In tax, the term is used in such
contexts as aligning the upper earnings limit for national insurance
with the threshold for higher rate income tax.
aliment Payment for nourishment and food. The word also means the
nourishment and food itself.
alimentary trust Trust which is established for the purpose of protecting the
beneficiaries.
alimony Old term for payment a man made to support a former wife. This is now
simply called maintenance.
alio intuitu Latin: with a motive other than the ostensible and proper one.
A-list List of members of a company who may be liable for a company’s

unpaid debts.
Under UK company law, they are only liable if the company is
unlimited, there are unpaid sums on calls, or the member has
guaranteed a company debt.

[The term also has other meanings. A-list is also used to describe film
stars who command the highest fees. The word is also used by the
Conservative party to indicate individuals to be preferred as
candidates.]
aliter Latin: otherwise.
aliunde Latin: from elsewhere.
ALJR Australian Law Journal Reports, published from 1958.
ALLA Audit liability limitation agreement.
allegans contraria non est audiendus

Latin: he who makes statements mutually inconsistent is not to be
listened to.
allegans suam turpitudinem non est audiendus

Latin: a person alleging his own infamy is not to be listened to.
all employee share ownership plan (AESOP)

Old name for what is now called a share incentive plan (SIP).
All England Law Reports One of the two official series of law reports for the whole of England.
The other is the Weekly Law Reports (WLR).
The series was started in 1936 and is still published.
The citation for cases in these reports takes the form Pepper v Hart
[1993] 1 All ER 42. This means that the case between Pepper and Hart
can be found in volume 1 of the 1993 All England Law Reports,
starting at page 42.
all-equity net present value

Value of net present value calculated as if that which is being valued
was funded entirely by equity. In particular, the discount rate used is
that for equity finance.
All ER All England Law Reports. This is one of two official series of law
reports; the other is the Weekly Law Reports (WLR). These reports
were started in 1936 and are still published.
allied headquarters “Means an international military headquarters established under the

North Atlantic Treaty” (Income Tax (Earnings and Pensions) Act 2003
s303(6)).
allied headquarters staff Such staff are generally exempt from UK taxation (Taxation of
Chargeable Gains Act 1992 s11; Income Tax (Earnings and Pensions)
Act 2003 s303; Income Tax Act 2007 s883).
alligator spread Options spread where any possible gain is eaten up by commission.
all-in-one printer Term used for a piece of computer equipment which combines several
functions, typically printer, scanner, copier and fax machine.
all-in price Price which includes related expenses, such as tax, delivery and
insurance.
allocate Assign a whole item of revenue or cost to a cost centre, account or time
period.
allocated costs Overheads which have been allocated to a particular cost centre.
allocation of cases For tax tribunals, process for determining how the case will be heard.
The process is set out in The Tribunal Procedure (First-tier Tribunal)
(Tax Chamber) Rules SI 2009 No 273 rule 23.
The case may be a default paper case, basic case, standard case
or complex case.
allocation rate Amount of pension payment which is actually paid into the pension
fund. For example, a 70% allocation rate for a payment of £500 means
that only £350 is applied to the fund with the remainder paying charges
and providing profit for the pension provider.
Some schemes have very low allocation rates (such as 30%) in early
years but have rates above 100% at the end of the scheme. Some newer
schemes offer very high allocation rates, such as 107%, in early months
as a loss leader¸ but with lower allocation rates later.
allocatur Latin: it is allowed.
allodial Description of property which is held without anyone else having a

higher right.
allodium Land which is not held by any lord or superior person, and where the
holder therefore has absolute property rights.
all one transaction principle

For stamp duty, the principle that two transactions may be regarded as
one if sufficient close in time and nature. The leading case is Cohen and
Moore v IRC [1933].
all or none Instruction that no part of an order to buy or sell securities may be
executed unless the whole order is executed.
all or nothing option Binary option which has either a significant value or no value.
All Ordinaries share index

Most widely used index of Australian shares.
It is a capitalisation-weighted index of about 250 shares ordinary
shares quoted on the Australian stock exchange.
allotment Process of allocating new shares to those who subscribe for them,
usually against a prospectus. If the demand for shares exceeds the
supply, there may be a reduced allotment whereby each subscriber

receives a pro rata number of shares.
allotment letter Notification of how many shares have been allotted to a subscriber of
new shares. The allotment is either the full number applied for, or a
reduced allotment. An allotment letter is also known as a share
allotment form. The allotment letter is exchanged for a share
certificate or contract note.
allotment of equity shares In company law, this as defined as to “include —

(a) the grant of a right to subscribe for, or to convert any securities
into, ordinary shares in the company, and
(b) the sale of ordinary shares in the company that immediately
before the sale are held by the company as treasury shares.”
(Companies Act 2006 s560(2)).
allotted share capital “Shares of a company that have been allotted” (Companies Act 2006
s546(1)(b)).
all-out strike Stoppage of work involving all employees and resulting for as long as
is necessary, as against a selective strike.
allowable Something which is permitted, such as expenses which may be claimed

from an employer or deducted from taxable income.
allowable agricultural expenses

“In relation to an agricultural estate, means any expenses attributable
to the estate which are deductible:
(a) in respect of maintenance, repairs, insurance or management of
the estate, and
(b) otherwise than in respect repayable on a loan.
(Income Tax Act 2007 s123(5)).
allowable expenses Expenses which an employee may deduct from taxable income.
allowable loss Loss which may be offset against a profit for tax purposes.
allowance Sum of money provided to a person for a particular purpose.
all-risks insurance Insurance policy that provides fill cover against almost all risks,
particularly in marine insurance.
all risks policy Insurance policy which covers every risk with no exceptions. In
particular it insures household items which are not on the premises.
all risks whatsoever Term used in marine insurance to cover a greater range of risks than the
usual all risks policy. The policy does not cover inherent vice and
delay, nor does it include inevitabilities which are not risks.
all-up Description of total weight of a loaded aircraft.
alluvion Land gradually gained from a river or sea by washing up of sand, stones
and similar material.
alluvium Deposits of sedimentary material along a river bank or coast which adds
to the size of land.
Almighty Dollar US dollar seen in reverential terms as the power of money. The term
was first used by Washington Irving in 1837.
almond oil This is generally zero-rated for VAT as food. Bitter almond oil is
standard-rated.
almoner Person who collects donations for distribution to the poor.
almonry Place where an almoner resides
alms Gifts for the poor.
alpha Investment term used to describe the risk adjusted outperformance of an

investment. A large alpha indicates good performance relative to the
market. The beta indicates factors that affect the market as a whole.
The term is the first letter of the Greek alphabet, indicated by the
symbols α and A.
alpha coefficient Element of share price movements which applies to shares generally, as
opposed to movements which relate to a specific share, known as the
beta factor.
alpha shares Term once used to describe the most commonly traded shares on a
stock exchange.
alpha stocks Term used between October 1986 and January 1991 to describe the
most actively traded securities on the London Stock Exchange. It was
the most active of four categories, of which the others were predictably
beta, gamma and delta.
Since January 1991, the term has been replaced by the normal
market size (NMS) measure.
ALR Australian Law Reports, previously Argus Law Reports.
Altalános Forgalmi Adó (AFA)

Hungarian: value added tax.
alteration (1) In law, changing the text, as in a document.

A material alteration in certain documents, such as changing the
date on a bill of exchange, has the effect of invalidating the document.
For a will, an alteration is assumed to have been made after the will
was executed, and therefore is invalid, unless there is evidence to the
contrary such as the signatures of the testator an attesters by the
alteration.
(2) In accounting, changing a figure. This must always be done so that
the original figure is still legible, and the revised figure and reason for
the revision are made known.
alteration of share capital An increase, reduction or other change in the share capital of a limited
company.
Such an alteration is only legal if permitted by the company’s
articles of association. The relevant company law is found in
Companies Act 2006 s617 onwards.
alternate director Person who may act as a temporary replacement for a director. This
arrangement usually requires a specific provision in the articles of
association and agreement of the other directors for a particular person
to act.
alternative currency option

Option in which the underlying security is in one currency and the pay-
out is made in another.
alternative delivery procedure

Terms in an options or futures contract which are not standard.
alternative dispute resolution (ADR)

A means of resolving disputes without resort to the Courts. Particularly
used in relation to disputes between pension schemes, trustees and
members. In general, civil courts usually expect the parties to have
made some effort at ADR before starting litigation.
For tax cases, the tribunal has a duty to bring to the attention of the
parties ADR procedures (The Tribunal Procedure (First-tier Tribunal)
(Tax Chamber) Rules SI 2009 No 273 rule 3(1)).
alternative document In employment, a document which is not included in a contract of

employment but referred to in it. An example is a works manual. An
employee must have access to such a document under Employment
Rights Act 1996 s7.
alternative finance arrangements

Various financial products designed to get round the ban under Islamic
law of charging interest. Such products replace interest with profit-
sharing. There are many tax provisions which are designed to ensure
that such products are taxed on the same basis as the products they
replace.
Capital gains tax provisions are given in Taxation of Chargeable
Gains Act 1992 from s151H. This lists five categories of such
arrangement:
• purchase and resale arrangements
• diminishing shared ownership arrangements
• deposit arrangements
• profit share agency arrangements, and
• investment bond arrangements.
alternative finance investment bonds (AFIBs)

Investment bonds subject to alternative finance arrangements. A full
definition is given in Finance Act 2009 Sch 61 para 1.
alternative finance return Total return made from alternative finance arrangements.
For capital gains tax, the law is found in Taxation of Chargeable
Gains Act 1992 from s151P.
Alternative Investment Market (AIM)

A stock market operated by the London Stock Exchange for small,
young and growing companies. It opened on 19 June 1995.
The admittance rules for AIM are less onerous than for a full
listing on the main market.
For the investor, there was the advantage that any investment in an
AIM company counted as an acquisition of a business asset which
meant that the investor paid a significantly lower amount of capital
gains tax on the eventual disposal of the AIM shares.
alternative investments Term used for investments outside the usual range of savings and
investment products.
Typically they are in tangible assets such as wine, coins, jewellery,
art, classic cars etc. Great care needs to be exercised in alternative
investments as usually only the best quality examples even hold their
value against inflation, and specialist knowledge is usually needed in
the assets collected. Many alternatives do not provide any income, only
capital gain.
alternatively secured pension (ASP)

Misnomer for a scheme operated like a money purchase pension but
operated for some who is at least 75 years old.
“Payment of income withdrawals direct from a money purchase
arrangement to the member of the arrangement (who is aged 75 or over)
and that meet the conditions laid down in paragraphs 12 and 13 of
Schedule 28 to the Finance Act 2004.” (HMRC manual RPSM
glossary).
alternatively secured pension fund

“Funds (whether sums or assets) held under a money purchase
arrangement that have been 'designated' to provide a scheme member
(who is aged [77] or over) with an alternatively secured pension, as
identified in paragraph 11 of Schedule 28 to the Finance Act 2004.
Once sums or assets have been 'designated' as part of an 'alternatively
secured pension fund' any capital growth or income generated from
such sums or assets are equally treated as being part of the 'alternatively
secured pension fund'. Similarly, where assets are purchased at a later
date from such funds, or 'sums' generated by the sale of assets held in
such funds, those replacement assets or sums also fall as part of the
'alternatively secured pension fund' (as do any future growth or income
generated by those assets or sums).” (HMRC manual RPSM glossary)
alternative minimum tax (AMT)

In USA, a requirement that individuals must pay a minimum amount of
tax however low their taxable income becomes.
alternative order When an instruction is given to follow one of two alternatives. A

common example is an order for securities where a limit price is
quoted with an instruction to buy or sell at that limit price.
alternative proportion For corporation tax, term used in relation to distributions on shares with
limited rights (Corporation Tax Act 2010 s170).
alternative work Work other than that which an employee normally does but which is
offered when the employee cannot do his or her normal work.
An employer should try to make such an offer to avoid the
employee being made redundant or being suspended on maternity
grounds (Employment Rights Act 1996 s67).
alternatively secured pension

Payment of withdrawals from a money purchase scheme to a member
of that scheme. The member must be at least 75. The conditions are set
out in Finance Act 2004 Sch 28 para 12-13.
alternatively secured pension fund

Funds held in a money purchase arrangement and which have been
designated to a scheme member to provide that member with an
alternatively secured pension from the age of 75. Details are set out in
Finance Act 2004 Sch 28 para 11.
Once assets or sums have been so designated, any income, gain or
replacement assets are similarly regarded.
alternis vicibus Latin: alternately.
alterum tantum Latin: as much more.
alum Class of chemical compounds based on hydrated potassium aluminium

sulphate, of which the commonest has the formula KAl(SO4)2.12H2O. It
has a wide range of commercial applications including as astringent,
water purification, cosmetics and medicine.
Profits from alum mines are specifically listed as being taxable
trade profits (Corporation Tax Act 2009 s39(4)(b); Income Tax
(Trading and Other Income) Act 2005 s12).
The rent received is taxable under Corporation Tax Act 2009 s270.
ALV Arvonlisavero, Finnish for “value added tax”.
A&M Accumulation and maintenance trust.
AMA Advanced measurement approach.
a majori [ad minus] Latin: from the greatest [to the least].
amalgamation Process of putting things together, such as when two bodies combine to
make one larger body.
The term is usually restricted to non-commercial bodies such as
trade unions and professional bodies. For commercial bodies, it is more
common to talk of a merger.
amani Gold coin issued by Afghanistan, that may be a gold investment coin
for VAT purposes.
amateur status Status as non-professional, particularly in sport. This distinction was

once more important than now. For example, it was a significant factor
in the case Jarrold v Boustead [1964] 41TC701 that allowed a signing-
on fee for a Rugby player not to be taxed as employment income.
ambassador Diplomatic agent resident in a foreign country.

Ambassadors have diplomatic immunity, which means they are
generally exempt from obeying laws, paying taxes or being sued in the
host country. The usual sanction for misconduct is for the Foreign
Office to expel them.
ambiguitas verborum patens nulla verificatione excluditur

Latin: a patent ambiguity in the words of a written instrument cannot be
cleared up by evidence extrinsic to the instrument.
ambiguity Uncertainty of meaning of words in a document.

Ambiguity is patent when it arises from the document (such as
leaving a payee’s name blank on a cheque) or latent when it arises from
external factors.
ambulance Vehicle that is specially designed for the transport of the sick or injured.
Such a vehicle is exempt from VAT.
VAT notice 701/1 states that the ambulance must have a lift or ramp
to raise a person on a stretcher, and have clamps to secure a person in
transport. An ambulance does not have to be a road vehicle, so a
suitable helicopter or boat may qualify.
The use of an emergency car used as an ambulance is (from 6 April
2004) is not a taxable benefit in kind (Income Tax (Earnings and
Pensions) Act 2003 s248A).
ambulatoria est voluntas defuncti usque ad vitae supremum exitum

Latin: the will of a deceased person is ambulatory until the latest
moment of life.
ambulatory Capable of change during a person’s lifetime.

A will is ambulatory.
AME Annual managed expenditure.
a mensa et thoro Latin: from table and bed. Description of a judicial separation of a
married couple.
amercement Financial penalty imposed in Middle Ages that served a similar purpose
to taxation.
American depositary receipt (ADR)

Document issued by an American bank to its citizens making them
unregistered shareholders in foreign companies. Possession of an ADR
entitles the holder to receive dividends. The ADR may itself be traded
as a security.
American Institute of Certified Public Accountants (AICPA)

The main body in the United States for qualified accountants.
American option Option which may be exercised at any time up to the expiry date,
whereas most options in Europe may only be exercised at or after
expiry date.
American Stock Exchange

Old name for New York Stock Exchange. It is now applied to the
second largest exchange formerly known as the New York Curb
Exchange. It is tiny in comparison with the New York exchange.
American style option A traded option but where the buyer can exercise the option any time
before the expiry date.
AMEX American Stock Exchange.
Amicable Grant Wealth tax imposed in 1524 after a war with France.
amicus curiae Latin: friend of the court. A person who gives advice to the court on
any matter in doubt.
a minori [ad majus] Latin: from the less [to the greater].
ammunition Customs may seize any ammunition brought into the country.
amortization Any process whereby one sum is spread over several areas.
Depreciation is a form of amortization, as it spreads the cost of a
fixed asset over several accounting periods.
Absorption costing is another form as this allocates overheads to
units of production.
Amortization is also used as the term for the annual charge of
writing off acquired goodwill. For corporation tax, goodwill may be
amortized at 4% a year on the straight line basis.
The term can also be used to mean repayments of a loan.
amortization period Period over which an amount is amortized, particularly in a lease.
amortization schedule Schedule which summarises the dates on which amounts must be paid
against a loan.
amortizing cap Interest rate cap on a reducing principal of a loan.
amortizing collar Upper and lower limits on interest rates for a reducing principal of a
loan.
amortizing mortgage Another term for the normal repayment mortgage
amortizing option An option in which the notional principal reduces over the life of the
option,
amortizing swap option A swap option in which the notional principal reduces over the life of
the swap option.
amotion Removal from office.
amount (1) General term for a quantity of money.

(2) In the USA, a sum purchased or sold in Gift Fund Pools as a result
of a contribution or other activity.
amount at risk (1) In investment, the difference between the forced sale value of a
lender’s security and the principal owed to the lender,.
(2) In insurance, the amount of an insured risk which is not covered by
the insurer’s reserves allocated to such risks.
amount realized American term for a profit or loss realised from trading.
amounts differ Words written on a cheque which cannot be honoured because the
amount expressed in words and the amount expressed in numbers do
not agree.
AMP Asset management plan.
AMRA Access To Medical Records Act 1988.
Amsterdam Interprofessional Market (AIM)

Market established in 1986 by banks, commission houses and other
financial institutions to transact large amounts of business without using
brokers.
Amsterdam Stock Exchange

Stock Exchange based in Amsterdam. It was founded in 1602 and
claims to be the world’s oldest.
AMT Alternative minimum tax.
amusement machines Most types of amusement machine (fruit machines, video games,
pinball machines and quiz machines) require licences. There are
exemptions for some types of machine.
For VAT purposes, it is a machine “in which there is no prize in any
circumstances, or the prize is dependent purely on the player’s level of
skill or knowledge such as quiz machines” (VAT notice 701/13). They
are not regarded as gaming machines.
analysis Process of determining the constituent parts of something. In finance,

this usually means apportioning income and expenditure into
categories.
analysis of variance Technique of determining how much of a variance may be ascribed to

a particular cause. The term is sometimes abbreviated to anova.
This is a statistical test which checks a mean against a sample.
The process involves identifying the factors which could affect the
variance, and determining by how much each factor affects the variance
if at all.
The process also usually requires consideration of sampling error.
If all the variance can be attributed to sampling error, there is no
variance.
analyst Person who studies something with a view to determining how it

functions.
In finance, someone who examines stock markets or industry
sectors to make buy or sell recommendations about buying and selling.
These are arrived at through a combination of research, economic
statistics. Larger firms of analysts also visit the companies themselves.
analytical estimating Estimating something from adding estimates of its parts, such as
estimating the time for a job by estimating (or guessing) the time for
each element.
a natura rei Latin: from the nature of the case.
ancestor Person from whom someone is descended through either the paternal of
maternal side. Some tax and other law refers to ancestors.
anchor store Major retailer who brings customers to an area who then spend money
in other outlets. The term is widely used in town planning.
anchor unit Town planning term for a significant retail development which attracts
smaller retailers to an area. An anchor unit is usually one of the major
supermarkets.
ancient documents Documents which are at least 20 years old.

If properly produced and otherwise free from suspicion, their
reliability may generally be assumed.
The period was 30 years before 1938.
ancient lights Legal principle that if light has been enjoyed by a building for at least
20 years, nothing may be built which removes that right. It was
formalised in Prescription Act 1832. The right is a form of easement.
ancient monument Monument which is considered by the Secretary of State to have

sufficient historical significance to justify protection on broadly the
same basis as listed buildings.
Certain work on ancient monuments is zero-rated for VAT.
ancients Former name of older barristers in an Inn of Court. Certain barristers of

Middle Temple retain the title for dining purposes.
ancillary credit business Business which includes credit brokerage, debt adjusting, debt
counselling, debt collection, credit reference and similar.
ancillary jurisdiction In USA, jurisdiction assumed by federal courts beside those of district
courts, particularly when used as a matter of convenience to litigants.
ancillary probate Grant of probate to an executor appointed by under a foreign

jurisdiction to let him deal with assets in the UK.
ancillary relief Relief sought by a defendant in addition to the main relief, such as
requesting an injunction to prevent further loss in addition to damages
for the main loss.
ancillary restraint Restriction that is imposed as part of a larger transaction.
ancillary trade Second trade that may be regarded for tax purposes as a separate trade,
even though it supports the main trade.
A leading case on this is Reid’s Brewery Co Ltd v Male [1891]
3TC279. This held that a brewery carried on an ancillary trade of
lending money to its tenants. Accordingly expenses of money-lending
were tax-deductible as a revenue expenses. The matter is discussed in
the Inspectors’ Manual at BIM37753.
ANCT Assumed notional council tax.
and company Words often written on a cheque.

These words, or “and co”, when written on a cheque between two
parallel lines constitute a general crossing of the cheque (Bills of
Exchange Act 1882 s76(1)).
Anderson, Sir John English politician (1882-1958) who was Chancellor of the Exchequer
from 24 September 1943 to 26 July 1945 under the coalition
government of Winston Churchill. He was elected as a non-party
politician by the Scottish Universities.
Before becoming Chancellor, he was Lord Privy Seal, in which role
he developed the Anderson air-raid shelter named after him.
and his heirs Term added to wills, deeds and other documents to indicate that the
rights of a person pass to his descendants if the person dies before he
can inherit.
Andorra A small principality between Spain and France, governed jointly by the
President of France and Bishop of Urgell.
Andorra is not a member of the European Union but has various
special agreements. These includes being part of the mutual assistance
recovery directive (Finance Act 2004 s322).
angary The right of a party in war to seize property belonging to a non-

combatant, provided compensation is paid.
angel Private investor who invests in a business which is too small to attract
investment from venture capital sources or banks. Angels fill the
equity gap for such businesses.
For income tax, angels may be able to claim their investments as
trading profits or losses under extra-statutory concession A94.
angels’ share Colloquialism for spirit lost by evaporation.
Anglo-Brewing Tax principle that a payment for winding up a business is not deductible
from trading profits.
The name comes from the case Anglo Brewing Co Ltd [1925] 12
TC 803. It is discussed in the Inspectors’ Manual at BIM 42955.
Anglo-Irish Free Trade Agreement

Agreement made from 1 July 1966 under which the UK ceased
charging protective duties on goods from the Irish Republic. This has
now been superseded by the European Union.
animal Any creature that breathes and is not human. The term includes birds,
insects, fish, mammals and reptiles.
For VAT purposes, live animals are zero-rated if:
● used as food for human consumption;
● yield food for human consumption; or
● produce food for human consumption.
Thus pigs, cows and bees are zero-rated.
Animals for other purposes, such as pets, racing pigeons and work
horses, are standard-rated. Details are given in VAT notice 701/15.
For Customs purposes, pet animals may only be brought in with
travellers if they either comply with the PETS scheme or are
quarantined upon arrival. Pet birds must be licensed by Animal Health.
Endangered species may generally not be imported unless the holder
has a CITES permit.
There are some special tax provisions for farm animals.
animal food Term used in VAT notice 701/15 in determining what items are
standard-rated.
Animal Health Imports Controls

Many types of live animal and animal products are subject to health
controls on import to the European Union (EU). Animals susceptible to
rabies are subject to health controls on entry to the UK, even if they
arrive from other EU Member States (except the Irish Republic). In the
UK, all animal health controls are enforced by the Department of the
Environment, Food and Rural Affairs (DEFRA).
animo et facto Latin: by mind and deed.

In tax, the term is particularly used for a domicile of choice.
[The expression is sometimes given as factor et animo.]
animus Latin: soul, spirit. Used to mean a person’s intention.
animus cancellandi Latin: the intention of cancelling.
animus dedicandi Latin: the intention of dedicating.

This term was used when an owner of land appeared to dedicate it
to public use under common law.
animus deserendi Latin: the intention of deserting [a spouse].
animus et factum Latin: intention and act.

These are the usual two ingredients necessary for something to be a
crime.
animus furandi Latin: the intention of stealing.
animus manendi Latin: the intention of remaining.
animus quo Latin: the intention with which.
animus revertendi Latin: the intention of returning.
animus revocandi Latin: the intention of revoking, particularly a will.
animus testandi Latin: the intention of making a will.
Ankara agreement Agreement reached in 1995 which ensures that no customs duties or
other import taxes are charged on goods exported between Turkey and
the European Union.
annates First fruits. At various times in history these have been payable as a tax
to the Pope, the Crown or to Queen Anne’s Bounty. All these
provisions were ended on 16 July 1926.
anniversary rate Rate of inheritance tax used for the most recent ten-yearly charge
payable by certain trusts. This rate is used to calculate the exit charge
for such trusts. This is done by multiplying the anniversary rate by the
number of quarters (three-month periods) that have elapsed since the
ten-yearly charge was last paid, and dividing by 40.
anno ante Christum Latin: in the year before Christ.
anno Christi Latin: in the year of Christ. This is the same as anno Domini.
anno corrente Latin: this year.
anno Domini (AD) Latin: in the year of our Lord. The current system of dating years.
anno regni Latin: in the year of the reign.
annual accounting VAT scheme whereby a trader may elect to make one VAT return a
year. The trader makes nine monthly payments by direct debit, each of
which is equal to 10% of estimated annual VAT. Within two months of
the end of the year, the trader must make the return and pay the balance.
There is an upper threshold above which the scheme may not be used.
There is a separate scheme known as lower limit annual accounting.
Annual Accounting Scheme

This allows the submission of just one VAT Return each year. Traders
who are approved to use this scheme can make nine monthly payments
which can be made payable by direct debit (based on an estimate of the
amount of VAT due) and then send an annual return with a tenth
balancing payment.
annual accounts Financial statements which a body is required to produce each year.
annual accounts “(a) the company’s individual accounts for that year...., and
(b) any group accounts prepared for that year....” (Companies Act 2006
s471(1)).
annual accounts and reports

For an unquoted company, these are:
“(a) its annual accounts,
(b) the directors’ report, and
(c) the auditor’s report on those accounts and the directors’
report (unless the company is exempt from audit).” (Companies Act
2006 s471(2)).
For a quoted company, these are:
“(a) its annual accounts,
(b) the directors’ remuneration report,
(c) the directors’ report, and
(d) the auditor’s report on those accounts, on the auditable part
of the directors’ remuneration report and on the directors’ report”
annual allowance Term used in taxation of pension contributions.

From 6 April 2006, pension contributions are generally tax-free
provided that the contributions in one tax year do not exceed the annual
allowance, and the cumulative contributions do not exceed the lifetime
allowance.
annual allowance charge Tax imposed on pension contributions in a tax year which exceed the
annual allowance for that year. Since its introduction on 6 April 2006,
the rate of tax has been 40%.
“A charge at the rate of 40% in respect of the amount by which the
total pension input amount for a tax year in the case of an individual
who is a member of one or more registered pension schemes exceeds

the amount of the annual allowance for the tax year” (HMRC manual
RPSM glossary)
annual amount Term used in taxation of pension benefits.

The annual amount of a relevant annuity is the rate of annual
income which a person of the same sex and age would receive from the
annuity funds according to tables produced by the Government
Actuary. Details are given in Finance Act 2004 Part 4.
annual budget Budget for a year, usually determined by adjusting figures for previous
year.
Annual Budget documents

Documents, including the Red Book, produced by the Treasury each
year in relation to the Budget.
From 2011, these must comply with the Charter of Budget
Responsibility, in accordance with the Budget Responsibility and
National Audit Act 2011 s2.
annual compounding yield

Annual rate of return of an investment calculated on the assumption that
interest payments are reinvested at the yield rate.
annual depreciation Amount by which fixed assets have been written down during the year
in the annual accounts.
annual depreciation allowance

Amount by which the book value of a fixed asset is decreased each
year. The allowance is usually expressed as a percentage.
annual equivalent rate (AER)

Common method for evaluating investments. It is the equivalent of
APR for loans.
annual exempt amount For capital gains tax, an amount of gains up to which no tax is payable
(Taxation of Chargeable Gains Act 1992 s3).
The amount is usually revised every year in the Budget.
annual exemption An amount which may be deducted from annual profits when
calculating capital gains tax.
An amount that may be given to individuals each year free of
inheritance tax (Inheritance Tax Act 1984 s19(1)). This limit has
remained at £3,000 since the tax was introduced in 1986. Any unused
exemption may be carried forward for one year only. If more than
annual exemption is given away in a tax year, the exemption is applied
in date order until exhausted.
annual family financial healthcheck

Government backed service, due to be introduced in spring 2011.
annual fee Any sum a person is required to pay once a year. It is commonly
charged for providing a financial service such as for a life insurance or
pension. Depending on the financial service, the annual fee is usually in
the range of 0.35% to 2%. An annual fee is sometimes called an annual
management charge.
annual general meeting (AGM)

Meeting which an organisation holds once a year to transact business.
A public company must have an AGM within six months of its
accounting reference date (Companies Act 2006 s336(1)). There are
additional statutory requirements for the AGMs of listed companies.
Private companies are no longer required to have an AGM.
The agenda for an AGM is determined by the constitution of the
body and any relevant law. Typically an agenda comprises:
● approval of the minutes of the previous AGM;
● matters arising from those minutes;
● reports from officers;
● acceptance of the accounts;
● election of directors or equivalent;
● appointment of any auditor;
● resolutions, such as changing the constitution; and
● resolutions notified in advance by members.
annual hours contract Contract of employment where an employee is required to work so

many hours a year but where there is considerable discretion on when
they are worked. This is common in organisations such as supermarkets
which are open for long hours during the week. The actual working
hours can accommodate both employer and employee.
annual investment allowance (AIA)

In tax, an amount which a business may spend on certain fixed assets in
a year and claim the whole cost against taxable profits. (The main
exception is cars.) This provision takes effect from 1 April 2008 for
companies subject to corporation tax, and from 6 April 2008 for
individuals and partnerships subject to income tax.
The AIA was introduced as a package of reforms of capital
allowances, which generally saw allowance rates reduced, meaning that
companies pay more tax. The AIA helps compensate for this additional
tax by benefiting smaller businesses.
The AIA was introduced at £50,000 a year, and increased to
£100,000 from 1/6 April 2010. It is planned to reduce to £25,000 from
1/6 April 2012.
For capital expenditure above this figure, the business may only
claim part of the expenditure known as the capital allowance.
annual leave The amount of holiday an employee is allowed to take in a year.
annual limit In pensions, maximum amount a person may pay into a pension plan
during a tax year to qualify for tax relief. The annual limit is a figure up
to 100% of salary to a figure announced for each tax year.
annually managed expenditure (AME)

Government spending on programmes which are typically volatile and
demand-led, and which are therefore not subject to firm multi-year
limits in the same way as DEL. The biggest single element is social
security spending. Other items include tax credits, Local Authority Self
Financed Expenditure, and debt interest (HM Treasury definition)
annual management charge

Another name for an annual fee.
annual meeting Meeting held once a year. In the USA, this term is used in preference to
annual general meeting.
annual payments Payments of interest, royalties and similar. The extent to which income
tax relief may be claimed is set out in Income Tax Act 2007 s448.
Historically this was a much more generous relief, extending to
ordinary mortgage interest and to bank loans.
annual percentage rate (APR)

Rate that makes all forms of loan comparable.
APR takes into account all the costs, interest charges, arrangement
fees etc.
annual profits Profits that arise from a trade, profession, vocation or other income
previously assessed under Schedule D.
Despite the name, the profits do not have to relate to a year nor
recur each year. The term refers to the nature of the profits rather than
the period to which they relate. A fuller discussion is given in
BIM14060.
annual report Report which a company’s directors are legally required to provide each
year to its shareholders, or an equivalent report by any organisation.
annual return Document which all registered companies are required to submit to
Companies House.
annual stockholders’ meeting

American term for annual general meeting of a company’s investors.
annual subscription This may be tax deductible if paid to a professional body (Income Tax
annual tax Description of income tax given in Income Tax Act 2007 s4.
Income tax is only charged if an Act of Parliament is passed each
year allowing it. Such an Act has been passed every year from 1842.
annual travel insurance Insurance policy that covers all journeys during a year. The policy
usually has a maximum length of trips of between 31 and 60 days.
annual value Term used in Income Tax (Earnings and Pensions) Act 2003 s110 in
calculating the notional benefit on which an employee may be liable to
pay income tax if the employer provides accommodation.

Annual value is defined as “the rent which might reasonably be
expected to be obtained on a letting from year to year if:
(a) the tenant undertook to pay all taxes, rates and charges
usually paid by a tenant, and
(b) the landlord undertook to bear the costs of the repairs and
insurance and other expenses (if any) necessary for maintaining the
property in a state to command that rent”.
annual volatility Volatility is one measure used to assess the risk of a portfolio as it helps
to describe the likely range of returns achieved by the fund. In statistical
terms it is the standard deviation of the return distribution. Greater
volatility of monthly fund returns means that there is a wider range of
likely returns in the future, or greater uncertainty regarding the fund
return. Most investors would equate this greater uncertainty with
greater risk.
annualised percentage rate (APR)

The percentage rate for borrowing money expressed on a common
basis. The law requires that all advertisements and offers for lending
must quote the APR.
The APR is used for comparing figures; it is not used for calculating
interest.
annualised Converted to the equivalent of an annual rate. For example, 2% a month

applied cumulatively is equivalent to an annualised rate of 26.824%.
annually Once a year.
annually compounding yield

Annual rate of return on an investment, based on the assumption that
interest payments are reinvested in the investment at the yield rate.
annual parties Annual parties and similar events provided by an employer are exempt
from tax up to a value of £150 per person attending (Income Tax
(Earnings and Pensions) Act 2003 s264). This includes Christmas
parties.
annual rental value In relation to accommodation provided to an employee, “is the rent
which might reasonably be expected to be obtained on a letting from
year to year if —
(a) the tenant undertook to pay all taxes, rates and charges usually
paid by a tenant, and
(b) the landlord undertook to bear the costs of the repairs and
insurance and other expenses (if any) necessary for maintaining the
land in a state to command the rent”
(Income Tax (Earnings and Pensions) Act 2003 s207(1)).
annuitant Person who receives an annuity.
annuitise General requirement to turn a pension fund into an annuity or similar by

a certain age. This provision is largely removed from 6 April 2011.
annuity A series of payments, possibly subject to increases, made at specified

intervals until a particular event occurs. Most commonly an annuity will
cease after a specified period or upon the death of the annuitant.
annuity Arrangement whereby a lump sum is converted to an annual payment,

particularly as part of a pension. The annual payment is usually for the
rest of the life of the person, known as a pensioner.
Suppose a man aged 65 has £100,000 and wishes to convert this to
an annual payment for the rest of his life. Neither he nor the pension
provider knows how long he will life. However, they will know that on
average such a man may live for perhaps another 20 years and calculate
the annual payment on such a basis. If the man lives for 25 years, he
will have received more than expected. The pension provider will be
compensated by having paid a pension to someone else who may only
have lived for another 15 years. Thus those who die young subsidise
those who die old.
This does not mean that the man will receive £5,000 a year until he
dies. In reality, he will receive a higher figure, around £7,000, as the
sum remains invested. At the end of the first year of payment, there is
still £93,000 of the original lump sum earning interest.
The above describes a flat rate annuity which pays a flat rate just
to the person. There are many options now available for variances in
annuity. These include:
● pension guarantee which means that the pension is paid for
a minimum number of years even if the pensioner dies soon after the
annuity starts;
● dependant benefits which continue payments after the
pensioner has died to those who were dependent on him, such as a
spouse or young children:
● indexation which increases the annual payment to offset the
effects of inflation;
● fixed-term pensions which only last for a finite period, after
which the pensioner may buy another annuity from whatever is left of
the initial lump sum plus accrued interest.
Each of these options imposes an additional liability on the pension
provider, and therefore reduces the amount of annual payment. For
example, if the 65-year old man wished his 62-year old wife to receive
2/3 pension after he has died, he may find that the annual payment
starts at £6,000.
The amount of annuity paid by different companies can vary by up
to 25%, particularly when certain options are chosen.
“A series of fixed payments paid over a fixed number of years or
during the lifetime of an individual, or both. An annuity is often used to
provide a pension. It can also be an annual payment provided for in a
will” (HMRC glossary of inheritance tax terms).
The extent to which annuities are allowable as a business expense is
discussed in the Inspectors’ Manual from BIM 42601.
annuity certain An annuity which makes payments for a fixed number of years even if
the annuitant dies. In effect, it is similar to the pension guarantee.
annuity contract Legal agreement by which a person exchanges a lump sum in return for
an annuity of regular payments for a defined period, often for the rest
of the person’s life.
annuity due Annuity whose first payment is made in advance.
annuity finance Loan that is repaid as a set of payments calculated by reference to the
principal and interest.
annuity protection lump sum death benefit

A lump sum benefit paid to an annuity scheme member who dies before
the age of 75 and was in receipt of either a lifetime annuity or a scheme
pension under a money purchase arrangement. This benefit is subject to
limits set out in Finance Act 2004 Sch 29 para 16.
annuity rate Amount of income a pension provider will pay for a fixed amount of
capital.
annulment Formal declaration that something is invalid, particularly a marriage

which has not been consummated.
It should be understood that something which is annulled is
regarded as never having happened, whereas something which is voided
is regarded as having happened but no longer of any effect.
Annunciation Day Another name for Lady Day, one of the quarter days.
annus et dies Latin: a year and a day.
anomaly In finance, an opportunity to achieve particularly high financial returns.

Under the efficient market hypothesis, there should never be any
anomalies.
another relevant person Term used by the Home Office’s UK Border Agency to mean an
individual responsible in the sponsoring body for people from overseas
who wish to work in the UK.
ante Latin: before.
antecedents In law, a person’s criminal record.
antecedents report List of a person’s criminal record which may be passed to a judge after
conviction but before sentencing.
ante-date Put a past date on a document. Depending on the context and reasons,
this may be illegal or improper.
antedated Given an earlier date, usually on a document.

This does not affect the validity of a cheque or bill of exchange
(Bills of Exchange Act 1882 s13(2)).
ante diem Latin: before the day.
ante litem motam Latin: before litigation was in contemplation.
ante lucem Latin: before light.
antemeridian Before midday.
ante-natal care A period of necessary preparation for a woman expecting a baby.

A pregnant employee is entitled to paid leave from work for ante-
natal care, provided she is pregnant at the time and the care is on the
advice of a doctor, midwife or registered health visitor. Ante-natal care
does not include classes in parenting skills.
If a woman attends more than one paid ante-natal absence, the
employer is entitled to see evidence for the second and each subsequent
absence.
ante-natal care Guidance to a pregnant woman relating to the pregnancy, childbirth or

immediate childcare.
A woman has the right to paid leave to attend such classes provided
she is pregnant at the time and she attends on the advice of a doctor,
midwife or health visitor (Employment Rights Act 1996 s55).
ante-nuptial Before marriage.
anti Greek: against.
anti-avoidance Statutory provisions designed to counter avoidance schemes.

About one fifth of all tax law is anti-avoidance.
anticipation Literally, this means to make plans to prevent, as in anticipating

trouble. Colloquially the word is sometimes used to mean to expect. To
avoid ambiguity, the word “expect” should always be preferred for that
meaning.
anticipation of loss Principle of tax law that a loss (or a profit) may not be anticipated in
accounts.
This principle was upheld in such cases as BSC Footwear Ltd v
Ridgway [1971] 47TC495. However in some cases a provision for
future expenditure may be included in the accounts under accounting
standards, and therefore be allowable.
anticipation of profit Profit that has not yet been earned. Such profits should not be included
as sales income and therefore are not generally taxable.
There is an exception for long-term contracts, where accounting
standards require an element of profit on work completed to be
included. This should be followed for tax purposes, as is discussed in
There is a limited exception to these general rules, as set out in

Willingale v International Commercial Bank Ltd [1978] 52TC242.
anticipatory breach Breach committed before the time of performance, particularly under a
contract.
It is possible to sue for breach of contract on an anticipatory breach
if the action makes subsequent performance impossible, such as when a
promise to sell a car on one day is pre-empted by selling the car to
someone else before that day.
anticipatory exercise of power

Right of a government or body to make necessary preparations to give
effect to an Act between its receiving Royal Assent and its
commencement date. This right is given in Interpretation Act 1978 s13.
anticipatory fetching Computer process where data are read before being required.
anticipatory hedge Hedge for a transaction which is expected to happen on a future date.
anticipatory letter of credit

Letter of credit one of whose terms allows a part payment to be made
to the supplier on proof that the goods have left his possession, even
though not yet delivered. It is sometimes called a red clause letter of
credit.
anticipatory paging Computer process where a page is read from auxiliary storage to real
storage before the latter requires it.
anticipatory pricing Pricing policy which allows for inflation when goods are to be
delivered in the future. Such policies have been adopted at times of high
inflation. It is also known as hedge pricing.
anticompetitive practice An unfair practice which stifles competition. If practised by a company

with an annual turnover of at least £10 million, it may be investigated
by the Office of Fair Trading under Competition Act 1980.
Anti-Corn Law League Body formed in 1839 to fight the Corn Laws.
These imposed heavy duties on imported wheat to protect the
domestic market. A consequence was that the price of this basic
commodity became unaffordable to ordinary people. The League
gained the support of some MPs who abolished the duties in 1842 and
recouped the lost revenue by the re-introduction of income tax.
anti-dilution clause Term sometimes included in a share issue designed to protect the
shareholder from risk of further share issues and hence dilution of
dividend income.
anti-dumping Description of a law or tax which is designed to prevent a country or

overseas manufacturer killing off local business by selling vast
quantities of goods at prices which cannot be matched.
anti-dumping duty (ADD) Customs duty on imports, providing protection against the dumping of
cheap goods in the European Union by foreign producers. The law is
contained in EU Council Regulation 384/96.
anti-forestalling Description of any tax provision that is designed to prevent a taxpayer

deriving a tax benefit before an announced change in tax law.
antique Something which is more than 100 years old. It includes items which
have been repaired or restored during the last 100 years provided the
item has not lost its original character.
There is a special VAT scheme for antiques, which allows VAT to
be charged at 5%.
antique Can be relieved from customs and excise duties (Customs and Excise
Duties (General Reliefs) Act 1979 s9).
anti-trust laws Various American laws which seek to prevent corporations becoming
too big and powerful. In American terminology, “trust” means
“monopoly”.
The first such law was the Sherman Anti-Trust Act 1890. This was
followed by Clayman Act 1914.
Anton Piller order Order made by a High Court judge which allows a claimant to enter the
defendant’s premises to seize items which the defendant may wish to
destroy to frustrate a legal action. It is most commonly used for cases
alleging serious breaches of copyright. The name comes from the case
Anton Piller KG v Manufacturing Processes [1976].
Since 1988, this is known as a search order.
A/O Account of.
AOA Any one accident. Term used in marine insurance.
AOB (1) Any other business, sometimes a final item on an agenda.

(2) Any other bottom. Term used in marine insurance to mean any other
vessel.
AOR (1) Airport of Receipt - the Cargo Community System (CCS-UK)

airport at which a transit shed operator creates a consignment record for
uncleared imported goods.
(2) Any one risk. Term used in marine insurance.
AP (1) Accounting period.

(2) Additional premium. Term used in insurance when cover is sought
for additional risks.
APA Advance pricing agreement.
APACS Association for Payment Clearance Services.
APB Auditing Principles Board.
APB engagement standards

These comprises “APB Ethical Standards and International Standards
on Auditing” (APB Scope and Authority of Pronouncements para 12).
APB pronouncements Pronouncements from the Auditing Practices Board (APB).

In its statement The Auditing Practices Board — Scope and
Authority of Pronouncements states that its pronouncements “include:
● quality control standards for firms that perform audits of
financial statements, reports in connection with investment circulars
and other assurance engagements;
● a framework of fundamental principles which the APB
expects to guide the conduct of auditors;
● engagement standards for audits of financial statements,
reports in connection with investment circulars and other assurance
engagements; and
● guidance for auditors of financial statements, reporting
accountants acting in connection with an investment circular and
auditors working in other assurance engagements.”
APCIMS Association of Private Clients Investment Managers and Stockbrokers.
APD Air Passenger Duty, a duty on the carriage of passengers by air from a
UK airport.
There are exemptions for: some non-paying passengers; certain
airline employees and small children; for flights in small aircraft; for
short-duration pleasure flights and for flights which originate at airports
in the Scottish Highlands and Islands.
APEC Asia-Pacific Economic Co-operation, an international organisation with

the purpose of facilitating economic growth, cooperation, trade and
investment in the Asia-Pacific region.
It was formed in 1989. APEC currently has 21 members: Australia;
Brunei Darussalam; Canada; Chile; People's Republic of China; Hong
Kong, China; Indonesia; Japan; Republic of Korea; Malaysia; Mexico;
New Zealand; Papua New Guinea; Peru; The Republic of the
Philippines; The Russian Federation; Singapore; Chinese Taipei;
Thailand; United States of America and Vietnam.
apices juris non sunt jura Latin: legal principles must not be carried to their most extreme
consequences, regardless of equity and good sense.
a posse ad esse Latin: from the possible to the actual.
a posteriori Latin: from the effect [to the cause]. Legal term used to denote
inductive reasoning. This is knowledge based on experience.
apparent authority When a person acts as if he has authority whether or not he has,
particularly when an agent so acts.
apparent good order and condition

Statement made by a ship owner regarding the state of the packaging of
cargo, indicating that there is no external evidence of damage or

deterioration. It comprises no warranty of damage which cannot be
externally evidenced. Such statements have largely disappeared with
the advent of containerisation.
apparent possession The person who makes out a bill of sale for chattels is deemed to be in
apparent possession of any chattels on his property (Bills of Sale Act
1878 s4), “so long as they [the chattels] remain or are in or upon any
house, mill, warehouse, building, works, yard, land, or other premises
occupied by him, or are used and enjoyed by him in any place
whatsoever, notwithstanding that formal possession thereof may have
been taken or given to any other person”.
apparently insolvent In Scotland, legal step in sequestration.
App Cas Law Reports of Appeal Cases, 1875 to 1890.
appeal Challenge to a legal decision in a higher court.
Appeal Commissioners Bodies who hear tax appeals. They are replaced by tribunals from 2009.
The term “Appeal Commissioner” has come into use as the word
“Commissioner” also means a member of the Board of HMRC.
The two types of Commissioner are General Commissioners and
Special Commissioners. The former are lay people with a status
similar to magistrates. The latter are legally qualified people.
Some tax laws specify to which body particular appeals may go.
Otherwise the taxpayer has a choice. A taxpayer will usually choose the
Special Commissioners when the issue is a technical point, and the
General Commissioners when the issue is one which commends itself
to a reasonable man.
appeal Requirement for a legal decision to be reconsidered.

In many tax and employment matters, a tribunal may give a ruling
on fact which is fact, leaving an appeal possible only on a point of law.
appearance Attendance by a person at court, particularly an appearance to explain

to the person the implications of proceedings being brought against
him.
appearance de bene esse Conditional appearance in court.
appearance fee Payment to a person simply for attending an event, such as a film star
attending a fashion show.
appearance money Money paid to a prominent person for appearing at a function.

VAT notice 701/5 gives guidance on the treatment of such
payments in relation to competitions run by clubs.
appear very likely Term used in Income Tax Act 2007 s384A in relation to the
disallowance of certain loan arrangements against income tax.
appellant Person who brings an appeal in court.

For tax appeals, “(a) the person who starts proceedings (whether by
bringing or notifying an appeal, by making an originating application,
by a reference, or otherwise);
(b) in proceedings started jointly by more than one person, such
persons acting jointly or each such person, as the context requires;
(c) a person substituted as an appellant under rule 9 (substitution
and addition of parties)” (The Tribunal Procedure (First-tier Tribunal)
(Tax Chamber) Rules SI 2009 No 273 rule 1(3)).
Appellate Committee Part of the House of Lords which announces legal decisions.
appellate court Court which hears appeals against decisions from lower courts.
appellate jurisdiction Authority to hear appeals against decisions from lower courts.
appellee American term for a person who argues against an appeal.
appendant In law, description of incorporeal hereditaments which arise because

the land was originally from the same manor as other land.
Appendix 7A arrangement
Arrangement to pay national insurance for tax equalised employees
from overseas.
applicable law The national laws which apply to a particular transaction.

Under the international Rome convention, the courts will respect
any agreement made by the parties on the matter. Failing this, the courts
will regard the country with the closest connection as the applicable
law.
applicant Person who applies for something.

Under Family Law Act 1996, it is the term used for someone
seeking a divorce, replacing the previous term petitioner.
application Any formal process by which a person seeks to obtain something. In

particular, it can apply to a request for tax relief, or a process by which
an investor seeks to obtain shares.
application concluded Term used by the Home Office’s UK Border Agency in respect of a
person to whom they have granted asylum.
application designer In computing, the person who is responsible for turning a set of
requirements into a specification for computer software.
application for quotation Application made by a public company to be listed on a particular stock
exchange.
application form Form completed by a person seeking something, particularly a job.
application growth In computing, any system environment which is capable of expanding

smoothly to meet future increased demands.
application layer The layer of a computer operating system which is visible to the user.
application money Money which must accompany an application to buy shares.
application of funds Statement explaining how a business has acquired funds and how it has
used them. It is broadly the same as a cashflow statement.
application problem In computing, a problem identified by the system user which requires a
solution in the software.
application program Program which performs a task required by the user, as against a
system program.
application program interface

In computing, interface needed for application software to communicate
with an operating system.
application service provider

Company that provides software which can deliver programs over the
Internet.
application software In computing, software which is developed to perform a particular

purpose.
applied economics Branch of economics which studies practical problems and how they
may be solved using the tools of theoretical economics.
applied mathematics Branch of mathematics which determines how other branches may be
used to solve problems.
applied or nominal interest rate

This term is used to denote the rate of interest which is used to
calculate the interest owed by a borrower. It is usually lower than the
APR which includes charges.
applying the proviso In criminal law, when an appeal court uses the proviso in Criminal
Appeal Act 1968 s2. This allows the court to dismiss an appeal if it
believes that there has been no miscarriage of justice even though the
point of appeal may have some merit.
appointed counsel American term for a lawyer who is appointed to a defendant who would
otherwise be unrepresented in court.
appointed day Day on which a tax provisions (or other law) comes into force. Finance
Acts often contain provisions to come in at a future date. The date is
given in a Statutory Instrument, such as Finance Act 2008 Schedule 38
(Appointed Day) Order SI 2010 No 409. This announced that the
relevant Schedule (that makes amendments to stamp duty land tax)
comes into force on 1 April 2010.
appointee Person who has been appointed, or for whom a power of appointment
is exercised.
appointment (1) Arrangement to meet someone.

(2) Process by which a person is given a job or a new job.
appointment process This term is used to describe the process of a client nominating an
Agent to act on their behalf by way of the Agent ID.
Appointments Commission
Body corporate created under Health Act 2006 s57 as a successor to the
National Health Service Appointments Commission.
appointor Person given a power of appointment.
apportionment The process of splitting an amount on some basis. For example, an

electricity bill may be apportioned between two occupiers when a
property changes hands.
For certain VAT provisions, an amount may need to be apportioned,
such as between personal and business use of an expense.
Note that for income tax and corporation tax, expenses cannot
usually be apportioned as they must be “wholly” for a business to be
deductible.
For all taxes, apportionment is sometimes needed when income or
expenditure spans a date on which a tax rate or rule changes.
apportionment factor Number between 0 and 1 that determines how much of an item of
account may be allocated for a particular tax purpose. The term is used
in the Inspectors’ Manual at BIM24630 in the context of golf clubs.
apportionment schemes A simplified method of calculating VAT liability on retail sales, based
on the proportions of purchases which are liable to different rates of
VAT. The apportionment schemes are intended for retail traders that
may find it difficult to account for VAT on their sales in the normal
way.
appraisal Any systematic approach to establishing a value.

The term is particularly applied to determining the capabilities of
employees, and (particularly in the USA) to valuing property.
appraisal fee Charge for a professional valuation of a property that is offered as

security for a loan.
appraisal related pay Pay scheme where at least part of an employee’s pay is linked to an
appraisal of the employee’s performance. This is also known as merit
pay.
The two main forms of appraisal related pay are:
● performance-against-objectives; and
● rating by line manager against work competencies.
appraisement Valuation of goods, particularly those seized by distraint or similar

procedure.
appraiser Valuer, particularly of goods acquired by appraisement.
appreciation When an asset gains value, as often happens for land.

“An increase in the value of an asset. [The term] is also used for
currency to describe the value of one currency rising in relation to
another” (HM Treasury glossary).
apprentice System under which a young person worked beside an experience

worker for five or six years before being recognised as an experienced
worker. The apprentice was paid a low rate of pay. Apprenticeships
were common in the construction, engineering and printing industries.
This is an ancient arrangement, which was embodied in English law
as far back as the Statute of Artifices 1563. This was known as serving
time. The apprenticeship was ended by a celebration often involving
bizarre rituals.
The system started to die out from the 1970s, though even in the
mid-1970s, about 40% of boys leaving school became apprentices. An
attempt has been made to revive the scheme as modern
apprenticeships.
apprentice house Cheap accommodation provided for apprentices, often orphaned

children, attached to a factory. They were common in 18th century.
They became subject to statutory regulation in 1802.
apprenticeship Fixed period of work-based training in which a person learns a skill or

craft. The traditional apprenticeship largely died out during the 1970s
and 1980s, though a form of modern apprenticeship has been
introduced.
apprenticii ad legem Latin: apprentices at law. The term refers to junior barristers.
approbate and reprobate Legal term which means to blow hot and cold. It espouses the principle
that a person cannot both claim benefit under an instrument and also
deny liabilities imposed by the same instrument.
appropriate audit authority

Person to whom an auditor must report his concerns about a company if
he feels obliged to resign as its auditor. For a major audit, this is the
Secretary of State. For other auditors, it is the auditor’s professional
body. (Companies Act 2006 s525(1)).
appropriate body of persons

Term used in Income and Corporation Taxes Act 1988 s751A to define
the people affected by tax provisions relating to controlled foreign
companies.
appropriate judicial authority

Court that has the relevant power to seize property under Criminal
Justice and Police Act 2001. The authorities are listed in s64.
appropriate national health service allocation

Amount of national insurance contributions that are allocated for the
National Health Service, as set out in Social Security Administration
Act 1992 s162(5).
appropriate percentage A percentage taken from tables relating to the carbon dioxide emissions
of a car that is a taxable benefit in kind for an employee (Income Tax
The percentage is a figure of up to 35%. The tables have frequently
been revised, so a percentage for the same car may be higher in a later
tax year.
The employee is usually taxed on the notional benefit of having the
car as being the list price multiplied by the appropriate percentage. If
the employer also provides petrol or other road fuel, the employee is
also liable to pay tax on a benefit calculated as a fixed amount
multiplied by the appropriate percentage.
appropriate personal pension scheme (APPS)

A private pension scheme which allows a person to contract out of
state second pension. If the person is an employee, he or she pays the
full rate of class 1 national insurance but a portion of that is paid into
the APPS. This amount is known as the contracted-out rebate. The
pension benefits it buys are known as protected rights.
appropriation (1) Legal process whereby the property of one person passes to another.
(2) Situation where more units in a unit trust are being bought than sold.
appropriation account Account which apportions the profit for an accounting period between
the various provisions, reserves and retained profit.
In a partnership, the appropriation account apportions the profit to
the various partners’ capital and current accounts.
appropriation account Part of the accounts which shows how the profit has been used, in
particular how much has been paid to the shareholders and how much
has been retained.
appropriation in aid Item in the estimates of a government department which records

revenue from selling goods and services to the public.
appropriation to retail trading

Term used up to 1973 to determine when purchase tax became payable,
such as when goods moved from a wholesaler to a retailer.
approval Process by which the trustees or equivalent body make the treasurer’s
report their own.
approved airport Place where goods imported by air may be landed in the UK. It is an
offence to import goods by air at any other destination.
approved budget Budget which has been approved by members, adjusted to reflect in-
year virements.
Approved Code of Practice (ACOP)

Code issued by the Health and Safety Executive under statutory
regulations. An ACOP provides detailed guidance on how to comply
with health and safety law. An ACOP is not legally binding, but failure
to comply may comprise evidence of a failure to meet legal
requirements.
approved commercial document

Document which Customs has approved for use when exporting goods
under the Simplified Clearance Procedure.
approved consignor Old term for a consignor who was authorised by Customs and Excise to
produce his own forms for export purposes.
approved debts Debts which a debt factor is prepared to accept.
approved deferred share trust (ADST)

Trust fund established by an employer for the benefit of the employees.
The fund purchase shares in the employer. If approved by HMRC, the
tax on the dividends may be postponed until the shares are sold.
approved distributor Person who has been individually authorised and approved for the
purpose of supplying tied oil, in the course of trade for eligible use.
approved investment funds (AIF)

Fund that may use Enterprise Investment Scheme tax relief (Income
Tax Act 2007 s251).
approved list List of suitable investments in which a financial institution is prepared

to invest.
approved local enterprise agency

Local body approved by the government to promote enterprise in an
area. Contributions to it are tax deductible (Income and Corporation
Taxes Act 1988 s79).
approved pension scheme Pension scheme which is approved by HMRC and thus qualifies for
certain tax advantages.
approved profit-sharing (APS)

Tax-efficient scheme which ran from 1979 to 2002 as explained in
profit-sharing.
approved repairers Arrangement which is now popular among insurance companies,

particularly for motor insurance. Typically each insurance company
has a network of garages whose quality of work and pricing structure it

has approved. The insurance company requires the policyholder to use
an approved repairer.
approved school Educational establishment to which a court may send children whose
behaviour makes them impossible to educate in an ordinary school.
Since 1969, such schools have been replaced by community homes
or by accommodation in ordinary schools under special provisions.
approved scheme “Share award or share option scheme approved by the Employee
Share Schemes Unit, which gives favourable tax and NICS advantages
to employees and employers” (Inspectors’ Manual at BIM 44001).
approved securities Bonds and other investments which a bank is allowed to hold.
approved training Training under a scheme sponsored by the government. A young person
undergoing approved training is regarded as being in full-time
education for the purpose of claiming social security benefits.
approved wharf Place in a port where goods imported by sea must be unloaded.
A port is approved by a Statutory Instrument which defines the area
of the wharf. Some wharves are restricted as to what goods may be
imported. Once unloaded, either customs duty must be paid or the
goods must be held in a transit shed.
approximation Process or result from making an informed guess.

An approximation is usually acceptable if:
● it is sufficiently close to the likely answer as still to be a
useful figure;
● the real answer is not readily available at that time;
● the number is identified as an approximation;
● an indication is given on how accurate the approximation is
considered to be.
The term “approximation” is the generic statistical term. In finance,
the term estimate is considered more appropriate.
The term “very approximate” should be avoided. Literally this
would mean a number very close to the original, but as its use is likely
to be the opposite, this expression should be avoided.
appurtenance In law, something which has been attached to property, as against

something which is part of the property or which is naturally attached
(such as a tree).
appurtenant property “In relation to a building or part of a building or a flat, means any
garage, outhouse, garden, outhouse, yard or appurtenances belonging
to, or usually enjoyed with the building or part or flat” (Commonhold
and Leasehold Reform Act 2002 s112(1)).
APR (1) Agricultural property relief, from inheritance tax.

(2) Annualised percentage rate. A standard method of expressing
interest rates to make them comparable.
APRA Australian Prudential Regulation Authority.
a priori Latin: deductively.
APS Approved profit-sharing.
aptitude test Test of a person’s innate skills, such as clerical, mechanical and
numerical ability.
aqua cedit solo Latin: water passes with the soil.

This means that ownership of water is by owning the land
underneath it.
AQL Acceptable quality level. In computing, a term used by component

manufacturers to determine the quality required and achieved.
AR All risks (in insurance).
ARA Assets Recovery Agency.
Arab blacklist Blacklist against suppliers and shipping agents operated by some Arab
countries in the 1960s and 1970s as a means of putting economic
pressure on Israel.
Arab Currency-Related Unit (ArCRU)

Fictitious currency created by Hambros Bank in 1974 as a means of
valuing Middle East oil while exchange rates were volatile.
Arab Fund for Economic and Social Development

Body established in 1972 to promote development within Arab states.
arable area payment Payment to an arable farmer under EU Common Agricultural Policy.
Tax Bulletin 02/94 states that HMRC may accept such a payment as
a sales subsidy.
A rating Description given by the Home Office’s UK Border Agency to those

who are allowed to sponsor workers coming to the UK. It is a
permanent rating, unlike the B rating.
arb Abbreviation of arbitrageur.
arbitrage Process of buying something with a view to selling it at a profit

somewhere else.
Arbitrage typically exploits small differences in prices between
such items as currencies and commodities. So if a pound could be
bought for $1.800 in London and sold for $1.801 in New York, the
arbitrageur would buy pounds in London and sell them in New York.
Typically arbitrage involves spending large sums and selling promptly
(usually within seconds) to make a small profit.
For shares, there is a special form known as risk arbitrage.

There are provisions in Taxation (International and Other
Provisions) Act 2010 from s231 that allow HMRC to issue notices to
companies to calculate their tax less advantageously in certain arbitrage
schemes.
arbitrage-free condition Assumption made in financial modelling that there are no anomalies,
that is no opportunities for risk-free excess returns in the market.
arbitrage pricing theory (APT)

Theory which is based on the value of a security being driven by
various factors of two types: those that relate to the market generally
and those that relate to the specific company.
The main difference between APT and the capital asset pricing
model is that APY attempts to identify many factors rather than just
one. For this reason, APT is often seen as sound in theory but
impractical in practice.
arbitrage syndicate Group of people who provide the capital to engage in arbitrage.
arbitrageur One who engages in arbitrage, that is someone who buys something in
a large quantity and sells it again almost immediately at a small profit.
arbitration A process of judging the merits of competing claims. The arbitrator

hears the claims and makes his decision.
Arbitration must be distinguished from mediation which is the
process of trying to help two parties to resolve their differences
themselves. Arbitration often follows when mediation has failed.
arbitration award Amount which is awarded against a party following an arbitration.
arbitration cover Additional cover which ECGD offered for the additional risk of a claim
being lost after arbitration.
ARC (1) Advanced reduced instruction set computing. An old term for the
specification for computer microprocessing platforms.
(2) Accounting Regulatory Committee.
archive Repository of old records. Originally, it was the repository for public
records.
The maintenance of a business archive is generally accepted as a
business expenses (Inspectors’ Manual at BIM42501).
archive file In computing, a file or collection of files which are not readily needed.
Such files are usually compressed and placed in a separate part of the
computer.
archiving Process of taking old documents and storing them. The term can apply
to either paper files or computer files. In both cases, the procedure frees
up space for current documents at the expense of making the archived
documents less accessible.
archwiliad Welsh: audit
archwiliwr Welsh: auditor
ArCRU Arab Currency-Related Unit
Arctic Systems Company set up in 1992 by a married couple, Geoffrey and Diana
Jones, and which became subject to a protracted test case with the tax
authorities.
The couple eventually won in the House of Lords after four years of
litigation in Jones v Garrett [2007]. This case did considerable damage
to the reputation of HMRC and the courts.
The company was set up as a standard husband and wife company
where they each held one share, the husband did most of the work, and
the income was drawn in dividends rather than salary. This avoids
national insurance and allows the wife’s personal allowance and basic
rate tax band to be used.
HMRC claimed that this represented a trust created by the husband
in favour of his wife, a practice subsequently called income splitting.
This provided a novel interpretation of laws first passed in 1922 but
never before used in such a manner. The consequence of that
interpretation was that the wife’s income was held to be taxable as the
income of the husband.
After many interpretations from the courts, the House of Lords
eventually held that the wife’s income was not taxable as her
husband’s. Although this was also the decision of the Court Appeal, the
Lords dismissed the Appeal Court’s reasons and substituted their own,
which was basically that any trust would fail as it was between husband
and wife and therefore exempt under tax law.
are Unit of land measure equal to one hundredth of a hectare; 100 square
metres.
argentine Gold coin issued by Argentina, that may be a gold investment coin for
VAT purposes.
argumentative affidavit Affidavit which contains arguments about the facts. Such an affidavit is
generally forbidden under English law.
ariary Currency of Madagascar.
Ariel Automated real-time investments exchange owned by the Accepting

Houses Committee where bargains were struck from 1974.
arising basis When tax is charged on foreign income regardless of whether it is

remitted to the UK. The opposite is known as the remittance basis.
The arising basis is used for taxpayers for are UK-resident and
either ordinarily resident or domiciled in the UK. The arising basis may
also be used for other taxpayers who voluntarily elect to do so, possibly
to avoid the annual charge which they may be required to pay after
seven years.
arithmetic Most elementary branch of mathematics used for performing simple

calculations. Its four main functions are addition, subtraction,
multiplication and division. There are other functions such as square
roots and logarithms.
Arithmos Forologikou Mitroou (FPA)

Greek: value added tax.
ARM Adjustable rate mortgage.
armed forces “Royal Navy, the Royal Marines, the regular army and the regular air
force, and any reserve or auxiliary force of any of those services which
has been called out on permanent service, or embodied” (Customs and
Excise Management Act 1979 s1(1)).
UK forces are subject to UK income tax and national insurance,
regardless of where they are posted. National insurance provisions are
given in Social Security Contributions and Benefits Act 1992 s116.
The allowability of various expenses are set out in Income Tax
(Earnings and Pensions) Act 2003 from s296.
armorial bearings tax Form of excise duty first charged in 1798 which replaced clock and
watch tax.
arm’s length bargain “A normal commercial transaction between two or more person”
(HMRC manual RPSM glossary). The same as arm’s length price.
arm’s length price Price at which goods would be sold if there were no connection
between the parties. It is a similar concept to fair value.
For tax purposes, arm’s length price may be substituted for the
transfer price if HMRC suspect transfer pricing.
ARP Adjustable-rate preferred stock.
ARPA Advanced Research Projects Agency, part of the US Department of

Defense.
ARPANET Advanced Research Projects Agency Network. This was developed by

the US Department of Defense as a means of exchanging data. It
gradually expanded and eventually became the Internet.
arpent Old land measure varying from about 1¼ acres to 5/6 acre. The
measure is still sometimes used in Louisiana and Quebec.
ARPS Adjustable rate preferred stock.
ARPU Average revenue per user.
ARR Accounting rate of return.
arraign Call a prisoner to court by name, to read the charge against him, and to
ask whether he pleads guilty.
arranged marriage Marriage where the parties have not chosen each other but have been
chosen by someone else, such as their parents. An arranged marriage is
not always void.
arrangement Any form of scheme or agreement. In finance it has many specialist

meanings.
In pensions, the term means a contractual or trust-based
arrangement made by or for a member under the scheme. This meaning
is defined in the Inspectors’ Manual at RPSOM02300050. A member of
a pension scheme may have more than one arrangement.
In tax planning, the term means any pre-ordained combination of
transactions designed to create a tax advantage.
arrangement fee Charge made for providing a financial fee, one form of administration
fee. It is most commonly charged for arranging a mortgage or other
loan.
array In computing, an aggregate of data objects which have identical

attributes but can be individually accessed.
array processor In computing, a computer or computer part which is designed to

process mathematical procedures at a higher speed than from normal
mathematical processes. These involve grouping numbers for mass
calculation.
arrears date In a case for equal pay, the day up to six years before the action started
from which the claim is made (Equal Pay Act 1970 s2ZB).
arrears Amounts owed from a previous period, such as missed loan repayments
or rent from previous months.
The lender will typically try to establish the reason for arrears using
normal credit control methods. If this does not resolve the matter,
some arrangement will usually be sought with the borrower, such as
rolling up the arrears into a new loan or allowing the loan to run for an
extended period.
If the borrower is in financial difficulty, the lender may consider an
arrangement such as a debt management plan. Failing that, some form
of insolvency arrangement is usually inevitable.
arrectis auribus Latin: with ears pricked up.
arrest Deprive a person of his liberty by lawful authority to compel his

appearance to answer a criminal charge.
arrestable earnings Amount of an employee’s pay which a Scottish court may make subject
to an order for arrestment of earnings.
This comprises all salaries and wages, plus occasional payments

such as bonuses, commission and overtime.
arrestable offence A criminal offence for which a person may be legally arrested.
Police and Criminal Evidence Act 1984 s24 allows for arrest
without a warrant for a list of offences including theft and fraud. These
are broadly offences for which a person could be imprisoned for at least
five years.
arrestment of earnings Scottish system of requiring certain debts to be paid by regular

deduction from wages, similar to attachment of earnings which apply
in the rest of the UK. The legislation is contained in Debtors (Scotland)
Act 1987. An arrestment may only be ordered by a Scottish court, but it
can apply to a payroll which operates in any part of the UK.
There are three types of arrestment order:
● earnings arrestment;
● current maintenance arrestment;
● conjoined arrestment.
For an earnings arrestment, the court states the amount which must
be collected, and provides tables which determine how much of the
employee’s pay must be taken according to earnings. The latest tables
were issued in 2006, replacing those from 2001.
For a current maintenance arrestment, the court advises the daily
amount to be collected. This is converted to a payroll figure by
multiplying by the number of calendar days since the worker was last
paid. There is a protected sum below which no arrestment may be made
from wages. This sum has been £12 a day since 5 April 2006.
A conjoined arrestment is simply a combination of the other two.
Each element operates under the rules for that element.
An employer may deduct a further £1 for himself to cover the
administrative cost of operating the arrestment.
arrived ship Notice that a ship has arrived and is ready to discharge its cargo.
art Works of art have several specific tax provisions.

For the VAT position on sale from a historic house, see VAT notice
701/12.
artificial person Legal term for a legal person that is not a human individual. Examples
include companies, trusts, estates and other legally constituted bodies.
artificial price Price which differs from normal price for no obvious commercial
reason.
The Inspectors’ Manual at BIM38400 notes that where an artificial
price is paid for trading stock, “there is usually some other purpose
involved”. To the extent that the artificial (usually inflated) price cannot
be justified, it will be disallowed for tax purpose.
artificial trade Activity that appears to be trade but is not. Common examples include
hobby activities, investments, and realisations of capital gains. The
matter is discussed in the Inspectors’ Manual at BIM20090 and

BIM75740.
Article 6 agreement An agreement to set up a European works council or equivalent, which

has been negotiated through a Special Negotiating Body.
Article 13 agreement Voluntary agreement between a multi-national company operating in

Europe and its workforce to establish a European works council.
article 184 reliefs Reliefs from customs duty for many categories of imported goods, such
as the personal effects of someone moving into the UK.
articled clerk Clerk under written articles of agreement to serve a professional person,
usually an accountant or solicitor, as a condition of joining the
profession.
articles of association Document which a limited company must file, with the memorandum
of association (Companies Act 2006 s18).
articles of incorporation Document which sets up a company in the USA. It governs the
relationship between the company and its investors.
articles of roup Conditions of sale at a roup, as announced by the crier.
articulation Impact of transactions on the balance sheet and profit and loss account
through application of the accounting equation.
artificial arrangement For VAT, arrangements which have no commercial purpose other than
the avoidance of tax. The European Court of Justice has ruled that this
may constitute an abusive practice.
The European Court of Justice held that tax avoidance is itself not a
commercial activity (Halifax plc v Customs [2001]).
artificial arrangement One of the hallmarks of a tax planning scheme of which taxpayers are
advised to be wary.
artificial tax avoidance Tax avoidance that goes beyond what tax law intended or has become
accepted. Such avoidance is likely to be challenged by HMRC. Even if
the challenge is unsuccessful, it is likely that an artificial scheme will be
legislated against in anti-avoidance provisions.
The nearest to a definition is probably when then financial secretary
Dawn Primarolo on 1 April 2004 described such schemes as “where
they create economic distortions, provide commercial advantages over
compliant taxpayers, redistribute tax revenues in an unfair or arbitrary
manner, or represent an abuse that conflicts with or defeats the will of
Parliament”.
HMRC provides guidance in the form of hallmarks.
artist An artist, sculptor, composer or other creator of art may average profits
over three years under certain conditions (Income Tax (Trading and
Other Income) Act 2005 s221).
art loan For tax, there is a special provision when a non-resident person lends a
work of art for display in the UK. This is excluded from consideration
of the remittance basis, and so cannot in itself establish residence.
Arusha Agreement Agreement made in 1969 with effect from 1971, between the European
Union and Kenya, Uganda and Tanzania. It was superseded in 1975 by
the Lomé Convention.
Arvonlisavero (ALV) Finnish: value added tax.
ASB Accounting Standards Board
ASC Accounting Standards Committee.
ASCLA Apprenticeships, Skills, Children and Learning Act 2009.
ASEAN Association of South-East Asian Nations.

The members of the association are: Brunei Darussalam; Indonesia;
Malaysia; the Philippines; Singapore; Thailand; Laos; Cambodia and
Vietnam.
as fast as can Obligation placed on a person chartering a vessel to deliver goods. The
obligation is that the goods be delivered as fast as the ship can load.
This obligation has lost much significance with the development of
containerisation.
A-shares (1) In the UK, ordinary shares with different voting rights from other
ordinary shares. It is possible to have B-shares and even C-shares,
though these are rare in practice.
A shares are often issued to provide the bulk of the equity capital,
leaving control in the hands of a few individuals, often founders.
Sometimes the term is hyphenated as A-shares.
(2) In the USA, a standard way of pricing sales charges on mutual funds
by including an up-front charge, typically around 5.75%. The B-share
does not have this up-front charge.
ash cash Colloquial name for fees paid by undertakers to doctors in relation to
cremations. Such fees are taxable as income.
Ash Wednesday The first day of Lent. It is not a public holiday.
Asian Development Bank Bank founded in 1966 to help development in Asia. It is exempt from
UK taxation under SI 1997 No 168.
Asian option Option that has an exercise price calculated on the average price of the
underlying security over the period.
asked price Price at which a security or commodity is offered for sale, or at which a
loan will be granted at a particular time. Similar to offer price. The
equivalent figure for the seller is known as bid and asked.
asking price Price at which any item is offered for sale. The term suggests that the
seller may be willing to sell for a lower figure.
as near thereto as she may safely get always afloat

Qualifying statement which traditionally appears in a bill of lading. It
allows the ship owner the right to use a different destination port if it is
not possible for the ship to dock at the intended port without grounding.
ASP (1) Accountancy service provider

(2) Alternatively secured pension
(3) Act of the Scottish Parliament.
(4) American Selling Price, system adopted by American Customs for
import duty purposes.
ASPP Additional statutory paternity pay.
Asprey Report Report on taxation submitted to the Australian government in 1975. It

led to a re-ordering of the personal tax system.
Asquith, H H English politician (1852-1928) who served as Chancellor of the

Exchequer from 10 December 1905 to 12 April 1908 under the Liberal
government of Sir Henry Campbell-Bannerman. He introduced the
Liberal reforms including the first old age pensions. He was prime
minister from 5 April 1908 to 5 December 1916.
assay Test of a metal to see what it contains. This is particularly used to

determine whether an item is made up largely of gold or another
precious metal, and is not an alloy with a base metal.
assay mark Symbols on gold and silver to indicate its provenance.
assay-master Officer who determines how much precious metal there is in coin or
bullion.
assay piece Coin, item of jewellery or other sample which is offered for assaying on
behalf of all such items.
assayer Person who assays coins, jewellery and similar items.
assembly Stage of manufacturing which involves putting components together,

rather than making the components.
assent Form acknowledgment of acceptance.
assent of executor Requirement for a person to inherit under a will.
assented stock Ordinary share (or sometimes another form of security) whose holder
has agreed to the terms of a takeover bid. The opposite is known as
non-assented stock. Occasionally, assented and non-assented stock
attract different prices.
assert Claim decisively and unequivocally.
assess Determine the value of.
assessed tax Amount or rate at which each category of income is subject to income
tax.
assessing procedure Means by which HMRC determines amount of tax payable when this
has not been provided by the taxpayer. The procedure is given in Taxes
Management Act 1970 s30A.
assessment Method used to create a legally enforceable debt. This applies if there is
a failure to declare taxes or charges, or submit returns, that are due; or if
an incomplete, or incorrect, declaration is made.
assessment base In insurance, the base on which a deposit insurer calculates the
premiums for the insured depositors.
assessment phase First weeks of entitlement to employment support allowance. The

phase usually lasts for 13 weeks. During this period, the claimant
receives just a basic allowance.
It is followed by the main phase where either support component
or work-related activity component may also be paid.
assessor Person who makes any kind of assessment. In some instances, this
includes a person who may provide assistance to a court while not
taking part in the decision.
asset Money, something that become money, or something worth money.

The opposite of asset is a liability.
In accountancy, assets are usually distinguished between fixed
assets and current assets. The difference is that a fixed asset is
expected to last for at least one year from the balance sheet date. Fixed
assets include land, buildings, plant, machinery, furniture and vehicles.
Current assets include stock, debtors, prepayments and cash.
FRS 5 para 1 defines an asset as “rights or other access to future
economic benefits controlled by an entity as a result of past transactions
or events”.
HM Treasury glossary defines an asset as “anything of positive
economic value that can be owned or controlled”.
asset allocation Process of determining how an investment vehicle should invest its
funds between different types of investment. The process usually starts
by analysing the requirements of the investor.
asset allocation optimisation

Investment technique that maximises the return of a diversified
portfolio within the constraints set by the investor.
asset and liability management committee

In banking, a senior management committee which has overall
supervision for the management of the bank’s assets and liabilities.
asset backed Description of a business whose market value is largely represented by

tangible assets such as land and plant.
asset-backed fund Fund in which money is invested in tangible or corporate assets rather
than in loans and intangibles.
asset-backed security Share, bond or other form of financial instrument whose value is largely
determined by ownership of tangible fixed assets.
asset card American term for a debit card.
asset constraint Restriction on what assets may be contained in a portfolio.
asset cover Accounting ratio which provides a measure of a company’s solvency.

It is calculated as net assets divided by debt. In general, the higher the
figure, the more solvent is the company.
asset derived from other assets

Assets that have been merged or divided, or whose nature has otherwise
changed. The capital gains tax treatment of such assets is given in
Taxation of Chargeable Gains Act 1992 s43.
asset financing Funding secured on fixed assets, secured loans, mortgages and hire
purchase are examples.
asset held on 6 April 1965 There are special provisions for capital gains tax for assets that have
been from before 6 April 1965 (Taxation of Chargeable Gains Act 1992
Sch 2).
asset held in 6 April 1982 There are special provisions for capital gains tax for assets that have
been held from before 6 April 1982 (Taxation of Chargeable Gains Act
1992 Sch 3).
Broadly gains that accrued before 1982 are exempt from tax. The
1982 valuation may be determined exactly or determined as a pro rata
value according to the period of ownership.
asset-liability gap In banking, a measure of a bank’s risk. It looks at the risk-sensitive

assets and liabilities for the same time frame.
asset-liability management
In banking, the management of assets and liabilities to minimise risks,
particularly with regard to interest rates, liquidity and credit.
asset lock Arrangement used by a community interest company to ensure that

those assets cannot be distributed to members or shareholders.
asset management (1) In business management, looking after the financial assets of a
business to maximise their overall return.
(2) In banking, a service offered to look after a client’s assets. This
service is usually offered to the very wealthy.
asset management plan (AMP)

Method of maintaining a large fixed asset by routine replacement of
parts. The accounting and tax implications are discussed in the
asset management revenue account

An account that a local authority is required to maintain. It is used as a
balancing account to record capital charges made into service revenue
accounts, and other capital accounting entries so there is no cost to the
taxpayer.
asset No 1, 2, 3 Terms used in relation to hold-over relief for capital gains tax
Asset Protection Scheme Scheme announced by Chancellor of the Exchequer on 26 February

2009 to protect banks in the economic crisis. Its legal provisions are
contained in Financial Services Act 2010 s19.
asset purchases In investment, the term is used for a buyout which acquires the assets of
a business, rather than the whole business.
This has several tax implications. VAT will usually be payable on
the assets, as there is no transfer as a going concern. Corporation tax
restrictions on acquiring a business are usually avoided.
asset rich Description of a person or business with valuable tangible fixed assets,
such as land and buildings.
asset rich, cash poor Description of a person or business with valuable tangible fixed assets,
such as property, but who has inadequate or barely adequate cashflow.
A common example is an older person who may own a valuable
freehold house but have a low income from pensions.
assets amount Total assets as shown in a company’s balance sheet. In relation to

distributable profits of a company being wound up, it is defined in
Corporation Tax Act 2010 s166(3).
asset securitisation Process of turning assets into tradeable securities.
asset-sensitive In banking, description of a situation where the bank’s assets are of

shorter duration (or have a shorter period before repricing) than the
corresponding liabilities. This makes a bank vulnerable to interest rate
risks.
assets Rights or other access to future economic benefits controlled by an

entity as a result of past transactions or events.
Assets Recovery Agency (ARA)

Agency established under Proceeds of Crime Act 2002 s1(1).
asset stripping Practice of buying a business, not for its trading value, but for the value
of the assets it owns. The business is then closed, the workforce
dismissed, and the assets sold for a quick profit.
assets under management In investment, amount of a client’s funds which are under the control of
a fund manager.
asset swap Exchange of assets between two parties. The most example is when two
financial instruments swap assets of different cashflows to match each
of their needs.
asset turnover ratio Accounting ratio which indicates how quickly a company uses its
assets. It is calculated by dividing turnover by current assets minus
current liabilities. In general, a high ratio indicates an efficient business,
but this is subject to an understanding of the nature of the business.
asset value Amount a person’s or company’s property is believed to be worth. It is

calculated by adding together the value of each asset, once the basis of
valuation has been established.
asset with enhanced value Term used in Taxation of Chargeable Gains Act 1992 s31 in relation to
taxation of a distribution followed by a disposal of shares.
assign Any arrangement whereby a benefit is transferred to another person.
assignable letter of credit Another name for a transferrable letter of credit.
assignat Bank note issued between 1790 and 1793 by the revolutionary
government of France. Its value was secured on church lands.
assignatus utitur jure auctoris

Latin: an assignee is clothed with the right of his principal.
assigned matter “Any matter in relation to which the Commissioners, or officers of

Revenue and Customs, have a power or duty” (Customs and Excise
Management Act 1979 s1(1)).
assignee Person to whom something is assigned.
assignment A transaction whereby the rights of ownership are transferred to

another person.
Assignment commonly arises when the benefits of a life insurance
policy are assigned to a lender as a condition of a mortgage. This
means that if the policyholder dies before the mortgage is repaid, the
lender may claim the balance of the loan from the proceeds of the
insurance policy. Assets so assigned are commonly known as
collateral. When the mortgage is finished, the lender releases the
security so the rights of ownership revert to the original owner.
assignment capsule Business jargon for a clearly defined job description.
assignment of action Process by which a writ in the Chancery Division of the High Court is
assigned to a group of judges.
assignment of contract Process by which a liability under a contract may be passed to another
party.
Generally, a liability cannot be assigned unless the other party
agrees. This creates a novation. It is much easier to assign a right or
benefit under a contract.
assignment of insurable interest

In insurance, the assignment of a right under a life insurance policy so
that the assignee will collect the proceeds on death. This is commonly
found on life assurance arranged in connection with a domestic
mortgage.
assignment of life policies In insurance, the transfer of legal rights to collect the proceeds.
Life policies are generally the only insurance policies which can be
so assigned. It is a popular method of obtaining value from endowment
policies.
assignment of seamen’s wages

Provision under Defence (General) Regulations 1939 reg 47D whereby
wages of seamen could be assigned to bodies providing benefits to
them.
Although this provision has long been repealed, Finance Act 1944
s45 remains in force to exempt such assignment from stamp duty.
assignor Person who assigns.
assimilate Make into something similar or to subsume to the same effect.
assisa cadera Latin: a non-suit.
assist Provide help to, particularly by assisting someone in various tasks.
assistance In the context of international aid, “means assistance in any form or of

any nature, including —
(a) financial or technical assistance, and
(b) assistance consisting in a supply of materials”.
(International Development Act 2002 s5(1)).
assistance dog Guide dog or other dog which assists a disabled person. The term is
used in Private Hire Vehicles (Carriage of Guide Dogs etc) Act 2002
s1.
assistant Person who provides help to another.
assisted area Area in the UK where regional aid may be granted under EU
legislation. The areas are listed in SI 2007 No 107. Their status as an
assisted area runs from 13 February 2007 to 31 December 2013.
assisting an enemy Offence for military personnel under Armed Forces Act 2006 s1.
assize rents Fixed and certain rents.
Assizes Former sessions of criminal court, now replaced by the Crown Court
under Courts Act 1971 s4.
associate Term increasingly used for employees in businesses which want to

stress the concept of partnership between management and the
workforce.
associate “In relation to a participator:

(a) any relative or partner of the participator
(b) the trustees of the settlement in relation to which the participator
is, or any relative of his (living or dead) is or was, a settlor, and
(c) where the participator is interested in any shares or obligations
of the company which are subject to any trust, or are part of the estate
of a deceased person:
(i) the trustees of the settlement concerned or, as the case may
be, the personal representatives of the deceased; and
(ii) if the participator is a company, any other company
interested in those shares or obligations” (Income and Corporation
Taxes Act 1988 s417(3).
For (a), relative means “a spouse, civil partner, parent or remoter
forebear, child or remoter issuer, or brother or sister (ibid s417(4)).
associate company Alternate name for an associated company. This term is used in
Corporation Tax Act 2010 s25.
associated acquisition Payment made by a company to a charity on condition that the charity
uses it to make an acquisition.
Such an acquisition can disqualify a charitable payment from tax
relief under Corporation Tax Act 2010 s193.
associated benefit Benefit received by a charitable donor from the charity. The general
principle is that nominal benefits, such as a book or free admission to
grounds, are ignored. More substantial benefits can have the effect of
restricting the tax relief under Gift Aid.
Under Income Tax Act 2007 s418(2) the limit on the associated
benefit is:
(a) 25% for gifts up to £100
(b) £25 for gifts between £100 and £1,000
(c) 5% for gifts over £1,000.
It is also a condition that the benefits associated with the gift,
including any relevant prior gift do not exceed £2,500 (£500 before 6
April 2011).
Equivalent rules for donations from companies are found in
Corporation Tax Act 2010 ss195-198.
associated company Term that was used to describe a company where a parent company
owned between 20% and 50% of its shares. A smaller holding made the
company an investment; a larger holding made the company a
subsidiary.
The term “associated company” was used in SSAP 14. It was
replaced in 1992 by FRS 2 which uses the term participating interest.
For capital gains tax, definition in re Johnson Publishing (North)
Ltd [2008].
Stamp duty is not payable on property transferred between
associated companies (Finance Act 1930 s42).
associated company “A company is to be treated as another’s associated company at a given

time if, at that time or at any other time within one year previously, one
of the two has control of the other, or both are under the control of the
same person or persons” (Income and Corporation Taxes Act 1988
s416(1)).
associated employments Term used in Income Tax (Earnings and Pensions) Act 2003 s24(4)(b)
which means employment with the same employer or an associated
employer. To the extent that this generates chargeable overseas
earnings they must be aggregated.
associated index Separate index for a register of interests (Companies Act 2006 s810).
associate director Term occasionally used for someone who attends board meetings but
who has not been elected a director by the shareholders.
associated operations In inheritance tax, when two or more transactions or operations are so
connected that they are treated as a single transaction or operation.
An example is when a man transfers an asset to his wife who
transfers it to a discretionary trust.
associated properties Properties that are connected, such as an outbuilding to a main

residence. The term is used in Inheritance Tax Act 1984 s32A in
relation to conditionally exempt transfers.
associated returns Returns of income tax and national insurance for the same period by the
same person. This concept is introduced in Social Security
Contributions and Benefits Act 1992 Sch 1 para 7(13)).
associated state “A territory maintaining a status of association with the United

Kingdom in accordance with the West Indies Act 1967” (Interpretation
Act 1978 Sch 1).
associated transaction For stamp duty, a transaction that is regarded as being part of a single
transaction.
association Informal group of people who meet for a common purpose.

Their VAT position is explained in VAT leaflet 701/5.
Association Agreement Agreement reached between the European Union and another country
prior to their becoming members. Such an agreement was particularly
used for Greece before its accession in 1981. The agreement requires
reciprocal reductions of duty, and free circulation of goods.
Association for Payment Clearing Services (APACS)

An association formed by the clearing banks in 1985 to manage
payment clearing in the UK. It also deals with transmission of funds
from overseas to the UK.
APACS has three divisions:
● BACS Limited company
● Cheque and Credit Clearing Company Ltd
● CHAPS.
Association of Accounting Technicians (AAT)

Professional body for accounting technicians.
Association of African Development Finance Institutions

Organisation set up in 1975 in Côte d’Ivoire to encourage and support
project funding in African countries.
Association of British Insurers (ABI)

An association representing some 450 insurance companies which
account for over 95% of the business transacted by UK insurance
companies. Is the forum through which UK insurance companies
collectively liaise with Government Departments and other bodies.
Brings insurance companies together to set industry standards and
codes of practice.
Association of Chartered Accountants in the United States (ACAUS)

Body which represents chartered accountants who are based in the
USA.
Association of Chartered Certified Accountants (ACCA)

Professional body for certified accountants.
Association of Corporate Treasurers (ACT)

Professional body for corporate treasurers.
Association of Financial Advisers (AFA)

Trade association which represents independent financial advisers.
Association of Futures Brokers and Dealers (AFBD)

Self-regulating body which oversees the activities of futures brokers
and dealers.
Association of International Bond Dealers
Association of Lloyd’s Members (ALM)

Voluntary organisation set up for external members of Lloyd’s
insurance market.
Association of Natural Rubber Producing Countries (ANRPC)

Organisation set up by countries which produce natural rubber to
promote mutual interests such as marketing and development of rubber.
Association of Private Client Investment Managers and Stockbrokers

Body formed in 1990 to represent the interests of investment managers
and stockbrokers.
Association of Publishing Agencies (APA)

Trade body representing contract publishers. Affiliated to PPA.
Association of Tin Producing Countries (ATPC)

Organisation of countries which produce tin. Its main aim is to control
the market price.
Association of Unit Trusts and Investment Funds (AUTIF)

Body which represented managers of collective investment funds. In
February 2002, it merged with the Fund Managers Association to form
the Investment Managers Association.
assumable mortgage Mortgage which may be passed to someone else.
assumed notional council tax (ANCT)

The standard level of council tax for a Band D property (the middle of
the range) if all the local authorities spent at the level of their Formula
Spending Share (FSS.)
assumpsit Latin: he promised or undertook.
assurance (1) Undertaking or guarantee of some sort. In finance, the term can
mean a letter confirming a balance or agreeing to make payments. The
term is also an abbreviation for life assurance, where payment is made
on death at any age.
(2) In law, a surrender, assignment, conveyance or appointment under a
power.
assuré contre l’incendie French: insured against fire.
assured In insurance, person named in a life policy to receive the proceeds of a

claim.
assured tenancy allowance

Capital allowance for a property let on an assured tenancy, usually by a
housing association or similar body (Capital Allowances Act 2001 from
s490).
An assured tenancy is as defined in Housing Acts 1980 and 1988.
assurer Company which sells life assurance.
assymetric information Any arrangement where some people inevitably have more and better
information than others. For example, directors of a company will
always know more than other investors.
assymetric margining Situation where parties to a contract are subject to different margin
conditions reflecting their relative creditworthiness.
assymetric payoff Situation where the arrangements for paying off investors or others
depends on the result. Typically, the term applies to bonds or options
where the payment depends on whether the market has risen or fallen.
AST Automated screen trading.
astatki Fuel made from the residue of petroleum distillation.
astronaut Residence is determined according to residence before leaving the

planet.
asylum Protection afforded to a person fleeing persecution.

The term is particularly used for people from overseas who seek
refugee status in the UK under the relevant UN convention of 1951.
The requirements for asylum are that a person has left his country and is
unable to return because of a well-founded fear of persecution.
asylum screening unit Centre run by the Home Office’s UK Border Agency to determine
whether a person qualifies for asylum.
AT Country prefix code for Austria.
at One hundredth of a kip, currency of Laos.
at best Instruction to buy or sell securities at the best price available. This is
the usual form of contract for securities. It is also known as at the
market.
Alternative instructions are at the close; limit order; market order
and time order.
at call Description of something which is immediately available, particularly a

share or other security.
ATII Associate of the Chartered Institute of Taxation.

The letters originally stood for Associate of the Taxation Institute
Incorporated.
at limit Instruction to trade in securities up to a predetermined limit.
at or better Instruction to trade in securities at a specific figure or at a better level

(eg sell for higher price, buy for lower price).
at par The nominal or face value of a security. A 25p share which is sold for
25p is said to be sold at par.
at-risk pay Part of an employee’s pay which is dependent on the employee or

group of employees achieving a predetermined objective. At-risk pay is
also known as variance pay. Examples include commissions, bonuses,
profit-sharing and employee share schemes.
at the close Market order to be executed as near as possible to the close of

business.
at the market Another expression meaning at best, with regard to buying securities.
at the money An option with an exercise price equal to or very close to the current
price of the underlying instrument. (The words are often hyphenated.)
at the money option Call option or put option where the exercise price is the same or close
to the market price of the underlying security.
at the opening Market order to be executed when the market opens, or not at all.
ATA Carnet Admission Temporaire Carnet - a document accepted by countries party

to the Admission Temporaire (ATA) (Temporary Admission)
Convention which facilitates the temporary import and export of goods
and replaces normal customs documentation. In the UK, carnets are
issued by the London Chamber of Commerce and Industry, and by
several other Chambers of Commerce in various towns and cities.
ATCA Advance thin capitalisation agreement.
Athens Stock Exchange Stock exchange of Greece. It was established in 1876 and reconstituted
in 1988.
athlete tax Term used in the press from at least 1991 to describe taxes charged on
athletes by the host country when competing in international events.
ATK Available tonne kilometres, a measure of aircraft carrying capacity.
Atk Atkyn’s Reports, Chancery law reports of 1736 to 1755.
ATL Actual total loss, term used in marine insurance.
ATM Automated teller machine, cash machine or “hole in the wall” from
which cash may be extracted using a debit card.
ATR Admission Temporaire Roulette - Temporary Admission on Wheels -

certificates used to indicate that goods are entitled to preferential rates
of duty in Turkey.
ATS (1) Automated trading system.

(2) Automatic transfer service.
ats Latin: at the suit of [abbreviation of ad sectam].
attaching goodwill Term used up to 1973 in relation to valuation of certain supplies that
were subject to purchase tax.
attachment Anything which is provided with something else.

In computing, it refers to any document which is sent with an e-
mail.
In finance, it often means an attachment of earnings.
attachment of debts Proceeding whereby a person A who has obtained a judgment against B
who is owed money by C may get an order requiring that C pays A
directly. This is known as a third party debt order, previously known
as a garnishee order.
attachment of earnings Order requiring an employer to make deductions from an employee’s

pay and pass them to a third party. There are different types of
attachment. Attachments only apply in England and Wales and (under
different but similar law) in Northern Ireland.
The equivalent system in Scotland is known as arrestment of
earnings. However the territorial limits apply to the courts which make
the order, not to the address of the employee. So an English employer
could be requires to operate a Scottish arrestment for a Scottish
employee, and vice versa.
Attachments in England and Wales are issued under:
● Courts Act 2003;
● Attachment of Earnings Act 1971;
● council tax and community charge law;
● child support law.
No new orders are being made under the 1971 Act or for community
charge, but orders already made continue in force.
Orders under the 2003 Act, council tax and community charge Acts
work by stating a total amount which must be deducted. The amount
then deducted from each payslip is determined by tables. There is a
level of protected earnings up to which no sum may be deducted.
These deductions are made until the whole sum has been recovered, or
the employee leaves, or the employer receives a notice to stop.
Orders under the 1971 Act and child support law state an amount to
be deducted from each payslip. Orders under the 1971 Act are classified
as priority orders or non-priority orders, where the former take
precedence over the latter. There are special rules for determining the
order if more than one attachment is served.
The employer may make a charge of £1 each time an attachment is
made from pay.
attachment order Court order requiring an attachment of earnings.
attainment test Test of a person’s knowledge or skills.
attendance allowance (AA)

A social security benefit payable for disable people who are 65 or over.
Those under this age may qualify for disability living allowance
(DLA). Unlike DLA, there is no mobility component and there is no
lowest rate for the care component.
It is payable under Social Security Contributions and Benefits Act
1992 s64.
The allowance is not means-tested, is not taxable (Income Tax
(Earnings and Pensions) Act 2003 s677), and does not depend on a
national insurance record.
Payment of AA is not regarded as income in calculating entitlement
to tax credits.
The level of disability must be the same as for the middle or highest
rates of the care component for DLA.
attendance bonus Bonus payment to an employee in respect of maintaining a satisfactory

attendance record. It is taxed as gross pay, and is subject to income tax
and class 1 national insurance.
attention In regard to disability living allowance, a distinction is made between

attention and supervision. Attention means that another person must do
something for the disabled person, whereas supervision means simply
that a person must be present while the disable person does the task.
attenuation charge Charge which is imposed in addition to spirits duty for each
distillation period. The charge is imposed by Alcoholic Liquor Duties
Act 1979 s14.
attest Formally state.

An auditor’s report is an attestation of the accounts. A will must
have an attestation clause signed by the witnesses.
attestation clause Statement signed by two witness to a will. A will is not valid unless it
includes such a clause (Wills Act 1837 s8).
attested copy Copy of a document which is certified as being a true copy by the
person who examined it.
Banks and finance companies often ask for attested photocopies of
financial documents, to be signed by an accountant, lawyer or person of
similar standing.
attorney Originally the word simply meant someone appointed by one person to
act on his behalf, as is evident in the expression power of attorney.
The term came to mean a person admitted to practise in the superior
courts of common law.
In Scotland, the term is used to mean the equivalent of barrister.
For tax, the word is used in its original sense of meaning an agent.
Where a taxpayer cannot act for his or her own benefit, an attorney
may sign the forms under statement of practice A13 of 18 June 1979.
An attorney may claim tax on building society interest for taxpayers

unable to act for themselves (Tax Bulletin TB04/96-5 of 22 April
1996).
Attorney-General (A-G) Principal law officer of the Crown and head of the Bar. Traditionally
the Attorney-General is a Member of Parliament for the ruling party,
but not a Cabinet minister.
The Attorney-General is the person under Crown Proceedings Act
1947 who may bring proceedings for or against the Crown. There are
also many offences were a prosecution may only be brought by the
Attorney-General or requires his consent.
attributable profit Profit which can be shown as coming from a particular area of the
company’s activities, such as sales for a particular product or in a
particular area.
attribute Qualitative characteristic of an individual, business or service.

The term means something which does not change, like a variable.
A person’s sex is an attribute; their age is a variable.
For the purposes of immigration, attributes are the categories for
which an overseas worker may be awarded points to see if he may work
in the UK.
attribution theory Process of judging a person’s behaviour by attributing motives to their

actions.
ATX Austrian Traded Index.
atypical work In human resources, any pattern of work does not follow the pattern of
full-time permanent employment. It includes part-time work, agency
work, secondment, self-employment, homeworking, temporary work
and zero-hours contracts.
AU Approved User, a person who has been individually authorised and

approved for the purpose of putting tied oil to eligible use.
AUC Ab urbe condita
auction A process whereby an asset is sold to the person who offers to pay the
highest price.
The process is overseen by an auctioneer. Companies which offer
this service are known as auction houses.
A sale by auction is legally a contract for sale. This means that the
highest bidder must buy the goods and the seller must sell them. A
refusal of either party to do so is a breach of contract. For this reason
it is usual for either the seller to provide an adequate representation of
the item sold, or for potential buyers to be allowed to inspect the items.
The seller may impose a reserve which is a minimum price he will
accept. If the reserve is not met, no sale is made.
An auctioneer may be required to make a return of transactions to
HMRC (Taxes Management Act 1970 s25(7)).
Auctions may be conducted on the Internet by such companies as

eBay.
There are different forms of auction, such as the Dutch auction.
An auction which is rigged is known as a mock auction. This is a
criminal offence. There are other auction offences, such as puffers and
knock-out agreements.
Auctions are also used for sale of government stock, as an
alternative to tendering.
auction house Business which specialises in organising auctions.
auction market preferred shares (AMPS)

“Preference shares that are entitled to dividends determined in
accordance with an auction process in which a panel of investors
participates, the shares being transferred at a fixed price to the investor
who will accept the lowest dividend” (FRS 4 application notes).
They are accounted for as non-equity shares.
auction system Method of marketmakers offering stock for sale at the highest price. It
is the alternative method to the much more common quote system
where prices are determined by quotes on a computer screen.
auctioneer Person who conducts an auction.

The exact point of sale in an auction is traditionally marked by the
auctioneer hitting a block with a gavel. The court case Bristol Car
Auctions v Wright [1972] established that a contract comes into being at
that point.
Auctioneers' Scheme VAT scheme that allows an auctioneer selling goods on behalf of a
third party to use a method of accounting for VAT which is similar to a
margin scheme. The scheme is optional and conditions apply.
audax et cautus Latin: bold and cautious.
audi alteram partem Latin: hear the other side.

This is a principle of natural justice: that no-one should be
condemned without an opportunity to present their case. The words
were first quoted by St Augustine.
audience In law, the right to be heard, such as by an advocate in court.
audit Investigation into accounts. This is a passive process, as indicated in the

original Latin meaning of “he hears”.
An audit requires three matters to be clarified first:
● to whom the auditor is answerable;
● the person the auditor is investigating;
● what aspects the auditor is required to investigate.
For example, in the statutory audit of UK companies, the auditors
are answerable to the shareholders for their investigation into the
directors to ensure that the accounts are true and fair and comply with
the Companies Act. They are not required to say whether the accounts
are correct, whether any fraud has been committed or if any other laws
have been obeyed (except to the extent that this may mean the accounts
are not “true and fair”).
The statutory audit of local authorities is quite different. The district
auditor is answerable to the Audit Commission and thus to the
government. The audit looks at matters such as value for money, and
achieving objectives set by the government and by the authority itself.
An audit may be for a specific purpose, particularly forensic audit.
Examples include when an audit is conducted to test a new system or to
quantify a loss after a fire.
audita querela Latin: the suit having been heard.
Audit Bureau of Circulation

Organisation founded in 1931. Funded by publishers, advertisers and
advertising agencies to verify publishers' circulation claims.
Audit Commission Statutory body set up under Audit Commission Act 1998 to audit local
authorities, other public bodies and government departments.
The US equivalent is the General Accounting Office. It has been
announced that the Commission is to be abolished in 2012.
audited accounts Accounts which have been examined by the auditor.

An organisation should not normally adopt accounts until they have
had whatever audit is required, if any. The audit does not confirm the
accuracy of the accounts, as the audit report may identify matters of
concern, the audit report may itself be flawed, the audit may be limited
in scope (most audits do not look for fraud, for example) or a serious
matter may have been concealed from the auditors.
audit fee Amount payable by an organisation for having its accounts audited.
If the auditors are paid for any work, such as preparing a tax return,
the fee for such work should be separately disclosed.
auditing The work of conducting an audit, or the practice of knowing how to

audit.
Auditing Practices Board (APB)

Body which issues UK auditing standards. It was established in 1991 by
the main accounting bodies.
audition fee Fee charged by some bodies for allowing a person to audition for a role,
particularly in the performing arts. The fee is usually refunded if the
person is successful, or sometimes if not successful but credible. The
aim is to deter time wasters with no talent.
An audition fee is regarded as part of the body’s income for all tax
purposes.
audit liability limitation agreement (ALLA)

Arrangement between a company and its auditors that restricts the
latter’s liability under a negligence claim.
An ALLA became legal from 6 April 2008 under Companies Act

2006 ss532-538. The agreement is effective only to the extent that is
“fair and reasonable”.
Guidance on ALLAs has been produced by the Financial Reporting
Council.
audit manager An employee of an accountancy firm, usually holding an accountancy

qualification, given a significant level of responsibility in carrying out
an audit assignment and responsible to the partner in charge of the
audit.
Audit Office Office of the department of the Comptroller and Auditor General
which is responsible for auditing government departments.
audit of expenditure or the investigation of complaints

Term used in relation to disclosure of information relating to social
security fraud. A list of persons engaged in such audit is given in Social
Security Administration Act 1992 s123(8).
audit opinion Statement by the auditor about accounts in the audit report.
It should be appreciated that most financial statements are
statements of opinion by the accountant, particularly with regards to
such matters as asset valuation. The audit report therefore gives an
opinion on an opinion.
auditor Accountant who reviews the accounts.

For all types of audit, three factors must be determined:
● who engages the auditor;
● the person whom the auditor investigates; and
● what the auditor is required to investigate.
For limited companies, the auditor is engaged by the shareholder to
investigate the directors to see if the accounts are true fair and comply
with Companies Act 2006 (or previous legislation).
Auditor Camerae Auditor of the Papal Treasury.
Auditors’ Code Statement issued by Auditing Practices Board (APB) as Appendix 2 to

its statement on Scope and Authority of Pronouncements.
The Code “provides a framework of fundamental principles which
encapsulate the concepts that govern the conduct of audits and underlie
the APB’s ethical and auditing standards” (para 11).
The Code requires the auditor to show accountability, integrity,
objectivity and independence, competence, rigour, judgment, clear
complete and effective communication, association and providing
value.
auditors’ liability Liability of an auditor for negligence. This liability may be limited by a
liability limitation agreement. Otherwise an attempt by an auditor to
limit liability is void under Companies Act 2006 532.
auditor’s opinion Another name for the audit report.
auditor’s remuneration Payment to an auditor for his audit work. For a limited company, this is
fixed by the members by an ordinary resolution at an annual meeting
auditor’s report Another name for the audit report.
audit papers Working papers prepared by an auditor.

The extent to which HMRC believes it may demand sight of these
papers is set out in SP 5/90 of 11 April 1990.
audit programme The schedule of work an auditor undertakes as part of an audit.
audit report Statement issued by an auditor about the accounts.

Such a report is either a qualified report or an unqualified report.
The former indicates that there are serious matters on which the auditor
has concerns. An unqualified report indicates that there are no serious
areas of concern.
In extreme cases, an auditor may refuse to give an opinion at all.
audit risk The possibility that the auditor may give an inappropriate report about
accounts.
Although the term can apply to giving an undeserved qualified
report, in practice the term is usually used for the converse situation of
an auditor giving an unqualified report to accounts which should have
been qualified.
audit signature Signature of the auditor in respect of a set of accounts. Under

Companies Act 2006 s503, the auditor’s report must:
● state the name of the auditor, and
● be signed and dated by the auditor.
If the auditor is an individual, the signature must be his. If the
auditor is a firm, it must be signed by the senior statutory auditor.
audit trail Requirement that transactions can be followed from their inception to
completion, and that transactions can be traced from source documents
or vouchers to the final accounts, or vice versa.
An audit trail usually requires every transaction to have a folio
reference which allows, for example, an invoice to be traced to a day
book. The daybook will then have a reference to the nominal ledger,
which in turn will be referenced to the trial balance and the final
accounts.
augend A number to which another number (the addend) is added in addition

to give a total.
augmented profits Basically, taxable profits plus franked investment income

(Corporation Tax Act 2010 s32).
aulnager Officer first appointed in the reign of Edward III to measure woollen
cloth offered for sale to determine the tax payable.
au pair Person, usually young woman, who performs domestic duties in return
for accommodation and, sometimes, a small payment.
aurar One hundredth of a króna, currency of Iceland.
Austria Member of the European Union. For VAT and Customs purposes, its
territory include Jungholtz and Mittelberg. It uses the terms
Mehrwertsteuer (Mwst) and Umsatasteuer (Umst) to mean VAT.
Austrian Schilling trick Practice of using two Austrian schillings glued together as a pound coin
to operate pay machines. The two coins were worth less than 10p.
Machines have subsequently been reprogrammed to detect them.
AUT Authorised unit trust.
author An artist, sculptor, composer or other creator of art may average profits
For VAT, royalties to authors may be paid by the publisher using
self-billing.
authorisation order In company law, a person authorised by the Secretary of State under
Companies Act 2006 s457(1) to make an application to the court for
defective accounts to be replaced by revised accounts.
authorised Permitted by obtaining the agreement of the appropriate body.
authorised auditor Individual who is allowed to audit a company even though he does not
have the relevant accounting qualification.
Such authorisations were given by the Board of Trade under
Companies Act 1976, based on their experience. This was largely a
transitional measure for unqualified auditors who still audited under
appointments made before the Companies Act 1948 introduced a
qualification requirement. The power to grant such authorisation ended
in April 1978.
The term is used for a person who may audit an unlimited company
but not a limited company.
authorised capital The maximum amount of share capital which may be issued by a
company. This must be stated in its memorandum of association.
The actual amount of issued capital is often much less. Many small
companies are formed with authorised capital of £100, and issued
capital of £2 (as two shares for £1).
authorised deduction An amount that may be deducted from an employee’s earnings to

determine whether it is lower-paid employment (Income Tax
(Earnings and Pensions) Act 2003 s218(4)).
authorised disclosure Disclosure relating to proceeds of crime that is properly made to a

police officer, tax official or similar person under Proceeds of Crime
Act 2002 s338.
authorised employer payment

Payment made to an employer who sponsors an approved occupational
pension scheme. Such payments are permitted in various circumstances
as set out in regulations. These include government payments to public
service schemes, payments of pension surpluses, compensation
payments and similar.
authorised financial adviser

Investment and financial adviser who is authorised under Financial
Services Act 1986 or similar legislation.
Authorised investment funds

Financial products including approved unit trusts, OEICs and others
that come within the scope of Authorised Investment Funds (Tax)
Regulations SI 2006 No 964.
authorised investments Restricted range of investments available to certain bodies, such as

local authorities, trusts and charities.
authorised limit The maximum amount of a financial institution’s debt at any one time
during the year, under the Prudential borrowing regime that was
introduced from April 2004
authorised member payment

Payment which a registered pension scheme may make to a member.
The commonest payments are pensions, lump sum payments,
refunds of contributions and transfer to another pension scheme. The
law is set out in Finance Act 2004 ss166-169.
authorised minimum Minimum amount of allotted share capital required for a public
company. The minimum is £50,000 or its euro equivalent (Companies
Act 2006 s763(1)).
authorised official An individual in an organisation which an outside body has accepted as

being allowed to perform specified transfers.
A signatory on a bank mandate is such an example. HMRC
require a charity to have an authorised official to operate Gift Aid.
authorised open-ended investment company

Body so authorised under Financial Services and Markets Act 2000
s262. It is more commonly known as an OEIC.
authorised operator Trader authorised by HMRC to operate one or more simplified export
procedures such as Simplified Declaration Procedure, Local
Clearance Procedure or a Designated Export Place.
The term also includes an exporter or third party allowed to make
full export declarations to the Customs Handling of Import and Export
Freight (CHIEF) system.
authorised overdraft Overdraft which the bank has agreed in advance.
authorised share capital Amount of share capital a limited company may issued under the terms
of its memorandum of incorporation.
authorised signatory Person who may sign a document on behalf of a body.

For a company, this is a director or company secretary (Companies
Act 2006 s44(3)).
authorised signer US term for authorised signatory.
authorised unit trust Unit trust which must be operated in accordance with UK law and EU
directives.
Authorised User A person authorised by HM Customs and Excise to receive methylated

spirits for use in an approved process, or supply to authorised users in
quantities of less than 20 litres at any one time.
authorising officer Person employed by a sponsor of overseas workers who is responsible

for matters relating to the sponsorship.
authoritarianism Description of a political system which exercises strict control over its
citizens with little consideration to their rights or public opinion.
authority (1) Position of power, particularly one which is delegated under a legal
power. Authority is not power in itself, but is one source of power.
(2) Source of law as quoted in a case.
authority for market purchase

Resolution passed at a general meeting of a company authorising the
purchase of its own shares (Companies Act 2006 s701).
authority to negotiate Description of bank documents which allow a UK bank acting for a
supplier to negotiate the terms of a letter of credit. It is an alternative
procedure to the documentary letters of credit, which offers little in the
way of guarantee to the supplier.
authority to purchase Description of bank documents which allow a UK bank acting for a
supplier to buy bills of exchange as a means of negotiating the terms of
a letter of credit. Such a method offers little security to the supplier.
AUTIF Association of Unit Trusts and Investment Funds, which is the

industry trade body of unit trusts and investment trusts management
companies.
auto-enrolment Automatic enrolment unless a person decided not to be enrolled. The

term is used in relation to NESTs.
Automated Clearing House (ACH)

US federal organisation to settle transactions carried out by computer,
such as mortgage payments and transfers between businesses.
automated screen trading (AST)

System of trading in shares where much of the work is done
automatically. This can include the automatic buying or selling of
securities when they reach a predetermined figure.
automated trading system (ATS)

Computer system for matching buyers and sellers of securities.
automated transfer service (ATS)

In banking, a depositor’s savings account from which funds may be
automatically transferred to cover cheques while maintaining any
minimum balance.
automatic debit transfer Giro payment.
automatic deportation Penalty imposed by UK Borders Act 2007 s32 for a non-British citizen
who is found guilty of an offence in the UK.
automatic enrolment Provisions in Pensions Act 2008 ss2 to 9 requiring employers to enrol
employers in the NEST pension scheme. Enrolment is phased in
between 1 October 2012 and 1 September 2016, starting with the larger
employers. Details of the phasing are given in SI 2010 No 4.
automatic penalty Additional sum imposed without consideration of factors, such as being
late with a tax return.
automatic stabiliser Elements of the tax and spending system which tend to cancel each
other out and thus dampen the economic cycle. In an upturn, tax
revenues rise and benefit claims fall, for example.
automatic tagging Facility offered by some tax software that automatically puts iXBRL
tags into corporation tax, as required from 6 April 2011.
automatic transmission Part of a vehicle where the gear changes according to the vehicle’s
speed and not according to the driver’s use of a gear lever,(known as
manual transmission).
A driver who passes a test in a car with automatic transmission may
not drive a car with manual transmission.
automatic vending Retail method where products are sold by inserting coins, tokens or
cards into a machine. This has obvious advantages in making sales
service available outside normal hours and saving in staff time.
Those who provide such machines must have procedures to:
● restock machines and collect cash;
● protect machine from vandalism;
● protect stock and any cash from theft;
● allow dissatisfied customers to complain, such as when the
machine takes the money but fails to provide the goods.
automatically unfair dismissal

Dismissal for a reason which the law considers is automatically unfair.
These are:
● belonging or not belonging to a trade union;
● claiming the national minimum wage;
● childbirth and pregnancy;
● asserting a statutory right;
● whistle-blowing;
● seeking to be represented in a disciplinary procedure;
● acting as safety representative or employee representative of
a pension fund.
There is no qualifying period for such dismissals, unlike other
unfair dismissals for which there is usually a qualifying period of one
year.
automated teller machine (ATM)

Machine provided at banks and in retail units which allow a person to
draw funds from a bank account or against a credit facility. There are
sometimes steep charges for this service.
The customer typically puts in a cash card, credit card, debit card
or similar into the machine and types in a four-digit PIN number. The
customer states the amount required.
The machines are also known as cash dispensers, cash machines
and hole in the wall.
automation Process of using machines to replace functions done by a person.

This process can have a huge impact in management accounting.
The machines, sometimes called robots, typically are very expensive to
buy and set-up but then have a very low marginal cost. A component
made by a person on an ordinary lathe may cost £2 an item. An
autolathe may cost £200,000 but then allow the component to be
produced for 10p an item.
autre droit French: other right.

Property is held in autre droit when held for the benefit of another
person, such as by a trustee or executor.
autrefois acquit Defence in criminal trial that a person has already been tried for the
offence and has been acquitted. It protects a person from the double
jeopardy risk of being repeatedly prosecuted for one offence.
There are some exceptions permitted under law. In particular
Criminal Justice Act 2003 (commenced in 2005) allows a second trial
of a serious offence if there is new and compelling evidence. The first
person to be convicted under this provision was William Dunlop for
murder on 11 September 2006, having been acquitted at a trial in 1989.
autre vie Latin: the life of another.
auxiliary Helper, particularly a person who assists a specialist (such as a nurse)

even though he lacks the qualifications or experience of the specialist.
auxiliary mint Mint operated outside London but under its control to meet a
particularly large demand for coins.
auxiliary tank Tank on a vehicle which stores fuel to drive machinery and which
cannot be used to propel the vehicle. Unmarked oil (on which duty has
not been paid) may be used in such tanks.
avail To be of service or value to someone.
availability The ease with which an item may be obtained.
available balance Amount that a person may spend from a bank account. It comprises
unallocated funds in the balance on the account plus the agreed
overdraft.
available capital Amount of capital which a business may use.
available earnings Another term for earnings per share.
available for reception by members of the public

Term defined in Communications Act 2003 s361 in relation to
regulatory provisions under that Act.
available income Amount of a person’s income which may be applied to clearing old
debts.
available periods For VAT, an accounting period for which HMRC can accept a VAT
Return from a VAT-registered trader.
An accounting period generally becomes available shortly before its
closing date, although returns should not be completed until the period
has ended. A period ceases to be available when a return is received.
available to all staff Term used in relation to many benefits provided by an employer as a
condition of their being tax-free. Examples include the provision of
canteen facilities and childcare vouchers.
The requirement is that the benefit is offered to all staff eligible to
accept it on broadly similar terms.
available tonne kilometre (ATK)

Measure of an airline’s capacity for carrying passengers or cargo.
The figure is calculated per aircraft, and then totalled to give a
figure per airline. The calculation is:
ATK = capacity in tonnes x kilometres flown.
available total profits Amount of profit which may be used in group relief. The term is
explained in Corporation Tax Act 2010 s140.
AVC Additional voluntary contribution, to an occupational pension

scheme.
average One number which represents a series of numbers.

The word “average” on its own usually means the arithmetic
mean, calculated by adding up the numbers and dividing the total by
the number of numbers. So the average of the number 6, 7, 9 and 10 is
calculated by adding them to give 32, dividing by 4 as there are
Other types of average are:
● geometric mean: multiplying the numbers and taking the
root equal to the number of numbers;
● meridian: number which occurs halfway down the list when
the numbers are ranked in order; and
● mode: number which occurs most often.
The term has acquired some more specific meanings in some
branches of finance.
In insurance, averaging refers to where assets have been under-
insured. For example, a trader with two shops worth £500,000 each
may consider that it is highly unlikely that both will burn down, and so
insure them for a total of £500,000. In such a case, the company will
usually have an averaging clause in its policy which says that the two
premises have only been insured for half the value and so it will only
meet half the claim.
Averaging is also used more generally in insurance and elsewhere
to mean any system which seeks to apportion loss on an equitable basis.
In marine insurance, average can refer to when the insurer and owner
share the cost of losing a ship.
average adjuster A person who calculates how much of a maritime insurance claim
should be paid by the insurer.
average adjustment Amount of a maritime insurance claim for loss of a ship which the
insurer must pay.
average agent Lloyd’s Agent who has authority to negotiate marine insurance claims.
average annual return Means of comparing different returns over different periods on a
consistent basis with the unit being years, hence per annum. Normally
only returns over periods greater than one year are annualised. The
average annual return is the rate that an investor would have earned in
each year to achieve the total cumulative return over the period.
average bond Form completed by a consignee and countersigned by his bank before
taking delivery of goods from a vessel where a general average loss
has been sustained. Under the bond, the consignee agrees to meet his
share of the general average loss.
average capital balance In relation to a claim for community investment tax relief for a loan,
this term means “the mean of the daily balance of capital outstanding
during that period, ignoring any non-standard repayments of the loan
made in that period or at any earlier time” (Income Tax Act 2007
s362(2)). An amended definition appears in s363(6) in respect of any

value received by the investor during the six-year loan period.
average clause Provision in a marine insurance contract. It states the amount of loss
that must arise before a claim is payable.
average contents rules For beer duty, the procedure set out in Customs notice 226 in relation
to beer sold in small packs of up 10 litres. The amount of duty may be
assessed on the average system rather than on each pack.
average cost The total cost of producing n units divided by n. As the total cost
usually includes an element of fixed costs, the average cost declines as
quantity increases.
average down Buying a security at a lower price than paid for the exiting holding.
This is one of the manifestations of unit cost averaging.
While it increases the chances of the overall holding becoming
profitable, it is not a generally recommended investment strategy. Each
purchase of shares should be considered on its own merits.
average due date The average date when several different payments fall due.
average earnings Earnings of an employee averaged over a defined period.

Average earnings are used for various purposes. For the purposes of
statutory maternity pay (SMP), the average earnings for the eight
weeks before the qualifying week are used to calculate the SMP for the
first six weeks, as 90% of these average earnings unless this is less than
the set rate.
Figure on which entitlement to SERPS and state second pension
are calculated.
average general Another form of general average in relation to marine insurance. The
principle is that if cargo has to be discarded to save a ship in peril, all
cargo providers will share that loss.
average income per capita

Another expression meaning per capita income.
average out An indication of general trends of averages.

For example if sales increases in successive years as 9.4%, 10.3%
and 9.9%, the increases could be said to average out at 10%.
average outgoing quality (AOQ)

Proportion of defective items being sent with a product after a system
of quality control has been implemented.
For a single inspection scheme, with an acceptance number n from
sample sizes of N, with 100% inspection of failed batches, the formula
for AOQ is:
AOQ = P(p) (1 – n/N)p
where p is the proportion of defective items and P(p) is the probability
of a batch with such proportion being accepted.
average outgoing quality limit (AOQL)

The highest average proportion of defective items than will be accepted
over a long run, after a system of quality control has been implemented.
This is determined by plotting the average outgoing quality
(AOQ) against the proportion of defective items. The AOQL is the
highest point on the graph.
average particular Another term for particular average, a clause in a contract in marine
insurance.
When some cargo is lost or damaged during a journey, the cost is
borne by the cargo supplier or his suppliers alone. There is no sharing
of the cost among other cargo suppliers as under average general.
average propensity to consume (APC)

The average propensity to consume is the proportion of income that is
spent. If a person spends £4,000 of a £10,000 income, then the APC is
0.4.
average rate option Form of Asian option.
average rate of tax The average rate of tax is the total amount of income tax paid as a
percentage of a person's income.
For example, a person has personal allowances and other tax
deductible items of £8,000. He earns £20,000 when the basic rate of
income tax is 20%. His income tax liability is £2,400 (20% of £20,000
less £8,000).
His average rate of tax is 12%. This is the ratio of £2,400 to
£20,000. His marginal rate of tax is 20%, as that is how much he pays
on every extra £1 earned.
average remaining service life

In occupational pension schemes, calculation of future liability to meet
the pension requirements of existing employees.
average revenue per user (ARPU)

Average amount of income generated by a single user. These figures
are commonly used in the telecommunications and similar industry.
ARPU is the main method for such companies in identifying where
revenue growth is.
average-sized As of the same size as most others of the same nature. The term is often
applied to businesses.
average stater Another term for an average adjuster.
average stock In financial accounting, method of valuing closing stock on the

assumption that every stock item has cost the average amount for that
stock item.
average system For beer duty, quality control method to determine the average
contents of a small pack of up to ten litres of beer. The system is set
out in Customs notice 226. Provided this is followed, it is not necessary
to measure the contents of each small pack.
average weekly earnings (AWE)

Figure used to determine eligibility of statutory payments, and to
calculate the first six weeks of statutory maternity pay. It is usually
calculated as the average for the eight weeks before the qualifying
week.
averaging (1) Process addressed in averaging clause in insurance contracts.

(2) policy of buying securities at different prices at different times, so
that their average value changes with each purchase. This is used in
different investment strategies, particularly pound cost averaging
which can be a simple but effective investment strategy, and buying
down the market which is usually an unwise strategy.
averaging clause Provision in most insurance policies that all assets must be insured, and
compensation is reduced if a claim is made when there is not full
insurance.
A person who owns four properties in different towns each worth
£1 million may decide that it is so unlikely that they will all burn down
at the same time that he only insures the four to a maximum of £1
million. The insurance company would therefore bear four times the
risk for the same premium. Under the averaging clause, the insurance
company would restrict its payment for one property burning down to
£250,000.
averia Latin: cattle
averment In law, an allegation made in pleading.
AVGAS Aviation gasoline, a light oil which is specifically produced as fuel for
aircraft, is not normally used in road vehicles and is delivered for use
solely as fuel for aircraft.
avian flu Disease people catch from birds, also known as bird flu.
The World Health Organisation said on 7 November 2005 that it
would cause a pandemic costing $800 billion. The UK Department of
Health said a quarter of the population would become infected and
50,000 people. None of this happened.
aviation hazard The additional insurance risk of death or injury from participation in
flying.
Most policies only require this for high-risk activities such as being
a private pilot or taking part in aeronautical displays. Such additional
risk is usually insurable for additional premium. Flying on a normal
passenger aircraft is not an aviation hazard.
aviation turbine fuel (AVTUR)

Kerosene which is intended to be used as fuel for aircraft. It may be
delivered for that purpose without being marked in accordance with
Customs regulations.
avital Of a grandfather, ancestral.
avo One hundredth of a pataca, currency of Macao.
avoid To make provisions not to discharge a duty, as in tax avoidance.

In law, the word can also mean to make void, such as in avoiding a
contract.
avoidance Seeking to avoid something.

The term is usually restricted to legal activities, whereas illegal
activates are evasion. So tax avoidance is legally planning one’s
finances to minimise the tax liability whereas tax evasion is illegally
concealing or misrepresenting one’s financial positions.
While this distinction is widely accepted, it is also widely ignored
and so a reader should not always assume that avoidance is legal or that
evasion is illegal.
avoidance scheme Scheme whose sole purpose is to avoid or reduce liability to a tax.
avow In law, to admit or confess something.
AVTUR Aviation turbine fuel
avulsion Process of cutting land off from other land, such as when a river
changes its course. In law, the ownership and other rights of the land
are usually unaffected.
award (1) Something given by a body in recognition of an achievement.

There are some tax provisions which allow awards for achievement
or long service to be made tax-free. There is also the Taxed Award
Scheme which allows the employer to pay the tax when an award is
taxable.
(2) Sum which an arbitrator or judge determines is payable to someone
after due process.
away In finance, American term occasionally used to describe a security,

quote or market which does not conform to current market levels.
AWB Air Waybill - an airline Air Waybill is a bill of lading which covers
both domestic and international flights transporting goods to a specified
destination. This is a non-negotiable instrument of air transport that
serves as a receipt for the shipper, indicating that the carrier has
accepted the goods listed and obligates itself to carry the consignment
to the airport of destination according to specified conditions.
AWE Average weekly earnings.

AWOL Absent without leave. Used in the express to go AWOL.
azonal Not arranged in zones.
B
B (1) The second person in an explanation, such as “A bought goods from
B to give to C.”
(2) For national insurance, the contribution letter for an employee who
is eligible to pay reduced rate contributions.
(3) For council tax, the second lowest band of property values:
• in England, between £40,001 and £52,000 in 1993
• in Wales, between £36,001 and £52,000 from 1 April 2005, and
between £30,001 and £39,000 before;
• in Scotland, between £27,001 and £35,000 in 1993.
A band B property pays council tax at the rate of 7/9 the amount for an
average band D property.
BA Bankers Acceptance
[The letters also denote the Bachelor of Arts university degree, and the
company British Airways.]
BAA British Accounting Association.

[These are also the letters for the public company British Airports
Authority.]
baby bonds (1) US bonds issued in small denominations to make it easier for
ordinary investors to buy.
(2) In UK, a bond offered by a friendly society in which up to £25 a
month may be invested for a child for a minimum period of ten years.
baby boom Period of a higher than usual birth rate, such as just after a war,
particularly in the years after 1945.
bachelor (1) Man who has never married. His marital status is therefore single.
The word originally meant a person aspiring to a knighthood.
The female equivalent is spinster. This word has acquired
connotations of a frumpy old maid, so sometimes the term bachelor
girl is used instead.
(2) First university degree, or a person who has one. It ranks below a
masters or doctorate.
back and filling Description of a financial market where prices rise and fall by a small
amount.
back bond Bond of indemnity given to a surety.
back contract Futures contract on an exchange with the latest expiry date.
backdate Give an earlier date to.
back door In economics, means by which the Bank of England provides cash to
the money market by purchasing Treasury bills at the market rate as an
alternative to lending money.
back duty Any arrears of tax (including taxes which are not normally referred to a
duties).
back-ended Form of tax relief which is given at a later point, such as when an asset
is realised.
“Back-ended relief simply means that, while there was no tax relief
on payments into PEP schemes, payments out — whether of dividends
or of capital gains — were tax free.” (The View from No 11, page 379,
by Nigel Lawson, Bantam Press).
back-end loaded Description of any financial product where charges are made at the end
of its life, such as when commission is paid when the investor
withdraws his cash.
back-end ratio In investment, a person’s ratio of total debt to income.
back freight Charge made for the return of goods which could not be offloaded at
the intended destination.
background checking Human resources for checking job applicants from sources other than
those provided by the applicant.
back letter Another name for a letter of indemnity. Such a letter is most common
in international transport. It releases the recipient from a duty. A back
letter is often required before a duplicate letter of credit is issued.
back-hander Bribe, from the practice of making payment by putting the hand behind
the back so others cannot see.
back-in Defence strategy against a takeover bid, similar to the poison pill.
In a back-in, the shareholders may sell their shares back to the
company.
back interest Interest which has been earned but not yet paid.
back load Consignment of goods offered to a lorry driver (or a person in charge of
any other delivery vehicle) to be transported in what would otherwise
be an empty vehicle after a delivery.
backlog Arrears of work to be done, such as maintenance which is overdue or

letters which should have been answered. The term does not apply to
work waiting to be done but which is not overdue.
backlog depreciation Term used in current cost accounting (now abolished) for the amount
of additional depreciation which should be accounted for in the current
period’s accounts to reflect the impact of inflation in the current period
on the depreciation charged in previous accounting periods.
back month Latest expiry month for a futures contract.
back pay Payment of a retrospective pay rise.
back payment Payment which is due but which has not yet been made.
back rent Rent which is owed but has not yet been paid.
back spread Strategy of selling an option near to the money and using the proceeds
to buy the same type of option.
back stop-loss In investment, an exit price set by a trader with a view to fixing the
maximum amount that may be lost. In practice, this has the effect of
encouraging investors to place more funds into a position than they
would otherwise.
back tax Tax which is owed but has not yet been paid. Back tax usually arises
following an investigation by the tax authorities.
back testing Testing a financial model using historic data. This allows what it
predicted to happen on a past date to be compared with what did
happen.
back the field Gambling term for betting on all runners except the favourite.
back-to-back credits Letters of credit used in international trading when a trader buys goods
from one country for immediate sale to another, or for string contracts.
Under a back-to-back credit, one letter of credit is raised on the security
of another.
back-to-back loan Loan between companies in different countries in the currency of that
country. Such loans were widely used as a means of avoiding exchange
controls.
back-to-back swap Two swaps which have been combined, usually as a means of winding
up the position and usually subject to a payment.
back to work action plan Plan worked out between an employer and an employee who has been
off sick for at least four weeks.
Such a plan is not compulsory but is recommended by the
government in its booklet E14 on statutory sick pay.
back to work bonus A bonus introduced in 1996 (and extensively revised in 2004) for social
security claimants who start paid employment. It is payable under
Social Security Contributions and Benefits Act 1992 s36.
The amount can be up to £1,000. Such a bonus is exempt from
income tax under Income Tax (Earnings and Pensions) Act 2003 s677.
back up Support or copy.

In computing, the term is used for any arrangement whereby data
are copied to minimise disruption should the original data be lost.
back-up credit Alternative source of funds which is made available should the initial
source not prove sufficient. The term is commonly used when an issue
of commercial paper is not fully taken up by the market.
back-up power supply Electrical device which may be connected to a computer to protect it
from damage in the event of a power cut. Such a device typically
provides another 15 minutes of mains power, designed to allow the
computer to be shut down properly and for files to be saved.
backing Support, particularly financial support for a commercial venture.
backing a warrant Process which allows a warrant issued by a magistrates' court to be

enforced.
backpacker travel insurance

Travel insurance for a single consecutive period of (typically) between
60 and 365 consecutive days. It is also known as gap year travel
insurance.
backpay Payment to an employee in respect of a retrospective pay rise, such as

when a pay deal is agreed on 1 April backdated to 1 January. The
employee receives the higher rate of pay from 1 April and, in that
month, also receives the additional rate of pay for the previous three
months.
Backpay causes many practical problems. It involves identifying
employees who were not employed for the whole period and
recalculating past payslips. It can also involve recalculation of
statutory maternity pay if the backpay period includes the reference
period. If the employer runs a pension scheme, contributions may need
to be recalculated.
There is also a practical problem in that employees will (using the
example above) believe that their April payslip represents their new
earnings and wonder why the May payslip is less.
backup withholding US term for a sum deducted from investment income towards the tax
due on that income.
backward integration Process of business growth where a business which provides the latter
stage of production acquires businesses which provide the earlier
stages. An example is when a machine maker acquires a component
maker.
backwardation (1) Penalty paid by a seller for being late with delivery, particularly of
shares or other securities.
(2) Situation where the spot price of a commodity or currency is higher
than the futures price.
backwardation In the futures market, where the price for a future delivery is less than
the cash price or sport price.
backwardation swap Commodity swap in which the payments are determined according to
the spot price and future price.
backward-compatible In computing, when a new appliance is made so that old equipment can
still be used.
The term can be applied to equipment or software. For equipment,
most DVD drives are backward-compatible to read compact discs.
Early record players were backward-compatible to play 78s. In
software, a new release of a program is made backward-compatible so
that it can open files created by an earlier release.
backwards spreading Spreading income over previous years.
BACS Bankers’ Automated Clearing System, system for making direct

payments from a bank account.
bad General term meaning wrong in law, ineffectual, inoperative or void,

depending on the context.
bad bargain Item which is not worth the price asked. A bad bargain does not void a
contract.
bad buy Product or service which clearly does not represent value for money.
bad character Evidence or a disposition by an accused person in relation to criminal

charges (Criminal Justice Act 2003 s98).
bad cheque Cheque which is not paid for any reason.
bad credit car loans Ways of borrowing money to fund the purchase of a new car for those
with a poor credit history.
bad credit cards Credit cards for those with poor credit records.
bad credit loan Loan designed for someone with a poor credit history or county court
judgements and is therefore refused unsecured personal loans by other
providers.
bad credit mortgage Home loan secured against the value of a property designed for people
with poor credit histories.
bad debt Debt that has been written off.

To be a bad debt, it must relate to a specific debt where there is
good reason to believe that payment will not be received. The debt is
then written off as an expense in the profit and loss account, with a
corresponding entry in the sales ledger.
A bad debt is a tax-deductible business expense (Corporation Tax

Act 2009 s55).
Guidance on bad debts is discussed in the Inspectors’ Manual at
BIM 42701.
A bad debt that is subsequently paid is a recovered debt. This is
added to taxable sales in the period in which it is recovered.
A bad debt that is part of a composition with the debtor is a
released debt.
No adjustment is made to the sales figure or gross profit, as the sale
was made and the profit earned despite the debt not being paid.
Provided these conditions are met, the bad debt is deductible from
taxable profits, and VAT bad debt relief may be claimed.
Writing off a bad debt it purely a financial transaction. Legally, the
debt remains payable.
If there is reason to suspect that a debt may not be paid, the
company may make a provision for a doubtful debt. Such a debt need
not be specific, so a business may make a provision for 1% of all debts,
for example, provided it has some evidence to support such a view.
bad debt provision Sum set aside in the accounts to allow for debts which a business
expects not to be paid.
Strictly this term is wrong, as such a debt is a doubtful debt. A debt
only becomes debt when it is written off. A business may not claim tax
relief for a provision for bad debts, but may claim relief for a bad debt
that has been written off.
bad debt relief Relief from VAT on bad debts. A claim may be made if supplies to a
customer have been made and no payment has been received.
bad debts recovered Sums received for bad debts. Writing off a debt as a bad debt does not
extinguish the debtor’s duty to pay.
As the debt has already been written off, the whole of bad debts
recovered is credited to sales.
badges of trade Six principles established in 1954 by a Royal Commission to determine

whether an activity constitutes a trade.
bad leaver Where an employment ends in dismissal. The term is used in relation to
anti-avoidance provisions for disguised remuneration.
bag (1) Container, typically made of cloth, paper or other soft material, for
holding money or goods.
(2) Secure for oneself.
Bagehot, Walter English economist and political scientist (1826-77). His treatise on the
British constitution is still widely regarded as authoritative.
Bahrain tax Oil tax imposed by the Kingdom of Bahrain. It is subject to provisions
in the UK/Bahrain Double Taxation Agreement.
bail Process of releasing an accused person into the security of others who
must ensure that he appears when required and forfeit a sum if he does
not.
bail bond Bond given to a prisoner and surety when he is bailed.
bailee Person to whom an owner entrusts possession of goods without

transferring ownership.
There are different types of bailment which attract different legal
rights and duties.
bailee clause Clause in a contract of marine insurance. It requires the exporter to take
all reasonable precautions that the ship owner, who is the bailee, fulfils
his obligations regarding the safe carriage of goods.
bailiff Officer of the court who is entrusted with certain functions, such as
serving writs and seizing goods. The bailiff is answerable to the sheriff.
There are also private bailiffs.
bailii British and Irish Legal Information Institute. This operates a website at
www.bailii.org that gives case reports of all decisions from the High
Court from 2002, and of the House of Lords and Court of Appeal from
2001.
bailment Transferring possession of goods without transferring legal title. This

can arise by various legal processes including simply lending someone
something.
bailor Person who bails goods to a bailee.
bait Fish, maggots, meat, cheese and anything else sold for the sole purpose
to catch fish. Bait is standard-rated even when used to catch fish for
human consumption. This is because bait is regarded as being to catch
the fish rather than to feed the fish. If the bait is of food normally sold
for human consumption, it is zero-rated as food, regardless of the
intention of the buyer.
bait and switch Unethical practice of advertising low-priced items that are not for sale
as a means of attracting customers.
bakery products Term used to cover bread, biscuits, cakes and similar products. They
are generally zero-rated as food, with a few exceptions for such items as
florentines and chocolate biscuits. The exact scope is set out in VAT
leaflet 701/14.
balance (1) Amount of money after transactions have been allowed for.
(2) To match two amounts to ensure a measure of equality, such as
matching net assets to capital on a balance sheet, or matching income to
expenditure in a budget.
balance certificate Share certificate provided to a shareholder who has hold some of his or
her holding. The certificate shows the lower number now held.
balance concentration In banking, the practice of consolidating the bank accounts of members
of a group of companies as a means of reducing bank charges.
balanced budget A balanced budget arises when the government receives the same
amount of money from taxation as it is spending. Classical economists
argued that this should always be the aim of government policy.
Keynesians on the other hand said that in times of low economic
activity the government should run a deficit (spending more than its
revenue) to boost the economy and when the economy was booming
they could run a surplus (spending less than revenue). In this way they
could balance the budget in the long-run.
balanced budget Budget where income and expenditure are equal.

The term is particularly used for government and local authorities.
Under Keynesian economics, it is acceptable to have a deficit budget at
times of low economic activity.
balanced mutual fund Low-risk unit trust whose aim is to balance growth and income.
balanced scorecard Technique for measuring organisational success, usually with a view to
improving performance.
The method is to identify those factors which contribute to success
and rate their relative importance. Each factor has criteria set for
scoring. Thus it is possible to rate a performance, though much
subjectivity still remains.
balance of payments (BOP)

Difference between exports and imports between two countries, or
between one country and the rest of the world.
As an export from one country is an import to another, these
balances for all countries should add up to zero, allowing for any timing
differences. They never do. Reported figures for exports always exceed
imports.
balance of payments deficit

Situation where a country imports more than it exports.
balance of payments surplus

Situation where a country exports more than it imports.
balance of power Any arrangement where two opposing forces are matched with
sufficient equality to create a stalemate.
The term has been used politically since the 18th century and
became particularly important in relation to nuclear weapons in the late
20th century. The term can also be used in other contexts, such as
between commercial competitors.
balance of probabilities Basis of proof in civil proceedings — you must prove that your case is
more likely to be true than not.
balance of revenue Additional revenue secured as a contribution to capital costs. The term
seems to have been exclusively used by the old Electricity Council.
balance of trade Difference between a country’s imports against its exports over a
defined period. This is also known as the trade gap.
balance off Add up both sides of an account and subtract one from the other to find
the balance. Such as determining how much a customer owes by
adding up invoices and subtracting payments and credit notes.
balance order Order enforcing payment of calls in a winding up or liquidation.
balance sheet Summary of the assets and liabilities of an organisation at a particular

date, indicating the organisation’s worth. A balance sheet is accurate to
a moment in time, often the end of the last day of the accounting period.
A balance sheet has two sides which must equal the same total.
Historically these two sides were placed next to each other in the
horizontal format. It is now more common to place one above the
other in the vertical format.
The assets side lists assets from which liabilities are subtracted.
Assets are distinguished between fixed assets and current assets. The
fixed assets are shown at net book value (NBV) which generally their
acquisition cost minus depreciation. Current assets are shown are
valuation on the balance sheet date. If the company has any
investments, intangible assets or goodwill in its accounts, these are also
shown as assets.
Current assets are listed in order of liquidity, such as cash,
prepayments, debts and stock.
Liabilities are distinguished between current liabilities and long-
term liabilities. A current liability is one payable within the next year.
It includes almost all sums owed by the business plus accruals. Long-
term liabilities are sums repayable in more than one year’s time, such as
loans.
The capital side of the business includes the issued share capital
plus any other form of capital. To this is added the retained profit from
previous accounting periods and the retained profit from the accounting
period just ended.
Traditionally the balance sheet is signed by the directors or treasurer
to indicate that these are the final accounts and not a draft.
balance sheet audit Limited audit, now rarely performed, that checks only those items
which appear on the balance sheet.
balance sheet date Date to which the balance sheet refers, usually the last day of the
accounting period. Note that this does not refer to the date the balance
sheet is signed.
Significant developments that occur between the balance sheet date
and signing the accounts may need to be noted in the accounts (FRS
21).
balance sheet format Method of laying out a balance sheet.

The horizontal format is the original format and shows the assets
and liabilities on the left, balancing with the capital employed on the
right.
The vertical format has the assets and liabilities above the capital
employed.
balance sheet hedge Hedge against the risk from translation of amounts in foreign currency
on the balance sheet.
balance sheet total Total of net assets as shown on the balance sheet. This represents one of
the measures of the value of a business, though if the business was to be
sold, a figure for goodwill would usually be added.
balancing allowance Capital allowance which represents the excess of written down value
over disposal proceeds.
balancing charge Negative capital allowance which represents the excess of disposal
proceeds over written down value.
balancing item Item introduced into a balance sheet or account to make it balance.
Baldwin, Stanley English politician (1867-1947) who was Chancellor of the Exchequer
from 27 October 1922 to 27 August 1923 under the Conservative
government of Andrew Bonar Law. He was prime minister from 7 June
1935 to 28 May 1937.
Balfour v Balfour Court case of 1919 which established that domestic agreements
between husband and wife are generally unenforceable as contracts.
balloon In banking, a large single sum as against regular payments. The term is
often used for loan repayments.
balloon loan Loan which is not repaid in regular instalments but as large amounts
(balloons) when funds become available.
balloon mortgage Mortgage where the last payment is significantly larger than the others.
Such mortgages are often for short periods such as five or seven years.
balloon payment Any financial arrangement where the last payment is significantly
larger than the others.
Balthazar Champagne bottle with a capacity of 16 standard bottles.
Baltic Exchange Place in London where, traditionally, shippers and ship brokers plied
for cargo.
Baltic Futures Exchange London-based institution that specialises in chartering ships and aircraft
for freighting, and also deals in commodity futures, particularly in
foodstuffs.
ban Order which prevents something, such as a particular product being

sold or exported.
Banca d’Italia Central bank of Italy.
Banca Rìoghail na h-Alba Gaelic name for Royal Bank of Scotland.
bancassurance Sale of banking and insurance products together.
bancassurer Colloquialism for company or group offering a range of financial

services to its customers, such as a bank with subsidiary insurance
companies.
banco Term once used to mean bank money of account, as distinguished from
currency.
band In finance, the commonest use of this word is a range of amounts for a
defined criterion, such as the range of pay for a particular grade of job.
Band D Equivalent The weighted number of domestic properties subject to Council Tax in
a local authority’s area. It is expressed as a proportion to Band D which
is the middle property band (e.g. 1 Band H = 2 Band D; 1 1/2 Band A =
1 Band D).
bang for the buck Colloquialism for measurement of the (usually high) return on an
investment.
bank A business that holds money for its clients, lends money at interest and
trades generally in money and financial products. The tax definition is
contained in Income and Corporation Taxes Act 1988 s840A.
The word originally meant a shelf or a bench where finance could
be transacted.
The tax treatment of banking profits is contained in Corporation
Tax Act 2010 from s635 and Income Tax Act 2007 from s837A.
bankable paper Document that a bank will accept as security for a loan.
bank account Arrangement whereby a bank holds funds and performs transfers for a
customer.
There are many different types of account. The commonest is the
current account where the customer has a cheque book, a paying-in
book and (often) one or more type of card for making payments or
withdrawing cash. The bank sends a statement, usually monthly, which
details these transactions with any charges or interest imposed by the
bank.
bank advance Another name for a bank loan.

bank book Book provided by a bank or building society that shows the balance in a
person’s account. It is sometimes also called a passbook. Such books
have generally been phased out during the last decades of 20th century
in favour of statements and on-line facilities.
bank borrowing That part of a business’s debt capital that is funded by a bank.
bank card Any card issued by a bank for use by a customer. There are different
types include the cash card, cheque card, credit card and debit card.
Sometimes a card may perform more than one of these functions.
bank card association Body owned by banks to handle credit cards and debit cards. In the UK,
the main associations are MasterCard International and Visa
International.
bank certificate Document from a bank confirming the balances held by a customer on a
certain date. Such a certificate is often requested during an audit.
If the bank simply confirms the balances suggested by the auditor,
the document is better described as a bank confirmation.
bank charges Charges made by a bank to a customer for providing banking services.
Bank charges are imposed in one of three ways:
● direct charging as so much per cheque cashed, direct debit
etc;
● free banking, whereby no charges are imposed provided the
customer keeps within agreed terms. The bank makes its profit from the
interest it can earn on those accounts, charges for additional services it
may be able to provide, and penalty charges when the customer fails to
keep the terms; and
● charges for packaged bank accounts where a sum of
perhaps £10 a month is charged regardless of the number or amount of
transactions during the month.
Free banking and packaged bank accounts specify which
transactions attract no additional charge. Any additional service, such as
foreign currency conversion, usually attracts a separate charge.
If an employer pays an employee’s bank charges, that is regarded as
a taxable benefit in kind, as explained in the inspectors’ manual at
EIM01010.
Bank Charter Act Law introduced in 1844 after a series of banking crises. The Act gave
greater power to the Bank of England. Many provisions remain in
banking law today.
bank cheque Cheque drawn by a bank on itself.
bank clerk Employee of a bank below the level of manager.
bank confirmation Document from a bank confirming that the balance held for a customer
is the figure first suggested.
If no figure was suggested and the bank simply advises the
balances, the document is better described as a bank certificate.
bank credit All overdrafts, loans and other borrowings from a bank.
bank deposit All money placed in a bank by an individual or business.
bank discount Charge made by a bank for accepting a bill of exchange or similar
instrument before its maturity. The discount is usually a fixed
percentage of the bill’s face value.
bankers acceptance (BA) Financial instrument from a bank to facilitate commercial transactions.
bank examiner Person who reviews a bank’s operations on behalf of a regulatory body.
Bankers’ Automated Clearing System (BACS)

Company set up to oversee the system of direct debits, standing orders,
salary cheques and other computer-generated payments. It provides the
service for all British banks and some building societies. It is part of
APACS.
bankers’ books Records kept by a bank of its customers.

A copy of such a record is prima facie proof of the balance shown
(Bankers’ Books Evidence Act 1879).
banker’s lien Legal right of a banker to hold a customer’s property as security against
repayment of a debt.
banker’s order Written instruction from a customer to bank authorising it to make

regular payments from the customer’s account.
Bank for International Settlements (BIS)

Bank established in 1930 to co-ordinate the payment of war reparations
between European central banks.
bank giro Method used by clearing banks which allows money to be transferred
rapidly between them.
bank giro credit (BGC) A one-off cash or cheque payment to an organisation or individual.
Processing a payment made using a Bank Giro Credit takes three
working days.
bank guarantee Undertaking by a bank to settle a debt if the debtor fails to do so. Such a
guarantee is good collateral for a loan, but the bank will usually want
good collateral to provide the guarantee.
bank holiday (1) Day on which a bank is allowed to close. The term now has the
same meaning as a public holiday.
There are eight public holidays in England and Wales, eight
different public holidays in Scotland, and ten public holidays in
Northern Ireland.
Public holidays are as determined by Bank and Financial Dealings
Act 1971. These allow the Queen to declare additional days as bank
holidays. Such days have included the wedding of Prince William in
2011, and the Queen’s diamond jubilee in 2012.
Employees have no statutory right to have a day off work on such
holidays unless their contract so allows. The statutory right to 28 days
annual leave is based on four weeks of five days plus the eight bank
holidays, but none of these days need be bank holidays.
If an employee is required to work on a bank holiday, there is no
legal requirement to pay at a higher rate, though this is a common
practice.
(2) In the USA, the term means a day on which a bank is forced to
close as its obligations exceed its resources.
bank holding company (BHC)

Company that owns or otherwise controls one or more banks.
Typically, a BHC is responsible for the banks’ regulation and
supervision, though the bank may have its own board for routine
administration.
bank identification number

Internationally agreed six-digit number that identifies a bank for charge
card purposes.
bank identifier code (BIC)

Series of codes developed by the International Organization for
Standardization to identify banks and their branches for the purpose of
inter-bank dealings. The BIC code has eight digits for a primary office,
and 11 for a branch. They are sometimes called SWIFT codes.
bank holiday Day when a bank is allowed to close.

It is widely also used as a day’s paid holiday. England and Wales
have eight bank holidays: New Year’s Day, Good Friday, Easter
Monday, May Day, May Bank Holiday, August Bank Holiday,
Christmas Day and Boxing Day.
Bank holidays are regulated by Banking and Financial Dealings Act
1971 plus any day added by Royal Proclamation. New Year’s Day has
been so added.
bank identification number (BIN)

A six-digit number which identifies a particular bank for charge card
purposes.
banking (1) Business of holding money for customers and lending money.
(2) Process of paying money into a bank account.
banking account American term which means bank account.
Banking Acts Banking Act 1979 and Banking Act 1987. These are the main laws
which regulate banks in the UK.
banking book Record of the banking activities of a bank, as against its commercial
activities. This distinction is often made with regard to management
risk.
banking covenant Agreement made between a company’s creditors and its bank on the
levels of debt in which the company should operate. They are also
called debt covenant.
banking directives European Union directives which apply to banking. The Second
Directive is particularly important.
banking employment Term used to define the scope of those within the scope of bank
payroll tax.
banking partnership Body so registered under Financial Services and Markets Act 2000 Part
4. Such a body must produce accounts which comply with some of the
provisions of company law (Companies Act 2006 s470).
banking products Financial services offered by banks to their customers. Examples

include credit cards, direct debits and statements.
These products are seen as part of the banking service. Ancillary
products, such as loans and insurance, are better described as financial
products.
banking secrecy country Country that does not disclose details of banking arrangements to other
tax authorities. The use of such a country is one of the hallmarks of a
tax planning scheme of which taxpayers are advised to be wary.
bank interest rates The rates of interest which a bank charges for borrowing money from it
or saving money with it.
Typically the bank interest rate is calculated by reference to the
base rate set by the Bank of England.
The rate for a loan depends on the credit rating of the customer,
the purpose of the loan, the period of the loan and the amount of the
loan.
The rate for savings is usually also calculated by reference to the
base rate. For a customer, it will also consider the nature of the savings,
the notice period for withdrawing the savings and the amount of the
savings.
Borrowers should look at the annualised percentage rate (APR)
for comparison. Savers should look at the annual equivalent rate
(AER) for comparison.
The difference between the rates for borrowers and savers is known
as the turn. This generally widened during the 20th century and is now
at least four percentage points. There are however opportunities for
smaller turns, such as Zopa which offers a turn of just one percentage
point.
Banking Consolidation Directive

EC directive 2006/48/EC of 14 June 2006, relating to the taking up and
pursuit of the business of credit institutions.
bank loan Money lent to a customer by a bank, usually for a fixed period.
Such a loan is said to be either secured or unsecured. A secured
loan means that the bank may take ownership of some item of the
customer’s property if the loan is not repaid. A common example is a
mortgage. An unsecured loan does not have this security. An example
includes the balance on a credit card.
banknotes Legal tender issued by the Bank of England. These are now minted in
values of £5, £10, £20 and £50. Bank
The term also applies to notes issued by other banks which are
accepted as currency, particularly from Scotland and Northern Ireland,
though such notes, strictly are not legal tender.
Bank notes were originally receipts for gold. They acquired the
legal status of promissory notes, but are now legally currency with the
same status as coins following the decisions in Miller v Race [1791]
and Suffell v Bank of England [1882].
English bank notes were subject to stamp duty until 1972.
Bank of England The central bank for the United Kingdom (and not just England).
It was originally formed on 1694 as a private company to raise
funds for the government. Although given national responsibilities in
the 19th century, it was not nationalised until 1946.
The Bank has had responsible for setting interest rates since 1870,
though this was subject to significant government control until 1997
when the Bank was given sole charge for setting interest rates except in
a national emergency. This task is undertaken by the Bank’s
Monetary Policy Committee (MPC).
The Bank is also responsible for issuing banknotes which are legal
tender in England and Wales, and generally accepted as such in
Scotland and Northern Ireland. The Bank became the central banknote
issuer in 1844.
Before 1998, the Bank of England was also responsible for
regulating banks. This task is now administered by the Financial
Services Authority.
The legal definition is “as the context requires, the Governor and
Company of the Bank of England or the bank of the Governor and
Company of the Bank of England” (Interpretation Act 1978 Sch 1).
Bank of International Settlements (BIS)

Bank established in Basle in 1930 to promote international banking. It
also acts as a bank for national central banks.
Bank of Ireland “As the context requires, the Governor and Company of the Bank of
Ireland or the bank of the Governor and Company of the Bank of
Ireland” (Interpretation Act 1978 Sch 1).
bank of issue Bank authorised to issue bank notes. Since 1921, only the Bank of
England may issue banknotes for use in England and Wales.
Bank of Japan Central bank of Japan, created in 1882.
Bank of Scotland (BoS) Scottish bank formed on 17 July 1695. It is the oldest bank in the UK,
and the only surviving company formed by the Scottish Parliament
before Scotland’s union with England in 1707.
The Bank of Scotland helped raise funds for the Jacobite rising in
1715. As a consequence it lost its monopoly of Scottish banking and the
Royal Bank of Scotland was formed.
The Bank acquired many other banks including Union Bank of
Scotland in 1955 and British Linen Bank in 1971.
Bank of Scotland was the first UK bank to use a computer, which it
installed in 1959.
In 2001, the Bank merged with Halifax, a former building society
which had become a bank, to form HBOS.
bank overdraft Arrangement whereby a bank lends money by allowing a customer to

make payments greater than the sum in the customer’s account.
bank panic Another name for bank run.
bank payroll tax One-off tax introduced by Finance Act 2010 Sch 1 to tax large bonuses
earned by bank workers.
bank rate “The main interest rate at which the Bank of England lends money to
financial institutions. This interest rate in turn affects the rates that
commercial financial institutions offer their customers for loans and
deposits. It is set each month by the Bank of England’s Monetary
Policy Committee (MPC).
(N.B. Also referred to as the ‘base rate’. The term ‘Bank Rate’ refers
solely to the rate set by the Bank of England. In other countries, central
banks use different terminology for their main interest rate).”
(HM Treasury glossary).
Before 1972, this was the equivalent of the base rate, namely the
rate of interest at which the Bank of England would discount first class
bills or make advances to a discount house. It was used for 270 years
from 1702. From 1932 to 1951 it remained at 2%, apart from a short
period in 1939.
In 2009, it reached a record low of 0.5%.
bank rate monitor index Weekly index of money market rates of US banks.
bank reconciliation Document produced to check accounting records against the bank
statement. Evidence of such reconciliations is usually an essential part
of demonstrating that the accounts have been properly prepared and
audited.
Bank Restriction Act Act of Parliament of 1797 that restricts the Bank of England’s ability to
exchange sterling notes for gold.
bank run Rapid loss of deposits suffered by a bank, usually on a fear that the
bank is about to become insolvent.
bankrupt Either a person who has been subjected to the legal provisions of
bankruptcy, or an adjective describing such a person.
The term comes from the Italian for “broken bench” from the
practice of breaking the bench to show that a moneylender was unable
to continue in business.
bankruptcy When an individual has been legally declared insolvent. The individual
must give up most assets and pay what can be done. The bankrupt is
under restrictions until discharged.
bankruptcy hearing Formal hearing before a judge to check that the requirements of
bankruptcy have been followed.
bankruptcy order Another name for a declaration of bankruptcy.

This indicates that a person is unable to pay their debts and, subject
to certain exceptions, deprives them of their property. The property can
then be sold in order to pay the person's creditors.
bankruptcy petition Document which must be filed to make a person bankrupt. It is usually
filed either by the bankrupt himself or by a creditor.
bankruptcy proceedings
The legal process of bankruptcy.
Bankruptcy Reform Act American law of 1978 which made major changes to US bankruptcy
law. It gave greater protection to unsecured creditors and greater
powers to judges.
bankruptcy restriction order (BRO)

Order imposing further restrictions on a bankrupt, during and after the
bankruptcy.
bankruptcy restriction undertaking (BRU)

Restriction agreed with a bankrupt which lasts during his bankruptcy
and afterwards.
bank statement Document provided by bank showing transactions for a period. They
are usually issued each month. Very busy accounts may have a weekly
statement while accounts with few transactions may have statements
issued quarterly.
Most banks now also offer a facility whereby a customer can look at
their bank statement at any time on the Internet.
Bank statements should be kept. Most banks provide free folders for
this purpose. They should also be used for a bank reconciliation as
part of a person’s or individual’s financial control.
Bankwire Electronic communications network owned by a group of banks for

transferring messages between them. It provides a clearing service
known as Cashwire.
banned and restricted goods

Goods that need a licence or certificate before they may be imported
into, or exported from, the UK.
banner year Business jargon for the best year of a firm.
Banque de France Central bank of France. It was established in 1800 and nationalised in
1946.
bar (1) Professional body for barristers.

(2) Partition in a court which only officers may cross.
(3) Ban or order excluding someone or something. A right which is
barred is extinguished.
bar code Arrangement of parallel lines of varying widths printed on a product or

label. These can be quickly scanned by a laser device to identify the
product.
Typically retailers record details of product lines against these
codes, allowing receipts and supporting records to be produced
accurately and quickly.
Bar Council Senate of the Inns of Court which regulate conduct of barristers.
barbell Portfolio comprising both short-term and long-term obligations. The

term comes from the fact that the portfolio is weighted at each end, like
a barbell used in weight-lifting.
Barber, Anthony Conservative politician (1920-2005) who was Chancellor of the

Exchequer from 25 July 1970 to 4 March 1974 in the government of
Edward Heath. Barber proposed a significant relaxation of banking
rules, introduced VAT and reduced direct taxes.
Barber boom Description of the economy between 1972 and 1974 when Anthony
Barber (1920-2005) was Chancellor of the Exchequer.
The boom included increased government expenditure, reduced
taxation and led to 18% devaluation. The balance of payments
deteriorated, the money supply doubled and inflation was not reduced.
Barclaycard Credit card issued by Barclays Bank.
Barclays One of the Big Four banks in the UK, though it operates internationally.
The bank was formed in 1690, though it did not take the name of
Alexander and David Barclay until 1736.
bare head Description of coins whose obverse shows the monarch not wearing a
crown, as in the half-crowns of 1825 and 1826.
bare licensee Person who occupies premises merely by the assent of an owner, such
as when hiring a room without a contract.
bare trust Trust where the beneficiary has an absolute entitlement to the trust fund
(or would do but for being under age or having an incapacity).
A bare trust can be created very simply, such as by giving someone
£1 to buy you an ice cream.
For tax purposes, a bare trust is regarded as though it did not exist.
Under see through provisions, the beneficiary as taxed as owner.
Common uses of a bare trust is when property is held for a beneficiary
who is under 18 (and who therefore cannot own property directly), and
a temporary arrangement before transferring an asset to another
beneficiary.
Provisions for capital gains tax are contained in Taxation of
Chargeable Gains Act 1992 s60.
Duties for self-assessment are set out in HMRC Brief 51/08.
bare trustee Person who possesses property belonging to another by a legal but
informal process, such as when lending someone a book.
The capital gains tax position is given in Taxation of Chargeable
Gains Act 1992 s60.
bargain (1) A transaction for the purchase or sale of securities between two
members of the London Stock Exchange
(2) Any transaction involving money agreed between two people.
Colloquially, the term is used more specifically for such a transaction
which one person considers favourable to himself, such as goods which
are less expensive than expected.
Baring, Francis British Whig politician (1796-1866) from the banking family, who was
Chancellor of the Exchequer from 26 August 1839 to 30 August 1841.
barnburner Colloquialism for an exciting business opportunity.
barometer stock Share price or other security that is regarded as being a reliable
indicator of the state of the financial market.
baron and feme Husband and wife.
barrel (1) Standard quantity measure for oil as a commodity.

A barrel is 42 US gallons. This is about 159 litres or just 34.9723
UK gallons. This size
(2) A cask of predetermined size used to store alcoholic drink. In some
processes, liquor is left to mature in a cask.
barrels per day (bpd) Standard measure of oil production for a particular oil field.
barren Description sometimes used to describe money that is not earning

interest.
barrier option Exotic form of option where the value depends on whether the
underlying security passes a particular price. The most common types
are knock-in and knock-out options.
barrister Lawyer who represents clients in court in England and Wales. In

Scotland the equivalent is an advocate. Traditionally barristers often
appear in wigs and gowns.
Generally they may only be instructed by a solicitor, though some
tax accountants may now instruct barristers directly.
A statutory definition of a barrister is “an individual who:
(a) has been called to the Bar by an Inn of Court, and
(b) is not disbarred by order of an Inn of Court”
(Legal Services Act 2007 s207(1)).
For the first seven years of practice, a barrister may prepare
accounts on the cash basis (Income Tax (Trading and Other Income)
Act 2005 s160). When this period has ended, the adjustment tax that
becomes payable may be spread over ten years under ibid s238.
barrister-at-law Another name for a barrister.
barter A trade when two people provide each other with goods or services
rather than paying cash. Someone growing apples may agree to swap a
quantity of them for potatoes grown by someone else.
Barter was the only means of trade before the invention of money.
The main problem with barter is the requirement for coincidence of
supply. This means that you can only sell your apples to someone who
wants them if that person can provide something you want.
Barter is still widely practised. For example, many computer
websites have barter agreements whereby two or more companies agree
to promote each other’s facilities.
For most tax purposes, a barter is regarded as two sales. As such
they should be valued for the purposes of value added tax and income
base (1) Numerical standard. Measures such a FT-SE 100 index and the
Retail Prices Index take a date and adopt a base of 100 or 1000 for that
date. The index is then subsequently calculated using the same
methodology to provide a simple comparison. So if a later index is 124,
it shows that there has been a 24% increase since the base was adopted.
(2) In logarithms, the base is the number to which the number which is
raised to a power which becomes the logarithm. So, for a base of 10,
the logarithm of 100 is 2.0 as 100 is the base of 10 raised to the power
of 2.
(3) Place from which a person operates, such as the headquarters or
head office of a business.
base currency Currency in which a portfolio is denominated.
Basel I Document produced in 1988 by the Basel Committee on Banking

Supervision on standards of bank regulation. Its main requirement was
that banks should have capital equal to at least 8% of its risk-weighted

assets.
Basel II Document produced in 2004 by the Basel Committee on Banking

Supervision. It builds on Basel I by providing more detail.
base metal Metal of little worth, such as nickel or iron, particularly in relation to a
precious metal.
base rate The minimum rate at which banks are prepared to lend money to each
other. Other borrowers and lenders usually pay a rate higher or lower
respectively.
In practice the base rate is set by the Bank of England. This acts as
the benchmark for setting all other interest rates.
The base rate is sometimes called the repo rate.
base stock Method of valuing stock where a number of units are valued at a fixed
amount, and a different method is applied for additional units. This was
held not be an acceptable basis for tax purposes in Patrick v Broadstone
Mills Ltd [1953] 35TC44 and other cases. The matter is discussed in the
base-tending Business jargon for protecting one’s assets.
base value The enhanced acquisition cost of development land, as used for
development land tax between 1976 and 1985.
base year The first year of an index against which subsequent years are
compared.
basic allowance For employment support allowance, a set rate paid during the
assessment phase, usually for 13 weeks.
This is followed by the main phase when the basic allowance may
be supplemented by support component or work-related activity
component.
basic balance In economics, the balance of a nation’s current account plus long-term
capital accounts.
basic case For tax tribunals, a case “which will usually be disposed of after a
hearing, with minimal exchange of documents before the hearing” (The
Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules SI 2009
No 273 rule 23(2)(b)).
basic commodities Farm produce produced in large quantities, such as corn and sugar.
They may be subject to special trading arrangements for commodities.
basic earnings assessment Assessment that an employer may be required to conduct at the
beginning of tax years from 2011/12 when an employee is provided
with childcare vouchers. This only applies to employees who start
receiving such vouchers after 5 April 2011.
The assessment is to determine the maximum weekly tax-free limit

for such vouchers.
basic pay Amount a person is entitled to receive for his or her normal work. This
may be supplemented by bonuses, commission, overtime or similar
payments.
basic products In the Common Agricultural Policy (CAP), a product of the soil, of
stock-farming and of fisheries, shown in Annex I to the Treaty of
Rome. The term also covers goods which are the result of first stage
processing of certain basic products.
basic rate A rate which generally applies unless conditions apply for another rate.
In particular, the term is used for the main rate of income tax. From
6 April 2008, this is 20% and is charged on the first slice of taxable
income, after which the higher rate applies.
In employment, the term is used to mean the amount an employee
receives for his normal hours of work. This may be subject to higher
rates for overtime, on-call or unsocial hours.
basic rate limit Slice of income subject to the basic rate of income tax.
basic rate of income tax Main rate of income tax, which is above any marginal rate and below
any higher rate or rates.
basic rate taxpayer Someone who pays income tax at a rate no higher than the base rate.
basic records Minimum financial records that must be kept by a business to support
its tax returns.
Guidance is provided by HMRC at http://www.hmrc.gov.uk/sa/rec-
keep-self-emp.htm.
basic registration Simple form of registration, particularly for VAT. Registration is by

completion of form VAT 1 which must be specially ordered on each
occasion.
basic salary Another term for basic pay.
basic state pension Another term for state retirement pension.
basic tax point For VAT, time when a supply is made.

This is when any VAT is due on the supply, unless the basic tax
point is replaced by an actual tax point. This can happen when the
supplier issues an invoice or receives payment. If the actual tax point
occurs before the basic tax point and the two points fall in periods with
different rates of VAT, the supply may be caught by anti-forestalling
provisions.
basic wage Another term for basic pay.
basis (1) A point or number from which a calculation is made.

(2) The general terms of an agreement on which a matter is decided.
In resolving any disagreement of any nature, it is first necessary to
establish the areas on which the parties are agreed. Philosophically if
there are no areas at all where the parties are agreed, there can be no
basis for a disagreement.
basis amount In pensions, the amount calculated for determining the maximum level
of unsecured pension or alternatively secured pension (and their
equivalents for dependants) from a money purchase arrangement. The
amount is basically the lifetime annuity which such a pension
arrangement could secure.
basis of assessment Method for determining how some financial liability is to determined.
In particular, it determines the financial period for which a direct tax
(such as corporation tax) should be charged.
basis period Period of a trade for which an income tax or corporation tax assessment
is made.
From 1994, the basis period for a trade is the current year basis.
Previously it was the previous year basis, subject to some transitional
provisions.
The main tax law is contained in Income Tax (Trading and Other
Income) Act 2005 from s198. A provision relating to loss relief is
contained in Income Tax Act 2007 s61.
basis point One hundredth of a percentage point. So if an interest rate moves from
4.63% to 4.67%, it has increased by four basis points.
basis price Price of a security or other investment calculated according to its

return.
basis risk Risk associated with imperfect hedging using futures. Such risk arises
because of a difference in the price of the future and the price of the
underlying asset, or because of a mismatch in selling dates.
basis swap Exchange of two financial instruments where each has a variable
interest calculated on a different basis.
basket of currencies Economic term for a fictitious currency created by valuing a weighted
mixture of currencies against which other currencies may be compared.
This has now been replaced by the real currency of the euro which is
valued on the same basis.
bastard Illegitimate child. This meaning has now largely been abandoned in
popular use in preference to its pejorative meaning.
batch Quantity of items viewed as a single item for such purposes as

production and sale.
batch costing Method of calculating the price of one item as part of a batch of items
produced at the same time.
batch number Number assigned to a quantity of goods to allow them to be identified

to the production process.
batch processing System of data processing which uses batch control.
batch production Making products in batches rather than individually or by mass

production.
Batch production is suitable when items are both produced and sold
in large quantities.
batch size Quantity for a run of production.

Subject to any constraints, the batch size is usually determined as
the economic batch size which seeks to determine the optimum
balance between incurring set-up costs and saving storage costs.
BATR Business asset taper relief, for capital gains tax.
battery For VAT, this is generally standard-rated. It cannot come within the
scope of a reduced-rated supply of domestic energy (VAT notice
701/19).
battle of the forms Term sometimes used to describe the position when companies trade
using standard forms, each of which has printed conditions claiming
precedence over the other. The general rule is that the last document
issued by one side prevails, however there are exceptions. The matter
was considered by the Court of Appeal in Butler Machine Tool Co Ltd v
Ex-Cell-O-Corp (England) Ltd [1979].
baud Measure of the speed of data processing. One baud equals one bit per
second.
bauf-week Old term used by pit workers in Durham for the week in which the
fortnightly-paid receive no pay.
BAX contract Canadian derivate product, usually with a maturity of three months.
Bay Street Street in Toronto where the stock exchange is. The term is sometime
used to mean the exchange itself, or the exchange and related financial
institutions.
B2B (Business-to-Business)
Website or other computer facility targeting other businesses rather than
consumers.
BBA British Bankers Association.
bboe Billions of barrels of oil equivalent.

A measure which allows production of oil and gas to be compared.
About 6,000 cubic feet of gas is considered to be the equivalent to one

barrel of oil.
BCC (1) British Chamber of Commerce.

(2) British Company Cases, law reports from 1983 published by CCH
Editions.
BCD Banking Consolidation Directive.
BCD credit institution “Credit institution that has its registered office (or, if it has no registered
office, its head office) in an EEA state, excluding an institution to
which BCD does not apply under article 2” (FSA glossary).
BCE Benefit crystallisation event.
BCLC Butterworth’s Company Law Cases, first published in 1983.
B&CR Bankruptcy and Companies Winding-Up Cases, law reports from 1915
to 1942.
BE Country prefix code for Belgium.
beamer American term for a mortgage-backed annuity.
bean-counter Derogatory term for an accountant.
bear Someone who expects a financial market to fall.

Typically a bear is someone who short sells, that is the bear sells a
security in the expectation of being able to buy it back at a lower price.
A bear may also sell a security he does not own in the expectation
of being able to buy it more cheaply. Such a person is known as an
uncovered bear in the UK, or a shortseller in the USA.
The term comes from the animal, though the etymology is obscure.
The opposite is a bull.
bear CD Certificate of deposit that increases when the underlying market

decreases.
bear closing Purchase of securities, currencies, commodities or similar to close an

open bear position. This usually has the effect of strengthening a weak
market.
bear covering Situation where a bear who has sold securities he does not own is now
buying them to cover his position.
beard tax Tax imposed in Russia between 1672 and 1725 by Peter the Great who
wanted his citizens clean-shaven.
bearer Person who has something, particularly something he can use, such as a
bank note or a bearer bond.
bearer bond Bond which is payable to whoever has possession of it, and not to a
named individual.
bearer instrument Financial instrument where ownership is transferred by mere possession

of the document.
Since 1986, such documents attract stamp duty at three times the
rate payable if they were not bearer documents (Stamp Act 1891 Sch
1A).
bearer security A security where there is no register of owners. Proof of ownership is

demonstrated simply by possession of the security, as for an ordinary
banknote.
A bearer security has coupons attached which must be physically
removed from the certificate to claim a dividend.
Such securities are now rare because of the risk of theft or loss of
the document, and the fact that registered shares are more easily
administered. Bearer securities attract a higher rate of stamp duty.
bear hug An indication to the board of a target company that an offer for it is
being considered.
Particular forms are known as strong bear hug and teddy bear
hug.
bear market A stock market where prices are falling or expected to fall. The
opposite is a bull market.
bear position A short position in securities, such as selling shares you do not own
with a view to buying them later more cheaply.
bear raid Heavy short selling by one or more big traders in the hope that this will
force down prices, allowing them to buy back the securities at a lower
price.
bearskin jobber Old name for someone who sells shares he does not yet own, what we
now call simply a bear.
It has been suggested that these terms come from the saying that
such a person “sells the skin before he has caught the bear”.
bear slide Sharply falling financial market, usually caused by a bear raid.
bear spread A position in the bond market that is long in short-dated securities, and
short in long-dated securities. This allows the position to benefit from
any fall in the security prices. If the yield curve becomes steep, the
position can be closed out at a profit.
bear squeeze Strategy whereby an authority supports a market by taking action to

prevent bears from gaining from short selling. Central banks routinely
do this in currency markets.
bear trap Short-term dip in the price of a share or other security which tempts an
investor to believe that there is a bear market and act accordingly.
beati possidentes Latin: blessed are those who have [for they shall receive].
The legal aphorism that possession is nine points of the law.
Beatles clause Tax provision introduced in 1969 to counter an avoidance scheme

whereby a wealthy individual could sell his income from personal
activities.
Under the avoidance scheme, the rights of the individual are sold to
a specially formed company whose shares could be sold subject to
capital gains tax at a lower rate than the income tax otherwise
applicable.
The clause simply makes such a payment from the company subject
to income tax.
These provisions are now found in Income Tax Act 2007 from
s773.
beat the bushes Business jargon for moving to an unconventional or rural area.
beauty contest Colloquialism for a competitive tendering process.
Beav Beavan’s Reports, law reports of the Rolls Court from 1838 to 1866.
bed and breakfast (1) Form of hotel type accommodation where a person is provided with
the basic facilities of a bed and a breakfast.
(2) A form of tax avoidance before 6 April 1998 which allowed a
security to be sold one day and reacquired the next as a means of
reducing a person’s liability to capital gains tax. This arrangement is
no longer effective.
The tax provisions are now contained in Taxation of Chargeable
Gains Act 1992 from s105. The topic is also addressed in IR
interpretations 218 and 224.
bed-pepping Colloquial term for transferring existing investments into a personal

equity plan to obtain the tax advantages. The term is particularly used
when shares are sold and the cash is invested in a PEP.
beer “Includes ale, porter, stout and any other description of beer, and liquor
which is made or sold as a description of beer or as a substitute for beer
and is of a strength not exceeding 0.5%...” (Alcoholic Liquor Duties
Act 1979 s1(3)). The section exempts black beer.
Beer brewed for private consumption is exempt (ibid s41).
beer Any drink with an alcoholic strength of at least 1.2% which involves
brewing with hops, or any equivalent drink (other than cider or perry).
Strictly ale is any drink made from brewing, and beer is ale which uses
hops, though such distinctions are not always observed. Beer includes
many variations such as bitter, mild, brown ale, lager and stout.
Beer is subject to excise duty on alcoholic liquor though at the
lowest rate. From 1 June 1993, the strength of beer is determined as
alcohol by volume which is the same measure as for other alcoholic

drink. Previously the excise duty was calculated by reference to specific
gravity.
beer and ale duty Excise duty introduced in the Civil War. It is still charged though now
known as beer duty, a category of alcoholic liquor duty.
Beer and ale were the common day-time drinks until tea and coffee
replaced them. The charge was per barrel brewed. There was a separate
duty on hops at 2s per hundredweight home-grown, and 10s imported.
beer-based mixed drink Term used in Customs notice 226 for a drink made by mixing beer with
another alcoholic drink other than spirits. Provided the result has a
strength no greater than 5.5%, it is dutiable as beer. Above 5.5%, it is
taxed as wine.
If mixed with spirits in anything other insignificant quantity, it is
taxed as spirits regardless of strength.
beer class One of four classes of beer used to determine the rate of beer duty.
The classes are:
• A: bulk beer held on the same or adjacent premises at which
it was produced
• B: packaged beer held at the same or adjacent premises at
which it was produced
• C: bulk beer which was produced elsewhere
• D: packaged beer which was produced elsewhere.
beer duty Alcoholic liquor duty that is charged on beer. The provisions are
explained in Customs notice 226.
beer duty receipt Receipt provided by a consignee when beer is moved under duty
suspension. From 1 January 2011, such a receipt is not always
required, as explained in Customs notice 226.
beer duty return Form that must be submitted, usually monthly, in relation to beer duty.
The standard form is EX46.
beer packager Person who packages beer but does not produce it. Such a person
should register for duty suspension, as explained in Customs notice
226.
beer production account Requirements under Revenue Traders (Accounts and Records)
Regulations 1992 that must be kept by a brewer.
They require the brewer to record actual production for the previous
year for each month, and to estimate production for the current year.
Details which have the force of law are given in Customs 226.
beer regulations Regulations issued under Alcoholic Liquor Duties Act 1979 s49
regarding the administration of beer duty. The Regulations are SI 1993
No 1228 as amended by SI 1995 No 3059.
beginning inventory American term for opening stock.
behavioural finance Psychological study of how people take financial decisions.
Beige Book US publication compiled by Federal Reserve Banks, largely based on

anecdotal evidence of economic conditions.
Belasting over de Toegevoegde Waarde (BTW)

Dutch: value added tax. The term may be seen on invoices from
Belgium or Netherlands.
beldam Grandmother or remoter female ancestor. The term is French and is

rarely used. It can be spelled with a final E.
Belfox Belgian Futures and Options Market. It was opened in April 1991, is
based in Brussels, and trades in Belgian government bond futures and
stock index options.
Belgian franc Currency of Belgium before it adopted the euro in 2002.
Belgium European country of 30,528 sq km. Its currency is the euro.

The country was a united state with Netherlands from 1814 to 1830
when it became independent. It was invaded by Germany in both world
wars, regaining its independence in 1945. It was a founder member of
the EU in 1957 and of the eurozone in 2002.
Belgium-Luxembourg Economic Union (BLEU)

Economic union formed between the two states of Belgium and
Luxembourg on 25 July 1921. This arrangement continued after the
formation of Benelux between 1944 and 1948. It is now subsumed in
the European Union.
belly tank Another name for an auxiliary tank.
belly up Colloquialism for the state of being insolvent.
belong Requirement for claiming capital allowance, namely that the asset must
belong to the taxpayer (Capital Allowances Act 2001 ss167-170). This
was demonstrated in the case Stokes v Costain Property Investments Ltd
[1984] where a tenant was not able to claim for plant installed in the
landlord’s premises. This provision has now been amended.
belongings For Customs purposes, “the goods you keep for your personal use, for
example caravans, bicycles, clothing, cameras, furniture, pets and riding
animals” (Customs notice 3). Alcoholic drink, tobacco products and
tools of trade are excluded.
below par For less than its nominal value. If a share with a nominal value of 25p
sells for 20p, it is below par.
below the line Items such as extraordinary items and payments of dividends. The
line is net profit after tax in the profit and loss account. Items below
the line relate to how the profit is applied rather than to how it has been
calculated.
Businesses may try to put expenses below the line and income
above the line as this maximises the reported profits.
BEN Business Economic Notes, old publications produced by Inland

Revenue.
Benchers Governing body of each of the four Inns of Court which admit
barristers.
benchmark Any standard set down as a guide to achievement.

Its original meaning is a surveyor’s mark on rock to be used as a
reference point.
benchmark accounting policy

The normal policy as prescribed in an accounting standard, as against
an alternative accounting policy which the standard may permit.
benchmark bond Bond that is regarded as a reliable indicator of the general market.
benchmark index Index or similar measure against which the performance of a particular
type of fund is measured.
benchmarking Process to measures standards of performance against others doing

similar work.
benchmark price Price of an item which is regarded as a benchmark for other items,
particularly a commodity or oil.
benchmark scale rate Rate published by HMRC on its website setting recommended rates for
accommodation and subsistence for employees when on business
overseas without the employee needing to produce receipts.
bender Old slang for a sixpence coin.
benefaction Altruistic motive, such as when donating to a charity or staff welfare

fund. An element of benefaction is in itself not sufficient to disallow tax
relief for trade expenditure provided there is sufficient trade connection.
The issue is discussed in the Inspectors’ Manual at BIM37400.
beneficial interest Where a person has any kind of financial stake in an asset, business or
venture, regardless of whether that beneficial interest is formally
recognised.
beneficial joint tenancy Having the benefit of a joint tenancy. This is where the joint owners
have an identical interest in the property. The death of an owner causes
his or her to pass to the remaining owners under survivorship.
beneficial loan Loan that is either interest-free or where interest is charged at a low
rate. If such a loan of at least £5,000 is made by an employer to an
employee, the amount of interest foregone may be taxable as a benefit
in kind.
In tax law, it is called an employment-related loan.
beneficially entitled Term used to describe what comprises a person’s estate for the
purposes of inheritance tax. It comprises all assets to which the
deceased was beneficially entitled immediately before death.
beneficial occupier Person who occupies a property but does not fully own it.
beneficial owner Legal term for the person who derives the real benefit of ownership
rather than the nominal owner. Typically the nominal owner exercises
the rights of ownership in accordance with the wishes of the beneficial
owner.
Such arrangements are usually used in two situations:
● where the beneficial owner wishes to conceal his or her
identity; or
● for administrative convenience.
Concealing a person’s identity may comprise fraud depending on
the circumstances. It can be legitimate in some circumstances, such as
where a beneficial owner fears that a price would be inflated if his real
identity was known.
Administrative convenience includes most forms of trusteeship and
nominee accounts.
beneficial owner Person who is regarded as the real owner of an asset, even though the
asset may be in someone else’ name, such person being the nominal
owner.
The term is also sometimes used to mean the rights of a beneficiary
of a trust.
beneficial use Use which is considered to be beneficial to the whole public,

particularly of environmental assets such as air and water.
beneficiary Person who receives property or other benefit from a trust, will or
intestacy.
For social security, “in relation to any benefit, means the person
entitled to that benefit” (Social Security Contributions and Benefits Act
1992 s122(1)).
beneficiary’s income The taxation of a beneficiary company’s interest in an estate is set out
in Corporation Tax Act 2009 from s943.
beneficiary’s own resources

Funds that a beneficiary has other than from a trust or inheritance.
The term is particularly used in Inheritance Tax Act 1984 s29A
with regards to abatement of relief for deaths from 26 July 1989.
Suppose a man leaves £100,000 to his mistress and the balance of
£200,000 to his wife. The wife could pay the mistress from her own
funds and then claim £300,000 from the estate which would be covered
by the exemption from spouses. Under s29A, this is no longer of effect.
The exemption is abated to the net benefit received by the wife.
benefit Any kind of financial advantage or asset to a person or business.
benefit Acts “Means —

(a) the Social Security Act 1973,
(b) the Social Security Acts 1975 to 1991”
(Social Security Act 1986 s84(1)).
benefit basis The benefit structure of a group insurance policy or pension

arrangement. It defines the type and level of benefits for each category
of membership. For example, life assurance cover for one category of
employees might be 3 x salary and for another category of employees it
might be 4 x salary (the categories must be clearly defined groups in
terms of jobs carried out so as to ensure there is no illegal
discrimination).
benefit cap Maximum amount of social security benefit that may be paid to a
household under Welfare Reform Act 2011.
benefit crystallisation event (BCE)

Defined occurrence which triggers an entitlement to benefit. The term is
particularly used in pensions to mean that the moment when a member
decides to take the pension benefit. This is not always at retirement.
benefit in kind An element of remuneration which is provided in goods or services

rather than money. Some benefits have been taxable since 1948. The
first significant increase in scope occurred in Finance Act 1976. Since
then many details provisions have been enacted on particular benefits.
benefit in kind Something provided by an employer to an employee other than cash.

Common examples of benefits in kind include company car, medical
insurance, beneficial loans and subsidised facilities.
The provision of a benefit in kind generally creates a liability for
income tax, though many benefits are specifically exempted from tax.
This is usually disclosed on a year-end form P11D. The tax on the
benefit is usually collected by adjusting the employee’s tax code for the
following tax year.
From 1999, there is usually also a liability for employers' national
insurance or its equivalent as class 1A or class 1B national insurance.
There can still be tax advantages in providing a benefit in kind.
First, the employee rarely has to pay national insurance. Also, some
benefits (such as beneficial loans and company cars) are taxed under
specific provisions which can create a tax advantage against providing
cash. Conversely, such provisions can make a benefit (particularly low-
mileage expensive company cars) more expensive than paying the
employee additional salary to provide the benefit himself.
Employers sometimes wish to provide benefits for non-tax reasons,
particularly where the perceived value is high, or where the benefit

connotes status.
benefit offence “Means —

(a) any criminal offence in connection with a claim for a relevant
social security benefit;
(b) any criminal offence in connection with the receipt or payment
of any amount by way of such a benefit;
(c) any criminal offence committed for the purpose of facilitating
the commission (whether or not by the same person) of a benefit
offence”
(Social Security Administration Act 1992 s121DA(5)).
benefits The monetary amounts payable by the insurance company to a

claimant, assignee, or beneficiary under the terms of an insurance
policy.
benefits associated with a gift

Term used in Income Tax Act 2007 s417 in relation to donations under
Gift Aid. It refers to a benefit received from a charity by its donor. If
the associated benefit exceeds a limit, the tax relief on the donation is
restricted.
benefits cap Maximum amount of social security benefits that a household may
receive. It is proposed to introduce this cap in 2013. The cap will be set
at median household earnings, estimated at around £500 a week.
benefits code Tax term for Chapters 3 to 7, 10 and 11 of Income Tax (Earnings and
Pensions) Act 2003. These determine how benefits in kind are taxed.
benefits we have awarded for added years

Term used by employers in relation to occupational pension schemes.
Added years are additional pensionable years that the employer may
grant when a member of staff retires early because of redundancy or in
the efficiency of the service, These additional years will increase the
employee’s retirement benefit which are paid for by the employer, not
the pension fund, and are usually financed from the savings that will be
made.
benefit year Year in which contributory social security benefits are paid in respect of
a contribution year or years.
This is defined in Social Security Contributions and Benefits Act
1992 s21(6) as beginning from the first Sunday in January, to the
Saturday before the first Sunday in the following January.
Benelux Customs union formed between Belgium, Netherlands and Luxembourg

between 1944 and 1948. In 1968 it was replaced by the single tariff of
what is now the European Union.
bene merentibus Latin: to the well-deserving.
benevolence (1) Generosity.

(2) An addition to tenths and fifteenths imposed in 1492 by Henry VII
with doubtful parliamentary authority to collect such amount as those
“that live in a splendid manner give evidence of ability to pay”.
benevolent society Friendly society formed for the objects of benevolence or charity.
Benford’s law Mathematical observation that in any random selection of numbers

from real life, the most common digit is 1, then 2 and so on to 9 as the
least common. The actual frequencies are:
1: 30.1% 4: 9.7% 7: 5.8%
2: 17.6%, 5: 7.9% 8: 5.1%
3: 12.5%, 6: 6.7%: 9: 4.6%
This arises from the fact that lower numbers predominate in any
sequence from 1. For example, the numbers 1 to 12 contain 15 digits, of
which there are 5 number 1, 2 number 2, and just one of each other
digit.
The law is named after Frank Benford (1883-1948) who discovered
it in 1938.
One of its uses is in checking credibility for fraud. If someone made
up a series of numbers, they would probably produce a more even
distribution of numbers. A departure from Benford’s law does not
automatically indicate fraud, but it could indicate that further
investigation is appropriate.
benign Favourable. The term is particularly used for a regime which is

reasonably kind though capable of being oppressive.
benignae faciendae sunt interpretationes et verba intentioni debent inservire

Latin: liberal interpretation should be the rule, and the words should be
made to carry out the intention.
BEP Breakeven point.
bequeath Leave money or assets in a will. The items left are a bequest.
Strictly speaking, land is devised and not bequeathed.
bequest A sum of money or other property available upon the donor's death.
bereaved minor Person under the age of 18, at least one of whose parents or step-parents
has died.
It may be possible to set up a tax-advantaged trust for a bereaved
minor (TBM) for such a beneficiary.
bereavement Loss when someone close dies. Consequences of death are explained in
that section.
A husband, wife or civil partner of someone who dies may be
eligible for some of these social security benefits:
● bereavement payment: a lump sum;
● bereavement allowance: weekly benefit paid to surviving
partners who are at least 45, for 52 weeks; and
● widowed parent’s allowance: weekly benefit paid to

surviving partners with children.
Entitlement to these benefits depends on the late partner having
sufficient national insurance record.
bereavement allowance Social security benefit paid for 52 weeks to a young widow, widower or
surviving civil partner.
A person cannot receive bereavement allowance and widowed
parent’s allowance at the same time. In practice a person receives
bereavement allowance when their entitlement to widowed parent’s
allowance ends.
The main conditions for receiving the allowance are:
● the partner died after 8 April 2001;
● the claimant was at least 45 years old when the partner died;
● the claimant is still under state pension age;
● the partner died within the last 52 weeks; and
● the partner either had sufficient national insurance record or
died from an industrial injury or disease.
bereavement payment Lump sum social security payment (currently £2,000) paid to a widow,
widower or surviving civil partner.
The main conditions are that:
● the late partner had sufficient national insurance record;
● the claimant was under pensionable age when their partner
died (or was over pension age but not entitled to a state pension);
● any claim is made within 12 months of death.
From 24 September 2007, it may not be necessary to make a claim
as payment will be made automatically.
Entitlement is not affected by the remarriage of the claimant.
This benefit is not subject to income tax (Income Tax (Earnings and
Pensions) Act 2003 s677).
bereft Word that originally meant “bereaved”. It is now more widely used, but
is still restricted to something that a person once had.
berhad Malay: private. The term is used to describe a Malaysian limited

company.
Berlin white beer Form of black beer which is exempt from alcoholic liquor duty
(Alcoholic Liquor Duties Act 1979 s4(1)).
BERR Department for Business, Enterprise and Regulatory Reform. In

2009, it was replaced by Department for Business, Innovation and
Skills.
BERTI Binding European Retrieval of Tariff Information - a correspondence

handling and management system used by the Tariff Classification
Service. It is used to produce Binding Tariff Information classification
decisions for issue to importers and exporters; and Liability Rulings for
issue to Customs staff.
BES Business expansion scheme.
BESA Bond Exchange of South Africa.
besaiel Great-grandfather. A form of legal action for recovery of lands.
bespoke retail scheme For VAT, an arrangement which allows large businesses, which are
ineligible to use published retail schemes, to agree with HMRC a
method for accounting for VAT on retail supplies.
best effort American term for a new issue which is not underwritten but simply
sold for whatever price can be achieved.
best execution The obligation placed by the London Stock Exchange on a broker to
obtain the best deal for a client in any transaction. This means the
highest price for a seller and the lowest price for a buyer. In practice
this is administered by SEAQ.
best judgment assessment Tax assessment made by the HMRC in the absence of any or sufficient
information from the taxpayer. The inspector is required to make such
an assessment to the best of his judgment.
best part Greater part.
best price (1) In marketing, a price that is not likely to be bettered by the seller.
(2) In investing, an order to buy a security at the best price possible.
bet “A bet is merely an irrational agreement that one person should pay
another person on the happening of an event” (Evans v FCT [1989],
Australian case). This held that betting is not a trade. However
organising oneself to take bets is a trade. This matter is discussed in the
An exception is where a bet is related to a trade, such as placing a
bet to hedge against a downturn in trade, such as a fall in a share index.
beta Measurement of a return on a particular share compared with a 1%

return on the stock market in general. This shows the volatility of that
share, as expressed by the beta factor.
beta coefficient Measure of the volatility of the share. This is also known as the beta
factor.
bet made for community benefit

Term used in Customs notice 147 to define a category of pool betting
that is not subject to pool betting duty.
better-of-two-assets option
An exotic option where the payment is on the better of two underlying
securities.
betterment Improvement, particularly in the value of land.
betting Form of gambling.
betting and gaming (B & G)

In tax, a general term for all the excise duties that relate to any
gambling activity or to amusement machines.
betting levy Charge made on bookmakers.
beverages “Liquids that are commonly consumed [and] characteristically taken to

increase bodily liquid levels, to slake the thirst, to fortify or give
pleasure.” (HMRC guidance).
Manufactured beverages are standard-rated for VAT, but other
beverages are zero-rated as food. Zero-rating extends to milk, tea,
coffee, cocoa and malted drinks.
Beveridge Report Plan presented by Sir William Beveridge (1879-1963) in 1942 to

reform the social security system. It was largely enacted by 1948 and
remains in force today though with many adaptations.
beyond reasonable doubt Basis of proof in criminal proceedings, as opposed to balance of

probabilities which is used in civil proceedings.
bfa British Franchising Association.
BFH Bundesfinanzhof, German supreme court for taxation matters.
BFPO British Forces Post Office.
b/fwd Brought forward. Indication in bookkeeping of a sub-total taken from

a previous page.
BG Country prefix code for Bulgaria.
B&G Betting and Gaming.
BGC Bank giro credit.
B2G VAT Returns Service

Government facility that allows the processing of bulk VAT Returns
via an XML scheme direct from a trader’s software accounting package
into HMRC systems, via the Government Gateway.
BHC Bank holding company.
BHRC Butterworth’s Human Rights Cases, a book of court cases that was first
published in 1996.
bias In accounting, influence that affects how accounts are presented.

Examples include accounts adjusted to resist a takeover bid or to obtain
finance.
Statement of Principles sets out four requirements for accounting
information. One of these is reliability. This in turn has five elements,
one of which is that financial statements must be neutral. Any bias
conflicts with that accounting requirement.
BIC Bank identifier code.
bicycle Two-wheeled vehicle which is propelled by the rider’s own power.

As it has no motor, it may legally be used on roads without any
licence, insurance, MOT or road tax. It may be ridden at any age. It is
not subject to Vehicle Excise Duty. There are a few roads, such as
motorways where it may not be used.
There are several special tax provisions for bicycles.
Provisions of cycles and equipment is not a taxable benefit in kind
(Income Tax (Earnings and Pensions) Act 2003 s244).
Provision of workplace facilities for cyclists, such as showers and
cyclists’ breakfasts are excluded as a taxable benefit.
An employee who uses his bicycle on his employer’s behalf is
entitled to a tax-free allowance per mile.
bid Either an offer to buy shares (or indeed, anything else) or the highest
price at which a person is prepared to pay for them. The term is also
used for a takeover bid.
bid basis Pricing policy of unit trusts where the bid price is reduced to encourage
sales.
bid defence costs Costs incurred by a company in resisting a take-over bid.

Their tax treatment is discussed in the Inspectors’ Manual at
BIM38285.
bid market Market where there are more bids to buy than offers to sell.
bid offer Shares, units in unit trusts and other investment vehicles are bought at
one price and sold at another. The higher price is called the 'offer price'
since this is the price at which the unit trust company or other
institution offers the security for sale. The lower price is called the 'bid
price' and is the price at which the investor can sell the security back to
the institution in question.
bid-offer spread The difference between the bid price and offer price for a security.
This spread must be quoted by market makers. The bid price is the
price at which the security will be bought; the offer price at which it
will be sold.
The bid-offer spread is determined by the underlying price of the
security, its sector; its liquidity; any likely takeover and any other
factor which the market maker considers relevant.
There is a limit to the spread set out in Financial Services Act 1986.
bid price Price at which a market maker or broker is prepared to buy shares or
other securities.
bid rate Rate of interest offered on deposits.
bid valuation Where unit trust managers value bids and offers according to the actual
sale cost of the holdings within the fund.
biennial bond Bond in which the first coupon payment is made after two years.
BIFEX Baltic International Freight Futures Exchange.
bifurcation Divesting part of a business to improve the strategic focus of what is

left.
Big Bang Radical change in the way the London Stock Exchange operates
which took effect on 27 October 1986.
The main changes were:
● screen-based computer trading largely replaced floor
trading;
● rules on owning stockbroker firms were relaxed, with the
result that many were bought by banks;
● stockjobbers were replaced by market makers who
performed a similar but no identical role.
These reforms were followed by Big Bang 2 in 1997.
The term comes from a theory postulated in 1950 as to how the
universe was created. From this, the term came to mean any change
which is introduced suddenly in one go and which is not phased in.
Big Bang 2 Change in the way the London Stock Exchange operated, which
took effect on 20 October 1997. The main changes were:
● moving from a quote-driven system of trading to an order-
driven system;
● introducing the electronic order book known as SETS which
cut out the middleman, replacing market makers with retail service
providers.
Big Five The five largest accounting practices which dominated the profession
until 2001 when Andersens disappeared in the wake of the Enron
scandal.
Big Four (1) The four largest accounting practices which have dominated the
profession since 2001, namely: PriceWaterhouse Coopers, Deloitte and
Touche, KPMG and Ernst & Young.
(2) The four largest British banks, namely Barclays, Lloyds TSB,
HBOS (Halifax and Bank of Scotland) and Natwest (owned by Royal
Bank of Scotland).
(3) The four largest Japanese security houses: Daiwa, Nikko, Nomura
and Yamaichi.
Big Society Flagship policy of Conservative party in 2010 General Election which
has been adopted by the subsequent coalition government.
Its aim is “to create a climate that empowers local people and
communities, building a big society that will ‘take power away from
politicians and give it to people’” (Government press release 18 May
2010).
bilateral credit Credit that banks allow each other while cheques are being cleared.
bilateral netting An agreement between two parties that transactions between them will
be netted off and settled by a single payment. Such arrangements may
be made between two businesses or between a business and its bank.
bill Written document, particularly a formal one. The word originally meant
a document served under seal.
Today, the word on its own usually means an invoice or other
document which details sums the recipient is expected to pay. This may
be an unpaid invoice or charges which otherwise, such as for damage
done.
The term is also used almost colloquially to denote the charges
which a person has agreed to pay but whose exact value is not known at
the time, such as a telephone bill or restaurant bill.
Other uses of the word are as an abbreviation for a specific type of
bill, such as bill of exchange or bill of lading, depending on the context.
bill-chamber Department of the Scottish Court of Sessions.
billet Temporary accommodation for soldiers or people displaced by war, or a

piece of paper giving details of such accommodation. Tax relief was
granted for the additional cost of travel to work by billeted workers.
billeting allowance Payment from the government to billetors of children during the
second world war. The amount was initially fixed at 8s 6d a week.
billing authority The local authority, which collects the council tax. It may do so on
behalf of itself and other authorities. Those other authorities serve a
precept on the billing authority.
billion (bn) This now means one thousand million, which can be expressed as 10003
or 109, or 1,000,000,000. This comprises 1 followed by nine noughts.
In the UK it originally meant one million million or 1012 — a
thousand times greater than the current meaning. The new meaning of
billion was conveyed by the word milliard.
This change of meaning can cause problems if looking at old
documents which refer to billions.
bill of adventure Written statement by a merchant stating that goods shipped in his name
belong to another.
bill of costs Statement of account of charges made, particularly made by a solicitor

to a client.
bill of entry Account deposited at a Customs house of goods imported or exported.
bill of exceptions Statement of the objections of a litigant to the decision of a judge. This
procedure was abolished in 1852 in favour of simply asking for a new
trial.
bill of exchange “An unconditional order in writing, addressed by one person to another,
signed by the person giving it, requiring the person to whom it is
addressed to pay on demand or at a fixed or determinable future time a
sum certain in money to or to the order of a specified person, or to
bearer” (Bills of Exchange Act 1882 s3).
A cheque is a specific form of bill of exchange. Other bills of
exchange are now rare as other means of payment have proved more
convenient and reliable.
bill of health Document once signed by port authorities to certify that there was no
infection on board. This was also known as a clean bill of health,
which expression has become a metaphor.
bill of indictment Legal procedure before 1933 which accused a person of a crime, which
accusation was tried for a possible indictment.
bill of lading A list of goods to be carried by a ship on a single journey. It is widely

used for customs purposes.
bill of particulars Statement of writing of what a claimant is seeking in a legal action.
bill of peace Bill which could once be filed in the Chancery division of the High
Court to restrain proceedings between litigants.
Bill of Rights (1) Act of Parliament in 1689 which asserts the rights of Parliament
against the monarch.
(2) In USA, the first ten amendments to the Constitution, made in 1791.
bill of sale Document which a seller gives to the buyer to show that a sale has
taken place.
Bills of Sale Act 1878 extends the scope of the Act to many more
documents.
A bill of sale cannot be registered unless stamped (Stamp Act 1891
s41).
bill of sight Entry once made by an importer of goods who is unable to make a
proper Customs declaration immediately.
bill of store Old form of licence issued by Customs which allowed British goods to
be reimported.
bill of victualling List of necessary stores drawn from a bonded warehouse.
bill payable Promissory note or bill of exchange payable.
bill rate Rate at which bills of exchange are discounted in the market.
bill receivable Promissory note or bill of exchange receivable.
BIM HMRC Inspector’s Manual for Business Income.
BIMBO Buy-in management buy-out. A form of management buy-out which

uses venture capitalists who exercise a degree of control.
bimestrial Lasting for two months.
bimetallic Being made of two metals, such as the British two-pound coin.
bimetallism Practice of valuing coinage according to its value in either gold or

silver, where their relative values were fixed.
bimillenary Lasting for 2000 years.
BIN Bank identification number.
binary option Option which pays either a fixed amount or nothing.
binary prefix Alternative series of prefixes used to define storage capacity for
computer data. The prefix replaces the second syllable of the ordinary
decimal prefix with the letters “bi”, so kilobyte which means 1000
bytes becomes a kibibyte which is 210 bytes, which is 1024 bytes.
binary scale Another term for binary notation.
bin card Stock record card held in a stores or warehouse which records receipts,
issues and stockholding of an item of stock. They have now largely
been replaced by computerised records.
bind To tie, either physically (as with string) or metaphorically (as in making
an agreement from which neither party may withdraw).
binder (1) Temporary insurance agreement issued while the permanent

agreement is prepared.
(2) Folder for holding documents. For VAT, a binder is generally zero-
rated if sold with printed material and otherwise standard-rated (VAT
notice 701/10).
binding Description of an undertaking from which a person cannot withdraw.
binding information Statement from HMRC on the rate of customs duty payable. Provided
the request was made honestly and properly, the statement is binding on
HMRC for four years.
binding in honour only Words on an agreement which create an honour clause. This means
that the agreement is not a contract that binds the parties.
binding precedent Decision of the court which must be followed in a later court case if
the facts are the same. This decision must be stated in the ratio
decidendi of the court, and not in its obiter dicta.
A litigant may argue that a precedent should not be followed in a
particular case if it can be distinguished. Otherwise a binding
precedent can only be overturned by a decision of a higher court or by
legislation.
Binding Tariff Information (BTI)

System for implementing the Common Customs Tariff. The
information is issued to economic operators by the customs authorities
of the European Union (EU) Member States. Thus, traders will know,
in advance, the tariff classification of the goods they intend to import or
export. This information is introduced into a data-base run by the
European Commission (EC) and is legally valid in all Member States,
regardless of the Member State which issued it.
bingo Popular gambling game where cards are issued with a selection of
(usually) two-digit numbers which are then called out at random. The
first person to have all their numbers called is the winner.
For licensing, bingo, “means any version of that game, irrespective
of by what name it is described” (Gambling Act 2005 s353).
The game is subject to bingo duty.
bingo duty Duty which, from 27 October 2003, is charged at 15% of a bingo
operator’s profits. Previously the duty was a lower percentage of profits
plus a share of amounts staked. Small operators may be exempt.
The law is contained in Betting and Gaming Duties Act 1981 as
amended, Finance Act 2003 s9, and Bingo Regulations SI 1988 No
333, all as amended.
bingo operating licence Licence issued by Gambling Commission to someone who provides
facilities for playing bingo (Gambling Act 2005 s65(2)(b)).
bingo promoter Person who promotes the playing of bingo and who is liable to pay
bingo duty.
bin tax Charge made for amount of non-recyclable material produced by a

person or business. Such a charge was to be experimentally trialled
from 2009, but the plans were dropped in 2008.
biobutanol An alcohol which is obtained by the fermentation of biomass. It attracts

a lower rate of hydrocarbon oil duty.
biodegradable Capable of being broken down to harmless substances, such as when

plastic degrades by bacteria which may be found in soil.
biodegradable municipal waste

“Waste that is both biodegradable waste and municipal waste”
(Waste and Emissions Trading Act 2003 s21(2)).
biodegradable waste “Any waste that is capable of undergoing anaerobic or aerobic

decomposition such as food and garden waste, and paper and
paperboard” (Waste and Emissions Trading Act 2003 s21(1)).
biodiesel Equivalent to diesel oil which is produced from either biomass or waste
cooking oil. It qualifies for a reduced rate of hydrocarbon oil duty
provided it:
● can be used as a substitute for diesel;
● has an ester content of at least 96.5% by weight; and
● has a sulphur content of 0.005% or less by weight.
bio-ethanol Ethanol (ethyl alcohol) created from most common crops. It is

increasingly being used as a renewable form of road fuel.
biofuel Oil used as road fuel that is made from crops.
biometric immigration document

Document which may be used in connection with people entering the
UK (UK Borders Act 2007 s5).
biometric information “In relation to an individual means data about his external
characteristic, including, in particular, the features of an iris or of any
part of the eye” (Identity Cards Act 2006 s42(1)).
biometry Study of biological data by means of statistical analysis.
BIOS Basic Input/Output System.

This is the software built into the computer which controls the
keyboard, monitor, disk drives, communications ports, and other
functions. It works independently from the computer’s operating
system.
BIP Border Inspection Post - control point at the place of importation into
the European Union (EU) where Products of Animal Origin (POAO)
and live animals are subject to veterinary checks.
BIPRU Prudential Source Book for Banks, Building Societies and Investment
Firms.
bird For VAT, birds are standard-rated unless sold as food, such as certain
species of fowl. Bird food is standard-rated unless sold for poultry or
game birds (VAT notice 701/15).
bird net Net containing peanuts or similar, hung up to feed wild birds. They are
standard-rated (VAT notice 701/15).
BiRiLiG The 1985 German law on accounting directives. It is an abbreviation for

“Bilanzrichtliniengesetz”.
birr Currency of Ethiopia.
birth Date on which a person is born. A birth must be registered within 36

hours.
For all legal purposes, birth is a date and not a time. So a person
born one minute after midnight on 1 January and a person born nearly
24 hours later at one minute to midnight, both have a birthday of 1
January, and both are regarded as having reached the same age when 1
January arrives.
In employment, birth is also relevant for the purposes of statutory
maternity pay (SMP). A distinction is made between expected birth
and actual birth. Expected birth is when the doctor or midwife expects
the baby to be born, and actual birth is when the baby is born.
birth certificate Certificate confirming the details of birth of a child.
birth certificate Prompted by need to know a child’s age when working in a factory.
birthday Day when a person was born, and the anniversaries of that date.
For legal purposes, a person’s birthday starts immediately after
midnight on the day, regardless of when in the day a person was born.
birth sex Whether a person is born male or female. A person retains that sex for
life until they have a gender reassignment, which is now recognised
for all legal purposes, including for tax.
BIS (1) Department for Business, Innovation and Skills

(2) Bank for International Settlements.
biscuits For VAT, biscuits are generally zero-rated as food. Chocolate biscuits
are standard-rated (VAT notice 701/14). Biscuits for cats and dogs are
standard-rated (VAT notice 701/15).
bis dat qui cito dat Latin: he gives twice who gives promptly. (Proverb by Bacon)
bissextile Referring to a leap year.
B/L Bill of Lading.
Blackacre Fictitious piece of land widely used in legal texts. Its existence is
similar to the widget.
black beer “Means beer of the description called or similar to black beer, mum,
spruce beer or Berlin white beer, and any other preparation (whether
fermented or not) of a similar character (Alcoholic Liquor Duties Act
1979 s4(1)). Black beer is exempt from alcoholic liquor duty.
black economy That part of a nation’s trade which is unofficial. It is usually also illegal
as it is not declared for tax.
black knight Person or organisation that makes an unwelcome takeover bid.
black list List of people, organisations or products that are banned or restricted in
some way. Many types of black list are now illegal.
blackmail Criminal offence committed “if, with a view to gain for himself or
another or with intent to cause loss to another, he makes any
unwarranted demand with menaces; and for this purpose a demand with
menaces is unwarranted unless the person making it does so in the
belief —
(a) that he has reasonable grounds for making the demand; and
(b) that the use of menaces is a proper means of reinfocing the
demand”
(Theft Act 1968 s21).
The equivalent offence in Scotland is called extortion.
From 30 November 1993, payment of blackmail is a criminal
payment and therefore not allowed as a tax deduction under
Corporation Tax Act 2009 s1304. This disallowance applies even where
there is no criminal intent by the payer.
The matter is discussed in the Inspectors’ Manual at BIM 43160.
black market Trading in prohibited goods, or trading in a prohibited manner (such as

buying goods in excess of one’s ration during a war).
Black-Scholes Method for valuing options using a mathematical formula. The method
is complex. It involves constructing a portfolio using delta hedging to
create the same cashflows as the option.
BLAGAB Basic life assurance and general annuity business.

The term is used in connection with taxation of chargeable gains
and allowable losses in the taxation of life assurance companies
(Income and Corporation Taxes Act 1988 s432B(12)).
blanket policy Insurance policy which has one maximum sum payable but does not
specify individual maxima for items covered. It is often used to insure a
fleet of vehicles.
blank form Form which indicates what details are required and where they are to be
written.
blank transfer Transfer of shares or similar securities where the name of the transferee
has not been entered. Such a transfer document may be required when
shares are offered as a security for a loan.
blank window Feature of a building which looks like a bricked-up window.
bleed to death In finance, colloquialism for slowly becoming insolvent.
bleed white Colloquialism referring to heavy extortion, from the analogy of a body
from which all blood has been drained.
blemishing the peace Conduct which, though not a criminal offence in itself, can justify a
court to require a person to provide a surety for good behaviour.
blend Mix two items to make a product.
blende Mineral, particularly zinc sulphide. The term comes from the German
word meaning to deceive, as the mineral looks like galina.
blended funds Mixed funds from different sources, particularly when they derive from
different provisions of a will.
blending Process of mixing two or more wines to make a saleable alcoholic

drink. Alcoholic Liquor Duties Act 1979 is charged in accordance with
Alcoholic Liquor Duties Act 1979 s54(3A).
blending of liquors Mixing two or more alcoholic liquors to make a saleable alcoholic
drink. The tax provisions for blending are contained in Alcoholic
Liquor Duties Act 1979 s66A.
Blériot, Louis French aviator (1872-1936).

On 25 July 1909 he became the first person to fly from France to
Britain. Customs declared the aeroplane to be a flying boat and subject
to the same taxes and controls.
blet Natural internal decay in products like fruit, leading to a significant loss
in value.
Bligh Bligh’s Reports, law reports of the House of Lords from 1818 to 1821.
blight Something which causes injury or loss to another.

In finance, the term means the loss of value of property because of a
proposed development such as a nearby motorway or airport.
The word originally meant a disease which caused plants to wither.
blighty Military colloquialism for a serviceman’s home country seen in

affectionate terms.
blind Unable to see. Such a person may claim blind person's allowance.
blind person’s allowance (BPA)

Additional allowance for income tax for a person who is registered
blind. It is an anomaly in the system as it provides a measure of social
security benefit in the income tax system. Its provisions are contained
in Income Tax Act 2007 s38.
blind pig Another name for a speakeasy.

blind tiger Another name for a speakeasy.
blind trust Trust administered for an individual on the terms that the individual
does not know what the trust is doing.
A blind trust is often set up for individuals when they are elected or
appointed to political or public office. By not knowing in what
businesses the blind trust has invested, allegations of favour to those
businesses are avoided.
blocked account Account which cannot be used because of a restriction imposed either
by a court or by a law.
blocked currency Currency whose use is controlled by the government, usually restricting
its use to within the country.
This is often done by countries with a poor economy as a means of
hiding the low value of the currency. A blocked currency often has an
official exchange rate which is much higher than is otherwise justified.
Currency which is not blocked is known as convertible currency.
blocked earnings Tax term for earnings which cannot be received because of restrictions
imposed by a foreign government.
An election may be made for such earnings not to be taxed under
blocked funds Money held in a blocked account.
blocked input tax Input tax that is always non-deductible, such as that on business
entertainment and some cars.
block grant Old term for the sum which central government provided to a local
authority. It is now known as formula grant.
block order exposure system (BLOX)

UK stock market system for making quotes on large numbers of shares
and other securities.
block positioner Broker or dealer who acts as the other party in a sale for a large number
of shares or other securities.
block trade Buying or selling a large number of shares or other securities in a single
transaction.
block trading Trading in large numbers of shares or other securities.
block transfer In pensions, the single transfer of all sums and rights from one pension
scheme to another in respect of a group of members. This often happens
when a business is taken over.
The transfer is from a transferring scheme to a receiving scheme.
The main conditions permitting a block transfer are:
● every member transferred must have been a member for at
least 12 months;
● if the receiving scheme is a personal pension scheme, the
membership period excludes any period where the benefits paid into the
transferring scheme were only contracted-out rights;
● all the sums must be transferred from one transferring
scheme to one receiving scheme;
● the transfer must be made under a single agreement, but need
not be transferred on the same day.
block volume Total volume of block trades for a stated period.
block vote System where one person is allowed to cast a large number of votes on
behalf of other people, such as when trade unions cast votes at their
conferences based on the size of their membership.
blodwyte Fine or compensation for shedding blood. Historically this was paid to
the lord of the manor who passed some to the injured person or their
relatives.
blood In law, a personal relationship which derives from ancestry and

descendancy rather than from marriage or adoption.
blood money (1) Money paid by a killer to his victim’s next of kin.
(2) Money paid to an informant to convict a person of a capital offence.
Judas Iscariot was given blood money for betraying Jesus.
blood test Test on a person’s blood, usually to establish any illness.

Before advances in DNA, a blood test was sometimes used in
paternity cases. A blood test could prove that a man was not the father
but could not establish whether he was.
bloodbath Boxing slang for an unequal split where the manager receives a much
larger share of the money than the boxer.
bloodstock Collective term for valuable horses kept for breeding.
bloody code Criminal law of the 18th century which had a long list of capital
offences, such as stealing anything from a person.
bloody-minded Description of someone who is obstinate for no good reason.
Bloomberg American financial information service.
blot Drop of ink which dries on a paper, leaving an ugly stain and which
may obliterate writing. This has become less common with modern
writing implements.
In bookkeeping, any figure concealed by a blot must be written
again, indicating where it refers. If a large amount of information is
concealed by blots, the text should be written again, clearly indicating
this. In all cases, the original text should be left legible, and there must
be no doubt as to which entries are to be regarded as original.
More generally, the term refers to any impediment such as a defect

in character or unfortunate incident.
blot on title In law, a defect in title.
blowout American term for a rapid sale of a new stock issue.
blue badge Indication for cars indicating that it is carrying a disabled person who is
entitled to use special facilities such as reserved parking bays.
The presence of such a badge helps to determine that the car is for a
person with disability. This attracts certain tax benefits.
Blue Blanket Banner of Edinburgh craftsman.
Blue Book (1) In the UK, annual government publication detailing national
statistics relating to the economy.
(2) In USA, a document prepared for the Federal Reserve that reviews
monetary policy.
blue button Name once used for a trainee market-maker. He is allowed to collect
prices but not to transact bargains.
blue channel Customs term for the exit at ports and airports to be used by travellers
from the European Union who are carrying no banned or restricted
goods.
blue chip Term denoting a large, safe and respected company. Such a company is
usually regarded as safe and reliable. The term comes from the colour
of chips used in a casino.
blue chip out Where a company does not seek a stock market quotation of its own,
but is bought out by a blue chip company.
blue gas A form of wood gas.
blue list Daily list of municipal bonds and their ratings, produced in the USA by
Standard and Poor’s.
blue sky laws American state laws which protect investors from fraudulent traders.
bn Usual abbreviation for “billion”.
board (1) Provision of food with accommodation.

(2) Collective noun for directors, trustees or other group responsibility
for running an organisation.
board and lodging Provision of meals and sleeping accommodation. The tax treatment for
employees is explained in the inspectors’ manual at EIM01020,
If an employee is provided with “self-contained living space”, a tax
charge will probably arise under Income Tax (Earnings and Pensions)
Act 2003 s97, unless within an exemption. Otherwise s97 does not
apply to board and lodging.
boarding powers Powers of HMRC officers to board an aeroplane or vessel in connection

with customs duties.
board meeting Meeting of the directors of a company.
Board of Customs and Excise

Controlling authority for Customs and Excise until merged with Inland
Revenue in 2005. The original Commissioners of Customs were created
in 1671 by Charles II.
board of directors The group of people responsible for running a company.

In the USA, the term is also used to mean a group of people elected
by shareholders to appoint the company president and other executives.
Board of Green Cloth Body which controlled royal finances until 1782.
Board of HMRC Board of HM Revenue and Customs. The body formed in 2005 which
controls the UK taxing authorities.
Board of Inland Revenue Body that controlled the authority for dealing with direct taxes. In 2005,
it was merged with Customs and Excise to form the Board of HMRC.
Board of Trade Body first formed in 1889 to regulate matters relating to trade and
foreign plantations. This became a function of the Department of Trade,
later the Department of Trade and Industry, and now Department for
Business Enterprise and Regulatory Reform.
board order Order to a stockbroker to buy or sell at a particular price.
board wages Wages paid to servants which included money for them to buy their
own food which was not provided by the master.
bob Slang for a shilling, used from around 1800 to the coin’s replacement in
1971.
bodies with aims that are in the public domain

Term used in VAT leaflety 701/5 for public interest bodies.
bodily functions For the purpose of disability living allowance, this includes washing,
dressing and going to the toilet. A person who has difficulty with such
functions may be entitled to the care component of this allowance.
body of deed Operative part of a deed, as against the recitals.
bodyshopping Providing services to a client “by employees of service providers, being

small, medium or large companies who employ staff whom they second
to clients”.
This definition was given in the judgment of Burton J in the case

CIR v Professional Contractors Group [2001] regarding an IR35 issue.
BoE Bank of England.
boe Barrels of oil equivalent
boilerplate The standard terms which apply to all contracts or other forms of
agreement.
In accountancy, it particularly refers to the practice of using a
general description for an accounting practice rather than describing
what has happened. Such descriptions do not always accurately
describe the practice. The Financial Reporting Review Panel
criticised this practice in 2007.
boiler room High pressure selling techniques, particularly to persuade individual

investors to buy shares of doubtful value. The term is believed to have
originated in The Netherlands in 1986.
boliviano Unit of currency in Bolivia.
Bombay Stock Exchange Main stock exchange of India.
bona fide Latin: in good faith.

Many transactions and actions must be done in good faith to be
lawful.
bona gestura Latin: good behaviour.
bona mobilia Latin: moveable goods.
bonanza Source of great wealth.
bona peritura Latin: perishable goods.
Bonar Law, Andrew English politician (1858-1923) who was Chancellor of the Exchequer
from 10 December 1916 to 10 January 1919 under the coalition
government of David Lloyd George. He advocated tariff reform.
He was prime minister from 23 October 1922 to 22 May 1923.
bona vacantia Latin: unclaimed goods.

Such goods belong to the Crown, the Duchy of Lancaster or the
Duke of Cornwall depending on where they are located.
bond Any security which has the nature of an IOU. It is usually an

agreement whereby a sum is repaid to an investor, with interest, over a
period of time.
Companies may issue bonds as part of their debt equity. A
business may issue a bond when goods are deposited in an excise
warehouse.
The government issues bonds in the form of gilts.

“A certificate of debt issued by a government or corporation in order to
raise money - a bond is essentially an IOU. A bond states when a loan
must be repaid and what interest the borrower (issuer) must pay to the
holder. In the UK, government bonds are called ‘gilts’. In the US they
are called ‘Treasury securities’.” (HM Treasury glossary).
bond basis Method for calculating accrued interest on bonds.
bond broker Broker who specialises in trading in government bonds.
bond conversion Exercising the right to exchange from one bond to another, usually on
different terms.
bond covenant Term in the contract for the issue of a bond which restricts the conduct
of the issuer.
bond creditor Creditor whose debt is secured by a bond.
bond future Contract to buy or sell a specific bond at a future date for an agreed
price.
bond discount Difference between the face value of a bond and the lower price at
which it is issued.
bonded goods Goods in a bonded warehouse.
bonded warehouse A place approved by HM Revenue & Customs for the deposit, keeping
and securing of goods liable to excise duty, without payment of that
duty. This term is often applied to a Customs Warehouse: incorrectly,
since no bond is usually required for these.
bonded warehouse Warehouse where goods are stored until taxes are paid.
bond finance The name sometimes given to loan finance (more commonly in the
USA).
bondholder Person who owns government bonds.
Bond House decision Ruling of the European Court of Justice in a case of 2006.
It held that an innocent party to a missing trade fraud may claim
back the VAT input tax.
bondised Description of an insurance fund which is linked to a unit trust.
bond market Place where government and municipal bonds are traded.
bond premium Difference between the face value of a bond and the higher price at
which it is issued.
bond risk Risk associated with holding bonds as an investment. The two
commonest risks are interest-rate risk and credit risk. The former arises
if interest rates change, and the latter if the rating of the bond
deteriorates.
bond swap Simultaneous sale of one bond and purchase of another.
bondwashing The practice of selling a bond cum div so that the dividend is treated as
part of the capital gain and not income, and is therefore taxed more
favourably. Tax law changed in 1985 to make this practice ineffective.
bond yield Income produced by a bond, expressed as a percentage of the price paid
for the bond.
bonus Additional payment or benefit in some form, particularly

(1) to staff. It may be contractual or discretionary. Although a bonus
can be in kind, the term usually means a payment in money. Such
bonuses are subject to tax and national insurance as gross pay.
(2) an amount added to a with profits policy or similar. Typically such
a bonus, once added, cannot be removed.
bonus dividend Dividend paid to shareholders above those expected. Such a dividend
often arises on a takeover.
bonus issue An issue of shares to existing shareholders for no payment. Such an

issue is usually in proportion to the holder’s existing holding.
A bonus issue is usually for one of two reasons:
● to capitalise some retained profit; or
● to reduce the nominal value of the shares to a smaller size,
making them easier to trade.
Typically the former reason tends to be of a small size, such as one
bonus share for every five already held. The latter reason tends to be of
a much larger size, such as fiver shares for every one held.
A bonus issue does not increase the value of the company nor does
it increase the value of a shareholder’s holding.
A bonus issue is sometimes called a scrip issue, or (if for the
former reason) a capitalisation issue.
bonus share Share issued in a bonus issue.
bonus shares “Shares which are issued otherwise than for payment (whether in cash
or otherwise)” (Income Tax Act 2007 s151(1); Corporation Tax Act
2010 s90(1)).
book (1) Record of accounts, commonly used in the plural.

(2) Term used by foreign exchange dealers to represent their total
exposure to the market. The reduction of the book is known as book-
squaring.
(3) Bound collection of pages. They are commonly divided into
exercise books for the customer to write in, and text books for the
customer to read.
For VAT purposes, exercise books are standard-rated as stationery.

Text books are zero-rated under Group 3 of the zero-rating schedule.
Instruction books supplied with equipment are usually regarded as
part of the supply of the equipment.
Further details are given in VAT notice 701/10.
(4) In gambling, a book is a collection of odds at which bets are
accepted.
book of account Any book, or computer equivalent, which records financial transactions.
One which is part of the double-entry bookkeeping system is known as
a book of prime entry.
book of original entry Another name for a book of prime entry.
book of prime entry Book or equivalent in which all financial transactions are first recorded.
Typical books of prime entry are the cash book, petty cash book, wages
book, sales day book, purchases day book and journal.
The totals from the books of prime entry are entered into the
nominal ledger from which the trial balance is prepared.
book sales Sales as recorded in the business’s financial records.
book-squaring Process of reducing a dealer’s exposure to a financial market to zero.
book to bill ratio Ratio of orders taken in a period divided by invoices issued in the
period. This ratio is widely used in particular businesses such as for
semiconductors. The measure indicates whether demand is rising or
falling.
book value Value of an asset as recorded in the business’s financial records.

The value of a fixed asset after depreciation is known as the net
book value.
book with CD For VAT purposes, a book with a CD is treated as two separate
supplied with the book zero-rated and the CD standard-rated. There is
an exception if either the book or the CD is merely a promotional item
for the other. This is an area where care and professional advice is
needed.
booking fee Any fee which is payable in advance for the provision of a service.
In finance, it usually refers to a charge for either sourcing the funds
or reserving them for a fixed mortgage or a capped mortgage.
bookkeeping Keeping financial records.

[Bookkeeping, bookkeeper and bookkeepers are the only English words
to have three consecutive double letters.]
bookkeeping barter Financial record where two businesses or people trade by exchanging
goods in a barter transaction.
The bookkeeping requirement is to make two journal entries, one
for the purchase and one for the sale, so that the transaction is properly
recorded.
bookkeeping transaction Any financial transaction which requires entries in the business’s
financial records but which does not affect the value of the business.
Examples include reallocation of expenses and issues of bonus shares.
bookmaker Person whose trade is to accept bets.
book-squaring Process by which a foreign exchange dealer reduces his book, that is
his exposure to the market.
Boolean algebra Branch of mathematics for establishing truth of multiple statements.

At its simplest, letters such as x, y and z are used to denote
statements which may be true and equal to 1, or may be untrue and
equal to 0. Addition denotes “or”, and multiplication denotes “and”. On
this basis, the normal rules of algebra apply.
For example:
x = pigs have four legs
y = pigs can fly.
Using Boolean algebra, these statements have values:
x = 1 (true)
y = 0 (untrue)
Following the normal rules of algebra, we can conclude that:
x+y=1
which means it is true that either pigs have four legs or they can fly; and
xy = 0
which means that it is not true that pigs both have four legs and can fly.
Boolean algebra can be extended to more sophisticated applications.
Boolean logic Means of expressing functions using similar expressions to Boolean

algebra. In particular, it uses the three operations “and”, “or” and
“not”.
Such expressions are often used in search engines for websites. For
example “pig +legs” will find all references to pig and legs, while “pig
–guinea” will find references to pig but not to guinea pig.
boom Generally this imprecise term applies when there is sustained growth in
both prices and activity.
boom and bust Period of sustained growth and increasing prosperity interrupted by
recession.
The term has been widely and pejoratively used about the
Conservative government’s period between 1979 and 1997 when there
was sustained growth interrupted by two recessions, in the early 1980s
and early 1990s.
bootleg Illegal manufacture.

The term particular applies to:
● alcoholic liquor on which duty has not been paid; and
● copies of books, art, music etc on which copyright fees have
not been paid.
boot money Informal fee paid to a footballer who makes a guest appearance for a
team of which he is not a paid member. Such payments are taxable
income.
The term comes the fact that such money was originally paid by
being left in the player’s boots.
boot strap (1) A cash offer for a controlling interest followed by a lower offer for
the rest of the shares in a target company.
(2) In computing, a programme which loads the system or boots up the
computer.
boot strap business Colloquialism for a company started with a small amount of capital.
booty Strictly, military arms and stores captured on land. Booty belongs to the
Crown.
The term is used colloquially in a wider sense to mean anything
acquired other than as expected.
booty of war Alternative form of booty.
BOP Balance of payments.
bordar Villein of the lowest rank who did menial work in return for being
provided with a cottage.
border In computing, a line drawn all the way round a window. By clicking
and dragging on this border, the window can be resized.
border Edge of a piece of land, such as between neighbours or countries.
Border Agency UK Border Agency (UKBA).
Border Force Complaints Contact for complaints about Customs officers: Border Force
Complaints, Priory Court, St John’s Road, Dover, Kent CT17 9SH,
telephone 01304 664 511, or website
www.ukba.homeoffice.gov.uk/contact/makingacomplaint.
General guidance about Customs procedures is given in Customs
notice 1. Details of the appeals procedure are given in notice 12A.
border tax adjustment Allowing a country to alter the amount of indirect tax charged on
imported goods to a rate similar to domestic goods.
GATT rules generally allow such adjustments, but not in relation to
direct taxes.
borehole Deep hole in the earth to look for water or oil or other mineral.
borough Political division of a district for purposes of local government.

Before 1974, a borough was a council with a royal charter.
borough court Court which existed before 1974 to hear local disputes.
borough English Before 1925, a customary form of descent whereby the youngest son
inherited in preference to any older brother.
borough-monger Someone who buys and sells the patronage of boroughs.
borough-reeve Chief municipal officer of boroughs before 1835.
borrow Have the use of someone’s money or other property for a period.
If a charge is made for borrowing, it is called hiring. If money is
lent, it is common to charge interest.
borrow back “Feature of a regulated mortgage contract under which a customer has
the ability to re-borrow monies paid by him” (FSA handbook).
borrowed days Old term for the last three days of March, which were said to be
borrowed from April.
borrowed reserves American term for loans made to US banks by the Federal Reserve to
allow banks to keep reserves at acceptable levels. This is usually
required when lending by the bank is too high.
borrowed time Time beyond that which was allowed or expected, such as time after a
deadline where action may still be taken or where a person is still alive
after being expected to die.
borrower Person who has borrowed money.
borrowing The amount of money a person or business has borrowed.

Borrowing which is due to be repaid within the year is treated as a
current liability. Borrowing which is due to be repaid in more than a
year’s time is a long-term liability.
borrowing costs Charges made to someone in respective of lending them money. This
usually comprises interest calculated according to the amount borrowed
and the period. It may also include a fee.
borrowing days Last three days of March, from the old untrue idea that these days were
taken from April.
borrowing power The amount of money a person or business may borrow.
borrowings Account in the financial records which records all money borrowed.
boscage Thick woodland.
Boston Matrix Means of valuing a business by valuing its component parts according
to different criteria. For example, cash cows are valued differently from
start-ups.
Boston Tea Party Event in 1773 in Boston which led to a serious deterioration in relations
between Britain and America.
BOT Bought. It is sometimes used by stockbrokers as a form of shorthand.
botes Essentials for farming, such as wood for building or fuel. There were
certain common law rights regarding botes.
bottle conditioned beer Beer that continues fermenting after bottling.

Beer duty is calculated according to the expected strength at
consumption (Customs notice 226). Customs do not accept that there is
any undrinkable sediment in bottle conditioned beer.
bottom feeder Person who buys shares that have just fallen in value in the hope that
they will soon rise again.
bottom fishing Investment strategy which buys shares that are very cheap on the
assumption that some of them will recover. The massive return from
their doing so will compensate for the many others that become
worthless.
bottom line Net profit after tax.

The term derives from the fact that this was traditionally the bottom
line on the capital side of the balance sheet.
bottom out To reach the lowest point but not to fall any further.
Bottom the Weaver Person who believes he can do everything better than anyone else. The
name comes from a character in the play Midsummer Night’s Dream by
Shakespeare.
bottomry Secured loan for the emergency repair of a ship. The loan is secured on
the “bottom” of the ship, meaning its hull. The lender can thus demand
the ship itself if the loan is not repaid.
bottomry bond Bond under which the owner of a ship makes a payment to a lender if a
ship successfully completes its journey. It is an early form of marine
insurance.
bottom-up budgeting Another term for participative budgeting.
bought and sold notes Documents which record sales and purchases, particularly on a stock
exchange.
bought day book A book used to record purchases made on trade terms.
bought deal A transaction which is done for a fixed fee, rather than for a turn or
commission.
bought ledger clerk Person immediately responsible for operating the purchase ledger. The
duties usually include recording the totals for entry into the nominal
ledger, and overseeing payments to suppliers.
bought ledger Another name for a purchase ledger.
bounce Colloquial term meaning to dishonour, particularly when a bank does

not pay on a cheque, direct debit or standing order.
bound books Books where the pages are securely held in place.
It was once a requirement that all companies must keep their
records in bound books or otherwise protected against falsification
(Companies Act 1948 s436). A bound book can indicate if a page has
been removed.
This provision is now replaced by the general duty to keep
“adequate accounting records” (Companies Act 2006 s386(1)).
bounty Money or other financial benefit conferred on someone, particularly

when payable by the Crown.
bourse French term for exchange where merchants meet. In France, it also
means a stock exchange.
boursier French term for someone who speculates on a stock exchange.
boutique Shop, from the French word.

The word has been used with different shades of meaning. During
the 1960s, the term came to be applied to a small shop, particularly one
selling expensive clothes. The term then spread to shops in different
lines.
In the 1980s, the term was also used to a business offering financial
services from shop premises.
Bovill’s Act Petition of Rights Act 1860 and other laws relating to partnerships, all
of which have now been repealed.
box (1) Square on a form for someone to place a tick, cross, number or
similar mark.
(2) Term sometimes used for book in the sense of investments held by
an investment manager for clients.
(3) In finance, storage location for security documents.
Boxing Day Public holiday celebrated on 26 December, unless this day is a Sunday.
The term comes from the medieval tradition of giving boxed
presents to workers or those of a lower class on this day.
box number Reference number widely used by Post Offices and in classified
advertisements, simplifying communication from the public.
box spread Combination of call options and put options held at the same exercise
price.
box ticking Pejorative term for compliance work which is seen as merely ticking
boxes on a prepared form rather than taking a more considered look.
bpd Barrels per day, standard measure of oil production.
BPI Bits per inch. A measure of the storage capacity of a length of magnetic
tape for computers.
BPR (1) Business property relief, from inheritance tax.

(2) Business process re-engineering.
bps Bits per second, the speed at which a computer works.
BPSS Business Payment Support Service.
BR (1) Tax code used in the PAYE system. It denotes that the person pays
income tax on all his income without any personal allowance. This
codes is used in many situations, such as (before 6 April 2011) for a
second job, where the personal allowances are given in the tax code for
the first job.
(2) Bankruptcy Reports, series of US law reports.
brachium civile Latin: civil arm.
bracket indexation Change in the upper and lower limits of a tax band to reflect inflation.
bracket together Process of grouping items with similar properties as one item to
simplify presentation of financial data.
Brady bond Bond issued by the World Bank to help refinance less developed
countries.
Brady Commission US presidential commission to investigate the 1987 stock market crash.
It was chaired by Treasury Secretary Nicholas Brady.
Brady Plan Plan in which the World Bank and IMF attempted to improve the debt
funding for less developed countries in the late 1980s.
Braille System of raised dots by which text can be read by blind people. Books
printed in Braille may be zero-rated for VAT (VAT notice 701/10).
branch Local office of an organisation, such as a supermarket or bank.
branch accounts Financial records kept by a branch of a large organisation, such as a

supermarket or bank, and which are reported to the head office.
In practice, few branches now keep accounts as such, but simply
complete forms for the head office to keep accounts.
branch manager Person in charge of a branch of a bank, company or firm.
branch of knowledge In relation to VAT on professional subscriptions, this is defined in VAT

leaflet 701/5.
brand Name given to a product or range of products. It is usually identifiable

by name and style.
A brand name has a value which may be regarded as an intangible
asset.
brandy Spirit distilled from wine. It is an alcoholic liquor subject to duty.
brass farthing Smallest amount possible. A farthing is the smallest coin generally
minted in the UK. They have never been minted in brass, but in silver,
copper or bronze, all of which are more valuable than brass. The term is
most commonly used in the negative as in “not a brass farthing”.
brass hat Colloquialism for a staff officer or senior person. The expression comes
from the special brass helmets which are sometimes worn on
ceremonial occasions.
B rating Description for a sponsor of foreign workers who wish to work in the
UK. It is a transitional rating when a sponsor first joins the register of
sponsors kept by the Home Office’s UK Border Agency. It should lead
to the permanent A rating.
breach Failure to do something which is legally required.
breach of contract When a party to a contract fails to do something required by the

contract. The other party may sue for damages. In some limited cases,
the other party may instead sue for specific performance.
In terms of tax deductibility, in “civil damages are generally
allowable. But where the expenditure in fact serves a dual purpose it is
disallowed” (BIM37960). A leading case is Knight v Parry [1972]
48TC580.
breach of trust Improper activity by a trustee or similar person who is required to

exercise good judgment on behalf of someone else. Such a breach can
make the trustees personally liable for any loss.
breadcrumbing Business jargon for making one job from many small odd jobs.
breakeven The point at which a business or product makes neither a profit nor a
loss.
breakeven analysis Process of calculating the breakeven point.
breakeven point (BEP) How many sales of an item are sufficient to pay for its fixed costs.
For example, a widget requires £10 worth of material and £5 worth
of labour, and sells for £35. The fixed costs of selling the widget
(development, marketing, overheads etc) are £20,000. The widget is
said to have a direct cost of £15 (materials + labour). Each sales makes
a contribution to overheads of £20 (£35 - £15). So the breakeven point
is when 1,000 units are sold (£20,000 ÷ £20).

The breakeven point may be expressed algebraically as:
BP = fixed costs .
unit price – unit direct cost
breaking and entering Criminal offence of breaking a door, window or similar to gain illegal
entry to a building. It is an offence in itself, even if the person steals
nothing or does no damage once inside.
break out In investment, when a share price starts trading above its usual level.
break point Figure at which point a body must comply with a set of regulations.
break starch Pointless objective or piece of work, such as those sometimes found in
the armed forces.
The term is originally an American military colloquialism for the
extreme lengths soldiers went to so that their trousers remained stiffly
starched with an unbroken crease.
break-up value Value of an asset based on its components and materials rather than as
an asset. It is usually much less than its net book value to a business
which is a going concern.
Brent crude Price of a barrel of crude oil from the Brent and Ninian areas of the
North Sea.
The price is determined from 15 oilfields. This is a benchmark
price as about two-thirds of the world’s oil is valued on this basis. The
API gravity of Brent crude is 38.3 degrees. It is a light oil containing a
small amount of sulphur.
Bretton Woods International monetary agreement reached in 1944 and which lasted
until 1971. The name comes from the place in New Hampshire, USA
where the agreement was reached.
Its main provision was fixed exchange rates with devaluation only
permitted when there was a fundamental disequilibrium in that
country’s balance of payments. The system was underpinned by
temporary financing facilities to assist countries deal with short-term
problems.
The system collapsed in 1971 when a series of large US deficits
meant that the dollar could no longer be converted to gold at the fixed
price of $35 per ounce. However, two institutions created by Bretton
Woods survive: the International Monetary Fund and the World
Bank.
brewery Place where liquor is made.
brewery conditioned beer Term used to determine how to measure the alcoholic strength of beer
for beer duty.
brewery loan Loan from a brewery company to an organisation. If made to a

members’ club, it may be taxable as is discussed in the Inspectors’
Manual at BIM24305.
bribery Offence of offering a bribe.

A bribe is not tax-deductible as it is a criminal payment.
brick tax Excise duty introduced in William Pitt’s first Budget of 1784 at 2s 6d
per 1000 bricks, and 3s per 1000 tiles. The tax was discontinued for
tiles in 1833 and for bricks in 1850.
bridge A bridge is specifically included in the definition of industrial

building.
bridge finance Loan to cover a short-term need.
bridging loan Short-term loan used until other funds become available.
The commonest use of a bridging loan is to buy one property before
selling an existing property. A business may seek a bridging loan to
fund its operations while awaiting payment from a customer.
The extent to which an employee may claim tax relief as relocation
expenses is set out in Income Tax (Earnings and Pensions) Act 2003
s284.
bridle path Highway which may be used by pedestrians, bicycles and horses, but
not by other animals or motor vehicles.
brief (1) Concise statement, such as a statement summarising a case sent

from a solicitor to a barrister. The word is also a verb meaning to give
someone background details.
(2) Barrister who has been briefed.
briefcase Light case for carrying documents and similar items.
brigadier Military rank for the lowest order of general who has command of a
brigade.
brigading The practice of putting all the laws or other provisions in one place
rather than spread over several places.
Tax regulations are often periodically brigaded. Examples include
laws on the reduced rate of VAT and various anti-avoidance provisions.
brilliant uncirculated standard

Standard for newly minted commemorative coins from the Royal Mint.
bring forward To carry a sub-total of an account to the next page of a book.
bring to book Force a person to account for their actions.
bring to the hammer Take to auction.
brisk In investment, description of a period of active trading.
Britain Strictly, this means England and Wales. Great Britain is Britain plus
Scotland, and United Kingdom is Great Britain plus Northern Ireland.
Britannia (1) Bullion coin in gold or silver.

The gold coin was introduced in October 1987 in four values
containing 1 oz, ½ oz, ¼ oz and 1/10 oz of gold with a legal tender
value of £100, £50, £25 and £10 respectively. The silver coin was
introduced in 1997 in the same weights but with legal tender values of
£2, £1, 50p and 20p. All Britannia coins are worth many times their
legal tender values.
The coins are exempt from capital gains tax and zero-rated for
VAT, but are not exempt from inheritance tax.
(2) Personification of Britain as shown on the reverse of many coins.
British Pertaining to the United Kingdom.
British Accounting Association (BAA).

Association whose aim is to promote accounting research and education
in the UK.
British Bankers Association (BBA)

London-based organisation formed in 1919 to represent the interests of
all bankers.
British Chamber of Commerce

Organisation comprising a national network of local Chambers of
Commerce spread throughout the UK. There are also a number of
British Chambers of Commerce in other countries. Chambers of
Commerce provide a range of business services for members.
British citizen Person who has the right to live in the UK permanently, and who may
leave and re-enter at will.
British citizenship is usually acquired by birth, but can also be
acquired by adoption, descent, marriage, registration or naturalisation.
For these purposes, the UK includes the Isle of Man and the Channel
Islands.
British Commonwealth Former name to what is now known simply as the Commonwealth.
British compounded spirits

“Means spirits which have, in the United Kingdom, had any flavour
communicated thereto or ingredient or material mixed therewith, not
being methylated spirits” (Alcoholic Liquor Duties Act 1979 s4(1)).
British dependent territories citizenship

State of being a citizen of a British dependent territory.
British dependent territory

One of the territories so designated.
The current list comprises Anguilla; Bermuda; British Antarctic
Territory; British Indian Ocean Territory; Cayman Islands; Falkland
Islands and dependencies; Gibraltar; Montserrat; Pitcairn, Henderson,

Ducie and Oeno Islands; St Helena and dependencies; the sovereign
base areas of Akrotiri and Dhekelia; Turks and Caicos Islands; and
Virgin Islands.
Hong Kong ceased to be a British dependent territory on 30 June
1997 when its sovereignty returned to China. St Christopher and Nevis
ceased to be a territory on 18 September 1983 when it became an
independent Commonwealth country.
British disease Term coined in the 1960s and 1970s to refer to the high incidence of
strikes and other industrial unrest which made other countries reluctant
to trade with Britain.
British Empire The empire formerly controlled by Britain. It started in the 15th
century. By 1921, it controlled one quarter of the world’s land and one
quarter of its population. After the second world war, a process started
of granting independence to members, most of whom are member of
the Commonwealth. The remains of the Empire comprise 14 British
overseas territories.
British extraterritorial jurisdiction

Application of British law to a person with British nationality who is
living in another country.
British film Film which meets the criteria for a special tax relief.
This is achieved by the film scoring at least 16 points out of a
maximum of 28 as detailed in SI 2007 No 1050.
British Franchising Association (bfa)

A “voluntary self regulating governing body for franchising” (bfa
website). The organisation was formed in 1977.
British Insurance and Investment Bankers Association

Representative body formed in 1988 from a merger of smaller bodies.
British Islands “The United Kingdom, the Channel Islands and the Isle of Man”
(Interpretation Act 1978 Sch 1).
British national Person who has a form of British status of which there are six:
● British citizenship
● British overseas citizenship
● British overseas territories citizenship
● British protected person
● British subject
● British national (overseas).
British Olympic Association

Company limited by guarantee to oversee the London Olympics of
2012.
British subject Form of British nationality that has been restricted since 1983.
British Tax Cases (BTC) Publication of tax cases produced by CCH Editions from 1982.
British Tax Review (BTR)

Journal published from 1956 by Sweet & Maxwell. It was originally
quarterly but is now two-monthly. It contains news, articles, case
reports and other commentary relating to tax.
BRMA Broad rental market area.
BRO Bankruptcy Restriction Order.
broad liquidity Amount of money issued by a central bank plus new money created by
lending activities. Broad liquidity is often used by investors and
analysts to predict inflation.
broad rental market area (BRMA)

An area for which market rents are determined. This is used for the
local housing allowance element of housing benefit.
broken period A non-standard period for a particular financial transaction, particularly

in foreign exchange.
broker Person who deals on some else’s behalf, particularly in the buying of
shares and other securities.
In the context of controlled foreign companies, the term “includes
any person offering to sell securities to, or purchase securities from,
members of the public generally” (Income and Corporation Taxes Act
1988 Sch 25 para 9(2)).
brokerage Payment for the services of a broker.
broker-dealer Securities trading firm which combines the function of a stockbroker

with that of a dealer who acts a principal on his own account. Such
arrangements became possible after Big Bang in 1986.
brokered CD A contract for difference for a large amount sold by a bank to a broker
who divides it into parcels for his clients.
broker's report Bulletin written by a stockbroking firm for circulation to its clients,
providing analysis and guidance on companies as potential investments.
brought into account Term describing an event that is reflected in accounts.

For tax, the term is given a specific meaning in Finance Act 1989
s83A in relation to insurance companies.
brown Old colloquialism for a copper coin.
Brown, Gordon Scottish Labour politician (1951- ) who was Chancellor of the
Exchequer from 2 May 1997 to 27 June 2007 in the government of
Tony Blair whom he succeeded as prime minister.
His ten years in office was the longest since Lord North (1767-
1782). His Chancellorship coincided with a period of world economic
growth. He reduced corporation tax and income tax, introduced tax
credits and made several tax innovations that he later reversed.
BRU Bankruptcy Restriction Undertaking.
B/S Balance sheet.
B&S Best and Smith’s Reports, law reports of the Queen’s Bench Division of
the High Court from 1861 to 1870.
BSE Bombay Stock Exchange, the main stock exchange in India.
BSE index Index of the Bombay Stock Exchange.
B-shares Category of shares which have different voting rights from ordinary
shares and A-shares.
Traditionally, B shares have voting rights greater than other shares
and are held by the founders and his family, however this should never
be assumed.
In the USA, B-shares are of less importance than ordinary shares.
BTC British Tax Cases.
BTI Binding Tariff Information.
BTR British Tax Review.
BTW Belasting over de Toegevoegde Waarde, Dutch for “value added tax”.
The term may be seen on invoices from Belgium or Netherlands.
Buba Nickname of the Bundesbank, the central bank of Germany.
bubble Something which has size but no real substance and will therefore soon
burst. Typically this refers to a company whose share value is sustained
by sentiment and unsupported by any value, such as assets and
goodwill.
The value of bubble shares is caused by a buying frenzy where
investors rush to buy shares before the price increases further. Buyers
of bubbles can make large profits if they sell the shares before the
bubble bursts. If the bubble bursts first, they lose most of their
investment. However, most buyers do not recognise that the shares are
bubbles in the first place and acquire them under the herd instinct.
The most famous bubble is the South Sea Company in 1720. More
recent examples include housing companies in the early 1980s and
dot.com companies in the late 1990s.
Bubble Act Law passed in 1719 to check the creation of bubbles. The law proved
ineffective and was repealed in 1825.
bubble memory In computing, memory comprising minute amounts of moving pockets

of magnetism.
Buchanan Report Report on transport written in 1963 by Colin Buchanan. Its title is
Traffic in Towns. It predicted a threefold increase in cars between 1953
and 1980; it actually just doubled. It led to road planning.
bucket shop Place where something may be bought more cheaply than from its usual
source, often because it is not genuine.
The term originally applied to American gambling dens. It was then
applied to places where airline tickets could be bought cheaply. The
term now usually refers to a place where securities are offered for sale
at a price less than that quoted by a recognised stock market.
Bucket shops now usually offer worthless or even non-existent
shares. These are often touted using boiler room high pressure sales
techniques.
bucolic Pertaining to looking after cattle.
budget A statement of expected incomes and expenditure under general

headings produced by any organisation from an individual to a group of
countries.
A budget should be distinguished from a forecast in that a budget is
an executive direction as to what should be achieved, whereas a forecast
is merely what someone expects to happen. However, this distinction is
often not made in practice.
The main types of budget are:
● fixed budget where all items are stated;
● flexible budget where some items depend on others, such as
expenditure on materials being dependent on the sales for which those
materials are used; and
● zero-based budget where all items, particularly expenditure,
start at zero and must be objectively justified afresh for each budget
period. This avoids the practice of simply taking last year’s figure and
adjusting it for inflation. At least that is the theory.
Budget Annual or more frequent statement by the Chancellor of the

Exchequer setting out government’s proposals for taxation and
spending.
Typically it is held in the Spring, often in March. It includes a
statement of the nation’s finances with details of expenditure and any
changes in the tax system. The Chancellor is immediately followed by
the Leader of the Opposition and then the leader of the third largest
party in the House of Commons. This leads to a debate over several
days of the proposals.
Budget proposals are framed in draft legislation which goes to a
committee where amendments may be made. Eventually a Finance Act
is produced to enact the Budget changes.
budget account Bank account for individuals where payments are made sufficient to
cover all expenses during the year as they fall due even if this means
the account becoming overdrawn for a short period.
budgetary Pertaining to a budget.
budgetary control When expenditure is governed by a budget. The opposite is free

spending.
budgetary policy When the policy of planning income and expenditure is determined by
reference to a budget.
budgetary requirements
Income (or possibly expenditure) needed to satisfy the provisions of a
budget.
Budget book Publication issued on the day of The Budget given by the Chancellor of
the Exchequer which includes a statement about the national economy
plus tax and other proposals announced in the speech. The book is also
known as the Red Book.
budget committee Group within an organisation which sets the budget.
Budget day Day on which the Chancellor of the Exchequer presents The Budget in
the House of Commons.
budget deficit Deficit in a budget, particularly of a government, where income is less

than expenditure.
“The amount by which government spending exceeds government
income during a specified period of time (usually a year).
The budget deficit can be split into two key elements:

• the cyclical deficit – this occurs as a result of a downturn in
economic activity when tax receipts fall and spending on social security
increases. It can be subsequently eliminated by a period of economic
growth; and
• the structural deficit – this occurs when government spending
exceeds tax receipts. A government can run a structural deficit even if
the economy is growing strongly. Consequently, it can only be tackled
by reducing government spending or raising taxes.
budget department Department in a large store which sells discounted goods.
budget director Person in an organisation who is responsible for overseeing the budget.
budgeted capacity An organisation’s available output level for a budget period as

expressed in the budget. It is expressed in terms appropriate to the area,
such as machine hours or man hours.
budgeted revenue Income which an organisation expects to receive during the budget
period.
budget holder Person who controls expenditure for a cost centre as allowed in a
budget, and who must account for that spending.
budgeting Practice of a person or business to control expenditure (and sometimes

income also) according to a budget.
In practice, this is usually done in conjunction with economising.
budgeting loan Interest-free loan from the Social Fund to assist a person on means-
tested benefits meet a specific expense.
budget-limited When financial provision is limited by resources rather than need,

particularly discretionary payments from the Social Fund.
budget manual Instructions which accompany a budget stating how the budget is to be
met.
budget period Length of time for which a budget is prepared.
Budget speech Speech given by the Chancellor of the Exchequer when presenting The
Budget in the House of Commons.
budget variance Amount by which the actual expenditure on an item differs from the
budgeted expenditure. Large variances should be investigated.
Buenos Aires Stock Exchange

Oldest of the four stock exchanges in Argentina. It opened in 1872.
buffer stocks In finance, stocks which are acquired when the price is low and held for
sale when the price rises.
builder’s hardware Material provided for use in construction of a new building. If the
building is either a new construction or an adaptation of a listed
building, the hardware may be zero-rated for VAT.
builders’ merchant Person whose job is to acquire and deliver necessary building materials
to a building site.
building Any structure assembled on land.

In law, ownership of the land means ownership of everything on,
over and under the land, including buildings.
The purchase of a building often attracts stamp duty land tax.
There are many special provisions for value added tax, depending
on the nature of the building work.
For capital gains tax, a disposal of a building may be considered
separately from the disposal of the land (Taxation of Chargeable Gains
Act 1992 s23-24).
building and loan association

American body similar to a building society.
building lease Lease of land, typically of 99 years, where the lessee pays a small
ground rent and agrees to erect specified buildings. At the end of the
lease, the lessee usually has the right to buy the freehold, failing which
ownership of the land and buildings passes to the lessor.
building regulations “in relation to England and Wales, has the meaning given by section
122 of the Building Act 1984” (Interpretation Act 1978 Sch 1).
buildings insurance Insurance to compensate for the loss of a building, such as from fire,
subsidence or vehicle collision.
A building is usually insured for rebuilding cost typically with
cover for temporary accommodation. This means that if the building is
destroyed, the insurance company will pay for the person or business to
be rehoused temporarily while the site is cleared and original building is
rebuilt. This is usually a more expensive and less convenient option
than simply selling the site to a property developer and buying a new
property.
Where a loan is secured on property, as in a normal mortgage, the
lender will usually insist on adequate buildings insurance.
The Royal Institute of Chartered Surveyors (RICS) has produced
a calculator on its website on how to calculate house rebuilding costs.
As with all insurance, it is important to quantify the amount for
which the property is insured and the risks or perils for which insurance
is provided. The perils for buildings insurance usually are:
● fire;
● lightning;
● explosion;
● earthquake;
● vandalism and theft;
● riot;
● storm and flood:
● aircraft and things falling from them;
● subsidence, landslip and heave;
● falling trees and branches;
● impact by vehicles and animals;
● breakage or collapse of aerials;
● escape of water from pipes or tanks;
● escape of oil.
Building Societies Ombudsman

Work is now undertaken by Financial Ombudsman Service.
building society Mutual organisation owned by its members, not by shareholders, to

provide funds for buying property. They developed in the 17th century
from friendly societies.
Originally building societies “borrowed short but lent long”. This
meant that investors could deposit money and earn interest for short
periods while the society lent money for long periods, such as for 25
years for a mortgage. Today a large part of the funds of such bodies
come from commercial money markets.
Since Building Societies Act 1986, the rules for building societies
have been considerably relaxed, allowing them to compete more easily

with banks and other financial institutions.
Some building societies demutualised to become banks. Leading
examples include Abbey National (now known as Abbey and owned by
Banco Santander) and Halifax (now part of HBOS). The tax
consequences of doing so are set out in Finance Act 1988 Sch 12.
building works insurance Insurance for building works which the customer is usually obliged to
provide under the building contract.
built-in furniture For VAT, furniture which uses at least two walls of the building. Such
furniture may qualify for zero-rating as builder’s hardware when used
in a new construction or an adaptation of a listed building.
built-in obsolescence Practice of ensuring that a product will last only until the guarantee
expires, or soon afterwards, so that the customer has to buy another
product.
bulge Swelling. The term can mean an unusually large expansion of funds or
work.
bulge bracket bank Very large investment bank which operates globally in almost all
businesses. Their size makes them able to take big risks such as
underwriting large share issues. Their biggest problem is in addressing
conflicts of interest.
bulimia Eating disorder.
bulk buying Buying in a large quantity to obtain a lower price. An organisation set
up to do this for its members is treated as a mutual trading organisation
as is discussed in the Inspectors’ Manual at BIM24784.
bulk carrier Vessel which carries grain, coal and other loose cargo which is not
packed into containers.
bulk powers Power of HMRC to collect data on taxpayers in bulk for risk
assessment. Such powers can be used to compel banks to give details of
all holders of a particular type of account.
bulk transfer The transfer of a group of pension scheme members and their scheme
assets from one occupational pension scheme to another.
bull In investing, someone who expects stock markets to rise. The opposite
is a bear.
From 1945 to the 1970s, a bull was more strictly defined in London
as someone who bought shares at the start of the market’s two-week
trading period with the intention of selling them at a profit before the
end of that period.
bull CD Certificate of deposit that pays the holder a specific percentage of a

return increase for a specific market index and thus guarantees a
minimum rate of return. It is used by investors who want to invest in a

rising market at low risk.
bulldog bond Fixed interest sterling bond issued in the UK by a foreign borrower.
bullet Another name for a bullet bond.
bullet bond American term for a Eurobond which is only redeemed on maturity.
Bullet bonds are used as payment by central banks where they act as
currency backing.
bulletin Official statement issued at regular intervals.
Bulletin des Annonces Légales Obligatoires (BALO)

Publication of the French government which includes financial
statements of public companies.
bullet loan American term for a loan which is repaid in a single payment and not in
instalments.
bullion Precious metal, usually gold or silver, in a readily recognisable form

such as bars or ingots or special coins. The value of bullion is
determined by its weight.
Bullion has traditionally been a means to hedge against inflation or
other adverse financial crises. These risks are now more commonly
addressed by use of derivatives.
bull market Financial conditions where share prices are rising or are expected to
rise. The opposite is a bear market.
In 1894, Charles Dow defined a bull market as one which has risen
for two years. In modern parlance, this time limit is usually ignored.
bull note Bond whose redemption value is linked to an index, such as the FT-SE
100 index. The name come from the fact that such a note is worth more
in a bull market.
Bullock order Legal procedure which may be ordered by a judge when there are two
defendants.
If the judge is satisfied, he may join the defendants. The cost of a
successful defendant is added to the claimant’s costs which may then be
claimed from the unsuccessful defendant. The name comes from the
case Bullock v LGO Co [1907].
Bullock Report Report published by Alan Bullock in 1977 for the British government.
It recommended that larger businesses should have a measure of worker
participation. These proposals were not adopted.
bull position Strategy of buying shares in the hope that their price will rise.
bull run Period in which a market keeps rising, largely by the continued
optimism from investors.
bull spread Simultaneous buying and selling options on the same underlying
security to earn a profit on the expected rise of that security.
bump-up CD Financial instrument held for short or medium-term investment. It

allows the investor to increase the interest rate until the CD matures.
The increase may only be to market rates, but the investor does not
have to reduce his or her rate if the market rate falls.
Bundesbank Central bank of Germany, established in 1957 and based in Frankfurt.

It has independence in setting interest rates which is undertaken by
its Central Bank Council.
Its regional branches are known as Landeszcentralbank.
Bundesbond German government bond.
Bundestag Lower house of the federal German parliament.
Bundesfinanzhof (BFH) German supreme court for taxation matters.
Bundesobligation German medium-term financial instrument that may be bought by non-

German investors.
bunny bond Bond which gives its holder the choice of receiving interest or further
bonds.
buoyancy State of a financial market that appears to be continually rising.
BUPA British United Provident Association, formed in 1947 to preserve

freedom of choice in health care when the National Health Service
was established.
In effect it is an insurance company providing cover for private
medical treatment, though it has diversified since the 1970s.
burden In finance, any cost or liability which is onerous.
burden A financial cost; administrative inconvenience; obstacle to efficiency,

productivity or profitability; or a sanction (Legislative and Regulatory
Reform Act 2006 s1(3)).
burden of a contract The liability a party to a contract has to discharge that liability to the
other party.
burden of proof In law, the duty to satisfy the court of the truth of a matter.
In broad terms, it is necessary to consider the standard of proof and
on whom the burden falls.
The standard of proof is balance of probabilities (more than 50%
likely) in civil cases and beyond reasonable doubt in criminal cases,
which is much higher. This difference was dramatically illustrated in
the O J Simpson murder case in the USA (which has the same
standards). Simpson was acquitted of murdering his wife in a criminal
trial in 1995 but was ordered to pay compensation for her murder in a
civil trial in 1997.
The person who must prove the matter is usually the person who
brings the proceedings. So, if in a civil action, it proves impossible to
determine who is liable, the defendant “wins” as the claimant as not
proved the case. In some discrimination cases, there is a reverse
burden of proof.
burden of tax Responsibility for paying tax, particularly inheritance tax. There are
rules to determine who is responsible for payment of the tax. Any
legacy said to be net of tax will usually require to be grossed up.
bureau (1) Writing table, particularly one which contains space for files and
stationery and which folds up as a piece of furniture.
(2) Department or organisation set up to transact business.
The plural is bureaux.
bureau de change Place where money is changed from one currency to another. The
plural is “bureaux de change”.
Bureaux de change must comply with money laundering
regulations.
Bureau A third party providing a service to National Export Scheme (NES)

authorised traders to act as their direct Representative for the
submission of pre-shipment and Supplementary declarations.
burgage tenure Before 1925, form of free land-holding which is governed by a local
custom.
burglary Crime of improperly entering premises to commit an offence.
burial In law, the disposal of human remains on death. Strictly the term refers
to burial in the ground, though the term is often used for any legal
disposal.
This is the first duty of an executor of an estate, though it is usual
to respect the wishes of the deceased if known, or of the immediate
family if not known.
The disposal is subject to any requirement for a post mortem
examination and to any donation of organs authorised by the deceased.
The three legal means of disposal in the UK are burial in the
ground, cremation, or burial at sea. A parishioner has a legal right to be
buried in a churchyard of the parish where he lived, provided there is
available space and the church requirements are followed. These
include the deceased being baptised and there being a church funeral
service.
Burke, Edmund Irish lawyer and politician (1729-97). As an MP in 1770 he strongly

opposed duties on American trade.
burn In finance, the period when expenditure is incurred without any

significant income being received, as often happens at the start of a new
business. The art is to ensure that sufficient income is generated before
the initial capital has all been “burned”.
burn-out turnaround Arrangements to restructure a company which is in serious trouble. This

typically requires new funding and new management.
burn rate How fast a new business is consuming its initial capital.
A new business may have initial capital of £1 million to establish
itself before generating retained profit to stay in business. The burn rate
measures how fast that business is consuming that capital before being
able to generate sufficient profits. If the burn rate indicates that the
capital will be exhausted in nine months, the business must be
generating sufficient profits by then to sustain itself, or must seek
further capital, which is likely to be difficult.
Burn rate is often considered with such measures as EBITDA
which helps to indicate how fast a business is moving to profitability.
bus Vehicle with more than eight passenger seats, though up to 16

passenger seats the vehicle may be called a minibus. This is category D
on the driving licence. Generally a driver must be 21 to obtain a licence
for this category.
For the purposes of works transport service, a bus “has a seating
capacity of 12 or more” (Income Tax (Earnings and Pensions) Act 2003
s242(3)).
An employer who provides support for a public bus service to assist
his employees in getting to work, is not providing a taxable benefit in
kind under Income Tax (Earnings and Pensions) Act 2003 s243.
bus fares Zero-rated under Value Added Tax Act 1994 Sch 8 Group 8.
business Term for any commercial activity.

Many branches of law and taxation make a distinction between a
business sale and a consumer sale, where the latter is made by an
individual as part of the private life. For most purposes a business
includes a profession, vocation and public authority.
The term is used for VAT purposes as only a business activity can
create a VAT liability. So hobbies, and charitable and statutory
functions are excluded. The requirements for a business are broadly a
commercial enterprise and a series of transactions.
Value Added Tax Act 1994 s94(1) adds “business includes any
trade, profession or vocation”.
Further guidance is given in the case C&E Commissioners v Lord
Fisher [1981].
Business Accounting Deliberating Council

Committee in Japan controlled by its Ministry of Justice. It is
responsible for drawing up regulations regarding the consolidated
accounts of companies.
business activities In relation to VAT, any continuing activity that is mainly concerned
with making supplies to other persons for a consideration. The activity
must have a degree of frequency and scale and be continued over a
period of time.
business activity Commercial activity. If sufficiently large, the organisation must register
for VAT.
business address Premises from which a business operates.
business angel Angel who invests in any business and not just in stage shows.
business asset For the purposes of capital gains tax (CGT), a business asset is one of:
● an asset used in a business;
● a shareholding in an unlisted company, including a
company listed on the Alternative Investment Market;
● a shareholding of 5% or more in a quoted trading company:
or
● a shareholding of any size in a quoted trading company if
held by an employee or director.
A business asset suffers a lower rate of CGT than a non-business
asset.
business assets For capital gains tax, this is a class of asset which has at various times
enjoyed preferential treatment. Such assets are items owned, leased or
used in connection with carrying on a business by any person, but
excludes premises and documents.
business asset taper relief (BATR)

Relief from capital gains tax for business assets whereby the tax
payable reduces according to how long the asset has been held. This is
abolished from 1 April 2008, and replaced by a flat rate of 18% to
which the first £1 million of disposal attracts an entrepreneur’s tax
relief equal to 4/9 of the tax. This reduces the tax to an effective rate of
10%, which is the same minimum rate that applied before 1 April 2008.
business combination “The bringing together of separate entities into one economic entity as a
result of one entity uniting with, or obtaining control over the net assets
and operations of, another” (FRS 6 para 2 and FRS 7 para 2).
business computer Computer powerful enough for a business to use. In practice, domestic
computers have been powerful enough for most businesses.
business correspondence Letters to and from a business relating to its activities.
business cycle Period over which a business expands and contracts.
business day Any day which is not a non-business day (Bills of Exchange Act 1882
s92). Day on which banks are open for business.
Business Economic Notes (BEN)

Documents published by Inland Revenue (now HMRC) giving detailed
advice on how particular businesses are run.
BENs have not been updated and are now hopelessly out of date.
business end Part of a tool or anything else which is performing the required
function.
business entertainment Hospitality or entertainment of any kind provided for business purposes
to anyone who is not an employee. Includes the expenses of staff acting
as hosts.
business entity A business which exists independently of its owners.
business establishment In relation to controlled foreign companies, means “premises —

(a) which are, or are intended to be, occupied and used with a
reasonable degree of permanence, and
(b) from which the company’s business in the territory in which it is
resident is wholly or mainly carried on”
(Income and Corporation Taxes Act 1988 Sch 25 para 7(1)).
Business Expansion Scheme (BES)

Tax-advantaged means of investing in new businesses.
business expenses Expenditure which relates to the activities of a business rather than
personal expenditure.
business form Any document which is completed for business purposes, such as an
invoice, order form or application form. Such forms usually contain the
business’s logo, name and address.
business hours Times when a business premises is staffed to transact business, even
though it may be possible to transact some business outside these hours,
such as placing an order on a website.
business improvement district (BID)

All or part of the area of a local authority which has made arrangements
to enable projects for the benefit of businesses in the district (Local
Government Act 2003 s41). Such projects are funded by a BID levy.
business interruption policy

Insurance policy which pays for losses sustained when a business is
prevented from continuing from an insurable risk.
Such a policy is typically added to other policies. For example,
insurance for premises may cover the cost of rebuilding plus the loss of
profits and customer claims which may result from not being able to
trade until the factory is rebuilt.
Such policies are also known as consequential loss policy or loss
of profits policy.
business judgment rule Rule that courts will not interfere in the conduct of lawful business. For
example, it will enforce a breach of contract but not repair a bad
bargain.
Business Keepsafe Service offered by the Royal Mail where they will retain mail for up to
66 days and not deliver it. This can be useful when a business has a
break or when premises are left unattended. A pile of mail can indicate
that the premises are unoccupied.
business-like In an efficient and organised manner.
Business Link Government-funded business advice service started in 1993.

Between 30 November 1993 and 31 March 2000, a company could
claim tax relief for contributions to Business Link.
business link organisation

Person authorised to use a service mark of a local enterprise agency or
local enterprise company (Income and Corporation Taxes Act 1988
s79A).
business loan provisions The tax provisions in Income Tax Act 2007 ss 392, 396 and 401.
business name Name under which a business trades, which need not be its registered
name.
Business Payment Support Service (BPSS)

HMRC body established in the economic crisis of 2008. It deals with
Time to Pay requests from companies and individuals who are having
difficulty in paying any tax because of adverse economic conditions.
BPSS negotiates an extended period for payment, provided it is
satisfied that the reasons are valid and that the tax will eventually be
paid.
Business People Scheme Arrangement whereby a person may be able to come to the UK to run a
business provided certain conditions are met.
business plan Plan containing financial and narrative data about the future of a
business. A business plan is often used as a means of attracting funding.
business policy General set of rules and principles laid down to guide directors in the
running of a business.
Such rules typically take the form of a condition and preference, as
in “if X happens, do A in preference to B”.
The means of implementing a policy is known as a strategy, though
these times are not always used in such a precise manner.
business premises For capital gains tax, these are premises that HMRC thinks are used in
connection with the carrying on of a business. Where someone works
from home, the term is restricted to the rooms set aside for the business.
business process re-engineering (BPR)

Management term for reconsideration of administration, supervision
and procedural functions.
business property relief (BPR)

Relief from inheritance tax when businesses or business assets are
inherited on the death of the owner.
For a whole business, or a shareholding in an unquoted company,
the relief is generally 100%. For land, buildings and plant used in a
business, the relief is 50%. Some of these rates were lower before 1995.
business proportion Addition to a personal cost relating to a business. Such a cost is not tax-
deductible as it is not wholly for the business.
The matter was neatly illustrated in the case Caillebotte v Quinn
[1975] 50TC222. A carpenter’s lunch cost 10p at home but 40p on site.
He claimed the additional 30p as a business cost, but it was disallowed.
business rates Tax paid to a local authority for occupation of non-domestic property. It
is also called national non-domestic rate (NNDR).
The calculation is now based on a national rate in the pound set by
government multiplied the rateable value of the property. Business rates
are pooled nationally and a share is given back to local authorities
based on the number of people living in the area. The amount charged
is based on multiplying the rateable value of each business property by
the national rate in the pound.
business records check Audit of small businesses undertaken by HMRC. In 2011, it was
announced that 50,000 such checks would be made annually.
business relief Another name for business property relief.
business review Part of a directors’ report which gives “(a) a fair view of the
company’s business, and (b) a description of the principle risks and
uncertainties facing the company” (Companies Act 2006 s417(3)).
Small companies are exempt.
business segment Section of a company which may be clearly distinguished from the rest
of the company.
business strategy Procedures by which a business implements its business policy.
business test For VAT, test as to whether a not-for-profit activity is carrying on a

business activity.
The test is set out in VAT notice 701/1. It asks:
• is the activity a serious activity earnestly pursued?
• is the activity an occupation or function which is actively
pursued with reasonable or recognisable continuity?
• does the activity have a certain measure of substance in terms
of the quarterly or annual value of taxable supplies made?
• is the activity conducted in a regular manner and on sound
and recognised business principles?

• is the activity predominately concerned with the making of
taxable supplies for a consideration?
• are the taxable supplies that are being made of a kind which,
subject to differences in detail, are commonly made by those who seek
to profit from them?
business to business Sales a business makes to other businesses rather than to consumers.
business transaction Any act of buying or selling to or from a business.
business travel Travelling in the course of work, such as to see a customer.

Commuting, normal travel from home to work, is not business travel.
A definition is given in Income Tax (Earnings and Pensions) Act
2003 s171(1)).
business travel insurance Travel insurance for business travel. It usually provides such additional
cover as protection for laptops, and for the cost of sending a
replacement colleague if you are detained because of an insured risk.
business unionism Trade unionism viewed as a business with a duty to attract new
members, maximise income and secure the best deal for its members.
business units Parts of a business which may have their own Trading Accounts and
operate with relative autonomy from the rest of the company or service.
business use For Customs purposes, “the use of a vehicle for an activity carried out
for financial gain or consideration” (Customs notice 3).
bust Colloquial description of a person who has run out of funds.
busted bond Bond which has already defaulted and which is sold purely as a
collectable piece of paper.
Many pre-revolutionary Russian bonds are works of art, and are
collected for this and their historic value.
A busted bond is sometimes called an old bond.
Butler, Rab Indian-born English Conservative politician (1902-1982) who was

Chancellor of the Exchequer from 28 October 1951 to 20 December
1955 in the governments of Winston Churchill and Anthony Eden. His
real name was Richard Austen Butler.
He cut taxes in 1955 but was forced to reverse some of them after
the election.
butlerage An early form of wine duty in 14th century representing a commutation

of the rights of the king’s butler.
Butskellism Term widely used by political commentators to describe British

economic policy between 1951 and 1955.
The term is a combination of the name of R A Butler, the
Chancellor of the Exchequer in the Conservative government, and
Hugh Gaitskell, his immediate predecessor in the Labour government.

The term indicates that their policies were largely identical.
butterfly In investment, a strategy sometimes used by dealers of traded options.

It operates by buying and selling both call options and put options at
different prices, particularly when the prices are fluctuating. Options are
then selected for sale according to how the price has fluctuated.
butut One hundredth of a dalasi, currency of Gambia.
buy a cow Term sometimes used in management to mean diversification,

particularly diversification to avoid using contractors or suppliers. It
comes from the expression “if you want a glass of milk, buy a cow”.
The opposite is known as stick to your knitting or zero-basing.
buy and hold Investment strategy of buying investments with a view to holding them
for a long period.
buy and write Investment strategy of selling a traded option in a security which the
investor already holds. This allows the investor to benefit from the call
premium and to hedge any risk from the option pay-off.
buy back (1) Buying something from a person to whom you had previously sold
it.
(2) A payment made to reinstate into SERPS a person belonging to a
contracted out pension scheme.
(3) Reinstatement of life assurance cover after a claim has been paid on
critical illness under a policy that provides cover against critical illness
and death. (Normally a policy of this type ceases when the claim is
paid. The life assurance cover is then automatically cancelled.)
buyback store Another name for retail credit.
buy earnings Invest in a company with a low yield but high earnings to generate a
large capital gain.
buyer credit Loan granted to a buyer, particularly of exported goods.
buyers’ market Situation where demand outstrips supply, meaning that prices and
conditions for trade tend to be in the buyer’s favour.
buy in Any arrangement where a purchase is made to cover a position, such as

buying stock to meet a commitment to sell it. The term also applies to a
company buying its own shares.
buying business In marketing, a strategy of giving a customer a special deal, such as

selling at a loss or offering privileged trading arrangements, in the hope
of getting further business.
This strategy almost never works. Buyers quickly recognise the
strategy and take short-term advantage of it. Long-term business comes
from establishing a satisfactory trading relationship which is beneficial

to both parties.
buying forward Buying commodities and similar items for delivery at a fixed future
date.
buy in management buy out (BIMBO)

A management buyout where the existing mangers are joined by
venture capitalists who usually exercise control of the company.
buy out (1) Acquire someone else’s interest in an asset or business of which you
already have an interest. So if you own half a business, you may buy
out the interest of whoever owns the other half.
(2) The purchase of an insurance policy for a pension scheme member
in lieu of benefits from the scheme following the termination of
pensionable service.
buyout (1) Process by which the management of a company acquire ownership

of the company. This is known as a management buyout (MBO).
(2) Purchase of a listed company by the company itself which has the
effect of ending the listing and making it a private company.
buyout policy A means of transferring a pension entitlement from an occupational

pension scheme to a stand-alone policy. It is also known as a section
32 policy.
Pension benefits under such a policy are subject to maximum limits
based on those provided under the original occupational scheme.
buy side analyst Analyst who is employed by an institutional investor to provide

analysis on investment opportunities.
buy to let Arrangement whereby a person buys a property with a view to letting it
for someone else to rent. The rent received is then used to pay the
mortgage which allows the owner to benefit from the capital gain on
the property.
The term Buy to Let was coined in 1996. Buy to Let became
popular from 2000 when other forms of investment were less attractive.
Special Buy to Let mortgages were offered by financial institutions.
Typically a Buy to Let mortgage requires a larger deposit than a
normal house purchase, typically 15% or 20% rather than 10%. The
interest rate is usually higher by about one percentage point. Some
lenders require proof that the rent is at least 30% more than the
mortgage repayment.
Buy to Let has allowed many individuals to accrue wealth, though it
has many risks. On average Buy to Let properties have an average void
period of 27 days a year. Void periods can quickly turn a good
investment into a ruinous nightmare.
buyer Person who acquires something by making a payment.
buyer’s market Economic situation which favours those who wish to buy rather than
those who wish to sell.
buying down the market Buying more shares when the price is falling to reduce the average
share price. For example if someone holds 100 shares acquired for £10
each and the price falls to £5, purchasing another 100 shares will reduce
the average price to £7.50.
This is generally regarded as a poor strategy as each purchase
should be considered on its own merits.
buy-to-let Arrangement whereby a property is purchased with a view to letting it

out. If the rent received equals the mortgage payments, the owner
benefits from the capital appreciation of the property.
C
C (1) Third person in any explanation or legal guide, as in A buys from B
on behalf of C.
(2) National insurance contribution letter for an employee who is not
liable to pay class 1 national insurance, such as being over state
retirement pension age. The employer is still liable to make
contributions.
(3) Series of Customs forms. The more common ones include:
• C3: permanently importing personal goods
• C5: importing pets
• C21: importing inventory not accompanying a traveller
• C88: single administrative document
• C104A: importing private motor vehicle
• C179B: bringing a motor vehicle back into the EU
• C384: paying duty for importing a private motor vehicle.
The forms are available from most shipping agents or from Customs.
They can be downloaded from the website www.hmrc.gov.uk.
(4) Roman numeral for 100.
(5) For council tax, the third lowest band of property values:
between £39,001 and £51,000 before:
A band C property pays council tax at 8/9 of the rate for an average
band D property.
CA (1) Chartered accountant. For the Scottish Institute, these are also the
designatory letters after the member’s name.
(2) Consumers’ Association.
(3) Companies Act, usually followed by the year, eg CA 1948, CA
1985, CA 2006.
(4) Court of Appeal, in case citations.
(5) Carer’s allowance.
CA 2004 Children Act 2004.
CAA (1) Capital Allowances Act 2001

(2) Civil Aviation Authority, a public corporation, was established by
Parliament in 1972 as an independent specialist aviation regulator and
provider of air traffic services.
CAAT Central Agent Authorisation Team of HMRC.
CAB Citizens Advice Bureau.
Cabinet Committee of the prime minister and leading ministers which makes
decisions on running the country.
cabotage Coastal trading, or principle of restricting trade to within one’s defined

area. Another meaning is the practice of using foreign vehicles in that
country as a means of avoiding taxes or trading restrictions.
cab rank principle Common law requirement that a taxi driver must accept all passengers.
This is a departure from the normal law of contract where a supplier can
choose his customers. This common law requirement also applies to
innkeepers and barristers.
CAC (1) Customs Action Code.

(2) Cotation Assisté en Continue, term used by Paris Bourse.
(3) Central Arbitration Committee
CAC 40 Main index of the French stock exchange.

It is a subset of the SBF 120 index, which in turn is a subset of the
SBF 250 index. The CAC 40 replaced the CAC General Index.
cache (1) A secret horde of money.

(2) In computing, a technique computers use to save memory by storing
frequently accessed files.
In both meanings of the word, it is pronounced “cash”.
CACM Central American Common Market.

The members are Costa Rica; El Salvador; Guatemala; Panama;
Honduras and Nicaragua.
CAD (1) Cash against documents.

(2) Capital Adequacy Directive.
[The abbreviation is also commonly used to mean computer-aided
design.]
cadastral Pertaining to the public register of land.
Cadbury Report Report published in 1992 on corporate governance, particularly with

regard to board structures and accounting systems to deal with risk and
failure. The report’s conclusions have generally been adopted.
cadit quaestio Latin: the question drops.

In law this means that the matter admits no further argument.
Cadmean victory Victory achieved at a great loss; similar to a Pyrrhic victory.

The term comes from the battle of Cadmus in Greek mythology.
caeteris paribus Latin: other things being equal.
cafeteria benefits In human resources, an arrangement whereby an employee may choose

what benefits he wishes to have in making up his remuneration
package.
This can be tax effective when tax-advantaged benefits are selected,
but care must be taken if making a salary sacrifice.
cafeteria plan Another name for cafeteria benefits.
cage Term sometimes used to describe the part of a broking firm where the
paperwork is processed.
CAGR Compound annual growth rate.
Caillebotte Case that established that a business proportion of taxable spending is

not tax-deductible.
The full name is Caillebotte v Quinn [1975] 50TC222. A
carpenter’s lunch cost 10p at home but 40p on site. The business
proportion of 30p was not tax-deductible. The matter is discussed in the
cake decorations For VAT, these are standard-rated when inedible and sold separately
but zero-rated when supplied with the cake. The exact scope is set out
in VAT leaflet 701/14.
cakes For VAT, these are generally zero-rated as food even if covered with
chocolate or other sweet material, but are standard-rated when supplied
in the course of catering (VAT notice 701/14).
calculable Able to be calculated.
calculate Determine a number or amount by mathematics. The term is also used

for making a deliberate plan, particularly one which involves several
steps and considers alternatives.
calculated risk Risk whose likelihood and consequences have been included in a
calculation.
calculating machine Calculator, particularly of the older mechanical sort.
calculation Finding a solution to a problem using mathematics only.

If the solution involves applying rules (as in calculating tax), the
process is more accurately described as a computation.
calculator Device for performing mathematical functions. It is generally

distinguished from a computer in that a calculator does not usually
perform logic functions or store data, though such distinctions do not
always hold.
Early forms of calculator include the abacus, comptometer, slide
rule and mechanical adding machines.
Electronic calculators first used therminionic valves, then
transistors, then integrated circuits. During the 1980s, LED displays
were replaced by liquid crystal which use much less power.
calculus Branch of mathematics, based on algebra, which calculates how

variables relate to each other.
It is little used in finance, though it can be used to calculate
optimum selling price and similar.
calculus of finite difference

Branch of calculus concerned with changes in functions due to finite
changes in variables.
calendar Table of dates for a period.

The ordinary calendar comprises 12 months from 1 January to 31
December. The current calendar is the Gregorian calendar which
replaced the Julian calendar under Calendar (New Style) Act 1750 and
Calendar Act 1751. The change meant that 2 September 1752 was
immediately followed by 14 September 1752.
The Julian calendar started on Lady Day which is 25 March, nine
months before Christmas Day. This was changed by Calendar (New
Style) Act 1750, which also introduced 1 January as start of calendar
year.
Scotland had adopted 1 January as the first day of the year in 1600,
and adopted the Gregorian calendar in 1752 with England.
Other calendars relate to other periods such as a financial year or
tax year.
calendar convention Convention used in euromarkets that the maturity date of short-term
bonds is the same as the date of their issue.
calendar month One of the 12 traditional divisions of the year, as opposed to a tax
month or any other period of similar length.
Under Interpretation Act 1978, “month” means calendar month
unless the contest requires otherwise.
calendar spread Options strategy of selling an early-expiring option and buying a later-
expiring option in the same underlying security.
calendar variance Discrepancy that can arise when a company prepares accounts
according to the calendar but calculates other figures on the basis of
working days.
calendar year Period from 1 January to 31 December, used to distinguish a year from
financial year or tax year.
call Demand on shareholders to pay instalment on new shares.
callable bond Bond which can be redeemed before it matures.
callable capital The part of a company’s capital which has been authorised and issued
but not yet called up.
callable CD Certificate of deposit that can be redeemed by the issuing company

before the maturity date.
call account Another name for a current account where money may be withdrawn
without notice.
Callaghan, James English Labour politician (1912-2005) who was Chancellor of the
Exchequer from 16 October 1964 to 30 November 1967 in the first
government of Harold Wilson.
He tried to cope with a worsening economic crisis by increasing
taxes and introducing capital gains tax. He was forced to devalue the
pound in 1964. He subsequently introduced selective employment tax,
and introduced a national wage freeze.
He was prime minister from 5 April 1965 to 4 May 1979. He
remains the only person to have held the four big offices of prime
minister, home secretary, foreign secretary and chancellor.
call auction Process where orders for securities are batched and sold at an auction. It
is an alternative to the normal methods which involve continual
matching of buy and sell orders.
Call auctions have the advantages of concentrating liquidity but
have the disadvantage of customers having to wait to see if their orders
have been executed.
call-back pay Payment to an employee who has been called to back after finishing his
normal working hours. Such pay usually attracts a premium.
call deposit account Investment account which allows investors instant access to funds.
called up Description of share capital where the shareholders have paid the whole
amount of the acquisition cost.
called up capital Amount of issued share capital expressed as the amount by which
shareholders have paid the calls on their shares.
called up share capital The legal term for called up capital. It is defined as “in relation to
company [the term] means so much of its share capital as equals the
aggregate amount of the calls made on its shares (whether or not those
calls have been paid), together with —
(a) any share capital paid up without being called, and
(b) any share capital to be paid on a specific future date under the
articles, the terms of allotment of the relevant shares or any other

arrangements for payment of those shares”
(Companies Act 2006 s547).
call in Require a debt to be paid, particularly a debt which does not have a
fixed repayment date.
call money Amount loaned for which immediate payment may be demanded at any
time.
call-off stock Stock that a customer has adopted but takes delivery as required. Such
stock is often stored at the customer’s premises.
When the customer is in a different EU state, call-off stock is
regarded as being removed for VAT purposes when supplied, not when
adopted. However, in some member states, this may be regarded as
consignment stock.
call-of-more option An option which allows a buyer of option to double his holding of call
options. It is one of the forms of option to double.
call on shareholders Demand that shareholders pay the next instalment on buying their
shares.
call option The right to purchase shares (or other securities) at a specified price at a
specified date in the future. The duty to sell shares at that price is a put
option.
A call option is usually sold for a fraction of the current share price
plus a premium. If the shares rise above the option price, the shares can
be immediately sold for a profit. If the share price falls below the option
price, the option becomes worthless and the investor has lost the
premium.
call-over option Price which is determined by an individual seller in a market and not by
open outcry.
call-over price Price agreed for a commodity at callover. This price is used as the basis
for subsequent trading.
call premium Premium paid to purchase a call option.
call price (1) Exercise price of a bond’s call provision.

(2) In the USA, the term is used more widely to mean the price to be
paid on redemption of any bond.
call purchase Transaction where the buyer and seller can agree a price for a future
delivery.
call rate (1) Rate of interest on money at call.

(2) In sales, how many visits a sales person can make in a defined
period.
call risk Risk to a bond-holder that a call option will be exercised, by the bond
being redeemed before its maturity date.
call spread Investment strategy of buying a call option at one exercise price and
selling the same call at a higher price.
call to account Require an explanation from someone.
call up (1) Require payments to be paid by shareholders on their issued share

capital which has not yet been paid.
(2) Summons a person to perform a duty, such as jury service or
national service in the armed forces.
calls in arrear Money called up for shares but which has not been paid when due.
calorific gas Gas which can be burned for heating and power. These include
hydrogen, carbon monoxide, methane and various hydrocarbons.
Calvo clause Clause in a contract for international trade which states that the parties
rely solely on the law of the foreign territory to resolve any issue that
may subsequently arise. It is named after the Argentinean jurist Carlos
Calvo (1824-1906).
CAM Capital Allowances Manual, a book produced by HMRC to give

guidance on how to operate capital allowances.
cambistry Art of financial exchange, practised by a cambist.
camera Latin: chamber. The expression “in camera” means “in private”, such as
when the public is excluded from a court room.
Camera Stellata Latin: Star Chamber
Camphill Association Body formed in 1940 to promote Christian socialist ideals. They engage
co-workers whose tax status is discussed in the Inspectors’ Manual at
BIM22040.
Canada Revenue Agency (CRA)

Tax collection authority of Canada.
Canadian Institute of Chartered Accountants (CICA)

Principal professional body for accountants in Canada.
Cancellaria Curia Latin: Court of Chancery.
cancellation Act which has the intention of negating a document or act.

In terms of a cheque or other bill, cancellation may be indicated
simply by drawing a line across the document.
For a document, cancellation is insufficient to deny the document
effect. Such an act must be accompanied by a declaration from the
testator that the will is cancelled (Wills Act 1837 s20).
cancellation clause A provision in a contract that permits one or either party to cancel the
contract before it has been completed.
cancellation fee Charge to cover the administrative cost of cancelling something, such
as an order.
As this is not a charge for a supply, there is no VAT on such a fee.
cancellation of shares When a company removes shares from its register. This has the effect
of reducing the share capital. The legal implications are set out in
Companies Act 2006 s663.
cancellation of trade agreement

According to BIM38220 this is usually revenue expenditure, except if
the agreement is such that its loss would cripple the trade. This may be
capital following the decision in Vodafone Cellular & Others v Shaw
[1997] 69TC376.
cancellation price Price at which a unit trust will redeem units.
cancel out When two equal and opposite accounting entries come together.
cancer It is an offence to advertise a cure for cancer (Cancer Act 1939 s4).
candidate Person who seeks election or appointment to a position.
candle-holder Person who provides marginal assistance to another. The term

originally applied to the person who held a candle in church for a
reader.
Candlemas Old Scottish term day in Scotland on 2 February. Since 1991, it has
been replaced by 28 February.
It is a Christian festival commemorating Mary presenting Jesus at
the temple. It is celebrated by lighting candles.
candlestick chart Graph used in chartism to predict likely share price movements.
canister sharpener Pencil sharpener fitted in a small container in which the shavings can
be collected. The contained has a screwed lid, allowing the shavings to
be discarded.
canned or packaged Term used in VAT notice 701/15 to determine whether pet food is
standard-rated.
cannibalisation (1) Making up a complete product by taking parts from incomplete

products or from the useable parts of scrapped products.
(2) Commercial arrangement whereby a business gains business in one
area at the expense of losing some in another, such as when a retailer
opens a breach near an existing branch.
canon Rule of canon law or ecclesiastical law. The term is also used for a
minor dignitary attached to a cathedral.
Canon A leading maker of printers and other computer equipment.
canon law Rules for governing a church. The canons of the Church of England are
part of the law of England but may only be enforced against its clergy.
Other churches may only enforce their canon law on the basis of a
society regulating its own rules.
canons of taxation Set of criteria developed by Adam Smith to judge whether or not a tax
was a “good” tax.
They canons are:
● The cost of collection must be low relative to the yield
● The timing and amount to be paid must be certain to the payer
● The means and timing of payment must be convenient to the payer
● Taxes should be levied according to ability to pay.
canteen Dining hall in a workplace.

There is generally no tax charge for a subsidy for meals provided in
a canteen (Income Tax (Earnings and Pensions) Act 2003 s317).
can’t see the word for the trees

Idiom which means that you cannot see the overall position because of
all the detail.
cap Impose a financial limit, usually as a maximum.
CAP (1) Chargeable accounting period.

(2) Common Agricultural Policy - the set of legislation and practices
jointly adopted by the nations of the European Union (EU) in order to
provide a common, unified policy framework for agriculture.
CAPA Confederation of Asian and Pacific Accountants
capacity (1) Amount which can be produced, either in terms of money or

production of goods.
(2) The largest amount of insurance or reinsurance available from a
company. It can also refer to the largest amount .of insurance or
reinsurance available in the marketplace.
(3) Person’s role in an organisation.
(4) Available space.
capacity of company Ability of a company to enter transactions. This may be restricted by its
articles of association. However Companies Act 2006 s39 makes clear
that any restriction does not invalidate any action taken with another
party.
capacity test The tax rule that the allowability of expenditure can depend on the
capacity of the person in making it.
The test was established in the case Strong & Co of Romsey Ltd v
Woodfield [1906] 5TC215. This held that a brewery incurred expenses

as a landlord and not as a trader. This has been subsequently followed
in other cases. The matter is discussed in the Inspectors’ Manual at
BIM37300 and BIM38510.
Such a marginal distinction is less likely to be made now. The
capacity test remains valid in terms of disallowing expenses incurred by
someone in their capacity as a parent or private citizen rather than as a
trader.
capacity to be a trustee In general, any legal person may be a trustee.

A minor under 18 cannot be a trustee under Law of Property Act
1925 s20. A person who lacks full mental capacity may only be a
trustee to the extent that he understands the nature of trusteeship.
A company may be a trustee if its articles of association permit this.
In practice, many trustees are trust corporations.
capacity to contract The legal ability to make a contract.

English law assumes that every person and legal person has such
capacity (that is they are sui generis) unless they lack capacity. The
legal restrictions are:
● minors who are restricted to buy necessaries at a
reasonable price;
● people of limited mental capacity who are generally
restricted to their ability to understand the contract;
● people who are drunk or under the influence of drugs, who
are similarly restricted;
● bankrupts who have some restrictions imposed on them
under insolvency law;
● enemy aliens with whom a contract may not be made.
capacity usage variance

Difference between budgeted and actual figures to the extent that it
caused by more or fewer hours being worked.
capacity utilisation Measurement of how much of a manufacturing facility is being used

productively.
capacity variance Difference between planned hours and the hours actually worked.
cap and collar mortgage Loan on a property where the interest rate fluctuates but only within
limits. It cannot fall below a lower rate, the collar, nor rise above a
higher rate, the cap.
Caparo case Another name for Caparo Industries plc v Dickman [1990].
Caparo Industries plc v Dickman

Court case of 1990 on auditor’s liability.
Caparo acquired a controlling interest in a company called Fidelity
whose reported profit of £1.3 million should have been a loss of
£400,000. Caparo sued the auditors for professional liability. The
House of Lords held there was no liability as the auditors owed no duty
of care to individual shareholders or to the investing public in general.
cape Writ used in a real action.
Capel Court Land adjacent to the London Stock Exchange where dealers once
congregated. It was also used for the exchange itself.
CAPEX Abbreviation of capital expenditure.
capias Latin: that you take. It describes a writ to arrest a named person.
capias ad respondendum Writ to a defendant in criminal proceedings to attend court to hear

judgment pronounced against him.
capias ad satisfaciendum Old name for a writ for the arrest of a defendant in civil proceedings
when a judgment remained unsatisfied.
capital Sum of money distinguished from revenue or interest. The term has
many meanings in finance depending on context.
In terms of business, capital often means the money provided to get
the business started, as in share capital.
In terms of investment, capital means the principal which is
invested and on which it is hoped interest will be earned.
In terms of mortgages, the capital is the sum borrowed from the
mortgagee.
capital An amount of finance provided to enable a business to acquire assets

and sustain its operations.
capital account (1) Item in partnership accounts which indicates funds provided by the
partners rather than from trading, or a similar account of funds provided
by directors to a company. The account indicates the initial capital
subscribed plus share of retained profits and other additions, less
drawings. Unless the partners agree otherwise, interest accrues on the
capital accounts at a rate of 5% a year (Partnership Act 1890 s24(3)).
(2) The total equity of a business.

(3) Items in a country’s balance of payments which refers to
investments rather than proceeds from trade.
capital adequacy Ability of a bank or other financial institution to meet its financial
obligations.
In particular, such a business must have sufficient financing:
● to support the normal risks of trading;
● to cover weak trading in adverse conditions; and
● to allow for non-payment by customers.
There are specific rules on capital adequacy for banks set out in the
Basle Convention.
capital allocation Allocation of risk capital to units within an organisation on the basis of
their possible losses. This is particularly common in financial
institutions.
capital allowance Deduction from taxable profits given instead of depreciation.

There are currently four types of capital allowance available:
• first year allowance
• annual investment allowance
• writing down allowance
• balancing allowance.
Historically there have also been initial allowances and investment
allowances.
If an asset is disposed of a sum greater than acquisition cost minus
allowances, a balancing charge is incurred.
From 1/6 April 1997, capital allowances have been treated as a
trading expense, and balancing charges as trading income.
capital allowance excess Term used in Corporation Tax Act 2010 s101 in relation to restrictions
on loss relief.
capital and interest mortgage

Normal mortgage where each payment includes a portion of capital as
well as interest.
capital and interest mortgage

The most common form of mortgage, whereby the borrower makes a
monthly repayment which repays some of the capital with the interest.
Such a mortgage may be for any period, though 25 years is the most
common. At 6% the monthly repayment for £100,000 is £644.30.
In such a mortgage most of the early payments are interest. After
one year only 1.6% of the capital has been repaid. It takes 17 years for
half the capital to be repaid.
capital asset Another name for a fixed asset but seen in terms of its ability to
generate financial returns.
capital asset pricing model (CAPM)

Method of valuing investments using a discounted cashflow on
expected returns. The discount rate used is the beta for the investment.
capital asset pricing model

Method of calculating the expected return of a share by determining
what percentage of future return is dependent on the movement of the
stock market as a whole.
capital at risk In banking, a measure used to calculate a bank’s capital requirements.
capital base Capital structure of a business.

This is basically the initial capital provided by shareholders or
equivalent, plus retained profits for all years since commencement.
capital beneficiary Person who is beneficially entitled to receive capital, but not income,
from a discretionary trust.
capital bond Bond issued by National Savings in 1989 which offers a guaranteed
return over five years.
capital bonus Extra payment made by an insurance company on a policy.
capital budget Budget for spending on fixed assets.
capital clause Clause in the a company’s memorandum of association stating the

amount of capital with which it intends to be registered.
capital commitments Expenditure on fixed assets which has been authorised but not yet
spent.
capital conversion plan Annuity that converts capital into income.

They are most popular with older people as a means of avoiding
capital gains tax.
capital costs Expense on acquiring fixed assets.
capital distribution Distribution of capital from a company to its members, other than as a
bonus issue of shares.
The capital gains tax implications are given in Taxation of
Chargeable Gains Act 1992 from s122.
capital duty Stamp duty charged on the issue of new shares issued by a company. It
was charged from 1973 until abolished on 1 January 1988.
capital employed How much a business is worth.
capital endowment Fund where only the interest may be spent; the usual form of
endowment fund.
capital expenditure Expenditure on capital assets, such as fixed assets.

Such expenditure is not usually deductible from taxable income, but
capital allowances may be claimable.
capital flight When large sums of money leave a country either because of problems
in that country, or because a better return is available elsewhere.
capital flow Another term for capital flight.
capital formation Another term for fixed capital formation used in the national accounts.
capital fund In treasury management, a reserve that is set aside to fund future
spending on assets.
capital gain Profit on disposal of a fixed asset.
capital gains expenses Incidental expenses incurred in acquiring fixed assets. This includes
delivery, installation, site preparation and similar.
Such expenses are normally added to the capital cost of the fixed
asset itself.
capital gains tax (CGT) Tax charged on capital gains, namely the profit from selling a fixed
asset. Such a gain is not subject to income tax. The tax was introduced
on 6 April 1965 for gains accruing from that date.
The tax is calculated by subtracting acquisition cost from disposal
proceeds. The tax is subject to many reliefs.
From 6 April 1988, CGT is generally only charged on gains from 6
April 1982 (Taxation of Chargeable Gains Act 1992 s39).
The main legislation is Taxation of Chargeable Gains Act 1992.
capital gearing Another term for gearing, the ratio of debt capital to equity capital.
capital goods Machinery, premises and raw materials which are used to make
products.
Capital Goods Scheme In VAT, a scheme that requires the adjustment of input tax, to reflect
the extent of changes in taxable use over time for certain items of
capital expenditure. Affects businesses that make exempt supplies.
capital instruments “All instruments that are issued by reporting entities as a means of
raising finance, including shares, debentures, loans and debt
instruments, options and warrants that give the holder the right to
subscribe for or obtain capital instruments. In the case of consolidated
financial statements the term includes capital instruments issued by
subsidiaries except those that are held by another member of the group
in the consolidation” (FRS 4 para 2).
capital intensive Description of a business that needs large amounts of capital to make it
work. Utilities such as water and electricity companies are examples.
capital interest In the context of a controlled foreign company, this terms “means an
interest in the issued share capital or reserves of the company or in a
loan to or deposit with the conductor or the liability of a guarantor
under a guarantee to or for the benefit of the company” (Income and
Corporation Taxes Act 1988 Sch 25 para 11(4).
capitalisation issue A bonus issue designed to capitalise some of a company’s retained

profit. It is also known as a scrip issue.
capitalisation of costs When costs are not treated as expenditure but as part of the cost of
acquiring a fixed asset.
capitalise To redesignate a current asset or expenditure as a fixed asset.
capitalised value Term used in relation to group life policies that provide a pension for
the spouse or other dependant of a member. The capitalised value is
used for underwriting purposes and is an approximation of the lump
sum that would be required to secure the pension.
capitalism Political system which favours private property and a free market
economy, with minimal government interference. It relies heavily on
the law of supply and demand.
Politically, capitalist systems are collectively known as
monetarism which has become the economic policy for the main
parties in Britain since 1979 in preference to Keysianism.
Many commentators believe that no system can have wholly
unfettered capitalism, as this provides no support for the weak who
cannot participate. Accordingly many now favour a mixed economy
where capitalism is allowed to function where it is most effective, and
the government provides some control in other areas, such as
employment and welfare.
capital lease American term for a lease that does not legally constitute a purchase.
The lease should still be accounted for as the lessee’s fixed asset,
provided appropriate conditions are met.
capital letter Large letter, such as A B C or D, produced on computers and

typewriters by pressing the shift key while typing the letter. The
opposite is known as lower case.
capital levy Tax on a person’s or business’s possessions, a form of wealth tax. Such
a tax proposed in 1914 but never implemented. In the UK, capital is
taxed only when realised as capital gains tax.
capital loss Loss from the disposal of a fixed asset. This may be offset against other
capital gains, for the purposes of capital gains tax.
capital maintenance Concept which sees profits as replacing the erosion of capital values
through such things as depreciation. The concept of capital maintenance
has been used in some models of inflation accounting.
capital market International market where funds can be raised for business.
capital payment Payment of a sum intended to be either principal on which income is

earned or to acquire a fixed asset.
The term is given a more specific meaning in Taxation of
Chargeable Gains Act 1992 s97 in relation to payments to a non-
resident trust.
capital profit Profit made by selling a fixed asset. It is more commonly called a
capital gain.
capital programme A plan of future spending on capital projects such as buying land,
buildings, vehicles and equipment.
capital reconstruction Process of voluntarily liquidating a company and then selling its assets
to another company with the same shareholders but with a larger capital
base.
capital redemption reserve

Account where funds are kept to pay for redeeming capital instruments.
The existence of such an account prevents a reduction of capital when
the instruments are redeemed.
The legal provisions are set out in Companies Act 2006 s723.
capital reorganisation Process of changing the capital structure of a business.

This usually involves splitting or amalgamating shares, and possibly
changing the nature of the shares.
capital requirement Amount of money a business needs for its normal operations.
In the USA, the term particularly applies to the funds that the SEC
requires brokers and dealers to have and the form that such funds must
take.
capital reserves Another name for undistributed reserves.
capital share Shares in a unit trust which rise as the capital value of the shares rise
but which do not receive any income.
Most unit trusts provide both capital growth and regular income
from the shares which they hold. It is possible to have a split-level
trust where the capital growth and income elements are separated
between capital shares and income shares.
capital spending charged to revenue

Paying for capital spending direct from a local authority’s revenue
monies.
capital stock American term for equity shares.
capital structure The relative proportions of different types of financial instrument in

providing the capital for a company.
capital subsidy An early and unsuccessful form of income tax imposed on income and
profits between 1670 and 1671.
capital sum In relation to disposal proceeds for capital gains tax, “means any
money or money’s worth which is not excluded from the consideration
taken into account in the computation of the gain” (Taxation of
Chargeable Gains Act 1992 s22(3)).
capital surplus American term for the difference between par value and its issue
price. The equivalent UK term is share premium.
capital to asset ratio Another name for capital adequacy.
capital transaction Transaction which affects a capital item, such as fixed assets or share
capital, rather than a revenue item.
capital transfer tax A tax levied between 1974 and 1986 on transfers of money either
during a person’s lifetime or on death.
It replaced estate duty and was itself replaced by inheritance tax.
capital turnover How quickly the capital of a business is spent to generate income. It is
usually measured by the capital turnover ratio.
capital turnover ratio Ratio of turnover divided by average capital for the accounting period.
capitula Latin: articles
CAPM Capital asset pricing model.
capped floating rate note Floating rate note which has an agreed maximum interest rate.
capped mortgage Loan on a property which is a hybrid between variable mortgages and
fixed rate mortgages. The rate of interest fluctuates in accordance with
economic conditions but is capped so it cannot rise above a stated rate.
If the mortgage also has a minimum rate below which the interest
rate cannot fall, it is known as a cap and collar mortgage.
capped option An option where the payout on exercise is subject to an upper limit.
capped prime loan Loan in which the interest rate is restricted to a maximum.
capped rate 1. Like a fixed rate, but the rate is guaranteed not to go above a certain
level for a set period of time. It can, however, move downwards. 2. An
arrangement that caps your mortgage rate for a specified period of time.
On the first day of the month following expiry of the capped rate
period, the interest rate will change to the then prevailing Standard
Variable Rate.
capping A power under which the Government may limit the maximum level of
local authority spending or increases in that level year on year, which it
considers excessive. It is a tool to restrain increases in council tax.
capsizing Business jargon for when so many employees are laid off (or
downsized) that the business cannot function properly.
caption (1) Formal heading of a legal document, stating before whom it was
made.
(2) Option on an interest-rate cap.
captive Term used to describe any person, organisation, market or similar

whose freedom is restricted. The restriction may be legal, contractual or
practical.
captive finance company Finance company which is controlled by another company, such as a
supplier of goods.
captive insurance company

Insurance company which is totally owned by another company, and
which usually insures only the parent company’s risks.
captive market Situation where a customer has no real choice as to the supplier for
particular goods or services.
capture (1) Method of acquiring property, such as res nullius.

(2) Seizure of enemy property or enemies during war.
(3) In computing, process by which data is saved to a computer, such as
capturing a photograph found on the Internet for later use.
car Vehicle designed primarily to carry passengers, as opposed to a van

which is primarily designed to carry goods. It is subject to many special
tax and legal provisions.
For VAT, new cars are standard-rated. Second-hand cars may be
sold under a margin scheme. A business may not usually claim back the
input tax on a car unless it is wholly used for the business, such as a
driving school car, or courtesy car for a hotel. This has been the subject
of much litigation.
Cars may be personally exported under a tax-free scheme, as
explained in VAT notice 705. Such a vehicle may usually be re-
imported to the UK, free of duty and VAT.
When VAT was introduced in 1973, cars were subject to 10% car
tax. With the rate of 10% VAT then applicable, this gave a total sales
tax of 21%. Car tax was reduced to 5% and then abolished.
Cars imported from outside the EU are subject to Customs duty.
Since 2006, the rate has been 10%. Such a vehicle must be registered
with the DVLA. It is illegal to drive a vehicle before registration other
than to be registered or to get an MOT certificate.
Cars are subject to vehicle excise duty (or road tax) according to
their carbon dioxide emissions.
If a car is provided to an employee for his private use, the employee
is liable to pay income tax on the car benefit. This is calculated by
multiplying the list price by a percentage, up to 35%, depending on the
car’s carbon dioxide emissions.
For these purposes, a car is defined as “a mechanically propelled
road vehicle which is not:
(a) a goods vehicle,
(b) a motor cycle,
(c) an invalid carriage, or
(d) a vehicle of a type not commonly used as a private vehicle
and unsuitable to be so used” (Income Tax (Earnings and Pensions) Act
2003 s115(1)).
If the employer also pays for private petrol or other road fuel, the
employee is also liable to pay income tax on the fuel benefit. This is
calculated as a fixed figure, £18,000 for 2010/11, multiplied by the
same percentage as used for the car benefit.
Where any employee is liable for car benefit or fuel benefit, the
employer is also liable to pay class 1A national insurance.
For mileage allowances and passenger payments, the term means
“a road vehicle that is not a goods vehicle, motor cycle, or vehicle of a

type not commonly used as a private vehicle and unsuitable so to be
used” (Income Tax (Earnings and Pensions) Act 2003 s235(2)).
For Customs, the procedure for importing a private motor vehicle is
set out in Customs notice 3. An export licence is required for a vehicle
more than 50 years old and valued at £65,000 or more, or more than 75
years old and valued at £30,400 or more.
car For driving licences, a car is category B if its maximum authorised

mass does not exceed 3,500 kilograms and any trailer weighs no more
than 750 kilograms.
CAR Compound annual return.

This provides a single comparative figure on different forms of
investment. It is to investment what APR is to borrowing.
carat (1) Traditional weight for precious stones, where 1 carat is about 1/42
of an ounce. For metric purposes, it was redefined as fifth of a gram
(Weights and Measures Act 1963 s10).
(2) Measure of the purity of gold, where 24 carat is pure gold. This is
now defined in Hallmarking Act 1973 Sch 1. A common standard is 22
carat, which means 22 parts of gold to 2 parts of base metal.
caravan “Any structure designed or adapted for human habitation which is

capable of being moved from one place to another (whether by being
towed, or by being transported on a motor vehicle or trailer) and any
motor vehicle so designed or adapted, but does not include:
(a) any railway rolling stock.... ;
(b) any tent”
(Caravan Sites and Control of Development Act 1960 s29(1)).
caravan Vehicle with some facilities for everyday living, such as facilities for
eating and sleeping. This may be towed by a car under certain
conditions. If the caravan has its own engine, it is considered to be a
motorhome.
A car driver who passed the test before 1 January 1997 may drive a
car towing a caravan provided their combined weight (MAM) does not
exceed 8.25 tonnes. From 1 January 1997, drivers must either have a
licence for category C or D vehicles to tow a caravan or trailer with a
weight of more than 750 kilograms.
caravan Zero-rated under Value Added Tax Act 1994 Sch 8 Group 9 provided
their unladen weight does not exceed 2,030 kg. This is above the weight
which may be ordinarily towed on a British road.
Hire of a sited caravan is standard-rated.
Carbolic Smoke Ball Name of the leading court case of 1893 Carlill v Carbolic Smoke Ball
Company.
carbon Naturally occurring element which takes various forms including

diamond, graphite and charcoal. Carbon is present in the molecules of
living matter and organic compounds. It combines with hydrogen to

form various hydrocarbon oils which are subject to hydrocarbon oil
duty.
The word is often used to mean the gas carbon dioxide, whose
molecule comprises one atom of carbon and two of oxygen. This is
produced naturally through combustion and exhalation. It is believed to
be a greenhouse gas which has led to climate change. There are many
financial and tax provisions designed to reduce carbon dioxide
emissions.
carbon capture and storage

Process of decarbonisation. It is defined in Energy Act 2010 s7.
carbon dioxide Common gas comprising molecules of one carbon and two oxygen
atoms, indicated by the formula CO2. It is produced by burning and
breathing. Plant life turns the gas back to oxygen.
Because of its perceived harm in the atmosphere, there are many tax
and other provisions to reduce its production.
carbon dioxide emission Amount of carbon dioxide gas in the exhaust emission of a vehicle.
This is used to determine the vehicle excise duty, and the taxable
benefit of a company car.
carbon offset Act which reduces carbon dioxide to compensate for other activity
which generates carbon dioxide. An example is planting a tree to
compensate for travel.
carbon price Figure used to calculate climate change levy.
Carbon Reduction Commitment (CRC)

Name for what is now known as CRC Energy Efficiency Scheme. It
requires large public sector bodies to reduce carbon dioxide emissions
by 10%.
CARD Consolidated Admissions and Reporting Directive.
cardiopulmonary resuscitation
“Means a combination of expired air ventilation and chest
compression” (VAT notice 701/1). If provided by a charity, such a
service may be zero-rated.
cards For national insurance, a card provided for an individual to record

national insurance payments. These were generally abolished in the
1970s, though they remained until 1993 for class 3.
The expression “to give someone their cards” means to dismiss
someone, even though a national insurance card has not been issued for
40 years and the P45 tax certificate has never been produced on card.
care and maintenance Term used in relation to a fixed asset, such as a building, machine,
vessel or vehicle. It is particularly used for assets not in current use but
which are being maintained for prompt use if required.
care component One of the two components that make up the disability living
allowance. The other is the mobility component.
The care component is paid at one of three rates depending on the
severity of the disability.
The highest rate is paid for a claimant who:
• requires frequent attention during the day and prolonger or
repeated during the night for attention to bodily functions or to avoid
substantial danger to himself or others; or
• who is terminally ill.
The middle rate is paid for a claimant who needs such attention
during the day or the night.
The lower rate is paid for a claimant who needs help with bodily
functions during the day, or who cannot cook for himself or herself (the
cooking test).
care relief Generic term for the various income tax reliefs allowed to foster carers,
shared life carers and similar.
carer’s allowance Social security benefit payable to someone who looks after a severely
disabled person. It replaced invalid care allowance on 1 April 2003.
The carer must provide care “regularly and substantially”. In
practice this means looking after a person for at least 35 hours in every
week for periods which, broadly, are 22 weeks out of 26.
Only one allowance is paid per disabled person. The allowance can
only be for one person, so a carer cannot claim for spending 20 hours a
week for looking after two people. The allowance cannot be claimed by
anyone who is employed or in full-time education. The carer must be at
least 16; there is no upper age limit.
Entitlement does not depend on national insurance contributions,
although the amount can vary according to the claimant’s
circumstances. While the allowance is being claimed, the carer is
automatically credited with class 1 national insurance contributions.
The allowance may be paid without time limit while relevant conditions
are met.
carer’s allowance (CA) Social security benefit payable to someone who spends 35 hours or
more a week caring for someone.
care, treatment or instruction

Term used to determine whether welfare services qualify for zero-
rating under Value Added Tax Act 1994 Sch 7 Group 9.
“Care treatment and instruction includes the protection, control or
guidance of an individual when this is provided to meet medical,
physical, personal or domestic needs.
“Examples include:
• personal or nursing care (including assistance with bathing,
dressing, toileting and other personal hygiene)
• general assistance and support with everyday tasks such as
form-filling, letter reading/writing, bill-paying
• certain routine domestic tasks
• counselling
• looking after or supervising vulnerable people
• support or instruction designed to develop or sustain a
person’s capacity to live independently in the community
• protection, control, guidance or companionship that is
required to meet an individual’s personal or domestic needs and
• residential care, including accommodation, board and other
services provided to residents as part of a care package” (VAT leaflet
701/2).
Carey Street Colloquialism for bankruptcy. It is a street in London where the

bankruptcy courts once were.
car fuel Petrol, diesel or other fuel used to run a car.

When an employer pays for such fuel for an employee’s private use,
a tax charge arised under Income Tax (Earnings and Pensions) Act
2003 s149. This is in addition to any charge for the car itself.
cargo Goods shipped for carriage.
cargo carrier Home Office term for carriers which operate cargo-only flights,
including mail flights.
Cargo Community System (CCS-UK)

Customs term for computerised cargo processing system that controls
goods in an inventory linked environment. It consists of a central
database and a “switch” to transfer messages between the various
computer systems connected to it.
Carlill and Carbolic Smoke Ball Company

Leading court case from 1893 which established, among other
precedents, that it is possible to make an offer to contract with the
whole world.
car loan Personal loan, marketed specifically to buy a car.

Many car dealers have arrangements with finance companies to
assist in the sale of cars. Buyers should remember that such a loan is an
independent transaction from buying the car itself. It may also not be
the most attractive. Most dealers are prepared to sell a call for less if the
buyer can find the cash.
The term of the loan should not exceed the period the buyer expects
to keep the car. The average life of a car in Britain is eight years. If it is
intended to keep a car in pristine condition, it should be replaced after
two years.
carousel fraud Form of missing trade fraud where goods are repeatedly sold between
businesses in different EU member states as a means of illegally
absconding with VAT input tax.
car parking An employer’s provision of car parking at or near the place of work is
exempted as a taxable benefit in kind under Income Tax (Earnings and
carpetbagger Person who engages in an activity with a view to gaining a quick

benefit. The term was particularly applied to people who invested in a
building society in the hope of receiving a windfall payment when it
demutualised.
carriage (1) Transport of goods between places.

(2) The goods themselves or the vehicle that carries them.
(3) Upper part of traditional typewriter which holds the paper and
travels from right to left as each line of type is produced.
carriage by air There are special laws relating to the carriage of people and property by
air, such as Carriage by Air Act 1961. This limits the amount of
compensation payable.
carriage outwards Delivery expenses incurred when selling goods.
carriage paid Commercial arrangement where the seller has already paid the carriage
charge to the customer.
carriage tax Excise duty charged between 1747 and 1869 for the few carriages able
to use the poor roads.
carried-back amount Term used in Corporation Tax Act 2010 s12 in relation to accounts not
prepared using sterling as currency.
carried forward Sub-total of a page to be taken to start of next page in record keeping.
carried-forward amount Term used in Corporation Tax Act 2010 s13 in relation to accounts not
prepared using sterling as currency.
carrier Person who operate the business of transporting people or goods.
carry (1) ....

(2) Term used by private equity companies to describe the percentage
of the profits earned by the company after it has paid back the investors.
This is taxed as a capital gain rather than as income, making private
equity tax efficient.
carry back When an amount is transferred to an earlier period.

This is rare in accountancy though there are some tax provisions.
(1) For loss relief, the term refers to a provision in Corporation Tax
Act 2010 s37 where a loss may be offset against a profit in the previous
accounting period. In the final year of a business, a loss may be carried
back against profits of the three previous years.
For accounting periods that ended between 24 November 2008 and
23 November 2010, there was a limited right to offset a loss against
profits of the three previous years.
(2) For pensions, the term was used for offsetting pension
contributions against income for the previous tax year. This was
abolished from 6 April 2006.
carry down To take the closing balance of an account at the end of a period as the
starting balance of the same account for the next period.
carry forward (1) In accountancy and bookkeeping, when a figure from the end of one
period or from one page of a book is taken to the beginning of the next.
The closing figure of one period or one page is the opening figure of the
next.
(2) A tax term for any provision where an expense or loss in an
accounting period may be offset against income of another.
For loss relief, the term means the right to offset a loss against the
profits of the same trade in any future accounting period. Provided the
same trade continues, a loss may be carried forward indefinitely. This is
given in Income Tax Act 2007 s83 for individuals, and Corporation Tax
Act 2010 s45 for companies.
For pensions, the term was a misnomer for the curious tax
provision which allowed pension contributions to be offset against
taxable income for the previous six tax years, starting with the earliest.
This was abolished from 6 April 2006.
carry-forward losses Term used in Corporation Tax Act 2010 s95 in relation to government
investment written off.
carry-forward property loss relief

When a loss from a property business may be carried forward against
profits of future years (Income Tax Act 2007 s118).
carry-forward trade loss relief

The relief whereby a loss from a trade may be carried forward
indefinitely for offset against future profits (Income Tax Act 2007 s83).
See carry forward.
carrying amount Value of an asset as shown on the balance sheet. For a fixed asset, this
is usually its net book value.
carry over Value of stock held at the start of an accounting period.
car sharing There is no taxable benefit in kind when an employer provides certain
assistance to employees when a car sharing arrangement has broken
down (Income Tax (Earnings and Pensions) Act 2003 s248).
Carta Mercatoria Latin: charter of merchants.

A charter granted in 1303 by Edward I to provide (among other
things) exemptions to foreign merchants from certain taxes.
car tax A sales tax once charged on new cars.

When VAT was introduced on 1 April 1973, cars were subject to
10% car tax plus 10% VAT, giving a total tax charge of 21%. The rate
of car tax was halved to 5% on 10 March 1992, and the tax was
abolished on 13 November 1992. Caravans paid car tax on 60% of their
value. Car tax was not charged on any other vehicles.
The term is sometimes (wrongly) also used to mean road tax or
vehicle excise duty.
cartage Charge for carrying goods.
cartel Arrangement when a group of people work together to fix a market,

such as when different suppliers of the same product agree to fix a
minimum selling price or agree that they will each supply in one area
only. Cartels are illegal.
cartwheel Nickname given to the large two-pence coin minted in 1797.
carucage A tax levied between 1194 and 1224.
CASC Community amateur sports club.
cascade shareholdings Arrangement where a company has a shareholding in another company

which has a shareholding in another company, and so on.
cascading Consequence of a gross receipts tax whereby items are taxed more
than once. The UK has never had a gross receipts tax, but several
European countries has such taxes before they adopted value added
tax.
The tax was charged on the total sales of a business, so an item that
passed from several manufacturers or suppliers could suffer tax several
times. VAT avoids this by refunding the tax paid by the purchaser.
case (1) Legal action

(2) Division of tax schedule D or E.
Case I loss Loss made under what was Schedule D Case I. For corporation tax
purposes, this is now known as section 35 loss in reference to
Case I profit Profit made under what was Schedule D Case I. For corporation tax
purposes, this is now known as section 35 profit in reference to
case law Decisions of court cases that collectively provide guidance on

interpreting the law.
case law trust “Employee share ownership trust or general purpose [employee
benefit trust] which relies on tax case law rather than specific
legislation as authority for allowing tax deductions on employers’
contributions” (Inspectors’ Manual at BIM 44001).
case management Rights to manage the conduct of a court case or tribunal hearing.
For tax tribunals, these rights are set out in The Tribunal Procedure
(First-tier Tribunal) (Tax Chamber) Rules SI 2009 No 273 rule 5.
case stated Statement of relevant facts by a court or tribunal for consideration by a

higher authority.
Case VI loss Loss incurred by a company on its Schedule D Case VI activities

(miscellaneous income). Loss relief may be claimable under Income
and Corporation Taxes Act 1988 s396.
cash Money in readily spendable form.

The term is imprecise and is used differently depending on the
context. In accounting, cash usually means liquid funds such as money
in bank accounts. It is the most liquid current asset.
Businesses that handle large amounts of cash may need to register
under money laundering regulations.
Anyone coming into the UK with more than €10,000 euros (or
equivalent value in any other currency) must declare this to Customs.
cashable Description of an item that can easily be converted to cash.
cash account Account which records the receipt and expenditure of cash.
cash accounting Term for accounting system which records transactions when payment
is made rather than when the transaction occurs. Sales and purchases
are not recorded when made but when paid for. The opposite is
accruals accounting.
Cash accounting is only appropriate for individuals and small
businesses. HMRC allow cash accounting for income tax purposes in
activities where payment is uncertain, such as for barristers and authors.
Charities may only use cash accounting up to a certain limit.
For VAT purposes, cash accounting is allowed up to a limit.
For income tax purposes, cash accounting may only be used for a
few occupations where there is reasonable, such as authors.
Professional people are generally not allowed to use it from 6 April
2001.
cash advance Providing cash to someone, such as an employee, to help pay for future
expenditure.
cash against documents (CAD)

Terms of trade whereby the seller is paid when certain documents are
presented to the bank. These are typically shipping documents in
international trade.
cash analysis Exercise book ruled with columns for recording amounts as a means of
analysing income and expenditure into categories.
cash and carry (1) Large store where goods may be bought in bulk provided immediate
payment is made.
(2) Transaction which can sometimes make a profit on a futures market,
particularly the London Metal Exchange. If the spot price for the
commodity plus warehousing, insurance etc for three months is less

than the futures market price for three months, the commodity may be
bought and sold for a profit.
cash back (1) Arrangement whereby a supermarket or other retailer will allow a
customer to add a sum to their shopping bill to receive back as cash
when paying by debit card. So someone who buys £100 worth of
goods may have £120 charged to the card and be given £20 in cash.
(2) A type of mortgage where the lender pays a sum to the borrower
when the mortgage finishes. Such a mortgage is usually subject to many
restrictions, such as high redemption penalties if the borrower wishes
to pay if off early.
(3) A sum paid by a supplier to a customer to persuade them to make a
transaction. This includes when an intermediary agrees to share
commission with a client. The tax position of such payments is
explained in Statement of Practice SP4/97.
cash back credit card A credit card which allows a cash discount as a form of loyalty
scheme.
The discount is usually in the range of 0.5% to 1.5% with higher
figures for special introductory offers. Such a card is only cost-effective
if the user pays the whole balance off each month.
cash balance Balance on a cash account. This ignores the amount owed or owing by
the person or business.
cash balance arrangement

In pensions, a form of money purchase arrangement where the
benefit received is not entirely dependent on what the fund will buy
when the scheme is crystallised for a member. Such an arrangement
may have elements of a final salary scheme, such as so much per
year’s service.
Such arrangements are often not fully funded during the member’s
working life, but are funded at the moment of crystallisation.
cash basis Using cash accounting.
cash book Book of prime entry for recording cash transactions.
cash budget Budgeted figures for income and expenditure.
cash card Plastic card, the same size as a credit card, which allows the person to
withdraw cash from automatic teller machines.
The user keys in a four-digit PIN number and states the amount he
or she wishes to withdraw. The cards can sometimes be used for other
purposes, such as checking the balance on the account or ordering a
statement.
Sometimes credit cards or debit cards may also be used as cash
cards.
cash consideration In relation to company law on buying shares, “means —

(a) cash received by the company,
(b) a cheque received by the company in good faith that the
directors have no reason for suspecting will not be paid,
(c) a release of a liability of the company for a liquidated sum,
(d) an undertaking to pay cash to the company at a future date, or
(e) payment by any other means giving rise to a present or future
entitlement (of the company or a person acting on the company’s
behalf) to a payment, or credit equivalent to payment, in cash”
cash conversion Measure of how much of a business’s profits are converted to cash,
particularly in the form of dividends.
cash cost Cost of production at site level, particularly in mining. This includes all
site costs, including transport, refining and administration, plus an
amortisation of other overheads.
cash counter A machine which counts coins or bank notes.

A coin counter usually comprises a large hopper into which coins
are poured. The machine sorts them according to denomination and
sends them to the appropriate section. A further section takes coins
which do not match the criteria of any coin, such as foreign coins,
washers and counterfeit coins.
A banknote counter is a machine which accurately counts
banknotes, usually by weighing them.
cash cow Product or service which can be relied on to generate income for a
business which can use it to fund other activities.
cash-credit In banking, account which includes an element of loan that the

customer may call down at will.
cash crop Crop grown for the purpose of generating income rather than to feed
those who grow it. The term is particularly used when considering
national economies.
cash cycle Time it takes from paying cash for goods to receiving cash from their
subsequent sale.
cash deal Transaction where it is agreed that payment will be made in cash. This
usually results in a lower price.
A cash deal can be justified as it avoids the seller the cost or
borrowing and the expense of credit control. Sometimes cash deals are
done to avoid the need to produce any paperwork with a view to
evading tax.
cash declaration The duty of anyone entering the UK from outside the European Union,
or leaving the UK to go outside the European Union to declare any
amount of cash with them which exceeds €10,000 (around £7,000).
This duty was introduced from 15 June 2007 to counter money
laundering.
cash desk Place in a shop or other premises where payments are made or received.
cash discount Reduction in price offered when a customer pays cash.
cash dispenser Machine which provides cash in the form of notes or, rarely, coins. The
commonest example is the automated teller machine.
cash dividend Dividend in the form of cash rather than bonus shares.
cash down Description of purchase where full payment is made at the time.
cash economy Another name for the black economy, where goods are traded for cash
which is not recorded for tax purposes.
cash equivalent Anything which is regarded as having similar properties to cash, such
as readily exchangeable securities or gold coins.
cash equivalents Short-term, highly liquid investments that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of
changes in value.
cash float Amount of cash, usually in small denominations, provided at the start of
trading to ensure that a seller has sufficient change to give customers.
cash flow Statement of how money flows in and out of the company (or other
reporting entity), made up of inflows and outflows over defined
periods, usually months but sometimes weeks, quarters or years.
A cashflow statement is of two types.
For financial accounting, a cashflow statement is one of the
financial statements prepared for the same accounting period as the
profit and loss account. It shows how much money has come into the
business and how much has gone out, and how much money the
business still has. Unlike the profit and loss account, this statement is
not subjective. It excludes all transactions which involve no transfers of
funds, such as depreciation and accruals.
In management accounting, a cashflow statement is often used to
ensure that a business has sufficient cash to meet its obligations over a
period. This is particularly important for a building contract where
heavy expenses may be incurred at the start with payment due later on.
A cashflow statement ensures that the business does not run out of
money at any point.
A cashflow statement is also useful when considering a new
business which takes some time to start earning sufficient income to
become self-supporting. It ensures that the business starts earning
sufficient profits before the end of the cash burn period when the
initial capital is spent.
Where a project extends over a long period, particularly in times of
high inflation or where there is a high cost of capital, a special form of
statement known as discounted cashflow may be used to ensure that
inflation or cost of capital have not eaten up the profit.

The term cashflow may be spelled as a single word.
cash flow at risk The extent to which an organisation’s cashflow is at risk.
cash flow hedge Any process which hedges the risk of an organisation having a serious
difference between cash inflows and cash outflows at a particular time.
Such hedges usually involve the facility to draw cash temporarily from
another source, sometimes in return for lending cash during periods of
great inflow.
cash flow matching Process of hedging whereby an organisation can match its cash inflows
with its cashflow outflows.
cash flow statement Summarises cash paid to and received from other organisations and
individuals for capital and revenue purposes.
cash flow projections Statements of cash expected to flow into the business and cash expected
to flow out over a particular period.
cash flow statement Provides information about changes in financial position.
cash fraction A small amount of cash paid to a shareholder in respect of shares which
could not be allocated on a share consolidation.
For example a company makes a 1 for 7 share consolidation, and a
shareholder had 100 shares. The shareholder receives 14 new shares for
98 of the old ones, and a cash fraction for the remaining two.
cash generator Fixed asset or cost centre which produces income that can be measured.
cashier Person who handles money in an organisation.
cashier’s check American term for a banker’s draft.
cash in Sell an investment for cash.
cash inflow Receipts of money to a person or business.
cash instrument Financial instrument or obligation that is sold for immediate delivery.
cash interest cover Ratio of operating cashflow divided by interest paid.
cash ISA Form of individual savings account (ISA) which invests in fixed
interest investments rather than shares.
From 6 April 2008, an individual may invest up to £3,600 in a cash-
ISA. This is half the overall ISA limit.
cash limit Maximum amount of money which is permitted in defined

circumstances, such as for spending in a period or which may be
withdrawn from a cash dispenser.
cash machine Alternative name for automatic teller machine.
cash management Policy of an organisation for the management of its funds.
cash management account

Bank account where funds are invested on money market, but where the
customer may draw freely using a cheque book.
cash market Term used for the financial market which trades in futures or
currencies. It is sometimes called the spot market.
cash offer Price someone is willing to pay in cash. It may be less than the offer
price.
cash-or-nothing option An exotic option where the holder either receives a payment or
nothing.
cash-out Process of turning tokens into cash, such as after a session in a casino.
cash outflow Payments of money by a person or business.
cash payment Amount of money paid in cash.
cash point Place in a shop or similar establishment which accepts payments.
cash position Amount of cash a person or business currently has available.
cash positive Business or activity where payment is received before the equivalent
payment is made.
A cash positive shop sells goods to customers who pay cash before
the shop has to pay the supplier to buy those goods.
cash price Amount which a seller is prepared to accept if payment is made in cash.
cash register Machine, also known as a till, for recording cash transactions,
particularly in shops and similar places. Typically it comprises a display
of the price, buttons to enter the price, and a cash drawer which opens
when a sale is rung up.
The first machine was built in 1879 and patented in 1883. It was
designed to prevent embezzlement by staff. The cash drawer would
only open when a sale was rung up or when a no sale button was
pressed. The no sale button typically required a special key possessed
by the owner.
Modern machines include an adding machine which records the
total of sales. They also print receipts and analyse sales using systems
such as Eftpos. Information is now widely entered using barcodes.
Some machines are connected to scales to weigh produce and with
terminals for credit cards and similar.
cash railway Mechanical device once common in large shops which allows for
exchanges of cash between cash desk and counter.
cash ratio Another name for liquidity ratio.
cash reserves Amount of easily accessible cash which a person or business keeps,
usually to cover an emergency.
cash returned on invested capital (CROIC)

Measure of return on capital but considering only cash returns. It is a
measure of cashflow rather than profitability.
cash sale Transaction for which payment was made in cash.
cash settlement Settlement made in a cash market, or a settlement made in cash in any
market.
cash shell Company which may have some assets and cash, but whose main value
is in its listing on a stock market.
cash shortage “A deficit arising in relation to amounts received in connection with

retail transactions” (Employment Rights Act 1996 s17(1)).
Where cash goes missing while a shop assistant is on duty, the
shopkeeper may deduct the sum from the assistant’s wages provided the
amount does not exceed 10% of gross wages.
cash surrender value The amount of money received when a policyholder surrenders a life
insurance policy or similar with cash value.
cash terms Terms for a transaction where payment is made in cash. The terms
usually include a lower price for the goods or services.
cash transaction A transaction where payment is made in cash.
cash unit trust Unit trust that invests in money funds rather than in shares.
cash up Add up the amounts of cash received during the day, as in a shop or
bank.
cash voucher Coupon or similar document which can be exchanged for cash rather
than goods.
cash voucher For the purpose of taxing benefits in kind, “a voucher, stamp or similar
document capable of being exchanged for a sum of money which is:
(a) greater than;
(b) equal to; or
(c) not substantially less than,
the expense incurred by the person at whose cost the voucher, stamp or
similar document is provided” (Income Tax (Earnings and Pensions)
Act 2003 s75).
Cashwire In the USA, a system operated by banks to clear payments between

them.
casino Place whose prime purpose is to allow people to gamble. The original
meaning was a place for dancing.
“An arrangement whereby people are given an opportunity to
participate in one or more casino games” (Gambling Act 2005 s7(1)).
A casino may be classified as a regional casino, large casino or
small casino, or may be below the limit for a licensed casino (ibid
s7(5)).
casino cage Place in a casino where cash and chips are exchanged. The term comes
from the high level of security needed for large amounts.
casino game “A game of chance which is not equal chance gaming” (Gambling Act
2005 s7(2)).
casino operating licence Licence issued by Gambling Commission to a casino operator

(Gambling Act 2005 s65(2)(a)).
casino premises licence Licence issued by a local authority which allows the holder to operate a
casino (Gambling Act 2005 s172(3)).
cask Large container for storing alcoholic drink. A barrel is a cask of

predetermined size.
cask conditioned beer Beer whose production process continues after being put into the cask.
Such beer produces an undrinkable sediment on which beer duty may
be relieved under procedures set out in Customs notice 226.
CASS Client Assets sourcebook.
cassation Annulment, especially in France.
cassetur billa Latin: let the bill be quashed.
cassetur breve Latin: let the writ be quashed.
cast accounts Add up and balance accounts on a page.
casual delegation Legal principle whereby a person who retains control of a chattel
remains liable for injuries inflicted by a negligent borrower.
casual ejector Legal fiction adopted until 1852 when the fictitious Robert Roe was
supposed to have come upon a land to evict the lawful possessors,
leading to an action for ejectment.
casual labour Workers who are engaged for a short period.

Such workers are usually employees who still have many
employment rights and duties. They are entitled to the national
minimum wage and must pay income tax and national insurance on
their earnings.
casual pauper Wayfarer or other wanderer who applies for relief.
casual worker Person who provides casual labour.
casualty ratio Estimated number of casualties for a defined activity, such as per ton of
bombs.
At the start of the second world war, the casualty ratio was believed
to be 50 dead or injured per ton of bombs. In reality the figure was
about 20.
casual vacancy In terms of a company auditor, when an auditor no longer holds that
post for reasons other than removal or resignation, such as on
retirement or illness.
casualwear Casual clothing which is regarded as acceptable in the workplace.
casus belli Latin: action which justifies war.
CAT (1) Customs Action Text, an expanded description of the Customs

Action Code (CAC).
(2) Cumbernauld Accounting Team, a department of HMRC.
(3) Coronary artery thrombosis. Common abbreviation for a sick note.
catalla Latin: chattels.
catalogue club Arrangement whereby goods may be bought from a catalogue and are
paid for by regular instalments.
catastrophe bond Security whose value falls sharply if a certain eventuality happens.
They can be used as a form of securitised insurance.
catastrophe theory A qualitative planning technique which allows for sudden and large
changes which cannot be predicted by normal forecasting methods.
CATCH Acronym provided by HMRC to outline the duties of a registered high

value dealer. These duties are to:
● Control the business by anti-laundering procedures;
● Appoint a nominated officer;
● Train your staff;
● Confirm the identity of all customers; and
● Hold all records for at least five years.
catching bargain Term once used for a loan on oppressive terms with an expectant heir.
Such a loan would now fall foul of Consumer Credit Act 1974 ss137-
140.
catching-up charge Amount which becomes liable to income tax as a result of moving from
cash accounting to accruals accounting.
This particularly arose from 2001 when certain professional
taxpayers were generally excluded from using cash accounting. The

catching-up charge could be spread over ten years.
cat-cracker Plant in which oil is cracked into different forms. The term is an
abbreviation of catalytic cracker.
categorical data Information which is provided in categories, such as male or female.

In statistics, it is distinguished from ordinal data (good, bad, poor
etc) and interval data (various heights or weights).
categorical scale In statistics, a scale which sorts variables according to category.

It is a requirement that the categories are exhaustive, exclusive and
clearly defined. This means that every variable can be categorised once,
only once, and without ambiguity.
The types of category are a priori categories and constructed
categories. The former already exist, such as a person’s sex or age
band. The latter need to be devised, such as categorising makes of car
or brands of food.
categories of earner People who are liable to pay national insurance.

They are divided into employed and self-employed by Social
Security Contributions and Benefits Act 1992 s2(1).
categorisation Method to determine what class of national insurance a person should

pay. This is set out in Social Security (Categorisation of Earners)
category A pension Commonest form of state retirement pension payable from the age of
65.
From April 2012, the main eligibility criterion is that the person has
a national insurance record for at least 30 years. For those who retired
before April 2012, the requirement is to have a national insurance
record for at least 9 out of every 10 years of working life. So someone
whose working life was between 21 and 65, needed 40 years’ national
insurance out of 44 years’ working life.
Category A to D machines
Covered in regulations.
category B pension State retirement pension payable to a widow or widower who does not
qualify for a category A pension.
category C pension State retirement pension paid to someone who had already reached
retirement age in 1948 or payable to the widow of such a man. In 2003
it was stated that there was “a very small number” of such pensions in
payment.
category D pension Non-contributory state pension payable to people from the age of 80.
The amount of this pension is the same as for a Category B pension.
category 1 territory Territory that exchanges information with the UK on savings income.
Under Finance Act 2010 s35 and Sch 10, a penalty of up to 100% of tax
may be charged for offshore tax evasion.
category 2 territory Territory that has agreed to exchange information with the UK on
savings income, but does not do so automatically. Under Finance Act
2010 s35 and Sch 10, a penalty of up to 150% of tax may be charged
for offshore tax evasion.
category 3 territory Territory that has not agreed to exchange information with the UK on
savings income. Under Finance Act 2010 s35 and Sch 10, a penalty of
up to 200% of tax may be charged for offshore tax evasion.
catering (1) Allowing for or accommodating, as in catering for an eventuality.

(2) The provision of food with facilities for eating it.
Catering is standard-rated for VAT whereas the supply of cold food
to be taken away for consumption is usually standard-rated. There have
been many cases on this point.
The main elements are:
● catering requires premises. This can be the open air but
requires some form of recognisable boundary;
● further preparation by the purchaser (other than adding
condiments) suggests a supply of food rather than catering;
● provision of tables, chairs, crockery, cutlery, napkins,
condiments etc indicates catering;
● the provision of a reusable tray suggests a supply of
catering;
● publishing a menu suggests catering.
A packed lunch is a standard-rated supply of catering.
CATS Certificate of Accrual on Treasury Securities.
CAT standard Government-defined standard for financial products. The term was
introduced on 1 October 1998 until its replacement on 6 April 2005 by
stakeholder products.
The letters stand for Charges, Access and Terms which had to be
reasonable, easy and fair respectively. An individual savings account
(ISA) could only be marketed if it met the CAT standard.
causa causans Latin: immediate cause.
causa justa Latin: just cause.
caus lucrativa Latin: lucrative cause. This is one brought to acquire significant money
rather to achieve justice.
causa mortis Latin: because of death.
causa proxima non remota spectatur

Latin: the immediate and not the remote cause are to be considered.
causa sine qua non In law, a preceding link without which the causa causans could not
have happened.
causa vera Immediate predecessor of an effect, or a cause verifiable by

independent evidence.
causal forecasting Projecting the future on the basis of established relationships. So

someone selling ice cream may be able to project sales on the basis of
daily temperatures.
causation In statistics, when one factor produces an effect in another. So if A = B

+ 3, causation means an increase in B leads to an increase in A.
Statistics in itself does not prove causation, but can indicate areas
where other disciplines may usefully look.
For example, statistical research showed that people who smoked
many cigarettes (A) had higher rates of lung cancer (B) than those who
did not. This does not in itself prove that smoking causes lung cancer,
as the causation choices include:
● smoking causes lung cancer: A→B
● cancer causes smoking: B→A
● they each cause each other: A↔B
● something else causes both: C→A+B
or there is another more complex set of interactions, or the result is
coincidence or error.
cause celèbre Celebrated cause; any case or trial which generates considerable interest
or sets a significant precedent.
cause (1) In philosophy, something which produces an effect.

Aristotle identified four causes:
● the efficient cause: which immediately leads to effect;
● material cause: subject matter of efficient cause;
● formal cause: essence or attributes introduced by the
efficient cause; and
● final cause: purpose for which the change takes place.
(2) In law, an ordinary civil proceeding or legal action.
cause and effect relations In statistics, determining which factors influence others. The matter is
discussed more specifically in causation,
cause list List of cases to be heard by a court.
cause of action The facts which give rise to a legal action.
caution (1) Any form of warning to a person, particularly the warning given to a
person by the police when arrested.
(2) Natural reserve or reluctance to proceed.
caution money Money deposited with a college or Inn of Court as a guarantee of good
behaviour.
CAV Cur adv vult. This is itself an abbreviation of curia advisari vult,
which is Latin for “the court wishes to be advised”.
cave canem Latin: beware of the dog.
caveat Latin: let him beware. Notice directing a person to refrain from such
action until a matter has been addressed. The word is also used more
generally to represent an exception or condition to a proposition.
caveat actor Latin: let the doer beware.
caveat emptor Latin: let the buyer beware.

The general principle is that the purchaser is legally liable to satisfy
himself about the quality of goods. For consumer sales, this is modified
by Sale of Goods Acts.
caveat venditor Latin: let the seller beware.

Although this term exists, English law generally places the onus on
the buyer, known as caveat emptor.
caveats Conditions, such as those attached to an insurance quotation.
cavendo tutus Latin: safe through taking care.
CB Common Bench Reports, law reports from 1845 to 1856.
CBA Cost benefit analysis
CBO Collateralised bond obligation
CBOE Chicago Board Options Exchange.
CBS index Share index of the Amsterdam Stock Exchange.
CBT Computer Based Training.
CCA Current cost accounting
CCAB Consultative Committee of Accountancy Bodies.
CCAEO Community charge attachment of earnings order.
CCC (1) Community Customs Code - the basic Customs rules applying
throughout the European Union (EU). The Code was established by
Council Regulation (EEC) No. 2913/92 but has been amended several
times since. Another regulation, Commission Regulation (EEC) No.
2454/93, sets out provisions for the implementation of the Code.
(2) Customs Co-operation Council - the former name of the World
Customs Organisation (WCO).
The WCO was known as the Customs Co-operation Council
between 1952 (when the organisation was first established) and 1994.
(3) Cox’s Criminal Cases, law reports from 1843 to 1941.
ccc Cwmni cyfyngedig cyhoeddus, Welsh for public limited company.

A public limited company registered in Wales must put either “plc”
or “ccc” after its name (Companies Act 2006 s58(2)).
CC(CP)A 1985 Companies Consolidation (Consequential Provisions) Act 1985.
CCEP Customs civil evasion penalty.
CCH CCH Editions Ltd, publisher of text books on tax and other topics.
CCLN Consignment Control Label Number, a unique 12 digit number on a

control label allocated to a consignment note CIM by which the
consignment note, its country and station of issue can be identified.
CCP Cross Country Pipeline.
CCR (1) Counterparty credit risk.

(2) Criminal Cases Reserved, series of Law Reports published between
1865 and 1875.
CCS Carbon capture and storage.
CCS-UK Cargo Community System, the computerised cargo processing system

that controls goods in an inventory linked environment. It consists of a
central database and a 'switch' to transfer messages between the various
computer systems connected to it.
CCTO Central Community Transit Office.
CD (1) Compact disc.

(2) Certificate of deposit.
CD ladder Storage unit which allows CDs to be stored vertically.
CDO Collateralised debt obligation.
CD-R Compact Disk-Recordable.

A type of disk drive that can create CD-ROMs and audio CDs. CD-
R drives are now standard on home computers, though CD writing
software is needed to use them.
CD-ROM Compact Disk-Read Only Memory.

An optical disk from which information may be read, but not
written. The term also refers to the standard disk drive that can read
CD-ROMs.
CDRP Crime and Disorder Reduction Partnership
CDT Compulsory drug testing.
C&E 132 Form issued by HMRC and which may be completed as evidence that
goods have been posted to another EU member state. Such evidence is
needed to justify zero-rating, as explained in VAT notice 725.
Céad-Aire angus Irish Gaelic: First Minister, of Northern Ireland Executive.
CEC (1) Commodities Exchange Center Inc.

(2) European Community Cases, law reports published by CCH from
1989.
cede To transfer all or part of a risk written by an insurer to a reinsurer.
CEDEL Centrale de Livraison de Valeurs Molitières, a settlement service in

Luxembourg for eurobonds.
cedi Currency of Ghana, comprising 100 pesewas.
cedula South American promissory note or mortgage bond on land.
CEECs Central and Eastern European Countries - the Central and Eastern
European Countries (CEECs) include: Latvia; Estonia; Lithuania;
Romania; Bulgaria; Hungary; Poland; Czech Republic; Slovakia and
Slovenia.
CEG Careers Employment Group (in armed forces).
ceiling Upper limit.

It can apply to a cash limit, such as the maximum earnings for a
particular job. Alternatively it can apply in other circumstances such as
the highest position to which a person may be promoted. When such a
ceiling is not admitted, it is called a glass ceiling.
celebration period Period of “exceptional international, national, or local significance” for

which the Secretary of State may make a licensing hours order
(Licensing Act 2003 s172(1)).
celibacy Abstention from marriage, not abstention from sex.
cellarage Charge for storing something in a cellar. The charge is often made for
storing wine.
cellar-book Register of wines kept in a cellar.
cell battery Battery in the form of a flat disc designed to be used in small
appliances, such as deaf aids.
cell bund Divider within a landfill cell to separate amounts of waste so dumped.
Material so used is not subject to landfill tax.
cell engineering Using clay and other materials to protect the sides and bottom of a pit
used for landfill. Material so used is not subject to landfill tax.
cell production In business management, a cross between assembly line manufacture

and where one person makes an entire product performing all
manufacturing tasks.
In cell production, a group of workers make a component, such as
an engine, but determine who does what jobs.
CEMA Customs and Excise Management Act 1979.
Cenedlaethol Cymru Welsh: National Assembly for Wales
Cenlon Tax case that restricts the right of inspectors to open old cases. The
term comes from the case Cenlon Finance Co Ltd v Ellwood [1962]
40TC176. It is discussed in the Inspectors’ Manual at BIM34035.
censure Blame or reproof, particularly as a punishment.
census Conducted every ten years ending in 1, under Population (Statistics)

Act 1938 s1.
census Official periodic count of the population providing basic information

about occupants of households on a particular day. In the UK, a census
is taken every tenth year ending in 1, such as 1991, 2001, 2011 etc.
except for 1941.
cent One hundredth of a dollar, euro or several other currencies.
centavo One hundredth of various currencies, particularly from South America.
centime One hundredth of a franc, or of some other currencies.
Central African Pension Fund

Fund established in 1963 to pay pensions from Rhodesia and Nyasaland
(now known as Zimbabwe). Under Finance Act 1967 s38, such
pensions were taxed as if they were paid in the UK. This provision was
repealed by Finance Act 1975.
Central American Common Market

A political and economic grouping of Costa Rica, El Salvador,
Guatemala, Panama, Honduras and Nicaragua.
Central Arbitration Committee (CAC)

Body which deals with such matters as trade union recognition. It is
now constituted under Trade Union and Labour Relations
(Consolidation) Act 1992 s259.
central assets account Single account held at a broker’s or bank to cover both banking and
broking services.
central bank The main bank in a country. The central bank of the UK is the Bank of
England.
The main functions of a central bank are to:
● accept deposits and grant loans to commercial banks;
● print and control the issue of banknotes;
● control the money supply;
● manage the country’s national debt;
● influence or set interest rates;
● influence exchange rates, and intervene when necessary;
● hold the country’s reserves of gold and foreign currencies;
● deal with central banks of other countries; and
● act as lender of last resort to the country’s banks.
Central Bank Advisory Board

Body set up in 1992 by the World Gold Council to advise central
banks.
Central Bank Council Part of Bundesbank which has responsibility for setting interest rates
in Germany.
central bank discount rate

Rate at which a central bank is willing to discount Treasury bills.
central bank intervention

When a central bank takes action to assist the national economy. This
usually takes the form of reducing interest rates or allowing financial
institutions to borrow more money.
central control and management

Determinant of whether a company is UK-resident.
In the de Beers case, the judge said “a company resides, for the
purposes of income tax [now corporation tax] where its real business is
carried on... I regard that as the true rule; and the real business is carried
on where the central management and control actually abides”.
The matter is discussed in statement of practice SP1/90.
central counterparty Financial institution which acts as an intermediary between participants

in a financial market. The two parties trade with the central
counterparty who bears any loss should either party default.
Central Criminal Court Court having jurisdiction to try all offences committed in Greater
London. It is commonly called the Old Bailey.
central departments Departments of a local authority or other public body which provide
support to departments, which deal with the public. Examples include
chief executive, personnel, accounts and legal services.
Centrale de Livraison de Valuers Mobilières (CEDEL)

Settlement service in Luxembourg for eurobonds.
Central Electricity Board (CEB)

Body formed in 1926 to build a national grid with a standard voltage.
Central Fund Fund maintained at Lloyd’s insurance market to pay claims of an

insurer who fails.
central funds “in an enactment providing in relation to England and Wales for the
payment of costs out of central funds, means money provided by
Parliament” (Interpretation Act 1978 Sch 1).
central government National government as opposed to local government.
Central Government Borrowing Requirement

In economics, the public sector borrowing requirement (PSBR)
minus borrowings by local authorities and public corporations.
centralisation Policy of taking control from local bodies to a central body, such as a
head office or central government. The opposite policy is known as
subsidiarity.
centralise Transfer authority from a local branch to a central office. The opposite
process is known as subsidiarity.
central limit theorem The observable fact that a distribution of sample means becomes
normal as the sample size increases.
In practice, this means that a normal distribution can be used for
estimating a mean when the sample size is at least 30 items.
Central Liquidity Facility (CLF)

In the USA, a government-owned corporation established in 1979 to
provides funds to credit unions that suffer short-term illiquidity.
central management and control

In relation to companies, this means the country from where the
company is directed. A non-UK registered company may be treated as a
UK company if its central management and control is in the UK. The
matter is discussed in the Inspectors’ Manual at INTM120140.
Central Office Central office of the courts system.
central office Office from which an organisation, particularly a political party, is run.
In business a central office is more commonly called a head office.
Central Powers Term used before 1918 for the German and Austro-Hungarian empires.
central processing unit (CPU)

The main part of a computer where calculations are made and data are
handled.
central purchasing When all of an organisation’s purchases are made by one department
instead of being made directly by the various departments which need
the items.
Central Registration Depository (CRD

In USA, computerised directory established by National Association of
Security Dealers giving details of members of the investment industry
who deal directly with the public.
Central Statistical Office Body now known as Office for National Statistics.
central treasury Part of an organisation which provides services of dealing with

financial markets and liquidity.
centrefold Spread across the two pages at the middle of a magazine.
centre party Political party which appeals to voters of non-extreme views.
centre spread Middle two pages of a stapled magazine.

As magazines naturally open there, advertisements may attract a
premium.
centum One hundred.
centuple One hundred-fold; one hundred times.
century Period of 100 years. Each century starts at midnight on 1 January in the
year ending 01, so the 21st century started on 1 January 2001.
CEO Chief executive officer.
CEP Civil Evasion Penalty - a penalty for dishonest evasion of VAT.
cepi corpus Latin: I have taken the body. Notification from a sheriff to a court that
he has custody of a person.
cereal Food product grown in quantity for making food products. It is traded
as a commodity. The main types of cereal are breadgrains,
foddergrains, corn and rice.
For VAT, cereals are usually zero-rated as food (VAT notice
701/14).
cereal bars For VAT, these are zero-rated as food unless they are sweetened with
“honey or other added sweetening matter” (VAT notice 701/14). There
have been many tribunal hearings on the exact scope.
cereal year Period of 12 months from 1 July to 30 June. It is used for the Whisky
Export Refund Scheme.
certain annuity An annuity which is paid for a fixed number of years, instead of for an
indefinite number (such as the rest of a person’s life).
certainty In law, a lack of ambiguity or confusion. This is a legal requirement in

many branches of law.
A contract may be void for lack of certainty. An express trust must
have three certainties of words and intention, subject matter, and
beneficiaries.
In philosophy, a distinction may be made between certainty and
certitude. The former denotes what may be proved to a person, so if A
= B and B = C, certainty shows that A = C. In contrast, certitude is what
is believed because the source is trusted. In tax as in every other aspect
of life, most of what we believe derives from certitude.
certainty equivalent method

In banking, a method of expressing risky returns in a capital budget in
terms of its equivalent in a risk-free return.
certificate Official document containing a declaration, such as that goods are of a

stated quality or that a person has passed a standard.
For social security, the term is used in Social Security Act 1998
s39ZA to mean a document signed by Secretary of State or equivalent
authority and which is conclusive evidence of a decision on social
security.
Certificate of Accrual on Treasury Securities (CATS)

In USA, a zero-coupon bond issued by the US Treasury.
certificate of approval Document confirming that something has been officially approved.
certificate of deposit Document indicating that money has been deposited. Although this can
apply to a deposit with a bank, it is most commonly used to mean funds
deposited with the tax authorities.
certificate of discharge Certificate that HMRC may issue in respect of inherited property under
Inheritance Tax Act 1984 s239. It confirms that the inheritance tax has
been paid. Such a certificate is normally issued no earlier than two
years after the transfer.
The certificate assures a acquirer that no further tax is payable,
unless the acquirer was party to a fraud or misrepresentation.
certificate of entitlement A certificate issued by an embassy, high commission, consulate,

visiting force contingent or international organisation, or equivalent.
Such a certificate is generally evidence that supplies to the issuer
are zero-rated for VAT in accordance with EC Council Directive
77/338/EEC article 15(10). The certificate must be retained.
The procedure is amended for British forces in Cyprus or for any
visiting forces in Germany.
Further details are given in VAT notice 725.
certificate of incorporation
A document which confirms that a company is now registered and gives
it a registration number.
The certificate is sometimes referred to as the company’s birth
certificate. The relevant law is contained in Companies Act 2006 ss14-

16.
certificate of independence
Certificate issued by the Certification Officer confirming that a trade
union is an independent trade union (Trade Union and Labour
Relations (Consolidation) Act 1992 s6).
Certificate of Master Report to the Chancery division of the High Court by a barrister on a
matter referred to him.
certificate of misfortune
Document once provided to a bankrupt to state that his bankruptcy was
not through his fault.
certificate of origin Document indicating the country from where imported goods
originated.
certificate of quality Document confirming the grade of a soft commodity.
certificate of registration of death

Copy of death certificate which may be used to claim social security
benefits.
certificate of registration
Document stating that a person or body has been registered for a stated
purpose.
Certificate of Secondary Education (CSE)

School leaving qualification which could be sat by students in
secondary education, usually at the age of 16, who did not intend to stay
at school to study for A-levels.
The examination was graded 1 to 5 where grade 1 was regarded as
the equivalent of a C grade at O-level or GCSE.
The examination was sat between 1965 and 1988 when, with O-
levels, it was replaced by the General Certificate of Secondary
Education (GCSE).
certificate of shares Another name for share certificate.
certificate of shipment Document issued by packers or consolidators who despatch goods by

road, rail or sea (not air) when they receive a single authenticated
transport document from the carrier.
The certificate is issued to each supplier whose goods were
transported. The certificate must comply with strict requirements set out
in VAT notice 725 when used as documentary evidence that goods have
been supplied to another country.
certificate of sponsorship Document given by a sponsor of an overseas worker to a worker they

wish to employ. It has a unique reference number. The worker uses the
certificate to see if he has sufficient points to work, train or study in the

UK.
certificate of value For stamp duty, a certificate made in connection with a transaction in
property that it is not a transaction nor part of a series of transactions
whose value exceeds a minimum, and that therefore either no stamp
duty is payable, or it is payable at a lower rate.
certificated bailiff Person who collects debts for bodies other than the court, such as for a
local authority or tax body.
certificated bankrupt Term once used for a bankrupt who was given a certificate of
misfortune.
certificate to commence business

Document issued by the Registrar of Companies to a public limited
company. The certificate confirms that the nominal value of the
allotted share capital is at least £50,000. The company cannot trade or
borrow money until this certificate is issued.
Certification Officer Public servant who keeps a register of trade unions (Trade Union and
Labour Relations (Consolidation) Act 1992 s254).
certified accountant Member of Association of Chartered Certified Accountants, now

known as chartered certified accountant.
Membership is by examination and satisfying the council of
sufficient relevant work experience. A member is an associate (ACCA)
until gaining a fellowship (FCCA).
certified cheque Cheque which a bank confirms will be paid from funds set aside from
the signatory’s account.
certified copy Copy of a public document which is certified as a true copy by an

officer to whose custody the original document is entrusted.
certified photocopy Photocopy of a document which a person of standing (such as

accountant or lawyer) has countersigned to confirm that he has seen the
original and this is a fair copy. Such certified photocopies are now
needed to open a bank account.
certified photograph Photograph bearing a countersignature by a person of standing who

confirms that the photograph is of a true likeness of the applicant.
certified public accountant

Accountant who has qualified in the USA and has a certificate allowing
him to practise in that state.
certiorari Injunction granted by a court to overturn a decision of a lower court or

tribunal, such as when that court or tribunal has overstepped its powers.
certitude In philosophy, belief because the source is trusted, as against certainty

where something is believed because the believer has demonstrated its
truth. In tax, as in all walks of life, most of what is believed is from
certitude.
certum est quod certum reddi potest

Latin: that which is capable of being made certain is to be treated as
certain.
CESR Council of European Securities Regulators.
cess Old word for tax, particularly a local tax.
cessante causa, cessat effectus

Latin: when the cause ceases, the effect ceases.
cessante statu primitivo, cessat derivativus

Latin: the original state ceasing, that which is derived from it ceases.
cessate grant Grant of representation that terminates at the end of a specified time
span.
cessat executio Latin: suspending execution
cessation Ending of a continuous process, such as when a business ceases trading.

There are special tax provisions for cessation of business. For
companies, these are set out in Corporation Tax Act 2010 s50.
cessation date Date on which something ceases. For example, the term is used in SI
2010 No 429 in relation to a pension fund that ceases but where the
benefits are transferred to a new fund.
cessation expenditure Expenditure of a business relating to a cessation of trade.

Such expenditure is usually not tax-deductible. This was established
in CIR v Anglo Brewing Co Ltd [1925] 12TC803 are discussed in the
Inspectors’ Manual at BIM38310. There are some statutory exceptions
such as for redundancy pay.
cesser In law, ending or determination of a matter.
cesser on redemption Legal term for when a mortgage must be repaid.
cessio bonorum In Scots law before 1913, when a debtor gave up his possessions to his
creditors as protection against imprisonment.
cession Yielding up.
cesspool For VAT, the emptying of a residential cesspool is generally zero-rated

as a sewerage supply under Value Added Tax Act 1994 Sch 8 Group 2.
Further details are given in VAT notice 701/16.
cestui que trust Old French: beneficiary; person for whom another person is a trustee.
cestui que use Old French: person who has an interest in property during the life of
another.
cestui qui vie Person to whose use or benefit lands or other hereditaments were held
by another person. This was originally subject to Cestui Que Vie Act
1666 of which sections 1 and 4 remain law.
CET Common External Tariff.
cetane Paraffin hydrocarbon found in petroleum,
cetera desunt Latin: the rest is missing.
ceteris paribus Latin: all things being equal.
cf Abbreviation: compare.
CFA Chartered financial analyst.
CFC (1) Common Fund for Commodities.

(2) Controlled foreign company.
CFD Contract for difference.
CFF Crime Fighting Fund
CFI code Code for classification of financial instruments. They identify the type
of financial instrument; they do not identify the actual security, such as
the company.
The main CFI codes are:
E: equity U: no restrictions
S: ordinary share F: fully-paid
V: voting A: registered
CFO Chief finance officer.
CFP franc Unit of currency linked to the value of the euro¸ used by French
territories in the Pacific.
CFSP Customs Freight Simplified Procedures.

A simplified procedure for the importation of third country goods,
including the Simplified Declaration Procedure and the Local
Clearance Procedure.
CFTC Commodity Futures Trading Commission.
c/fwd Carried forward. Indication in bookkeeping of a sub-total taken to a

later page.
CGBR Central Government Borrowing Requirement.
CGT Capital gains tax.
Ch (1) Chancery. Since 1875 this has been part of the citation for reports
of cases heard in the Chancery division of the High Court.
(2) Chapter, in Acts of Parliament.
CHAI Commission for Healthcare Audit and Inspection.
chain Old imperial unit of measure equal to 22 yards, 66 feet or 20.1168

metres. There are 80 chains in a mile.
chain of causation Term used for the legal principle that a person can be liable for
foreseeable consequential losses provided there is a clear link with a
previous loss.
chain of representation In executorship, the sequence of executors who may administer an

estate of the deceased. Suppose A dies nominating B as executor in his
will, but B has already died, nominating C in his will, and C has already
died nominating D in his will, D may act as executor for A.
chairman Person who conducts a meeting. Such a person may also have general
oversight functions between meetings.
The chairman is either appointed according to a constitutional
procedure, failing which the chairman is elected by the meeting itself.
Such a ballot is conducted as the first item of business either by the
secretary or most senior person present.
Provisions for determining the chairman for company meetings are
given in Companies Act 2006 s319.
chairman’s statement Statement made by the chairman of a company and usually included
with the published annual report. Unlike the statutory directors’
report, the chairman’s report is optional and is not subject to the same
audit scrutiny.
chair rental Charge for using a chair and other facilities, particularly in a
hairdressing salon.
It is common for a salon to have an arrangement whereby
hairdressers pay a chair rental to the premises owner and keep the fees.
There have been numerous cases on whether such arrangements
comprise one business or several for VAT.
chalan Waybill; pass sending a man to a magistrate. [It can be spelled challan.]
Chamberlain, Austen English politician (1863-1937) who was Chancellor of the Exchequer
from 9 October 1903 to 4 December 1905 under the National
Government of Arthur Balfour, and from 10 January 1919 to 1 April
1921 under the coalition government of David Lloyd George.
Chamberlain, Neville English politician (1869-1940) who was Chancellor of the Exchequer
from 27 August 1923 to 22 January 1924, and again from 5 November
1931 to 28 May 1937 under the national government of Stanley
Baldwin. He was the half-brother of previous Chancellor Austen
Chamberlain.
As Chancellor, Neville Chamberlain increased taxes to pay for
rearmament for the war. He was prime minister from 28 May 1937 to
10 May 1940.
Chamber of Commerce Representative body for trades in an area. They are taxed as a mutual
trading organisation as is discussed in the Inspectors’ Manual at
BIM24750.
chambers (1) Rooms attached to a court in which judges and other court officers
deal with matters that do not need to be heard in court.
(2) Private offices of barristers.
(3) Categories of tribunals according to the nature of what is being
determined, such as tax tribunals. Each tribunal has a first-tier tribunal
and an upper tribunal.
Chambre Agent General Index

Share index of the Paris Bourse.
Champagne Luxury sparkling wine produced in the Champagne region of France.

It is subject to wine duty and VAT. Use of the word is strictly
controlled.
Champions League Football competition. Finance Act s63 and Sch 20 provides tax
exemptions for those who participate in 2011.
chancel Part of the church which separates the nave from the altar.
For tax, the significance is that a lay rector (a local land-owner) can
be required to pay for the repair of the chancel under a practice that
originated under Henry VIII and is now in Chancel Repairs Act 1932.
This affects about 5,200 churches. As the church can only usually
obtain grant funding when all other sources are exhausted, a church is
in effect required to exercise this ancient right.
A practical problem is that the lands to which this liability relates
are ancient (sometimes from 13th century) and not always accurate.
In the case Aston Cantlow v Wallbanks [2003], the Court of Appeal
held that this liability was contrary to Human Rights, but the House of
Lords upheld the liability, meaning that the land-owners had a large
bill. Following that case, it is now possible to obtain chancel repair
liability insurance.
Under Land Registration Act 2002, existing chancel repair
obligations cease on 13 October 2013 unless the church has noted the
interest with the land registry before this date.
chancellor Officer of state whose powers vary with each use of the title.
Chancellor of the Exchequer

The finance minister in the British government.
Chancery One of the three divisions of the High Court. The other two are Queens
Bench Division and Family Division. It mainly deals with equity
issues.
change agent Management consultant who advocates significant changes.
change of name When a person decides that they wish to be known by another name.
This should be distinguished from simply using another name, as is
common among entertainers. This requires no procedure, provided the
real name is known by the tax and other authorities.
A change of name may be done simply by the person so declaring,
provided that:
• the change is for all purposes, and
• the change is not for a fraudulent purpose.
Although it is traditional for a married woman to assume her
husband’s surname, there is no legal obligation on her to do so. Where
she does, that is usually accepted without question.
Changes of name can be used for fraudulent purposes, such as for
tax evasion, social security cheating or to conceal offences. It is
therefore common for an employer or person who deals with that
person to ask for evidence, such as a statement from a person of
standing (such as a doctor) or for a signed affidavit.
There is a formal procedure of deed poll under the Judicature Act
1925. This is conclusive for all purposes. It is also possible to change a
name by Act of Parliament as in Baines Name Act 1907.
An adult who is baptised may changed their Christian names at a
service of confirmation under canon law B27(6).
Provisions for a company to change its name are contained in
Companies Act 2006 ss77-81. A change of name takes effect from the
date on the new certificate of incorporation (ibid s81(1)).
channel Term used by Customs to identify the exit through which a traveller
should walk on arriving in the UK. The three are blue for travellers
from the European Union; green for travellers outside with nothing to
declare; and red for travellers from outside with something to declare.
Channel Tunnel Permanent rail link between Britain and France which opened on 1
December 1990. It is also known as Chunnel.
There are special provisions for goods imported through the tunnel.
Under a special bilateral agreement, French and English Customs
officers are allowed to work in each other’s countries.
Export clearance facilities are provided at an inland clearance
depot (ICD). The English ICD is at Ashford in Kent. Incoming freight
trains may be cleared at Willesden. Outgoing freight may be cleared at
an ICD or at private sidings by special arrangement.
Ch App Chancery Appeal. Series of Law Reports published between 1865 and
1874.
CHAPS Clearing House Automatic Payment System

Bank procedure for making electronic payments from a bank
account.
chapter 7 Section of the US Bankruptcy Reform Act 1978 which sets out the
procedure for liquidating a company.
chapter 11 Section of the US Bankruptcy Reform Act 1978 which allows a

corporation in financial difficulties to be protected from creditors for a
period while it reorganises itself so that it can pay its debtors.
chapter 13 Section of the US Bankruptcy Reform Act 1978 which allows a

business to continue trading while paying its creditors by regular
monthly instalments.
chapter and verse Full citation of an authority being quoted to support an argument. The
expression comes from the Bible which is divided into chapters and
verses.
char (1) Charwoman, a female cleaner.

(2) Colloquialism name for a cup of tea. This meaning comes from the
Hindu word cha, when tea was served in the army in India.
character In law, evidence as to the personality of someone.
character appropriate In terms of agricultural property relief, means that the “farmhouse,
cottage or building must be proportionate in size and nature to the
requirements of the farming activities conducted on the agricultural
land or pasture in question” (HMRC inheritance tax glossary).
charcoal For VAT, charcoal as fuel may be reduced rated under Value Added
Tax Act 1994 Sch 7A Group 1 when supplied for domestic use. Further
details are given in VAT notice 701/19.
charge (1) An amount of money which must be paid for a reason.

(2) In relation to interest or taxes, describes the reduction in ownership
interest reported in the income statement (profit and loss account) due
to the cost of interest and tax payable.
(3) Legal or equitable interest on land, such as a mortgage.
(4) Legal interest on the assets of a company, such as a debenture.
chargeable Description of an amount which may be charged, particularly to tax.
chargeable accounting period (CAP)

Period for which a company’s profits are subject to corporation tax.
This is usually a quarter for large companies, and a year for small
companies.
chargeable amount In pensions, the amount that exceeds the lifetime allowance and is
therefore taxable.
chargeable amount on an age 18 to 25 trust

“On an age 18 to 25 trust the chargeable amount is the amount by
which the value of the trust has decreased as a result of a disposition by
the trustees.
chargeable asset Asset which will produce a capital gain when sold.
chargeable disposal Disposal of an asset that may trigger a liability for capital gains tax.
This excludes transfers between spouses or civil partners, and disposals
on a “no gain, no loss” basis (Taxation of Chargeable Gains Act 1992
s3A(1)-(3)).
chargeable dwelling Residential property for which council tax is payable (Local
Government Finance Act 1992).
chargeable event Transaction of event which gives rise to a liability for capital gains tax.
The term has a specific meaning in relation to employee share
ownership trusts where the term is defined in Finance Act 1989 ss69-
71.
chargeable event on an ASP

There are three such occasions:
• the scheme member dies with an ASP
• the relevant dependant of the member dies and benefitted
from the left over funds of an ASP from a scheme member
• (if neither of the above applied) when a dependant of a
scheme member dies while benefitting from an ASP from a scheme
member who died before the age of 75.
chargeable gain Another name for capital gain, particularly by a company (Taxation of
chargeable goods For Customs purposes means “goods on the importation of which value
added tax is chargeable or goods obtained in the United Kingdom
before 1st April 1973 which are chargeable goods within the meaning
of the Purchase Tax Act 1963” (Customs and Excise Management Act
1979 s78(1)).
chargeable income Total amount of income from all sources on which an individual is
liable to pay income tax.
chargeable lifetime transfer (CLT)

For inheritance tax, a transfer of value made during a person’s lifetime
on which inheritance tax is payable. This is usually a payment to a trust
of a sum greater than the annual exemption.
chargeable overseas earnings

Term used in Income Tax (Earnings and Pensions) Act 2003 s23 to
define how income from overseas is taxed in the UK.
chargeable period “A year of assessment of a company’s accounting period” (Taxes

chargeable process Term used to describe a process that brings a product within the scope
of purchase tax. Although the term died with the tax in 1973, the
principle still applies under VAT rules, such as when zero-rated food
becomes standard-rated catering.
chargeable purchase Term used up to 1973 to describe a purchase that triggered a liability to
purchase tax.
chargeable transfer Gift made during a person’s lifetime which is potentially chargeable to
inheritance tax.
There are many transfers that a person may make which are not
chargeable, such as regular payments to support a person. There is also
an annual limit per person and an annual limit per donor. If the transfer
remains chargeable, in general the donor must live another seven years
for the transfer to escape the tax.
chargeable transfer “A transfer of value which is made by an individual but is not (by virtue
of Part II of this Act or any other enactment) an exempt transfer”
(Inheritance Tax Act 1984 s2(1). Sections 2(2) and 2(3) provide further
definition.
chargeable value For inheritance tax, “the chargeable value of an estate on death is the
total of the assets less liabilities less exempt gifts and capital reliefs”
(HMRC inheritance tax glossary).
charge account Facility a person or business has with a supplier where the supplier
provides goods or services for later payment.
charge and discharge accounting

System of bookkeeping used in medieval times before double-entry
became standard. It involves a person charging himself with receipts
and discharges the account with payments.
charge by way of legal mortgage

The description of a property which is used to secure a loan of funds.
charge card Payment card that allows its holder to spend money provided the whole
amount is repaid within a defined period. American Express and Diner
Club are charge cards.
chargé d’affaires Diplomatic agent who is accredited by the foreign officer rather than by
the monarch.
charged amount Term used in Income Tax Act 2007 s427 in relation to the amount of
tax relief that may be claimed for certain annual charges.
chargee A person who has been charged.
charge for payment In Scotland, formal notice of unpaid debt which allows a sequestration
to proceed.
charge-hand Leader of a team of workers.
charges Companies can charge for financial services in different ways, some
more straightforward than others.
charges forward Amounts for a customer to pay later.
charges on income Payment by a company which reduces its liability to corporation tax
(Income and Corporation Taxes Act 1988 s338A). This is now
restricted to payments to charities.
From 1 April 2010, the term is replaced by charitable donations
relief and is governed by Corporation Tax Act 2010 ss189-217.
charging order Court order which requires some of the proceeds of sale of property to
be paid to someone.
charitable Description of something which is for the public benefit and therefore
qualifies for special rules for charities.
charitable deductions In the USA, deductions which may be made from taxable income in
respect of donations to charities.
In the UK, such deductions are not generally deductible, though the
charity can receive back the equivalent of the basic rate of tax paid if
the donation is made under Gift Aid. If the taxpayer is liable to the
higher rate, the additional tax relief is refunded to the taxpayer.
charitable donations relief

Term used in Corporation Tax Act 2010 ss189-217 for what was
previously called a charge on income.
charitable expenditure In charity accounting, a figure in SOFA disclosing how much has been
given to other charitable bodies.
charitable incorporated organisation (CIO)

Legal form currently being proposed for charities.
charitable payment Payment made by a company to a charity.

The term is used in Corporation Tax Act 2010 s192(1) in relation to
the tax deductibility of such a payment.
charitable purpose A purpose which is for the public benefit and is one of the following
descriptions:
“(a) the prevention or relief of poverty;
(b) the advancement of education;

(c) the advancement of religion;
(d) the advancement of health or the saving of lives;
(e) the advancement of citizenship or community development;
(f) the advancement of the arts, culture, heritage or science;
(g) the advancement of amateur sport;
(h) the advancement of human rights, conflict resolution or the
promotion of religious or racial harmony or equality and diversity”;
(i) the advancement of environmental protection or improvement;
(j) the relief of those in need by reason of youth, ill-health,
disability, financial hardship or other disadvantage;
(k) the advancement of animal welfare;
(l) the promotion of the efficiency of the armed forces of the
Crown, or of the efficiency of the police, fire and rescue services or
ambulance services;
(m) any other purposes within subsection (4) [which relates to
reasonably analogous purposes]”
(Charities Act 2006 s2(2)).
This new requirement took effect from 1 April 2008.
Before this date, charitable purpose was usually considered
according to the categories established in the case Commissioners of
Income Tax v Pemsel [1891]. These categories were:
(a) the relief of poverty;
(b) the advancement of religion;
(c) the advancement of education;
(d) any other purpose beneficial to the community, including the
relief of human or animal suffering.
charitable secondment Releasing employees to work for a charity. Provided relevant

conditions are met, such expenses are deductible from taxable profits
from 1 April 1983. This is extended to educational bodies from 26
November 1986.
charitable subsidy Tax charged from 1422. It was an extension of fifteenths and tenths
charged on chaplains and pensioners, who were otherwise exempt. It is
not clear when this tax ended.
charitable trust Trust established wholly for charitable purposes. Such a trust is exempt
from many rules and tax provisions which apply to other trusts. For
example, a charitable trust has an indefinite life.
The trust must be for a charitable purpose.
A charitable trust lasts indefinitely, it cannot be void for
uncertainty, it can be varied if it becomes obsolete and its property can
pass to another charity under the cy-pres doctrine.
For tax purposes, the advantages of a charitable trust are:
• donations may be tax-relieved, such as under Gift Aid,
covenanted payments or payroll giving;
• lifetime and death gifts to charities are exempt from
inheritance tax and capital gains tax;
• the trust itself pays no tax on its income or capital disposals.
Charities Charities are non-profit distributing bodies established to advance

education; advance religion; relieve poverty, sickness or infirmity or
carry out certain other activities beneficial to the community.
Charities Helpline HMRC telephone service to assist charities. The number is 0845 302
0203. The address is HMRC Charities, St Johns House, Merton Road,
Liverpool L75 1BB.
charity “An institution which:

(a) is established for charitable purposes only, and
(b) falls to be subject to the control of the High Court in the exercise
of its jurisdiction with respect to charities.”
Donations to a charity are exempt from inheritance tax (Inheritance
Tax Act 1984 s23(1)).
Certain supplies to and from charities have special VAT positions,
as set out in VAT notice 701/1.
charity “Any institution, corporate or not, which is established for charitable

purposes and is subject to the control of the High Court in the exercise
of the court’s jurisdiction with respect to charities” (Charities Act 1960
s45). This definition was introduced from 1 August 1993. Further
details are given in charities.
A broader definition for allowable donations from companies is
given in Corporation Tax Act 2010 s202 and s217. This adds certain
public bodies.
charity challenge event Treks, bike rides and similar events organised by a charity for fund-
raising.
The charity may provide travel and up to two nights’
accommodation and still qualify for the fund-raising exemption for
charities. After that, the event becomes taxable, usually under Tour
Operators’ Margin Scheme. Details are given in VAT notice 701/1.
The relevant section was revised in May 2004.
Charity Commission Body established under Charities Act 1993 s1A as a successor to the
Charity Commissioner for England and Wales.
Charity Commissioners
Body responsible for overseeing charities in England and Wales.
Similar bodies are proposed for Scotland and Northern Ireland
Charity Commissioners “means the Charity Commissioners for England and Wales referred to
in section 1 of the Charities Act 1993” (Interpretation Act 1978 Sch 1).
charity exemption For inheritance tax, a transfer made to a charity and which is generally
exempt from tax.
charity law “The law relating to charities in England and Wales” (Charities Act
2006 s2(8)).
charity lump sum death benefit

In pensions, a lump sum benefit paid from a money purchase scheme
to a charity on the death of a member aged 75 or over who has no
surviving dependant.
charity shop Shop that sells goods to raise funds for a charity.
Such a shop may benefit from reduced business rates. Donated
goods it sells are usually zero-rated for VAT.
Charity Tribunal Tribunal established by Charities Act 1993 s2A to hear appeals from
the Charity Commission, such as for non-registration as a charity.
charity trustees “The persons having the general control and management of the
administration of a charity” (Charities Act 1960 s46).
Charles I taxes Various taxes imposed by King Charles I between 1629 and 1640
during the 11 years that Parliament was suspended.
Charles II taxes Various taxes which Charles II tried to impose between 1660 and 1663
on the restoration of his reign.
chartered accountant Member of :

● the Institute of Chartered Accountants in England and Wales;
● the Institute of Chartered Accountants of Scotland; or
● the Institute of Chartered Accountants of Ireland.
It should be appreciated that it is the institute which holds the royal
charter, not the member. There are three other accounting bodies
which have royal charters.
In Scotland, members use the letters CA after their name. In the
other bodies, members use either ACA for an Associate, or FCA for a
Fellow.
It should be noted that it is the Institute that is chartered, not the
member, and three other accounting bodies hold royal charters.
Chartered Association of Certified Accountants

Name briefly used by the Association of Chartered Certified
Accountants.
chartered bank Bank which is established by a royal charter or government charter.

Many banks in the USA and Canada are established by government
charter.
chartered company Company which has been established by a royal charter rather under
one of the Companies Acts.
Chartered Institute of Management Accountants (CIMA)

Professional body for accountants who specialise in management
accounting.
It was originally formed in 1873 and given its first royal charter in
1912. Membership is either Associate (ACII) or Fellowship (FCII).
Chartered Institute of Payroll Professionals (CIPP)

Professional body for those who work in payroll.
It was formed in 1998 as the Institute of British Payroll Managers.
It was given its Royal Charter in November 2010.
Chartered Institute of Public Finance and Accountancy (CIPFA)

Professional body for accountants who work in the public sector. It is
usually known by its initials, pronounced as “sip-far”.
It was formed in 1885 and given its Royal Charter in 1959.
Chartered Institute of Taxation

Professional body for those who deal with taxes.
It is the most senior body for those who deal exclusively with tax. It
was formed in 1930 and given a Royal Charter in 1994. Its fellows and
associates use the designatory letters FTII and ATII respectively.
Chartered Insurance Institute

A body controlling professional standards in the insurance industry.
chartered psychologist “A person for the time being listed in the British Psychological
Society’s Register of Chartered Psychologists” (Gender Recognition
Act 2004 s25).
Charter of Budget Responsibility

Document prepared by HM Treasury in accordance with provisions of
Budget Responsibility and National Audit Act 2011 s1.
charterparty Agreement by which a master lets an entire ship or part of a ship to the
charterer, and undertakes to deliver the cargo placed there to a
destination for an agreed sum. The charterer then becomes the legal
owner of the ship; the master and crew become his agents.
chartist Person who produces graphs of such phenomena as share price

movements to determine patterns.
chart of accounts Listing of the accounts used by a company in its bookkeeping.

The accounts have six categories: assets, liabilities, capital, sales,
cost of sales, expenses.
charts Printed charts similar to maps may be zero-rated under Value Added
Tax Act 1994 Sch 8 Group 3 as explained in VAT notice 701/10.
Charts intended as posters, plans or drawings are not zero-rated
within this Group.
chattel mortgage Money lent against the item purchased which is not land or buildings.
chattels Moveable personal items.

The word is defined in Bills of Sale Act 1878 s4 as comprising
“goods, furniture, and other articles capable of complete transfer by
delivery”. Machinery is added by s5.
Chattels includes fixtures when separately charged but not
otherwise. It includes crops when harvested but not when still attached
to the ground (s7). It does not include shares, land or buildings.
“Personal property such as household and personal goods, furniture,
jewellery, antiques and works of art, stamp and coin collections, cars,
caravans and boats, electrical equipment, clothes, books and garden
equipment” (HMRC inheritance tax glossary).
chattels real Another name for leasehold properties.
CHD Coronary heart disease. Common abbreviation for sick notes (HMRC
leaflet E14).
ChD Chancery Division of the High Court. Part of case citations.
cheapest to deliver In futures trading, the most cost-effective security for the seller to buy
and deliver on the fixed date. This is usually a Treasury security.
cheat Common law offence of fraudulently obtaining the property of another.

It was abolished except for gaming, and for cheating the Revenue,
which remains a common law criminal offence.
cheating the devil Colloquialism for an evil act whose gain is applied to a virtuous
purpose.
check (1) American spelling for cheque.

(2) American term for a bill, such as in a restaurant.
(3) American term for a tick, or other sign which indicates that
something has been confirmed as correct.
(4) To verify the correctness of something.
checkable (1) Description of something which can be checked, such as

information in a job application form which can be verified with a
company still trading.
(2) In USA, description of a bank account for which cheque books are
issued.
checkbook American spelling of chequebook.
checked item In computing, an item from a list of options produced by a program

which the user has selected by clicking in a box. An example is when
the user is selecting options for loading software or is choosing
preferences in software.
check digit A control which helps verify that a number is valid.

This is usually calculated by performing mathematical functions to
the other numbers. For example, if a customer is given an account
number of 123456, a computer system may add them together (21) and
give the last digit as the check digit. So a customer knows that his
number is 1234561. The customer is not told how the check digit is
calculated or even that one of the numbers is a check digit. If someone
enters a number which has a wrong check digit, the number is
automatically rejected.
The last two digits of a VAT number are check digits.
checking account American term for a current account with a cheque book.
check-off System whereby the employer deducts an employee’s trade union dues
and pays them to the trade union.
Such a system is entirely voluntary on all parties. An employer does
not have to agree to operate such a system (even if the trade union is
recognised), the trade union does not have to accept payments, and
every employee in the trade union has the right not to have payments
made in this way.
Deductions must be authorised by the employee in writing before
the first one is made. An employee may notify an employer at any time
to stop making deductions. The employer must stop the deductions as
soon as possible on receiving such a notice.
From 23 June 1998, check-off requires only the same notification as
any other deduction from wages.
check routing symbol Number shown on a cheque in the USA. It identifies the Federal
Reserve district through which the cheque is cleared. It serves a similar
function to the UK sort code.
Cheney v Conn Court case from 1968 which established that a later Act of Parliament
takes precedence over an earlier Act.
cheque “Bill of exchange drawn on a banker payable on demand” (Bills of

Exchange Act 1882 s73).
An unindorsed cheque which appears to have been paid by a banker
may be used as a receipt (Cheques Act 1957 s3).
A cheque is treated as being received on the day it was issued,
except for tax. Payment of tax by cheque is generally regarded as being
made when the cheque is received by HMRC provided it is cleared on
first presentation (Taxes Management Act 1970 s70A(1)).
However for VAT, from 1 April 2010, a cheque constitutes
payment when the funds are paid to HMRC’s bank account. The trader
must allow three working days. This change was made under the
provisions of Value Added Tax Act 1994 s58B and Finance Act 2007
s95. It is intended to promote the use of electronic payment.
Cheques were subject to 2d stamp duty. This was abolished in
February 1971 when decimal currency was introduced.
cheque account Current account at a bank where the customer has a cheque book.
cheque book Book provided by a bank to customers containing perforated blank

cheque forms for the customer to use.
Cheques have been in use for centuries, though their use only
became common at the end of the 19th century. Forms were simple then
with instructions written on plain paper or forms with few details
printed on them. It is still legally possible to write a cheque on plain
paper (or anything else).
Cheque forms now contain a sort code comprising three pairs of

hyphenated digits to identify the bank and branch, an eight-digit
number to identify the customer, the customer’s name and the name and
address of the bank. The name of the payee is written on the top line,
and the amount payable is written in words in the two lines below,
except that pence may be indicated numerically, eg “forty-two pounds
59p”. The amount is repeated in numbers in an adjacent box. The
cheque must be signed and dated.
cheque book charity Belief that one’s altruistic obligations are met simply by making
payments to meet need, and not by any further involvement.
cheque book journalism Term introduced in the 1960s to mean the practice of paying people to
sell sensational stories for newspapers to publish.
cheque card Plastic card issued by a bank which guarantees to the payee that the
cheque will be honoured up to a figure stated on the card. It is now
usual for a cheque card to be combined with a debit card.
cheque clearing System for making payment on a cheque.
cheque requisition Written instruction within a business that a cheque needs to be raised.
Cheques Act 1992 Act of Parliament which gave legal effect to the words a/c payee only
on a cheque.
cheque stub The part of the cheque form which remains in the book when the
cheque has been removed. It is usual to record the date, payee and
amount of the cheque on the stub.
cheque to bearer Cheque where the payee is “bearer”. If this is an open cheque, it means
that anyone may walk into the bank and cash it. In practice, most
cheques now are supplied already crossed.
cheque voucher “A cheque:

(a) provided for an employee, and
(b) intended for use by the employee wholly or mainly for:
(i) particular goods or services, or
(ii) goods or services of one or more particular classes”
Chevening House Official country residence of the foreign secretary. Accommodation

provided there is specifically exempt as a taxable benefit in kind under
Chicago Board of Trade (CBOT)

Main American exchange for financial futures.
Chicago Board Options Exchange (CBOE)

Financial exchange for options, established in 1973.
Chicago Mercantile Exchange (CME)

Main American futures and options market. It started in 1919 as a
commodity futures market.
Chicago School School of monetarists led by Prof Milton Friedman and based at the
University of Chicago.
CHIEF Customs Handling of Import and Export Freight. This is HMRC’s

computerised system for processing import and export declarations.
chief accountant Person who is responsible for the accounts functions in an organisation.
In some organisations, particularly in the USA, the term chief finance
officer is preferred.
chief executive Person who is responsible for the overall management of an

organisation.
chief executive officer (CEO)

Term for a chief executive in a commercial organisation, particularly in
the USA, or in the British civil service.
chief executive The director in charge of the day-to-day running of a company.
chief finance officer (CFO)

Person who is responsible for the accounts of an organisation.
This term is used in USA and other countries. In the UK, the term
chief accountant is still preferred.
Chief Ombudsman Person so appointed by the Office for Legal Complaints under Legal
Services Act 2007 s122.
chief-rent Annual or other periodic sum payable to the owner of land. Provisions
to redeem chief-rent are set out in Law of Property Act 1925 s191.
Chief Secretary to the Treasury

Government minister who is second in command to the Chancellor of
the Exchequer at the Treasury. The Chief Secretary is usually a Cabinet
minister.
child Person under the age of 14 (Children and Young Persons Act 1933). A
person aged 14 to 17 is legally a young person.
There are many specific legal provisions for children. In particular,
VAT for children’s clothing is zero-rated whereas adult clothing is
standard-rated.
Children are liable to pay on the same basis as adults (except for
national insurance for which the taxpayer must be 16).
It is generally illegal to employ a child of school-leaving age. This
is a factor that may be considered in determining whether wages paid to
one’s children are excessive remuneration. A leading case on this is
Dollar & Dollar v Lyon [1981] 54TC459. This matter is discussed in
There are also tax laws regarding passing money to children.

Children are also connected persons with their parents, which can have
tax implications, such as for corporation tax.
In terms of relationship, tax law usually uses the expression simply
to mean a son or daughter. In such a context, the term is often further
defined. For example, in Income and Corporation Taxes Act 1988 Sch
14 para 2(5) (which relates to friendly societies’ life policies), the term
“includes a step-child and an illegitimate child whose parents have
married each other after his birth”.
child bearing Description of a woman considered to be able to bear a child.

There is no general presumption and, for example, statutory
maternity pay may be claimed at any age.
For the limited purposes of perpetuities, it is assumed that a
woman is of child-bearing age between 12 and 55 (Perpetuities and
Accumulations Act 1964 s2), though there are documented cases of
child birth outside these ages.
child benefit Social security benefit payable for a child under 16, or a qualifying
young person who is 16 to 18 and in full-time education, and to some
19-year olds in limited circumstances.
It was introduced under Child Benefit Act 1975 when it replaced
family allowance. It is now paid under Social Security Contributions
and Benefits Act 1992 s141.
The benefit is usually paid to the mother who cares for the child,
though it can be claimed by a man. It is a weekly amount for each child.
A higher rate is paid for the first child in any week than for other
children.
Benefit is paid weekly and does not depend on national insurance
contributions.
child benefit records scandal

On 20 November 2007, Chancellor of the Exchequer Alistair Darling
MP announced that HM Revenue and Customs has lost two discs
containing personal details of 25 million individuals used in connection
with child benefit. The discs have not been found, but there is no
indication that they have been used improperly.
childcare Various tax provisions relate to childcare.

A workplace nursery is not regarded as a taxable benefit in kind
provided certain conditions are met (Income Tax (Earnings and
An employer may provide childcare vouchers.
childcare voucher “Voucher, stamp or similar document or token intended to enable a

person to obtain the provision of care for a child (whether or not in
exchange for it)” (Income Tax (Earnings and Pensions) Act 2003
s84(2A).
Until 6 April 2011, they were tax free up to £55 a week.
From 6 April 2011, they are tax-free up to £55 a week only for:
• employees already receiving vouchers on 5 April 2011; and
• employees who start receiving vouchers after 5 April 2011
and who are not expected to pay tax above the basic rate.
For employees who start receiving vouchers after 5 April 2011 and
who are liable to pay either higher (40%) or additional (50%) rate
income tax, the weekly limit is restricted to £28 and £22 respectively.
An employer is required to conduct a basic earnings assessment to see
if the employee is likely to reach these higher rates.
Childers, Hugh English Liberal politician (1827-1896) who was Chancellor of the
Exchequer from 16 December 1882 to 9 June 1885.
child in care For such a child, it is important to seek a national insurance number
while the child is 15. If no-one is claiming child benefit, a number may
not be issued automatically.
Child Maintenance and Enforcement Commission

Body established as a replacement for the Child Support Agency from
2008.
child of the family In relation to capital gains tax on an interest in a settlement, means a
child of either person in a marriage or civil partnership (Taxation of
Chargeable Gains Act 1992 s169F(6)).
child or remoter issue Term used in some Acts of Parliament to mean a descendant. This is
son or daughter, or grandchild, great-grandchild, great-great-grandchild
etc.
Child Poverty Action Group (CPAG)

“The leading charity campaigning for the abolition of child poverty in
the UK and for a better deal for low-income families and children”
(CPAG website). It was formed in 1965.
The organisation also produces extensive literature on social
security and other welfare provisions.
child relief Allowance against income tax in respect of each child for whom the
taxpayer was responsible.
It was introduced in 1920, and abolished in 1980 for British
children and from 1982 for children overseas, when it was replaced by
child benefit. Relief was given at one of three rates in age bands of 0-
11, 11-16 and over 16.
children’s barred list List kept by the Independent Barring Board of people not allowed to
work with children (Safeguarding Vulnerable Groups Act 2006 s2(1)).
children’s books For VAT, these are zero-rated under Group 3 of the zero-rating
schedule to the extent that they are text books.
There are many special provisions for colouring books, pop-up
books, and books which have the nature of toys.
Children’s Commissioner
Office created by Children Act 2004 s1, effective from 15 November
2004. The Commissioner’s function is promote the interests of children.
children’s painting books Such books may be zero-rated for VAT under Value Added Tax Act
1994 and are not usually regarded as standard-rated stationery. Further
children’s picture books Such books may be zero-rated for VAT under Value Added Tax Act
1994 Sch 8 Group 3, even if printed on cloth or plastic. Further details
are given in VAT notice 701/10.
Children’s Rights Director

Officer of the Chief Inspector of schools, appointed under Education
and Inspections Act 2006 s120.
children’s services authority

Local authority which has responsibility for children’s services. It is
usually a county council or unitary authority (Children Act 2004
s65(1)).
child’s special allowance Social security benefit payable under Social Security Contributions and
Child Support Agency (CSA)
child support order (CSO)

Order made under child support law which creates a form of
attachment of earnings order. This requires the employer to deduct
sums from net pay and pay them to the Child Support Agency.
child’s tax credit (CTC) Social security benefit for families on medium or low incomes to help
pay for children. It is paid under Tax Credits Act 2002 Part 1.
child trust fund Government-sponsored savings scheme for children, introduced on 6

April 2005 and discontinued for new claimants in 2011.
For every child born between 31 August 2002 and 2 January 2011,
the government provides £250 for a trust fund. This is doubled to £500
for poorest families. A further payment is made on the child’s seventh
birthday. Parents and others may add up to a further £1,200 a year. The
fund matures when the child is 18.
The law was introduced by Child Trust Funds Act 2004 and
repealed by Savings Accounts and Health in Pregnancy Grant Act 2010
s1.
child trust fund business In relation to taxation of life assurance business, “means so much of a
company’s life assurance business as is referable to child trust fund
policies (but not including the reinsurance of such business)” (Income

and Corporation Taxes Act 1988 s431BA).
child trust fund functions Functions of HMRC as set out in Finance Act 1989 s182(2ZB) in
relation to disclosure of information.
child trust fund policy “A policy of life insurance which is an investment under a child trust
fund (within the meaning of Child Trust Funds Act 2004)”.
China International Trust and Investment Corporation (CITIC)

Chinese government body which provides finance for venture capital
projects in China. It works with foreign investors, and issues bonds.
Chinese walls Term used to describe barriers within an organisation.

Information may not be passed across those barriers. This is
necessary to avoid accusations of insider dealing.
chip and pin System for authorising payment on a credit card or debit card,
generally adopted on 14 February 2006.
The cards contain a microchip containing basic information.
Payment is authorised by the card holder entering a secret four-digit
PIN number in a machine.
chip card Type of credit card, debit card or similar which incorporates a micro-
chip to store data, such as transactions.
CHIPS Clearing House Inter-bank Payments System.
chit Bill, letter or similar document, particularly in an abbreviated form to

meet the minimum standards of an accounting voucher.
chocolate For VAT, this is regarded as confectionery and is therefore standard-

rated as confectionary is explicitly excluded from the scope of zero-
rated food. However chocolate couverture, chips, leaves, scrolls and
similar supplied as cake decorations may be zero-rated (VAT notice
701/14). Chocolate buttons are always standard-rated.
choice of law clause Where one of the parties to a contract may choose the territory whose
laws govern the contract. The term is used in Unfair Contract Terms
Act 1977 s27.
chon Currency of North Korea.
choose option Option where the holder may, up to a predetermined date, decide
whether to treat it as a call option or put option.
chop Mark made on a document to indicate that a process has been

completed, such as payment has been made.
chose As a noun, the word means a chattel under the control of the owner.
chose in possession Legal term for a physical object which can be owned, such as a piece of
furniture.
Christmas Public holiday and bank holiday.

In the church it commemorates the birth of Jesus Christ, though the
exact date of his birth is not known. The date was adopted by the
church in 440 AD by taking over the secular festival of the winter
solstice.
A large shop may not open on Christmas Day (Trading) Act 2004
s1(1)).
In England and Wales, it is a quarter day when rent is often paid.
There are some special tax provisions, regarding the taxation of
Christmas bonus, Christmas gift and Christmas party.
Christmas bonus (1) An additional payment sometimes made to employees by the

employer at Christmas time.
A payment in cash is taxed as employment income. A voucher that
can be readily exchanged was held to be employment earnings in
Laidler v Perry [1965]. The position on Christmas presents is
explained in the inspectors’ manual at EIM01040.
(2) Additional £10 paid to certain social security claimants at
Christmas time. This figure has remained unchanged since it was
introduced in 1971, except that in January and February 2009, a one-off
bonus of £60 was also paid to claimants to reflect the cold winter.
Christmas box Gift of money given traditionally given to servants at Christmas. It is

taxable as a Christmas bonus.
Christmas Day Public holiday on 25 December. If it falls on a Sunday, the public

holiday is moved to 26th, and Boxing Day to 27th.
It is a religious festival marking the birth of Christ.
Christmas Eve Day before Christmas, namely 24 December. This is not a public
holiday, and is a normal working day (at least in theory).
Christmas party When provided by an employer, there is no taxable benefit provided

that the value provided per person attending does not exceeds £150
This figure is cumulative throughout the tax year when more than
one such function is organised.
The limit is per attendee, not per employee. It includes all costs
borne by the employer, including overheads. It includes VAT even if
the employer may reclaim it as input tax. This limit may not be used to
provide Christmas presents.
Christmas present Present given on Christmas Day. Where the present is cash, it is
generally treated as a Christmas bonus and taxed as employment
income under Income Tax (Earnings and Pensions) Act 2003 s62.
Where the present is in the form of a gift, it may be taxable as a
benefit in kind, depending on the circumstances. If it arises from the
employment, it can be so taxed even if provided other than by the
employer (though there is annual tax-free limit for third party gifts).
The fact that a gift comes from an employer does not automatically
make it a taxable benefit in kind if it is clear that the gift does not derive
from the employment. For example, a son who is employed by his
father is not taxed on a Christmas present from him if the gift has the
nature of a normal gift from a father.
Guidance is provided in the inspectors’ manual at EIM01040.
chronological age Actual age which has not been adjusted in any way.
chronological order When documents or notes are presented in order of date, usually
starting from the earliest.
Church Commissioners “means the Commissioners constituted by the Church Commissioners

Measure 1947 (Interpretation Act 1978 Sch 1).
Churchill, Randolf English Conservative politician (1849-1895), father of Winston, who

was Chancellor of the Exchequer from 3 August 1886 to 22 December
1886.
Churchill, Winston English politician (1874-1965) who was Chancellor of the Exchequer
from 6 November 1924 to 4 June 1929 where he returned Britain to the
gold standard.
He was prime minister from 10 May 1940 to 26 July 1945, and
from 26 October 1951 to 7 April 1955. He is the only Chancellor or
prime minister to be depicted on a British coin.
Churchill crown Five shilling (25p) coin minted in 1965 to commemorate the life and
death of former prime minister Sir Winston Churchill.
church-rate Assessment which Anglican churches could make on parishioners.
church scot Form of tax comprising amounts of corn and poultry given to parish
priests in Saxon times on St Martin’s Day, 11 November.
church taxes Taxes imposed on the church in 13th and 14th centuries by both the
king and the Vatican. These were levied in various ways, with the
clergy allowed to assess themselves. In 1294 Edward I demanded very
heavy taxes including half their revenues as “convocation tax”. The
Pope unsuccessfully maintained that church tax needed his permission.
churchwarden Officer of the parish. Although this is not restricted largely to church
duties, the churchwarden was once a local authority official. Some
aspects of this remain. For example, all residents of a parish may vote
in the elections for churchwarden whereas only members on the
church’s electoral roll may vote for other church officers, such as
treasurer.
churning Practice which can occur at stockbrokers and insurers whereby they
repeatedly trade for the main purpose of earning commission.
The term is also used when the same funds are recycled for no
reason but to create an allusion of financial activities, such as moving

sums between two bank accounts to create an allusion of trading
activity.
CIC Community interest company.
CICA Canadian Institute of Chartered Accountants
cider Drink made from the fermentation of apple juice. It is subject to a

specific rate of excise duty for alcoholic liquor. This rate also applies
to perry, which is fermented pear juice. No duty is payable for cider
with a strength below 1.2%.
From 1 January 1997, cider or perry with a strength above 5.5% is
taxed as wine.
cider “Means... cider (or perry) of a strength exceeding 1.2% but less than
8.5% obtained from the fermentation of apple or pear juice without the
addition at any time of any alcoholic liquor or substance which
communicates colour or flavour other than such as the Commissioners
may allow as appearing to them to be necessary to make cider (or
perry)” (Alcoholic Liquor Duties Act 1979 s1(6)).
CIF Carriage, insurance and freight. This is a form of contract for sending
goods overseas. It means that the price quoted or charged includes
carriage, insurance and freight.
A CIF contract imposes five duties on the seller:
● to ship to the port of shipment within the time stated;
● to procure on shipment a contract of affreightment which
ensures that the goods are delivered to the required destination;
● to insure the goods on terms current in the trade to the
benefit of the buyer;
● to provide an invoice for the goods; and
● to tender to the buyer a bill of lading, the invoice and the
insurance policy.
CII Chartered Insurance Institute.
CILOCT Contribution in lieu of council tax (in armed forces).
CIMA Chartered Institute of Management Accountants
CIM/TIEx Convention International Marchandises Chemins de Fer, an

international rail carriage receipt.
cinch Colloquialism for a very easy task.
Cinderella Poor relation, when referring to either a person or organisation.

The name comes from the traditional story of a daughter who is ill-
treated by her step-sisters but marries a prince.
Cinque Ports Originally the five ports of Hastings, Sandwich, Dover, Romney and
Hythe, all of which are in Sussex or Kent. From the 12th century until
1685, they enjoyed special privileges. The concept remains for
ceremonial purposes.
CIO Charitable incorporated organisation.
CIOT Chartered Institute of Taxation.
CIPD Chartered Institute of Personnel and Development
CIPFA Chartered Institute of Public Finance and Accountancy.
CIPP Chartered Institute of Payroll Professionals.
CIPR21 Customs Information Processing Requirements in the 21st Century.
circle of mutuality Scope of tax-free mutual trading. Term used in the Inspectors’ Manual
at BIM24480 to define with whom such trading is mutual.
circuit (1) In law, an area for which a judge exercises jurisdiction.

(2) In computing, a series of components through which an electrical
current flows to perform a task.
circuit breaker In financial markets, a measure put in place by exchanges to prevent

movements of very large quantities of a security or currency, to restrict
financial speculation. These provisions were introduced after Black
Monday in 1987.
circular flow of income Model showing the flows of money around the economy. The economy
is conventionally split into firms and households and the circular flow
shows the movement of money between these groups. From households
to firms there is a flow of consumption expenditure which results in a
flow from firms to households of income. This income may be in the
form of wages, interest or profit.
circular funding Where money passes from one party to another, ending up where it
started. This is one of the hallmarks of a tax planning scheme of which
taxpayers are advised to be wary.
circular letter of credit Letter of credit sent to all branches of a bank which issued it.
circular letter of credit Precursor of travellers’ cheques. It is an instruction from a bank to its
associates to pay certain amounts to a customer who proves satisfactory
identification.
circular note Letter of bank-credit once given to travellers. The recipient could
redeem it for cash at the bank.
circular transaction An artificial transaction, such as in a group of companies, to create an

allusion of greater trading activity. In financial accounting, this serves
no purpose, as all intra-group activities are removed when preparing

consolidated accounts.
circularise Send a copy of the same document to many people.
circulating asset Term sometimes used for a current asset.
circulating capital Capital in the form of cash, debtors, raw material and stock. The
business needs this capital to run its business. The tax implication is
circulation The distribution of newspapers, magazines, and other print publications.

The term is also used for the size of circulation, particularly with
regards to advertising rates.
circulation date Date on which something is sent or submitted to someone.

In company law, the term is used in Companies Act 2006 s290 for
written resolutions.
circumstantial evidence Circumstances that point to a conclusion where direct evidence is not
available.
circumventing prohibition
Activity intended to circumvent the provisions of Terrorist Asset-
Freezing etc Act 2010. The term is used in s18.
CIS (1) Collective investment scheme.

(2) Construction industry scheme.
citation Quotation of decided court cases as authority in legal proceedings.

From 2001, neutral citations are generally used. These were
introduced in 2001 for House of Lords (now Supreme Court), Privy
Council, Court of Appeal and Administrative Court. From 2002, they
were extended to the High Court. These decisions are available free on
the bailii website. The citations take the form:
• UKHL for House of Lords
• EWCA for Court of Appeal, in England and Wales
• EWHC for High Court, in England and Wales.
This is followed by a number and year, so Rotman v MPC [2002]
UKHL 20 means the 20th decision of the House of Lords in 2002. The
EWHC citations also indicate the division of High Court.
Otherwise, the citation must refer to a published law report of the
case. As leading cases are often published in several different reports, a
case may have a long citation quoting them all.
For example, the leading tax case of Pepper v Hart has the full
citation Pepper v Hart HL 1992. 65 TC 421; [1992] STC 898; [1992] 3
WLR 1032; [1993] 1 All ER 42.
The full citation quotes five different law reports where the case
may be read:
• HL 1992 means in the Law Reports of House of Lords for
1992;
• 65 TC 421 means in Volume 65 of Tax Cases published by

HMSO, starting at page 421;
• [1992] STC 898 means in the 1992 volume of Simon’s Tax
Cases starting at page 898;
• [1992] 3 WLR 1032 means in volume 3 of the 1992 cases
published by Weekly Law Reports starting at page 1032;
• [1993] 1 All ER 42 means in volume 1 of the 1993 cases
published by All England Law Reports, starting at page 42.
It should be noted that the year refers to when the case is reported,
not when it is heard.
In addition to these, The Times newspaper also published
authoritative law reports. These are indicated as The Times. 1 January
2010. There are also other series of law reports.
The two main series dedicated solely to tax cases are Simon’s Tax
Cases, and Tax Cases.
Special Commissioner’s decisions are published under the
reference SPC followed by five digits. From April 2003, these are
published free on the First Tier Tribunal website.
From April 2009, all First Tier Tribunals for all taxes are published
with the reference TC followed by five digits. These are published free
on the First Tier Tribunal website.
CITES Convention on International Trade in Endangered Species.
Citibank Large international bank, originally founded in 1812.
CITIC China International Trust and Investment Corporation.
Citizens Advice Bureau (CAB)

Charitable organisation which provides free advice on legal and
administrative problems.
CITOPS Customs and International Trade Operations.
CITR Community investment tax relief.
City Area of London which is widely seen as the financial centre, a position
it has held from medieval times. It is also known as The City. It is an
area of about one square mile between Waterloo Bridge and Tower
Bridge.
city bank (1) In Japan, one of 13 banks which operate a national network.
(2) In USA, a bank in a city which operates for the Federal Reserve
Bank.
City Code on Takeovers and Mergers

Code imposed by the London Stock Exchange on companies which
wish to take over another company.
Under the rules, a company must make a takeover offer if it
acquires at least 30% of the shares, either on its own or in concert with
others. A timetable must be set with an acceptance level of at least 50%
when the bid becomes unconditional.
city company London corporation representing a medieval trade gild.
city editor Financial editor on a newspaper.
City Group for Smaller Companies (CISCO)

Pressure group formed in December 1992 to deal with the financial
needs of smaller companies.
city man Man who works in a city; business man.
city manager Person appointed by a city council to administer its affairs.
CIU Collective investment undertaking.
civic For VAT and such bodies, description of “objects which promote rights
and duties of citizens in matters of public interest and public affairs, and
whose objects do not solely or mainly benefit its members” (VAT
leaflet 701/5).
civic culture Observable phenomenon that political culture depends on the

environment in which it is based. The term is particularly based on a
study conducted on five countries in the early 1960s.
civil Legal term which distinguishes the subject matter from ecclesiastical,
criminal or military.
civil action Legal action brought by one person against another, such as for an
unpaid debt.
Civil Aviation Authority (CAA)

Public corporation established by Parliament in 1972 as an independent
specialist aviation regulator and provider of air traffic services.
Civil Aviation Authority

Public corporation established in 1972 as an aviation regulator and
provider of air traffic services.
civil damages Penalty for a minor breach of the law, imposed outside the criminal law
system. Most tax penalties and motoring penalties are civil damages.
Such payments may be tax-deductible are discussed in the
civil debt Sum of money that can be recovered summarily.
civilian clothing Term used in the Inspectors’ Manual at BIM37910 as an alternative to

everyday wardrobe. Such items are not tax-deductible.
civil investigation of fraud

Scheme used by tax authorities allowing a person one final opportunity
to confess tax irregularities before criminal proceedings are started.
civiliter mortuus Latin: civilly dead.
civil law (1) Tradition of a code of law, such as that which developed in Europe
in parallel to British common law. It can also be found in Louisiana in
the USA, and Quebec in Canada.
In civil law, the courts do not create or develop the law but simply
apply it.
(2) All that law which is not criminal law. It thus includes such areas
as contracts, torts, property and taxation.
Civil List Annual grant by Parliament for the maintenance of the Queen and her
household. It started in 1760 when George III gave up his rights to
hereditary revenues in exchange for the list. The present law is Civil
List Act 1972.
civil partnership Relationship between two people of the same sex who are not closely
related. The relationship must be registered. It has many rights and
duties in common with marriage. It is governed by Civil Partnership
Act 2004.
A civil partnership is void if the requirements for registration have not

been followed (ibid s173).
A civil partnership is voidable if either did not validly consent, a
partner suffered from certain mental disorders, a partner was pregnant
or the person was at the time not of the same sex (ibid s174).
civil partnership Legal arrangement similar to marriage but between two adults of the
same sex. It is generally regarded as a marital status.
Civil partnerships have been legal in the UK since 5 December
2005 under Civil Partnership Act 2004. The law has been extensively
rewritten so that civil partners have the same rights, duties and other
legal implications as marriage partners. There is a process similar to
divorce for ending a civil partnership.
Whatever tax or other financial provisions apply to a married couple
generally also apply to a civil partnership. Civil partners have similar
rights to claim benefits as marriage partners.
The few differences between a civil partnership and marriage is that
the former cannot be conducted in a church and there is no duty to
consummate a civil partnership.
civil partnership agreement

Agreement between two people to enter into a civil partnership in the
UK or a foreign equivalent (Civil Partnership Act 2004 s73). It is
similar to an engagement between two people contemplating marriage.
A civil partnership agreement is unenforceable.
civil partnership document

Document which must be delivered to a registrar by two people who
wish to enter into a civil partnership (Civil Partnership Act 2004 s7).
civil partnership registrar

Person who is authorised to register a civil partnership (Civil
Partnership Act 2004 s29).
civil proceedings Legal action brought in the civil courts, such as between litigants.
civil remedy Remedy from civil proceedings, without using the criminal courts.
civil rights Rights of citizens to enjoy personal freedom.
civil servant UK civil servants are liable to UK income tax and national insurance
wherever they work.
Civil Service Public administration of a country regardless of its political leadership.

It excludes military leadership.
The two functions of the civil servant are to implement the policies
of the political leadership, and to give advice to that leadership. A civil
servant acts as if he had no political views of his own.
Civil Service code Code of conduct produced for the Civil Service by the Civil Service
Commission (Constitutional Reform and Governance Act 2010 s5).
Civil Service Commission Body that deals with appointments to the Civil Service, established by
Constitutional Reform and Governance Act 2010 s2.
CJ Chief Justice.
claim (1) Any statement made by a person that they are entitled to receive a
payment.
This can take many forms, including notification to an insurance
company that payment is due under the terms of a policy, a request to
receive social security or a bill for damages which the person believes
someone else should pay.
(2) The right of a person to use newly available land for a particular
purpose, particularly mining.
claim about defects Payment made to meet the legal expenses or other professional services
in connection with work done by a trade which is found to be defective,
particularly when that work was done after the trade ceased. There are
special provisions regarding tax relief for such expenses (Income Tax
Act 2007 s97(3)).
claimant (1) Person who brings civil proceedings, previously known as the
plaintiff.
(2) Someone who makes a claim, such as on an insurance policy.
(3) For Customs, “in relation to proceedings for the condemnation of
any thing as being forfeited, means a person claiming that the thing is
not liable to forfeiture” (Customs and Excise Management Act 1979
s1(1)).
(4) For social security, “in relation to benefit... means a person who has
claimed benefit” (Social Security Contributions and Benefits Act 1992
s122(1)). Another definition is used for those who claim relief from
national insurance (Social Security Administration Act 1992 s191).
claimant company Company in a group which claims group relief from another company
in the group (Income and Corporation Taxes Act 1988 s402(1)). The
other company is known as the surrendering company. The law is
now contained in Corporation Tax Act 2010 Part 5.
claimant count “The number of people claiming unemployment-related benefits. Since

October 1996 this has been defined in the UK as the number of people
claiming Jobseeker’s Allowance.” (HM Treasury glossary)
claimer Another name for claimant.
claim form Document provided to allow a person to complete details of a claim.
claim period For group relief, accounting period of the claimant company as
claims assessor Person who assesses insurance claims.
claims department The section of an insurance company which deals with claims from
customers.
claims equalisation reserve

Item sometimes found on the balance sheet of insurance companies.
This is simply a reserve which may be used as the company wishes,
usually to offset the adverse effect of a year where claims are high.
claims experience The relationship of insurance claims to premiums for a period. It is

usually expressed as a percentage or ratio.
Claims Management Services Tribunal

Tribunal established under Compensation Act 2006 s12.
claims manager Manager of a claims department.
claims ratio Ratio used by insurance companies. It represents the value of claims
paid divided by premium income received.
claims reserve Amounts set aside by an insurer to meet costs of claims incurred but not
yet settled.
clampdown Deliberate enforcement of rules, particularly of existing rules which

have been largely ignored.
In employment law, a clampdown should be preceded with an
appropriate announcement and possibly lesser penalties for offences
committed when the clampdown was announced. Otherwise the
employer could be exposed to claims for unfair dismissal.
clam up Suddenly become silent or unco-operative. In an interview, this could

indicate a failure of interviewing technique.
The term comes from the shellfish clam where the soft creature
lives in a shell which is usually tightly closed.
clan Tightly knit family or collection of families, particularly in Scotland.
clandestine entrant A person who enters a country by hiding in a vehicle, in other words, a
stowaway.
The term is used in Immigration and Asylum Act 1996 s32 as
amended by the Immigration and Asylum Act 1999. This provision
imposes a penalty on the driver of the vehicle unless he can prove that
he:
● did not know he had stowaways;
● had an effective system for checking for them; and
● had followed that system.
Clarke, Kenneth Conservative politician (1940- ) who was Chancellor of the Exchequer
from 27 May 1993 to 2 May 1997 in the government of John Major. He
reduced income tax but was forced to introduce a national insurance
surcharge when a Budget vote was unusually lost in Parliament.
class (1) Social status, as in upper class, ruling class, middle class, working
class.
(2) Category of investment, of which the two main types are stocks and
bonds.
(3) Category of national insurance.
class action Legal action brought by a group of people with a common claim, such
as victims of a dangerous product.
class-closing Description of a provision introduced by Perpetuities and

Accumulations Act 1964.
The provision allows a personal representative to close a class of
beneficiary, allowing distributions to be made from an estate. For
example, a clause in a will leaving property to all grandchildren who
may ever be born creates a class of beneficiary that may be closed when
the last daughter or daughter-in-law is considered to be past child-
bearing age. A class closure is effective even if a further grandchild is
subsequently born.
classes of shares “Shares are of one class if the rights attached to them are in all respects
uniform” (Companies Act 2006 s629(1)).
classes of spirits One of eight classes into which spirits are assessed for the purposes of
the quarterly returns for alcoholic liquor duty. The classes are:
1 Malt spirits
2 Grain spirits
3 Neutral spirits of agricultural origin
4 Neutral spirits of non-agricultural origin

5 Spirits produced from beer
6 Spirits produced from wine or made-wine
7 Spirits produced from cider or perry
8 Other.
classical organisation theory

Approach to running a business developed by such writers as Henri
Fayol.
The main elements of the theory is to divide the required word into
sets of tasks and to organise the workforce effectively to achieve them.
Control is achieved by authority and systems of checks.
Application of these methods did not achieve the results the writers
expected because of human factors. However, elements of the theory
will almost always be found in any organisation.
classical system of taxation

Another way of saying classical taxation.
classical taxation Traditional method of taxation, whereby the taxpayer completes a tax
return, and receives a tax assessment against which a payment is
made.
In the UK, classical taxation was generally replaced by the
imputation system for corporation tax in 1973. Classical taxation is
still used in the USA.
classic car For taxation of employment income, a car that is at least 15 years old
and with a market value of at least £15,000 (Income Tax (Earnings and
Pensions) Act 2003 s147(1)).
An employee who is provided with a classic car as a taxable benefit
is assessed according to market value rather than list price.
class meeting In company law, a meeting of holders of a class of shares.

Such meetings are governed by Companies Act 2006 ss334-335.
class 1 national insurance National insurance payable on cash earnings from employment.
Benefits in kind are generally not subject to class 1 national insurance,
but may be subject to class 1A national insurance or class 1B
national insurance.
Class 1 national insurance is paid by employees at the main
primary percentage on earnings which lie between the earnings
threshold and upper earnings limit. The employee then pays class 1
national insurance at the additional primary percentage on all
earnings above the upper earnings limit.
The employer pays employers' national insurance at the main
secondary percentage on earnings which lie between the earnings
threshold and upper earnings limit, and at the additional secondary
percentage on all earnings above the upper earnings limit.
The law on liability is contained in Social Security Contributions
and Benefits Act 1992 s6. The employee’s rate is set out in s8, and the
employer’s in s9.
class 1A national insurance

A payroll tax payable by employers on benefits in kind.
It was introduced in 1991 as a tax just on car benefit and fuel
benefit. The law is contained in Social Security Contributions and
class 1B national insurance

A payroll tax payable by employers on PAYE settlement agreements.
It was introduced in 1999. The law is Social Security Contributions
and Benefits Act 1992 s10A.
class 2 national insurance

National insurance paid by the self-employed, who also pay class 4.
The law is contained in Social Security Contributions and Benefits
Act 1992 s11.
class 3 national insurance Voluntary payments of national insurance to allow a person to maintain
a complete national insurance record.
The law is Social Security Contributions and Benefits Act 1992 s13.
class 4 national insurance National insurance payable by the self-employed (as well as class 2) but
which does not count as a contribution. It is calculated at:
• the main class 4 percentage on earnings between two levels,
plus
• the additional class 4 percentage on earnings above the
higher level.
The law is contained in Social Security Contributions and Benefits
Act 1992 s15.
Class 4 is collected with income tax. It is a pure tax as it does not
entitle the payer to any benefits.
class of assets Putting together assets which have similar characteristics. In particular
distinguishing tangible assets from intangible assets.
This distinction is needed because the rules for amortisation and
revaluation differ between the classes.
class of beneficiaries When the beneficiaries of a trust are described rather than named.
An example is a trust established for all the settlor’s grandchildren.
class of business Distinguishable part of a business that provides a separate service or

range of products (SSAP 25).
class of intangible assets Category of intangible assets, each of which has a similar use to the
business (FRS 10).
class of tangible assets Category of tangible assets, each of which has a similar use to the
business (FRS 15).
clause Section of a document, such as a contract or Statutory Instrument.
clavis Key or other device intended to help solve a problem.
clawback A practice where a sum previously paid is recovered.

An examples is in a pension scheme where the amount equivalent to
the state pension is subtracted from a target pension to calculate the
amount payable by the scheme.
If commission is paid to an intermediary by a financial institution
for the introduction of business and this does not stay in force for a
certain pre-determined period a part of the commission may be
repayable to the institution. This is known as 'clawback'. The practice is
more prevalent among insurance companies.
Clayton Act In USA, an anti-trust law passed in 1914. It restricts mergers and
acquisitions that limit competition, and prevents individuals from
serving on boards of competing companies.
CLC (1) CCH Commercial Law Cases, published from 1994.

(2) Company Law Cases, Australian law reports from 1971 to 1981.
clean bill of health Document once signed by port authorities to certify that there was no
infection on board a ship.
The term is now used figuratively to mean anything or anyone who
is satisfactory.
clean bill of lading Bill of lading to which there is no note attached saying that the goods
are faulty or damaged.
clean break Complete ending of a relationship so that there is no interdependence at

all. The term is sometimes used in divorce settlements.
clean chain Series of legitimate trading transactions which are run in parallel with a
dirty chain relating to missing trader fraud. The parallel trades are
known as contra-trading.
Because the VAT input tax from the dirty chain is offset against the
output tax from the clean chain, VAT relief is gained without making a
claim for a repayment. This reduces the likelihood of the fraud being
investigated.
clean float Process of floating a currency on the market without any interference
from the government which issues the currency.
clean hands Freedom from dishonesty; honest intent. A person must “have clean
hands” to sue in equity. The term can also mean acting in good faith.
clean money Money which has been legally acquired, as opposed to dirty money.
clean opinion Another name for an unqualified report from an auditor.
clean price Actual price of a bond less the accrued interest. The clean price is used
for comparing bonds.
clean sheet Record which shows that a person has not convictions or other marks
against his name.
clean surplus account Concept that a company’s income should show all gains and losses
without any of them being taken directly to capital on the balance sheet.
clear Reduce the balance on an account to zero.
clearance (1) In tax, an arrangement whereby the tax authority confirms the tax
position in advance.
Such clearances are only available in limited circumstances. In
general, they prevent the tax authorities from taking a different view
later.
(2) Certificate issued by Customs that a ship has complied with
requirements and may therefore put to sea.
(3) Process whereby a procedure has been concluded, particularly when
goods are cleared by HMRC which has accepted a declaration for them
and formally released them for import or export.
clearance area Area where a local authority is satisfied that every residential building
has a category 1 hazard and where demolition is appropriate under
Housing Act 1985 s289 (as amended by Housing Act 2004 s47).
clearance certificate (1) For Customs, document stating that goods have been cleared by
Customs.
(2) For inheritance tax, a certificate from HMRC, requested on form
IHT30, confirming that all returns have been made and all inheritance
tax has been paid.
clearance order Order that could be made under Housing Act 1957 for clearing slums.
Such an order justified relief from estate duty under Finance Act 1958
s33, now repealed by Finance Act 1975.
clearance sale Period when a retailer sells goods at a lower than usual price to clear
stock so that new stock can be brought in.
clearance time Period for allowing a financial transaction to be completed, particularly

paying money into a bank account.
clear day An entire day from midnight to midnight. The term is used in such
contexts as three clear days for a bill of exchange, meaning that parts of
a day are not counted.
cleared balance Balance on a bank account, excluding any sums paid in which have yet
to be paid out by the payer.
cleared date Date on which funds are removed from an account.
cleared for fate Description of process whereby a bank advises when funds will be
available to honour a cheque.
cleared value Description of when funds in a bank account become available to the
customer.
clearing Process of making payment from a bank account.
clearing agency In America, the central officer where financial transactions are settled.
clearing and settlement Processes which take place after a trade in a share or other security.
clearing bank Bank which is part of the clearing system which allows banks to settle
transactions between customers of different banks.
clearing house Place where clearing banks exchange cheques or where transactions
get settled.
clearing cycle Process by which payments are effected using cheques and similar.
Traditionally this period is three days, though some transactions were
reduced to two days in 1994.
clearing fee Sum charged by an agency for settling transactions on an exchange.
clearing house Central system for effecting payments between members. The best-
known is CHAPS used by banks.
Clearing House Inter-bank Payments System (CHIPS)

In USA, clearing system for banks.
Clearing Houses Automatic Payment System (CHAPS)

Bank procedure for making electronic payments from a bank account.
An electronic transfer of money between two bank accounts will clear
the payee’s account on the same working day provided instructions are
received before 3.15 pm.
clear profit Expression which refers to a profit, all of whose benefit goes to the
person or business with no amount to be deducted for any costs,
expenses, commission etc.
Clearstream Electronic clearing system for settlement of security transactions. It is

one of the principal clearing houses for Euromarket transactions.
clear the court Require all people in a court to leave if they are not involved with the
case.
clergy Ministers of a church, particularly of the Church of England or other

established denomination.
Clergy and other ministers are generally taxed on earnings as
employment income, even though they are usually office holders rather
than employees. They also pay class 1 national insurance.
Care must be exercised when the clergy raise funds or are given
donations that this is not treated as taxable income.
There are some specific tax provisions, such as tax exemption for
heating and similar expenses in defined circumstances. A parsonage is
regarded as representative occupation and therefore is not taxed as a
benefit in kind. Other provisions about such matters as glebe income
and Easter offerings are of little consequence now.
clergy grant An addition to the poll tax payable by clergy from 1377.
clerical collar Collar worn by clergy. As they are not legally required to wear one, it
cannot be claimed as an expenses against taxable income.
CLF Central Liquidity Facility.
Cl & Fin Clark and Finnelly’s Reports, law reports of House of Lords from 1831
to 1846.
click rate Measure of usage of a website. It is often used as the basis for payment
of commission between businesses.
clicks and mortar Colloquialism for a business that operates from both a website and
business premises.
client Customer. The word “client” is preferred by suppliers of professional

services.
client account Bank account operated by a solicitor or other professional person in

which they hold funds for the benefit of their clients.
Law Society regulations require such funds to be held separately
from the firm’s own funds. They are excluded from the firm’s accounts.
They are protected should the firm become insolvent.
clientage The whole of a firm’s clients viewed as a single entity.
clientele effect Company policy which is designed to attract or retain particular

investors, such as by its dividend policy.
client name Name of a tax agent’s client. When reporting, this name must be as
registered with HMRC.
cliff edge Any sudden and extreme change.

The term is often used to explain the lifestyle change from full-time
employment to retirement.
climate General state of the weather. By extension it refers to any general state,
such as in economic climate.
climate change Belief that the world’s climate is changing, particularly from human
activity. This includes burning fossil fuels which release greenhouse
gases. Climate change has legal, economic and fiscal consequences.
The legal consequences are the banning of certain products which

are considered environmentally unfriendly.
The economic consequences as climate change causes flooding and
other extreme weather, and changes to the patterns of crop production.
It is feared that this could lead to political tension as nations compete
for scarce resources.
Fiscal consequences include the climate change levy which
imposes a tax on power generation, and changes to the tax system in
vehicle excise duty and the taxation of company cars whereby less
polluting cars pay less tax.
climate change agreement Agreement that may be made by a large user of energy, in return for
which the amount of climate change levy they pay can be reduced by
up to 80%.
climate change levy Tax introduced on 1 April 2001 by Finance Act 2000 s30. Details are
contained in Sch 6 of this Act, statutory instruments and HMRC
guidance.
The tax is charged on supplies of power to commercial
organisations. It is charged on electricity and mains gas at a rate per
kilowatt hour, and on liquid petroleum gas and other physical fuel at a
rate per kilogram.
A large user of energy may save up to 80% of the levy by signing a
climate change agreement.
Income from the tax was used to reduce employers' national
insurance by 0.3 percentage points.
clipping Practice of cutting off small amounts from early gold and silver coins.
The practice was countered by having designs which went to the edge
of the coin, and giving coins either milled edges or engraving an
inscription on the edge.
CLO Collateralised loan obligation.
clock and watch tax An excise duty imposed between 1797 and 1798.
clog on equity of redemption

Legal doctrine that a mortgage deed may not contain any provision that
restricts the mortgagor’s right to redeem the mortgage.
close (1) Finish the accounts for a period, from the analogy of closing a book.
(2) In law, the term meant enclosed land. The term was used in action
for trespass.
close company A company “which is under the control of five or fewer participators”
with a few exceptions (Income and Corporation Taxes Act 1988
s414(1)). The US equivalent is a close corporation.
close corporation American term for a close company.
closed (1) In accounting, any period for which final accounts have been
produced.
(2) In tax, any period for which all returns have been properly
submitted.
(3) In business, a description where trading activity has ceased.
(4) In retail, a business that is not currently open for trade.
(5) In insurance, a syndicate year that has been closed by reinsurance
to close.
closed economy National economy where transactions are strictly controlled by the
government.
closed-end fund Fund established by an investment trust where the number of units is
fixed at the outset, and cannot be increased.
closed fund Any fund where the amount of capital which can be invested is fixed in
advance, such as investment trust.
closed market Trading arrangement where a supplier deals with only one agent or
distributor and does not supply any one else directly.
closed scheme Pension scheme which is closed to new members which has sufficient
assets to meet its protected liabilities. Special provisions apply to such
schemes under Pensions Act 2004 s153.
closed-end credit Loan, plus charges and interests, which are to be repaid by a specific
future date.
close-ended Description of any type of collective investment where the total capital
is fixed in advance.
closed-end fund Investment company with a fixed capital. Investments can only be made
by buying shares in that capital.
closed shop Arrangement whereby a person may only secure work by belonging to
the appropriate trade union. Such arrangements are now illegal.
In 1971, about one sixth of all British workers and 40% of trade
unionists worked in a closed shop.
close family “Close members of the family of an individual are those family
members, or members of the same household, who may be expected to
influence, or be influenced by, that person in their dealings with the
reporting entity” (FRS 8 para 2.1).
close investment holding company

Close company which does not trade. It is usually either a holding
company for trading companies, or a company which invests. Tax
provisions are given in Corporation Tax Act 2010 s34.
closely held Description of arrangement where shares in a company are held by a

few individuals and do not generally become available to buy.
closely held corporation In USA, public corporation that has a small number of stockholders and
where its stock is consequently rarely traded.
close off Process of finishing the accounts for a particular period.
close out Close an open position by buying or selling a financial obligation to

reach a zero position.
close period Period during which directors and other insiders are not allowed to
trade in shares or other securities of their company. It is also normal for
companies to refrain from making price-sensitive statements during this
period, though this is not strictly a legal requirement.
closer Term used in 19th century for workers, almost always women, who
made the upper parts of shoes in their homes.
close relative Term used by Financial Services Authority to mean a spouse or civil
partner, a child or step-child, the child’s parents or step-parents, a
child’s brothers, sisters or half-brothers or half-sisters, and any spouse
or civil partner of these.
(Regulated Activities Order; Financial Promotions Order)
close rolls Private deeds and similar held in Chancery from 1204 to 1903.
close season Another name for a close period.
closet tracker Fund which is tracking another fund or an index without disclosing that
fact.
closeting Buying an item and using it briefly before returning it for a full refund.
It is also known as wardrobing.
closing Relating to the end of an accounting period, either as a description of an

account, such as closing stock or closing balance, or as the process of
closing the books for the accounting period.
closing balance The amount of an account at the end of an accounting period. This is
expressed as a debit or a credit.
In traditional bookkeeping, all such debits and credits are taken
from the nominal ledger and listed as a trial balance. As every
transaction has equal amounts of debits and credits, the totals should be
the same.
closing bid The final bid in an auction for which sum the item is sold.
closing date Last date by which an action will be permitted, such as applying for a
job or a tender.
closing deal Transaction on a commodity market that closes a long or short position,
or terminates the liability of an option holder.
closing entries Entries made in the journal at the end of an accounting period to
balance the revenue and expense ledgers.
closing entry Entry made in the journal to close an account, that is to bring its debit
or credit value to zero. Such entries are made in accounts which are
created for a temporary purpose, such as a suspense account.
closing liabilities In relation to taxation of insurance companies, “means liabilities

assumed at the end of the period of account concerned in consequence
of the declaration of reversionary bonuses or a reduction in premiums”
(Income and Corporation Taxes Act 1988 s431(2)).
closing order Term once used when a local authority orders a house to be closed as
being unfit for habitation under Housing Act 1957 ss17-18, now
repealed. Under current law, such property is more likely to have a
demolition order served.
closing out American term for the practice of selling goods cheaply for the sake of
clearing the stock.
closing price Price of a share or other security at the end of a trading day.
closing purchases Acquisitons of a traded option or options by a grantor of options to

close his or her position.
Such purchases are generally ignored for capital gains tax purposes
under Taxation of Chargeable Gains Act 1992 s148.
closing rate Exchange rate of a currency at the close of business on the last day of
an accounting period.
closing rate method Technique for translating values in a foreign currency into the currency
of the business entity being reported.
The method translates the balances using the closing rate. This
method is widely used when consolidating accounts of a subsidiary
company which have been expressed in a foreign currency.
closing stock Value of stock held by a business at the end of an accounting period.
This figure is calculated by stocktaking to determine how much of
each item is held in stock, and valuation of the items. To this a figure is
added for work in progress.
The total is then entered in the nominal ledger as a journal entry.
The business calculates its cost of goods sold as:
cost of goods sold = opening stock + purchases – closing stock.
The cost of goods sold is subtracted from turnover to give gross
profit.
closing the books Point when an accountant or treasurer accepts no further transactions
for an accounting period.
closure (1) Shutting down a business or premises, particularly when this is

permanent.
(2) Activity designed to help a person come to terms with the finality of
a situation.
closure notice Any direction requiring some action to cease.

In particular, the term refers to a notice from HMRC under Taxes
Management Act 1970 s28B(1) stating that it has finished an enquiry.
closure notice Order issued by a police officer of at least the rank of superintendent to
close premises he reasonably believes are used for using or producing a
Class A drug (Anti-social Behaviour Act 2003 s1). This may be
followed by a closure order from a magistrates' court.
closure order Order made by police of licensed premises under Licensing Act 2003
s161.
cloth of gold Tissue made from threads of gold, often with threads of silk or wool.
cloth tax Customs duty briefly imposed by Queen Mary in 1558 when she
extensively revised customs duties. This replaced wool tax.
clothing For income tax, clothes provided to an employee are a taxable benefit in
kind. For a lower-paid employee, the taxable value is the second hand
value of the clothes following the decision in Wilkins v Rogerson
[1961] 39TC344. Other employees are taxed on the cost to the
employee.
Normal clothing cannot be claimed as a business expense as it is not
“exclusively” acquired for the performance of the duties of the
employment, but is always acquired partly for warmth and decency.
This applies even when the clothing is required to meet the particular
requirements of the job, such as formal skirts and blouses for a lady
barrister (Mallalieu v Drummond). Exceptions apply to safety clothing,
uniforms and performers’ costumes.
For VAT, clothing is standard-rated except for children’s clothing
and some safety clothing that is zero-rated.
clothing club One of several organisations which existed in the 1920s and 1930s as a
means of helping poor people to afford clothing and bedding.
cloture Vote for an immediate end of debate and for a vote to be taken on the
substantive motion.
cloud memory Computer term for data which is held off-line on a main computer from
which it is accessed.
CLR Commonwealth Law Reports, Australian law reports published from

1903.
CLT Chargeable lifetime transfer, for inheritance tax.
club Usually an unincorporated association run by and for the benefit of its
members.
Their VAT position is explained in VAT leaflet 701/5.
club deal Syndicated bank loan where the borrower states to which banks the
main lender may syndicate sub-loans.
club premises certificate Certificate which may be issued by a licensing local authority for a club
(Licensing Act 2003 s60).
Clydesdale Bank Bank formed in Glasgow in 1838. The bank grew throughout Scotland
and became the first Scottish bank to open branches in England.
In 1919, Midland Bank acquired Clydesdale. In 1950 it was merged
with North of Scotland Bank which Midland had also acquired.
In 1987, Midland sold the bank to National Australia Bank which
still owns it.
Clydesdale Bank is one of three Scottish banks which still issues its
own banknotes.
Cm. Command Paper.
c&m Care and maintenance.
Cmd Command Paper.
CME Chicago Mercantile Exchange.
CMLR Common Market Law Reports, published from 1962.
Cmnd Command Paper.
CMO Collateralised Mortgage Obligation.
CMR Convention Marchandises Routiers.
CMR Convention Usual abbreviation for Convention on the Contract for the International
Carriage of Goods.
CMT index Constant Maturity Treasury Index. This provides an index of US

Treasury securities. This index tends to respond quickly to any
perceived changes in the economy.
CN Combined Nomenclature
C/N Credit note.
CNCC Compagnie Nationale des Commissiares aux Comptes.
CNCD Combined Consignment Note and Customs Declaration.
CNCOM Concentration risk capital component.
CNG Compressed natural gas, a form of road fuel.
CNMV Comisión del Mercado de Valores, the Madrid stock exchange.
CNPA Civil Nuclear Police Authority.
CO Commanding officer, in armed forces.
co Company.
co- Prefix for someone working in conjunction with yourself, such as co-
worker or co-director.
coach (1) Person who trains others, particularly in sport.

(2) Means of transport. Before the 1830s, these were stagecoaches,
which went into sharp decline with the advent of the railway.
coaching Human resources term for methods designed to maximise performance

by a team or workforce.
COAD Chronic obstructive airways disease. Common abbreviation for sick

notes (HMRC leaflet E14).
COAF Part of the Financial Services Authority handbook that deals with
complaints against the Authority.
coal Producing coal is excluded from eligibility for venture capital trusts
under it s307B. Section 307B(3) clarifies that producing coal includes
extracting it.
The section defines coal according to EC Regulation 1407/2002 on
state aid to the coal industry. This says in Chapter 1 Article 2 (a) that
coal “means high-grade, medium-grade and low-grade category A and
B coal within the meaning of the international codification system for
coal laid down by the United Nations Economic Commission for
Europe (8)”.
This document was produced by United Nations in 1988. It broadly
defines high-rank coal as having a gross calorific value of at least 24
MJ/kg.
For VAT, coal may be reduced rated under Value Added Tax Act
1994 Sch 7A Group 1 when supplied for domestic use. Further details
are given in VAT notice 701/19. A supply of up to one tonne is usually
accepted as for domestic use.
Free coal provided to a miner, or an allowance in lieu of such coal,
is tax free under Income Tax (Earnings and Pensions) Act 2003 s306.
coalition Coming together of different bodies, particularly political ones, in face

of a common enemy. Differences are temporarily set aside.
coalition government Government by a combination of more than one party, particularly the
Conservative-Liberal Democrat government formed after the 2010
general election.
coal tax Tax charged between 1695 and 1831.

This was charged on “sea-coal” (because it was carried on vessels)
rather than “wood coal” (charcoal). Charges had been levied before to
discourage use to avoid harmful smoke. There was a form of coal tax
during the Commonwealth. This was followed by an earlier coal tax to
fund the rebuilding of churches. A general coal tax was introduced in
1695. It was constantly opposed by merchants as anti-trade until its
repeal in 1831. The City of London was allowed to charge it until 1890.
coarse grains Another name for foddergrains.
coastal erosion “The erosion of the coast of any part of England or Wales” (Flood and
Water Management Act 2010 s1(4)).
coastal tariffs A form of export duty charged from 1507. Customs tariffs were
significantly increased with great success. From 1487 coastal trade
required a certificate.
coasting ship Ship used for traffic between places in the UK and Isle of Man, known
as coastwise traffic.
It is an offence for a coasting ship to import goods to the UK.
coastwise traffic Sea traffic between places in the UK and Isle of Man.
It is assumed that such ships, known as coasting ships, are not
being used for the import of goods. It is an offence for them to do so.
COB (1) Close of business.

(2) In investment, conduct of business.
COBS Conduct of Business Sourcebook, a publication of the Financial

Services Authority issued on 1 November 2007.
COD Cash on delivery.
code (1) Letters or numbers with no intrinsic meaning, but which provides a
means of identification against a predetermined list.
(2) Set of rules and procedures to govern particular eventualities.
code number Original term for tax code when PAYE was introduced.
Code Napoléon French system of law introduced by Napoleon in 1807 and which is still
the basis of French law.
code of conduct Another term for code of practice.
code of practice (COP) Set of rules and procedures which govern a body’s ethical standards in
a particular area. HMRC have such codes known as COP 1 etc.
codicil Document which is executed in the same manner as a will but which
amends provisions in an existing will while leaving other provisions
unchanged. The law is Wills Act 1837 ss1, 9.
coding Practice of applying a code, particularly in giving a tax code to an

employee.
coding out Method of recovering unpaid tax by adjusting a person’s PAYE tax
code (Income Tax (Earnings and Pensions) Act 2003 s684).
This may be used to recover up to £2,000 in unpaid tax. The limit is
due to rise to £3,000 from 6 April 2012.
co-director Person who is a director of the same company as yourself.
CO2 emissions figure Amount of carbon dioxide from the exhaust of a car, expressed as so
many grams per kilometre. This figure is used to determine the amount
of vehicle excise duty payable, and the notional charge for providing a
company car to an employee.
COFACE Compagnie Française pour l’Assurance du Commerce Exterieur,

the French equivalent to the Export Credits Guarantee Department.
coffee For VAT, ....

Coffee was subject to an excise duty. This was relaxed in 1825 to
experiment with free trade.
Coffee provided free or subsidised at work is not a taxable benefit
COF index Cost of Funds Index. This is an index of interest rates on US Treasury
bills and Treasury notes. It is sometimes used to calculate mortgage
loans in the USA.
cogitationis poenam nemp patitur

Latin: the thoughts and intents of men are not punishable.
cognisance Judicial notice or knowledge, or jurisdiction.
cognovit Latin: he has confessed. An acknowledgment in law that a plaintiff’s

cause is just.
cognovit actionem Latin: he has confessed the action.
cohabitant “A couple consisting of:

(a) A man and a woman who are (or were) living together as if they
were husband and wife; or
(b) two persons of the same sex who are (or were) living together as
if they were civil partners” (Family Law (Scotland) Act 2006 s25(1)).
cohabitation Living with someone as though you were married or in a civil

partnership without having completed the legal formalities of marriage
or civil partnership.
In general, a cohabiting couple do not have the same rights and
duties as those who have completed the formalities. There is an
exception under Scots law.
There are some financial implications of cohabitation, as some
social security benefits are suspended during a period of cohabitation.
cohaerdes sunt quasi unum corpus, propter unitatem juris quod habent
Latin: co-heirs are regarded as one person on account of the unity of
title which they possess.
co-heir Person with whom you are due to share an inheritance.
coheritor Person with whom you share an inheritance.
cohort Group of individuals with whom there is a common factor.
coin Metallic token used as a means of exchange avoiding the need for
barter.
Originally a coin was simply a piece of precious metal, such as gold
or silver. It was stamped with a picture of the ruler and a symbol to
denote its provenance and weight.
Modern coins have intrinsic value less than face value. The
difference is called seigniorage which is sometimes seen as a tax.
COIN Continuously offered intermediate note.
coinage duty Ancient charge once imposed in Cornwall.
co-insurance An arrangement by which a number of insurance companies cover a

particular risk.
coke Solid residue from the distillation of coal such as after the production of
tar or coal gas. This residue may be used as fuel.
For VAT, coke may be reduced rated under Value Added Tax Act
are given in VAT notice 701/19. HMRC accepts that a supply of up to
one tonne is for domestic purposes.
[The word is also used to mean cocaine or Coca-Cola.]
cold start Colloquialism for a new business where there is no history on which to
base financial expectations.
cold weather payment Social Fund payment to certain categories of people when the weather
is expected to be below 0C for seven consecutive days.
COLL Collective Investment Schemes sourcebook, produced by Financial

Services Authority.
collar In finance, a minimum rate in a transaction whereby the rate fluctuates.

The term is used for cap and collar mortgages, where the collar is
the interest rate below which repayments cannot fall, and the cap is the
interest rate above which they cannot rise.
collateral Asset which is pledged to someone else as a condition of their lending

money or providing similar benefit.
A simple example is offering shares as a security for a bank loan.
The bank may require the borrower to sign an undated transfer form. If
the borrower defaults on the loan, the bank may complete the transfer
form and recover its loan by selling the shares. If the borrower does not
default, the loan is repaid as intended and the transfer form is not acted
upon.
collateral call Demand on a bank in respect of insurance contracts.
collateral contract Contract which runs with another contract. Breach of a collateral
contract may constitute a breach of the other contract.
collateralisation Process of making a debt secure by providing collateral.
collateralised bond obligation (CBO)

Asset-backed security where the backing is holdings of bonds.
collateralised debt obligation (CDO)

Asset-backed security where the backing is any type of debt. It is
common for one pool of assets to be used as collateral for more than
one CDO with a system of priority established between them.
collateralised loan obligation (CLO)

Asset-backed security where the backing takes the form of securitised
loans. These are usually commercial loans from a bank.
collateralised mortgage obligation (CMO)

In USA, a bond secured by a portfolio of mortgage obligations.
colleague Person with whom one works.
collect Practice of recovering funds from those who owe them. This is part of
the process of credit control.
collectable Item acquired for the pleasure of possession rather than for its intrinsic
value. Examples of collectables include stamps, coins, dolls, chinaware,
antiques, matchboxes and cigarette cards. Works of art are usually
excluded from the scope.
The value of a collectable derives from the desire of others to
possess such items, and their scarcity to such collectors. Ordinary items,
such as matchboxes, therefore have the highest item when they were
not seen as collectable when first used. Items sold as collectable, such
as commemorative coins, usually acquire no collectable value.
collectability Extent to which a debt is seen as being recoverable.
collecting agency Body which collects funds owing to others, usually for a commission
on the amount collected.
collecting bank Bank into which a person pays a cheque. The bank has a duty to recover
the funds from the payer of the cheque.
collection float Number of shares or other security that are outstanding and available
for trading by the public.
collection order Written order to a bank stating the conditions under which it may
release documents in connection with international trading.
collection ratio Average number of days it takes a business to turn its debtors into cash.
collection services Term used by Royal Mail for services which go beyond the normal
collection of mail. These include weekday collections, time collections
and single collections. Each of these attracts a charge.
collections Term sometimes used for cash receivable.
collective Group of people who work together for mutual support, eschewing
outside bodies. This includes communes and kibbutzes. It is often
overlooked that most ordinary families function as collectives.
collective agreement “Any agreement or arrangement made by or on behalf of one or more

trade unions and one or more employers or employers’ associations
and relating to one or more of the matters specified below” (Trade
Union and Labour Relations (Consolidation) Act 1992 s178(1)).
The matters “specified below” are terms and conditions of
employment, conditions of work, engagement or non-engagement of
members, termination or suspension of members, allocation of work,
discipline, membership or non-membership of the union, facilities for
union officials, negotiation machinery and procedures relating to this.
collective bargaining “Negotiations relating to or connected with one of those matters”

(Trade Union and Labour Relations (Consolidation) Act 1992 s178(1)).
“Those matters” are the same as for collective agreement.
collective goods Those goods and services which cannot reasonably be provided by the
individual or private enterprise. Examples include military, police and
courts.
collective investment Investments such as unit trusts and investment trusts schemes.
collective responsibility
The managerial principle that all members of a board, team or political
cabinet should be bound by the decisions agreed by a majority of that

body.
collectivisation Wholesale reorganisation of farming in the Soviet Union introduced

from 1923 in a series of five-year plans. The peasant farmers worked on
collective farms. The result was a drastic reduction in crop production.
collectivism System of living where groups of people voluntary live together and
provide for the needs of themselves and other members.
collector (1) Person who obtains payments from debtors.

(2) Tax officer who obtains payment from taxpayers (when the word
usually has a capital C).
(3) Person who acquires collectables.
collectors’ items Items which are acquired purely for the joy of collecting them rather
than for their utilitarian value.
Most such items can benefit from a special VAT scheme which
allows VAT to be charged at 5% on their sale. There are several
exclusions, including bullion coins and items which had been exported
in the previous 12 months.
This arrangement also applies to works of art and antiques.
COLLG Collective Investment Scheme Information Guide, produced by

Financial Services Authority.
colliery worker In relation to free coal, “means a coal miner or any other person
employed at or about a colliery other than in clerical, administrative or
technical work” (Income Tax (Earnings and Pensions) Act 2003
s306(4)).
colón Unit of currency in Costa Rica and El Salvador.
colonial legislature “Mean[s] the authority, other than the Parliament of the United
Kingdom or Her Majesty in Council, competent to make laws for the
possession” (Interpretation Act 1978 Sch 1).
colonial pension Term used in Finance Act 1956 s40 to mean a pension paid by the
government of India, Pakistan, Burma or any British colony,
protectorate, protected state or UK trust territory. Subject to conditions,
the pension was free of income tax. This law was repealed by Finance
Act 1975.
colony “means any part of Her Majesty’s dominions outside the British Islands
except—
(a) countries having fully responsible status within the
Commonwealth;
(b) territories for whose external relations a country other than the
United Kingdom is responsible;
(c) associated states:
and where parts of such dominions are under both a central and a local
legislature, all parts under the central legislature are deemed for the
purposes of this definition to be one colony.” (Interpretation Act 1978
Sch 1).
COLTS Continuously offered longer-term securities.
column Description of amounts which are listed one above the other, such as a
column of figures. They allow such figures to be added easily to give a
total.
columnar system Basic form of cash analysis which uses columns of figures to help
analyse income and spending to produce category totals.
combination General term for whenever two or more businesses come together to
form a group.
Combination Acts Laws passed in 1799 and 1800 to outlaw trade unions.
combine As a noun, a large financial or commercial group.
combined bingo Bingo which is promoted at one place and, for the purpose of a
particular game, combined with bingo played at another place and
promoted by another person. This is so that the players at both places
share in the chance of winning a prize contributed partly by one
promoter and partly by the other. It is also known as Linked Bingo.
It is subject to bingo duty.
Combined Consignment Note and Customs Declaration (CNCD)

A single document which serves as both a Customs declaration and a
consignment note. The CNCD is used for traffic to and from the
Channel Islands.
combined financial statement

Financial statements of two or more businesses expressed as if they
were one business.
For a group of companies, the combined financial statements are
known as consolidated statements.
combined licence Licence issued by Gambling Commission under Gambling Act 2005
s68 in respect of more than one category of licence in ibid s65(2)).
combined ratio In insurance, claims and operating expenses as a percentage of premium

income.
COMECON Council for the Mutual Economic Assistance, a form of economic unit
similar to the European Union but for countries in the Warsaw Pact.
It was formed by the Russian leader Stalin in 1949 as a means of
exercising influence in Yugoslavia. The initial members were Albania,
Bulgaria, Czechoslovakia, Hungary, Poland, Romania and USSR.
Albania was expelled in 1961. Cuba and Vietnam joined in 1972 and
1978 respectively.
COMEX Commodity Exchange Inc of New York.
comfort zone Range of activities and other circumstances where a person feels
comfortable.
comitatus Latin: county
Comit Index Main share index of the Milan Stock Exchange.
commander “In relation to any aircraft, include any person having or taking the
charge or continued command of the aircraft” (Customs and Excise
commencing capital debt

In relation to written-off government investment, means “a debt to a
Minister assumed as such under an enactment” (Corporation Tax Act
2010 s96(3)).
commerce Trade of buying and selling goods or services with a view to profit.
commercial Term which describes activities conducted with a view to making a

profit.
commercial agreement Agreement made between two businesses. In the absence of any
indication to the country, the courts will regard such an agreement as a
contract.
commercial aircraft Aircraft intended to transport goods or passengers for payment.
commercial attaché Diplomat employed to promote the commercial interests of a country.
commercial bank Bank which offers its services to the public, as against a merchant
bank.
commercial bill Bill of exchange issued by a business, as against bills issued by the
Treasury.
commercial borrowing Borrowing funds on terms offered by a commercial lender.
commercial cause In law, causes arising from normal business trading activities.
commercial collection agency

Company which collects debts on behalf of businesses.
commercial credit company

In USA, finance house that lends money to businesses rather than to
individuals.
commercial debt Debt which arises in the course of business.

commercial district Part of a town or other area where the main offices and shops are
located.
commercial interdependence
For corporation tax, a relationship between two companies that makes
them associated companies.
commercial law General term for all aspects of a law which affect business activities.
These particularly include commercial law, company law, employment
law and tax law.
commercial lawyer Person who specialises in law relating to business.
commercial lines Insurance for businesses, professionals, and commercial establishments.
commercial loan Funds lent for the purpose of starting or expanding a business.
commercial loan selling Transaction where by a bank loan to a business customer is sold by the
bank to another bank.
commercial paper A method of borrowing money from commercial institutions such as

banks. It is a form of IOU issued by a company to obtain short-term
funding.
commercial paper Unsecured short-term financial instrument issued by a company. It is

usually less liquid than bonds. Commercial paper is usually issued to
meet a short-term need.
commercial port Port for goods only, and not for passengers.
commercial property Premises used primarily for trading.
commercial report Investigation into a business, such as may be made by a credit reference
agency or investment analyst.
commercial room Room set aside for use by commercial travellers.
commercial substance Economic reality behind a transaction or other arrangement.

This may not be the same as the ostensible reason. There is an
accounting concept known as substance over form which requires the
accounting treatment to follow the substance.
commercial traveller Person who travels extensively to pursue commerce.
commercial value Worth of an item expressed as the price it would expect to fetch if
offered for sale.
commercial woodlands In terms of excluding tax relief for a loan to occupy such woods, the
term means “woodlands in the United Kingdom which are managed on
a commercial basis and with a view to the realisation of profits”
commercial year Adaptation of the calendar year for the purpose of making financial
comparisons. Such methods are no longer widely used.
A commercial year typically recasts the calendar as 12 periods of 30
days each by making pro rata adjustments for months with fewer or
more days.
Commerzbank Index Share index of Germany.
Commissåo de Valores Mobiliaros (CVM)

Brazilian securities commission.
commissary One into whose custody a charged person is committed. The term is
used for other types of officer.
commission Fee paid to someone for acting on their behalf. It is normally calculated
as a percentage of sales proceeds. When paid to employees such as
sales staff, it is taxed as employment income.
commission agent Person who acts on behalf of another in return for a commission, such
as a sales person whose only pay is a percentage of the sales he secures.
commission broker Stockbroker who works for commission.
Commission des Opérations de Bourse

Body that supervises the French stock exchange.
Commissione Nazionale per le Società e la Borsa (CONSOB)

Supervisory body of the Italian stock exchange.
commissioner for oaths Person who is allowed to administer oaths. This includes every solicitor
with a practising certificate.
Commission for Equality and Human Rights (CEHR)

Body formed under Equality Act 2006 from October 2007 to oversee
areas of equal rights and human rights. Its work was previously
undertaken by Commission for Racial Equality, Equal Opportunities
Commission and Disability Rights Commission.
Commission for Equality and Human Rights

Body corporate established by Equality Act 2006 s1.
Its functions are to promote and oversee the principles of equality
and human rights, and the elimination of unlawful discrimination.
Commission for Healthcare Audit and Inspection (CHAI)

Body corporate established under Health and Social Care (Community
Health and Standards) Act 2003 s41.
Commission for Social Care Inspection (CSCI)

Body corporate established under Health and Social Care (Community
Health and Standards) Act 2003 s42.
commission house Firms which buy or sell for clients and charge a commission for this
service.
commission of the peace for England and Wales

Commission established under Courts Act 2003 s7.
commission recapture Service offered to allow investors to recover commission they have
improperly paid or had deducted, particularly for pension plans.
commission rep Sales person, or representative, who sells goods or services for a
business which pays him commission on such sales.
commissionaire Person employed to look after customers at a hotel or similar

establishment.
Typically a commissionaire wears a distinctive uniform and is
situated at the entrance of the hotel. His duties include welcoming
customers, arranging for their luggage to be taken to rooms, advising on
local amenities, hailing taxis and dealing with other matters raised by
customers.
Commissioner for Older People in Wales

Office created under Commissioner for Older People (Wales) Act 2006
s1.
Commissioner for Victims and Witnesses

Person appointed under Domestic Violence, Crime and Victims Act
2004 s58 to promote the interests of victims and witnesses in cases of
violence.
commissioner Title of a senior officer used in various contexts.

Members of the board of HMRC are called commissioners.
Those who hear tax appeals are commissioners.
Most solicitors are commissioners of oaths.
commit The process of giving a firm undertaking to do something, such as to

spend money or to enter a transaction.
The term is most commonly used to describe something which is
more than an intention but less than a contract. It may often seen as a
moral obligation rather than a legal one.
commitment (1) Course of action which a person has agreed to follow.

(2) Loyalty someone feels to a business or a cause.
commitment document Term sometimes used to describe a letter of intent or similar

document. Such a document usually creates a contract.
commitment fee Charge made by a bank for providing a line of credit.
commitments basis Method of recording the expenditure of a public body.

The accounts show the sums the body has agreed to spend, whether
or not payment has been made.
commitments for capital expenditure

Amount a company intends to spend on fixed assets in future years.
UK company law requires companies to disclose this figure in its
annual report.
committal Holding a person in prison temporarily, such as while a full trial is

pending.
committal warrant Court order committing someone to prison.
committed facility Agreement between a bank and a customer to provide funds to a

maximum figure at a specified interest rate, usually expressed as so
many percentage points above LIBOR.
committed for trial “Means—

(a) in relation to England and Wales, committed in custody or on
bail by a magistrates’ court pursuant to section 6 of the Magistrates’
Courts Act 1980, or by any judge or other authority having power to do
so, with a view to trial before a judge and jury;
(b) in relation to Northern Ireland, committed in custody or on bail
by a magistrates’ court pursuant to Article 37 of the Magistrates’ Courts
(Northern Ireland) Order 1981 or by a court, judge, resident magistrate
or other authority having power to do so, with a view to trial on
indictment. (Interpretation Act 1978 Sch 1).
committed funds A portion of a budget that has already been allocated.

The term is used in several different contexts. It can represent the
funds of a donor or grant-making body which it has already allocated.
It can represent the funds of an individual or business which have
been allocated to particular spending and which are therefore not
available for other spending.
committed money Money which is allocated for particular spending.
committee Group of people who are tasked with a function.

The two main types of committee are executive committees which
make decisions, and advisory committees which advise those who do.
committee of reference Body of people to whom the management of an organisation may refer
matters for advice. Typically such a committee is established by a
charity or other voluntary body. Its members are people of eminence
whose inclusion is intended to reassure others with whom the
organisation deals about the integrity of the organisation. It is rare for
anything to be referred to the committee. Also called a council of
reference.
Committee on Accounting Procedure

American body. It is a committee of the AIPCA which defined
accounting principles between 1939 and 1959. Some of these are still
part of the accounting principles used today.
Committee on Uniform Securities Identification Procedures (CUSIP)

UK regulatory organisation that is responsible for allocating a nine-digit
identification number to all securities issued in the UK.
commodities Basic items in large quantities which are traded in a manner similar to
securities.
Commodities include hard commodities, particularly metal such as
copper, lead and tin, and soft commodities, particularly foodstuffs such
as wheat, oats and maize.
commoditisation In marketing, what happens when customers become less concerned

about what make, brand or product they use.
commodity Basic raw material, for which special procedures and markets have been
developed for selling in large quantities.
Commodities are classified as hard or soft. Hard commodities are
mainly metals such as copper, tin, zinc etc.
Soft commodities include cocoa, coffee, cotton, grain, jute, orange
juice, pork bellies and rubber. Soft commodities are sometimes called
produce.
commodity-based Description of a financial obligation relating to a commodity.
commodity broker Broker who deals with commodities, particularly one who acts for a
principal in a futures contract. The rules vary according to the
commodity market.
Commodity Code The code that identifies the description of individual goods or items in
the Customs Tariff.
The full code is either 10 or 14 digits long, but for many purposes
only the first 4 or 8 digits are used. It is also referred to as Combined
Nomenclature (CN) code.
commodity exchange Place where commodities are bought and sold.
Commodity Exchange Inc of New York (COMEX)

Commodity exchange in New York that specialises in futures contracts
for metals.
commodity future Contract to buy or sell a commodity at a future date.

There is a restriction on loss relief for such activities in Corporation
Tax Act 2010 s52.
Commodity Futures Trading Committee (CFTC)

US government body established in 1975 in Washington to oversee
trading in commodity futures.
commodity market Place where commodities may be bought and sold.
commodity or financial futures

In relation to capital gains tax, “means commodity futures or financial
futures which are for the time being dealt in on a recognised futures
exchange” (Taxation of Chargeable Gains Act 1992 s143(2)).
commodity trader Person who buys or sells commodities.
Common Agricultural Policy (CAP)

Policy of European Union to provide a measure of protectionism for
farmers in a free market.
common bond Statement on who may join a credit union.
Common Budget Fund administered by the European Commission into which is paid
levies and duties on imported goods, and from which payments are
made under Common Agricultural Policy.
common carrier Person who offers the services of carrying goods. Such a person is
obliged to accept all requests of carriage within the offered terms.
common cost Cost which applies to two or more cost centres. The management
accountant must determine an equitable basis for apportioning such
cost.
common court investment fund

A fund set up under Administration of Justice Act 1982 s42(1) to
provide benefits to a limited range of beneficiaries, such as child
victims of road accidents.
For most purposes they are treated as an unauthorised unit trust,
except that, from 6 April 1999, they are taxed as an authorised unit
trust.
common deed stamp Old form of stamp duty now abolished. It was charged for such
purposes as the appointment of a trustee or gamekeeper.
common employees One of the factors that can indicate commercial interdependence, and
therefore make two companies associated companies for the purposes
of corporation tax.
common employment Old law that excused an employer from injury suffered by one
employee from another. It was abolished in 1948.
common equipment One of the factors that can indicate commercial interdependence, and
of corporation tax.
Common External Tariff (CET)

The tariff imposed on goods imported into any member state of the
European Union. It is paid into the Common Budget.
Common Financial Statement

Standard form of debt statement agreed by banks and other bodies. Its
use can speed up and simplify debt recovery.
Common Fisheries Policy Fishing policy of the European Union established in 1983, replacing an
agreement of 1971.
commonhold Leasehold where the leaseholders collectively own the common parts.
commonhold assessment Amount which a commonhold association estimates is required to meet

the needs of the association and for which it may serve notices
requiring payment from unit holders (Commonhold and Leasehold
Reform Act 2002 s38).
commonhold association Body of unit holders of commonhold land (Commonhold and

Leasehold Reform Act 2002 s34).
commonhold community statement

Document which makes provisions for a commonhold association
(Commonhold and Leasehold Reform Act 2002 s31).
commonhold land “Land is commonhold land if —

(a) the freehold estate in the land is registered as a freehold estate in
commonhold land,
(b) the land is specified in the memorandum of association of a
commonhold association as the land in relation to which the association
is to exercise functions, and
(c) a commonhold community statement makes provisions for rights
and duties of the commonhold association and unit-holders (whether or
not the statement has come into force).”
(Commonhold and Leasehold Reform Act 2002 s1)
commonhold unit A unit of accommodation on commonhold land (Commonhold and

Leasehold Reform Act 2002 s11(1)).
common law Body of decisions which make up most of the law other than Acts of
Parliament.
The main principle is that judges decided what is equitable in a
particular situation and that became the principle of what must be
followed in all further situations where the circumstances are
sufficiently similar.
English common law was the basis of law in England and Wales,
the USA and many territories formerly part of the British Empire.
common law wife Real wife where the marriage cannot be proved. Note that a common
law wife is not a live-in girlfriend.
common lodging house Place where poor people were allowed to stay for the night (Public
Health Act 1936 s235). The law was repealed in 1985 under current
provisions for the homeless.
common management One of the factors that can indicate commercial interdependence, and
of corporation tax.
Common Market Original name given in 1957 to what became the European Union.
The term refers to its original aim of being a free trade zone and
Customs union, rather than a supranational federation.
common measure Measure of several quantities.
Common Nomenclature (CN)

The European Union system for classifying and defining goods. It is
based on the Harmonised System (HS) and is laid out in the Customs
Tariff.
common ownership Situation where a business is owned by many people, particularly by its
employees.
common parts Parts of rented or leasehold accommodation which is not owned by any
individual tenant. The common parts typically include main entrance,
lobby, halls, stairs and garden.
For commonhold land, this definition is contained in Commonhold
and Leasehold Reform Act 2002 s25(1).
common period Period in which a company both owes tax and is owed tax. During such
a period, interest is only payable or refundable on the net amount.
common premises One of the factors that can indicate commercial interdependence, and
of corporation tax.
common pricing Practice of suppliers agreeing to sell their equivalent goods or services
at the same price to eliminate competition. Such practices constitute a
cartel and are illegal.
common seal Device which a company may use to seal documents. It is no longer a
requirement for a company to have one.
The seal has the company’s name engraved in legible. characters. It
is fitted into a device which makes an impression on the paper. Its
provisions are contained in Companies Act 2006 s45.
A company may have another seal for use in another territory,
provided the name of the territory is added to the seal (ibid s49). It may
have another seal for share certificates, with the word “securities”
added (ibid s50).
common stock (1) The storage or mixture of goods which have been imported under a
relief such as end-use relief or inward processing relief with other
goods that share the same Commodity Code to 8 digits and the same
technical and physical characteristics.
(2) In the USA, the term has a similar meaning to an ordinary share
except that it is denominated in amounts of nominal value rather than
numbers of shares. In the UK, a new company may have 100 shares of
£1 each, and each member owns so many shares. In the USA, a new
company may have commons stock of £100, of which each member
owns so much.
Common Transit (CT) Term used to describe Community Transit movements to, from or via
European Free Trade Association (EFTA) and Visegrad countries.
commons council Body corporate set up under Commons Act 2006 s26 to oversee
common land.
common size statement American term for a financial statement that lists each item as both an
amount and a percentage.
commonweal Common good; welfare that benefits society as a whole.
Commonwealth Term used from 15th century. The word “wealth” is used in its old
meaning of well-being or “weal”. The term is therefore used to mean
some form of political unity.
England was briefly described as a Commonwealth from 1649 to
1660 after Charles I was executed. On restoration of monarchy all laws
during this period were declared invalid.
When the term is used on its own (usually with a capital C) it
generally means what was known as the British Commonwealth. In
2008, this was a voluntary loose federation of 53 states, all but one of
which (Mozambique) had been part of the British Empire. The Queen is
the head of the Commonwealth, in addition to being the head of state
for 15 of its member countries. The total population is about two
billion, one third of the world’s population.
The term is also used for Australia, Dominica, Iceland, Poland and
four states of the USA: Kentucky, Massachusetts, Pennsylvania and
Virginia.
Commonwealth Immigration Act

Law passed in 1962 which ended the automatic right of Commonwealth
or Empire citizens to live in the UK, and restricted entry to a quota.
commorientes Legal doctrine that where two people die in circumstances where it is
unclear who died first, the law assumes that the elder died first (Law of
Property Act 1925 s184). This presumption is rebutted on evidence that
one person lived longer, even for a second, such as when a person
appears to have walked further from a fatal accident.
An extreme example is the first Baron Stamp. He and his son were
killed in an air raid on 16 April 1941. The son, being younger, was
assumed to have succeeded him as the second Baron Stamp for a
notional split second.
From 1 January 1996, the law of intestacy is generally amended so
that a person must survive by 28 days (Law Reform (Succession) Act

1995).
The law of commorientes is generally not followed for the purpose
of inheritance tax under Inheritance Tax Act 1984 s54, for capital
transfer tax under Finance Act1975 s22(9) or estate duty (Finance Act
1958 s29).
The consequence is that there is no second charge on the theoretical
inheritance and death of the beneficiary. Even if there were, it would
qualify for 100% quick succession relief.
In the USA, commorientes is abolished in some states by the
Uniform Simultaneous Death Act. Some American wills achieve a
similar effect by including Titanic clauses (named after the ship).
commune bono Latin: for the common good.
communibus annis Latin: on the annual average.
communication Means by which information is exchanged between people. Many

workplace problems are caused or exacerbated by a lack of
communication.
communication network Patterns or channels by which information is communicated between

people.
communi consensu Latin: by common consent.
communion Christian sacrament. For VAT, wafers, and unfermented communion

wine or grape juice are (by concession) zero-rated as food even though
they are not primarily consumed as nutrition. Ordinary bread is zero-
rated as food. Alcoholic communion wine is standard-rated and subject
to alcoholic liquor duty.
These provisions also apply to unfermented grape juice used at the
Jewish seder or kaddish, provided it is prominently marked in English
“for sacramental use only”.
Further details are set out in VAT notice 701/14.
communis error facit jus Latin: common mistake sometimes makes law.
community amateur sports club (CASC)

A sports club which:
(a) is open to the whole community;
(b) is organised on an amateur basis; and
(c) provides facilities for more than one sport.
A CASC is able to claim tax relief under Finance Act 2002 s58 and
Sch 18. This relief is discussed in the Inspectors’ Manual at BIM24325.
community association Organisation that provides recreational, welfare and similar facilities to
a local area.
The taxation of their profits is discussed in the Inspectors’ Manual
at BIM24320. Those with charitable objectives are discussed in the
community care grant Lump sum discretionary payment from the Social Fund.
community charge A local authority tax introduced in Scotland in 1981 and in England and
Wales in 1982. It was never introduced in Northern Ireland. It replaced
the rates.
The community charge imposed a fixed amount per person, with
rebates of up to 80% for the poorest.
It became known as the poll tax, and proved unpopular. In 1993,
each person’s community charge bill was reduced by £140, paid by
increasing VAT from 15% to 17.5%. Community charge was replaced
by council tax in 1993.
community chest In USA, a fund of voluntary contributions for social and other
beneficial activities in an area.
community council Body elected to look after local interests.
Community Development Finance Association (CDFA)

Body which represents community development finance institutions.
community development finance institution (CDFI)

An independent organisation which invests in disadvantaged areas and
under-served markets in activities which usually cannot attract
financing from the usual sources.
Such bodies attract community investment tax relief of up to 25%
of the sum invested.
Typically these funds are provided as working capital, bridging
loans, grants for property or equipment purchase, start-up capital,
business purchase, marketing campaigns, personal loans, home
improvements and back-to-work loans.
community foundation In the USA, a type of foundation formed by broad-based community

support from multiple sources: trusts, endowments, individual
contributions, private foundations, or corporate grants.
A community foundation generally makes grants only within a
specified geographic area and is governed by a board representing the
community it serves. Some community foundations offer donor-advised
funds to contributors.
Community goods Items which have been imported into the UK and where Customs has
granted a release for free circulation. From 1 January 1993, goods in
free circulation in any EU member state are regarded as being in free
circulation in all EU states.
community interest company (CIC)

Form of company created by Companies (Audit, Investigations and
Community Enterprise) Act 2004 s26.
It is a company limited by guarantee, with limited rights to make
distributions to its members. Its object must to carry on benefits for the
community.
community interest test Test for a community interest company which is satisfied “if a
reasonable person might consider that its activities are being carried on
for the benefit of the community” (Audit, Investigations and
Community Enterprise) Act 2004 s35(2)).
community investment tax relief (CITR)

Relief from income tax given under Income Tax Act 2007 ss333-382
and from corporation tax under Corporation Tax Act 2010 ss218-269.
This comprises investment in enterprises for disadvantaged
communities which must be approved by the government.
The tax relief can be worth 25% of the sum invested.
There is a similar relief from capital gains tax under Taxation of
Chargeable Gains Act 1992 ss151BA-BC.
Community Plant Variety Rights

Plant variety rights administered on an EU-wide basis.
community reinvestment American social obligation that requires banks and some other financial
institutions to meet the credit needs of people who would otherwise not
be customers. The requirement arises from Community Reinvestment
Act 1977.
community society For pool betting duty, “a society established and conducted for
charitable purposes, or mainly for the support of athletic sports or
games and not for private gain” (Customs notice 147).
community tradable emissions allowances

“Transferable allowances which:
(a) relate to the making of emissions of greenhouse gases; and
(b) are allocated as part of a system made for the purpose of
implementing any [European] Community obligation of the United
Kingdom relating to such emissions” (Finance Act 2007 s16(6).
Community transit (CT) Documentary system of controlling the movement of certain goods
across the territory of the European Union (EU) and that of other
signatories to the Transit Convention.
Community transit goods For Customs purposes, goods that pass through the UK.
The long statutory definition is given in Customs and Excise
Management Act 1979 s1(1).
community work Work undertaken for the benefit of a local community.
commutation The giving up of part or the entire pension that would be paid at
retirement in exchange for a lump sum. Applied to any exchange of a
series of payments to which someone is entitled for a lump sum. In the
case of approved pension arrangements the amount that is commutable
is strictly limited.
commutation payment Lump sum payment that replaces a periodical payment, such as when a
single payment is made instead of a salary or pension for a period.
If paid in lieu of salary, wages or other employment income, it is
taxed as employment income under Income Tax (Earnings and
Pensions) Act 2003 s62. If it is not so taxed, it may still be taxable
under s401.
commutation factor Factor used to determine the amount of pension to be given up in
commute Travel regularly to work, particularly between a suburb and a city. Such
travel is not normally allowed as an income tax deduction for
employees as it is not incurred in the performance of the duties of the
employment. The matter is discussed in the Inspectors’ Manual at
BIM37935.
COMP Compensation Sourcebook, produced by Financial Services Authority.
compact disc (CD) In computing, a means of storing data in digital form.

A CD is a thin polycarbonate disc, usually silvery coloured and
120mm in diameter. They first became available in 1982. The
specification was largely agreed by the companies Philips and Sony. At
first CDs were used almost exclusively for music. The first CD issued
was The Visitors by Abba.
The CD became used for computer data from 1985.
A CD is 1.2 mm thick and weighs about 16 grams. A thin layer of
(usually) aluminium is added to the surface to make it reflective. This is
protected with a layer of lacquer.
Data are stored as a series of tiny indentations known as pits in a
spiral track moulded into the polycarbonate layer. The areas between
the pits are known as lands. These are read by a semiconductor laser
allowing the data in binary notation to be displayed in the form of text,
software, pictures, music or other data.
compact farm Farm all of whose land is together. This became the norm with
enclosures in the late 18th century.
Compagnie Française pour l’Assurance du Commerce Exterieur (COFACE)

French equivalent to Export Credit Guarantees Department.
Compagnie Nationale des Commissaires aux Comptes (CNCC)

Body which regulates auditors in France.
companhia Portuguese: company
Companies Act group accounts

Group accounts prepared under Companies Act 2006 rather than under
International Accounting Standards (Companies Act 2006 s404).
Companies Act individual accounts

Accounts of individual companies prepared in accordance with
Companies Act 2006 requirements rather than International Accounting
Standards (Companies Act 2006 s395(1)).
Companies Act Name given to many Acts of Parliament from 1844 for the regulation of
companies.
There was a major consolidation in 1948, amended by Acts of 1967
and 1976.
The next major consolidation was Companies Act 1985 as modified
by the Companies Act 1989.
The current law is Companies Act 2006.
Companies Acts Companies Act and other legislation is in force at a particular time. The
statutory audit requires that the accounts comply with the Companies
Act or Acts (which are usually identified in the audit report).
Currently Companies Act 2006 s2(1) defines this term as meaning:
● Companies Act 2006;
● Companies (Audit, Investigations and Community
Enterprise) Act 2004 Part 2;
● unrepealed provisions of Companies Act 1985; and
● unrepealed provisions of Companies Consolidation
(Consequential Provisions) Act 1985.
companies having a share capital

Includes a company that has power to issue shares (Companies Act
2006 s545)
Companies House Place where companies must file an annual report, submit their annual
accounts and notify certain other changes, such as changes of director.
Apart from an annual fee, most forms are filed at no cost to the
company. Most forms are now filed electronically. Information on
companies is available to the public, usually on payment of a fee.
Companies Registration Office (CRO)

Part of Companies House where new companies are registered.
companion Person who keeps someone else company.

In employment law, someone who is allowed to accompany a
colleague to provide moral support and limited assistance to a grievance
or discipline hearing.
company Organisation which has a separate legal personality from those who
own it, known as members.
It is defined in Companies Act 2006 s1(1) as a body either former
either under that Act or under the legislation it replaces.
“A company is a separate albeit artificial legal person”
(BIM38210).
company apartment American term for company flat.
company auditor Person who audits a company’s accounts as required by Companies Act
2006.
company car Car owned by a company and to which exclusive use is allowed to a
particular employee, and sometimes to his family also. This usually
includes the employee’s personal motoring in addition to business
mileage.
There are special tax provisions for company cars:
● the company cannot claim back any VAT on the car as input
tax;
● the employee must pay income tax on the benefit of being
provided with a car;
● if the employer also pays for the petrol, diesel or other fuel,
that also incurs a tax charge; and
● the employer (but not the employee) must pay class 1A
national insurance on the benefit.
The employee’s charges to tax are avoided if the company rules that
the car may only be used for business purposes and has procedures to
enforce this.
company contract Contract between a company and either a person or a business. Such a
contract is made either by a person acting on behalf of the company, or
by the company in writing under its common seal (Companies Act 2006
s43(1)).
company director Person appointed by the shareholders to manage a company.
company doctor (1) Person who specialises in analysing the problems of an ailing
company and proposing solutions. Such a person may be an employee
or a consultant.
(2) Medical practitioner whose services are retained by a company to
check on employees suspected of malingering or whose health is such
that their employment may not be able to continue.
company flat Apartment owned by a company for occasional use by its directors and
senior managers.
company formation Process of establishing a company. In practice, most companies are

created by buying from a company which specialises in selling them.
company image All factors which present an impression of a trading organisation.

This is seen as a marketing function as it is designed to promote the
overall impression of a business. It covers almost every aspect of the
business such as whether the grass is cut, how staff speak to customers,
and the quality of the notepaper.
In improving or maintaining company image, cost-justification
should not be forgotten. It is difficult to cost-justify spending on works
of art for a boardroom which no customer visits when the company has
a call centre providing a poor service to customers.
company law Branch of law which deals with the administration and oversight of
companies. The main law is Companies Act 2006.
company limited by guarantee

Limited company, usually without shareholders, but whose members
agree to contribute a nominal sum should the company become
insolvent. Such companies are usually non-trading companies, such as
charities or professional bodies.
company limited by shares

Usual form for a limited company, where the liability of its members is
limited to the amount of authorised share capital they have committed
or (rarely) are obliged to commit on uncalled capital.
company model Organisational plan of a company, often expressed in mathematical or

logical terms, which shows how it works. Such a model can often
reveal inefficiencies.
company name Name by which a company is known.

This must be stated when application is made. The name must not
be the same or too similar to one already in use. A name may also not
imply any association with the Crown or government unless such
association exists. A name may not be too similar to one that belonged
to another company owned by the same shareholders and which became
insolvent. It is common to suggest three names in order of preference.
company names adjudicator

Person appointed under Companies Act 2006 s70 to hear appeals that a
company’s name is too similar to an existing name.
company pension scheme Pension scheme for employees arranged by the employer although
administered by independent trustees. Such a scheme is either a final
salary scheme or, more likely now, a money purchase scheme.
company promoter Person who organises the setting up of a new company.
company registrar Person who keeps the share register of the company.
company representative In investment, a financial adviser who can only advise on his own
company’s products.
company seal Another name for common seal.
company secretary Person who is responsible for a company’s legal and financial
functions.
It is no longer a requirement for a private company to have a
company secretary (Companies Act 2006 s270(1)). Its secretarial
functions may be undertaken by a director or person appointed by the
directors.
A public company must have a company secretary (ibid s271). Such
a person must generally be a qualified accountant or lawyer, or have
held the position of company secretary in a public company for at least
three of the previous five years, or satisfy the directors that he otherwise
has sufficient experience for the post (ibid s273)
All companies are required to keep a register of secretaries (ibid

s275).
company share option plan (CSOP)

“Tax-advantaged discretionary share option scheme of which the
employee will become the owner at a future date if specified conditions
are met” (Inspectors’ Manual at BIM 44001).
The law is Income Tax (Earnings and Pensions) Act 2003 Sch 4,
previously Income and Corporation Taxes Act 1988 Sch 9.
company’s purpose The reason for a company’s existence. The Inspectors’ Manual states
“you should establish a company’s purpose by reference to the purpose
of those who are entitled to act for it” (BIM38210).
The matter can be important in determining whether company
expenditure is tax-deductible.
company tax return Form CT600 or equivalent which a company must complete each year
to indicate how much corporation tax is payable.
company vehicle Vehicle made available to an employee who may be subject to a taxable
benefit as a consequence. The definition is given in Income Tax
(Earnings and Pensions) Act 2003 s236(2).
company voluntary arrangement

Arrangement whereby a company is protected from debts while a
scheme is worked out with creditors.
company website Statutory requirements in Companies Act 2006 ss527-531.
company wholly owned by a charity

Tax implications are explained in Corporation Tax Act 2010 s200.
company with investment business

“Any company whose business consists wholly or mainly in the making
of investments” (Income and Corporation Taxes Act 1988 s130).
company’s constitution Term used in Companies Act 2006 s17 to mean the company’s articles
of association and resolutions and agreements to which Chapter 3 of
the Act applies.
company’s final accounting period

Accounting period in which a company is wound up. The term is used
in Income and Corporation Taxes Act 1988 s342 to determine the
company’s tax liability.
comparability Qualitative characteristic expected in financial statements, comparable

within company and between companies.
comparability The extent to which two figures, companies or other items may be
sensibly compared.
This is one of the four qualities of accounting information
required by Statement of Principles. Comparability has two elements:

consistency and disclosure.
comparative balance sheet

One of two balance sheets prepared on different dates using the same
bases and formats, and which allow easy comparison of how the
business’s financial position has changed.
comparative figure figure in annual report giving the equivalent amount for the previous
accounting period.
compassionate leave Absence from work granted by an employer in accordance with either a
contractual right or at the employer’s discretion.
Employees have certain statutory rights to take time off work.
These rights are maternity leave, paternity leave, parental leave and
time off for dependants. Compassionate leave is additional to any of
these statutory rights.
Most employers have a policy of allowing compassionate leave
within reason, particularly if the employee is willing to make up the
hours and the nature of the work allows this.
compensating balance Amount of money a customer is required to keep in a bank account to

qualify for “free” banking.
compensating errors Two or more errors which have the effect of cancelling each other out.
They are still errors which need correction.
compensating goods Goods which are exported having been imported for inward
processing for Customs duty purposes. When the compensating goods
are exported, the duty on the original import is refunded.
If the compensating goods cannot be exported, duty may be
reclaimed for equivalent goods.
compensating products Alternative name for compensating goods.
compensation Payment to someone to make up for a loss they would otherwise suffer.
Someone cannot claim compensation unless the other person is
liable in some way, such as:
● under an insurance policy;
● under a contract; or
● under the law of negligence.
For a business, the taxation of compensation depends on the nature
of the matter being compensated. This is discussed in the Inspectors’
Manual at BIM 42951.
For an employee, compensation is generally not regarded as taxable
income but may be adjusted to reflect taxation under the Gourley
principle.
compensation benefit In relation to public pensions means “so much of any pension,
allowance or gratuity as is provided under the civil service
compensation scheme by way of compensation to or in respect of a
person by reason only of the person’s having suffered loss of office or

employment” (Superannuation Act 1972 s2(3B)).
compensation culture Change in attitude discernable during the 1990s where every accident
gives rise to a claim from someone else rather than being seen as an
accident for which the victim should accept responsibility.
There was no significant law change. The change is one of
perception, exacerbated by heavily advertised companies offering to
pursue the claim.
compensation deal Where a sale includes an element of barter.

This most commonly occurs in international trade where A may pay
for goods from B by providing B with goods. This can be a useful way
of avoiding exchange control restrictions.
compensation for loss of office

Payment made to a person for losing their job, in additional to any
statutory redundancy pay. Such payments are usually made only to
directors and senior managers.
compensation fund Fund, often operated by a regulatory or statutory body, to compensate

customers if a company fails.
Such funds exist for banks, pension funds, stockbrokers and others.
They are usually funded by a levy on the companies.
compensation package Salary, pensions and other benefits offered to an employee.
compensation rate Addition to the amount of a statutory payment which an employer may
recover from the state.
compensation stock When gilts are offered by the government for shares in a company that
it has compulsorily required.
The capital gains tax treatment is set out in Taxation of Chargeable
Gains Act 1992 s134.
Compensatory Interest Interest charged by HMRC when Inward Processing Relief suspension
goods are diverted to Free Circulation.
compete Try against someone else for the same thing.
competence State of being adequate for the task.
competition (1) General term for all other companies providing the same products or
services and therefore competing against business.
This competition is regarded as healthy as it helps ensure that
customers get the best prices and service. There are laws against
monopolies and cartels which restrict such competition.
(2) Event where more people try to obtain something that only one can
have, such as when three companies compete for one order.
competition and credit control

Term used in 1971 by Bank of England when introducing a new system
of regulating banks and controlling credit.
Competition Commission Body formed in 1999 from the merger of Monopolies Commission and
Restrictive Practices Commission, formed in 1948 and 1973
respectively.
It investigates proposed takeovers and allegations of anti-
competitive practices.
competition pricing: Setting a price on the basis of what competitors are charging, rather
than on the costs of supply.
competition wallah Indian civil servant who obtained his appointment under the
competition system introduced in 1856.
competitive advantage Where a business provides a service or benefit which is not provided by
competitors.
competitive compassion Trying to outdo others in expressing compassion.
competitive devaluation Where a country devalues its currency to make its exports more
competitive.
This is now not regarded as a good policy. The policy has, among
other consequences, the effect of making imports more expensive.
competitive equality banking

American law that restricts commercial banks from engaging in certain
non-banking activates under Competitive Equality Banking Act 1987.
competitive pricing Determining pricing according to a policy of what will provide a benefit
against prices charged by competitors.
competitive products Products developed to compete with existing products from other
suppliers.
competitive teardown Stripping down a competitor’s product to examine its components,

materials and manufacture. It is similar to reverse engineering.
competitive (1) Description of a market where two or more businesses are

competing to supply.
(2) Description of a price which represents good value for money
compared with equivalent products from other suppliers.
competitor Business which provides the same goods or services in such a way that
both businesses must compete with each other for business.
competitor analysis Process of understanding and analysing a competitor, with a view of

finding a competitive advantage.
compilation Something which has been produced by bringing other things together,
particularly a book.
complaisant Desirous of pleasing. The word should not be confused with the similar
sounding complacent, which has a different meaning.
complement Go together well; fitting well with.
complementary goods Goods which are used together, so an increase or decrease in demand
leads to an increase or demand in the other.
complete Conclude the formalities, particularly in terms of buying property.
complete and free from material error

In accounting, an expression used in Statement of Principles as a
requirement for financial statements. It is one of the five elements of
reliability, which in turn is one of the four requirements for accounting
information.
Although considered as one requirement, it has two elements. The
former is that nothing should be omitted which could have a material
effect on the accounts. The latter is that what is included should be
presented with reasonable accuracy.
complete annuity Annuity where a portion is payable up to the date of death.
completeness Qualitative characteristic expected in financial statements.
completion Act of finishing a task, particularly in terms of taking possession of an

acquired property.
completion date When a particular task should be concluded.
completion day Date in a completion notice from which council tax or business rates
become payable on a new building.
completion notice Notice served by a local authority on the owner of a building when the
authority either considers the building to be complete or reasonably
expects it to be within three months. Council tax or business rates
become payable from the completion day.
completion risk Inherit risk in limited recourse financing of a project that the project
may not be completed.
complex case For tax tribunals, a case that is expected to be complex, require a long
hearing or involve a large sum (The Tribunal Procedure (First-tier
Tribunal) (Tax Chamber) Rules SI 2009 No 273 rule 23). Such a case
may go straight to the Upper Tribunal.
complex lottery Form of lottery which has two or more stages. In the first stage, a
winner is selected at random as in a simple lottery. There are then
further stages which do not rely on chance (Gambling Act 2005 s14(3)).
complex sale Sale which requires the consent of more than one person on the
customer’s side. Such sales are more difficult as the sales person must
address the concerns of all parties involved.
compliance Agreement to follow a set of requirements, or the processes put in place

to ensure that those requirements are followed.
compliance audit Audit of procedures, such as whether invoices paid can be traced to
despatch notes and orders placed.
compliance burden Cost to an individual or business of complying with a tax law or other
regulatory provision. It is a factor that must be considered when
legislating.
compliance certificate Certificate issued by a company to an investor under Income Tax Act
2007 s204(1) which states that its issue of shares meets the
requirements for EIS relief. The company must have first issued a
compliance statement to HMRC.
compliance cost Expenses of meeting requirements of compliance.
compliance department
Section of an organisation which is responsible for ensuring the
compliance of that organisation.
compliance officer Employee of an organisation who is responsible for ensuring the

compliance of that organisation.
compliance statement Certificate issued by a company to HMRC under Income Tax Act 2007
s205 confirming that an issue of shares meets the requirements for EIS
relief. Such a certificate must be issued before a compliance certificate
is issued to the investor.
component Part of something.
component of total income

An element of an individual’s total income which may be subject to a
specific tax provision (Income Tax Act 2007 s23).
composer An artist, sculptor, composer or other creator of art may average profits
compos mentis Latin: of sound mind.
composite hereditament Premises that are used both as business premises and living
accommodation.
Council tax is payable for the living accommodation, and business
rates on the rest.
composite holding Holding of more than one class of share or debenture of a quoted
company following a reorganisation of the company’s capital.
composite insurance company

Company which offers most forms of insurance and pensions.
composite rate Rate which seeks to average various rates.

The term was particularly applied to the special income tax rate
applied to interest paid on building society accounts between 6 April
1986 and 6 April 1991.
composite resolution Resolution which incorporates several different resolutions which have
the same general effect. These are often seen at the TUC conference.
composition In finance, an arrangement between a debtor and his creditors whereby

the debtor settles his debts by paying only part of them. It is also known
as compounding.
composition of felony Old criminal offence of working with a felon.
composition order Alternative to a final order when a debtor cannot clear his debts within
three years.
compos mentis Latin: of sound mind.
compound (1) Description of repeated addition.

(2) Arrangement whereby a debtor settles with his creditors by paying
only part of what is owed. This is also known as a composition.
compound annual growth rate (CAGR)

The annual growth rate over a period of several years. It takes a
geometric mean over the period. This means that if a company has
shown 20% growth over three years. The CAGR is the cube root of 1.2
is 1.0626, so the CAGR is 6.26%.
compound annual return (CAR)

Total return from an investment, expressed according to a common
formula which makes investments more comparable. It is to
investments what APR is to borrowing.
compound discount Difference between the nominal amount and its present discounted
value. So if £100 in two year’s time is worth £95, the compound
discount is £5.
compounded settlement Offer by HM Customs and Excise not to pursue criminal action in
return for a penalty payment made by the person charged with an
offence.
compounder “Means a person holding a licence as a compounder under section 18

below” (Alcoholic Liquor Duties Act 1979 s4(1)).
compound householder Person who makes one payment for both rent and council tax (or rates).
compounding Arrangement between a debtor and creditors for settling debts other
than by full payment when due.
compound interest Where interest is charged on the principal and on the interest already
applied, as against simple interest where interest is only charged on the
principal.
If interest is charged at 5% on £1,000, the interest rate after year 1 is
£50 under either simple interest or compound interest. For year 2, the
5% is charged on the total of £1,050, so the interest rate is £52.50. So
the total is £1102.50 for compound interest, against £1100 for simple
interest.
As time passes, the effect of compound interest is enormous as can
be shown by how £1,000 grows at 5% a year.
YearsCompound interestSimple interest
1 1050.00 1050.00
2 1102.50 1100.00
3 1157.62 1150.00
4 1215.50 1200.00
5 1276.27 1250.00
10 1628.89 1500.00
20 2653.29 2000.00
30 4321.94 3500.00
40 7039.98 4000.00
50 11,4673.99 4500.00
100 131,501.25 6000.00
To calculate compound interest, it is necessary to use special tables
or, more commonly, a calculator with a key marked xy. On many
calculators this key is obtained by pressing SHIFT and then another key
such as x (multiply).
The interest rate is converted from a percentage by dividing by 100
and adding 1, so 5% is expressed as 1.05. Using this figure for i, the
total amount of principal and interest after n years is in.
compound journal entry Entry in a journal which involves more than one debit and one credit.
compound net annual rate (CNAR)

The same as compound annual rate, but making clear that a net
interest rate is being used.
compound quantity In algebra, quantity containing more than one term, as in:
x+y
compound settlement Where land is settled by more than one deed.
compra Portuguese: purchase.
comprehension Ability of the mind to understand.
comprehensive income Total income from all sources, including capital gains.
In the UK, comprehensive income is shown in the statement of total
recognised gains and losses. In the USA, this figure must be declared
by businesses.
comprehensive income tax

Proposed tax on all income, with few if any exceptions, and no
distinction between income and capital gains. It has the advantage of
simplicity and avoiding marginal distinctions.
comprehensive insurance Insurance policy which covers all risks (with a few exceptions). The
term is particularly used for motor insurance.
COMPS Contracted-out money purchase scheme, a form of occupational

pension scheme.
COMPS service “Service in employment in respect of which minimum payments are

made to a money purchase contracted-out scheme” (Social Security
Comptometer Trade name for an old type of accounting machine.
comptroller Old title sometimes used for a financial controller, although it has the
same meaning. The term is commoner in the USA than UK.
Comptroller and Auditor General

Head of the National Audit Office who reports to the UK parliament on
the audit of government departments.
The terms “means the Comptroller-General of the receipt and issue
of Her Majesty’s Exchequer and Auditor-General of Public Accounts
appointed in pursuance of the Exchequer and Audit Departments Act
1866” (Interpretation Act 1978 Sch 1).
The position is now governed by Budget Responsibility and
National Audit Act s11.
Comptroller of the Currency

In USA, Treasury Department official who is responsible for looking
after the banking system.
compulsory acquisition Acquisition of shares from unwilling sellers, usually in the final stages
of a takeover bid.
compulsory annuity The UK legal requirement that at least 75% of a pension fund must be
used to acquire an annuity, and which therefore limits the payment of a
lump sum to 25% of the fund.
compulsory deregistration
When a business is obliged to have its VAT registration cancelled. This
must happen in various circumstances, such as ceasing to make taxable
supplies.
compulsory liquidation Liquidation of a company ordered by the court.
compulsory maternity leave

A period of two weeks after the birth of a child when a woman is not
allowed to return to work (Employment Rights Act 1996 s72).
This period is extended to four weeks if she works in a factory.
Compulsory maternity leave forms part of ordinary maternity leave.
compulsory purchase An annuity bought with the fund built up in a personal pension scheme
annuity.
compulsory purchase annuity

Some approved occupational pension schemes produce a benefit at
retirement that is expressed in cash terms rather than pension. The cash
sum produced must then be used to purchase an annuity known as a
'Compulsory Purchase Annuity' (but see Commutation).
compulsory recognition For trade unions, recognition which is awarded by the Central
Arbitration Committee after following the procedure in Trade Union
and Labour Relations (Consolidation) Act 1992 Sch A1.
compulsory registration When the law requires a person or business to register, particularly the
requirement for businesses of sufficient size to register for VAT.
compulsory severance In relation to public pensions, means “the consequence of dismissal...”

(Superannuation Act 2010 s3(6)(a)).
compulsory winding up Winding up of a company which is ordered by the court.
compurgation Old legal term for clearing an accused person by witnesses joining their
oaths to his.
computable Description of something which may be calculated.
computation Calculation.
Sometimes a distinction is made that a computation involves the
application of rules, as in calculating the amount of tax due, whereas a
calculation is simply the performing of mathematical functions.
computational error Mistake which arises from a calculation rather than from the original
figures.
computational provisions Those parts of tax law which state how tax is to be calculated.
computer Machine for calculating and processing data.
computer application A computer program with a graphic user interface (GUI).
computer-assisted trading (CAT)

Use of computers to make decisions about buying and selling according
to how the markets move.
computer bureau Business which provides computer services. This includes processing
data, usually with some related clerical services.
computer department Part of an organisation which is responsible for managing the

computers. These departments are now more commonly called IT
departments.
computer file Collection of similar data held on a computer, such as a list of

customers or a collection of letters.
computer hardware The machinery of a computer as against the software.

Computer hardware typically comprises a central processing unit
with input devices and output devices. Input devices may include a
keyboard, mouse, scratch pad, scanner and card reader. Output devices
may include a printer and screen. In addition, the computer may have
disk drives which can be both input and output devices.
computerisation Process of putting manual records on to a computer system.
computerise Transfer records to a computer, such as when an accounting function is

no longer performed using manuscript accounts.
computer listing Print of a list from a computer.
computer manager Person in an organisation responsible for oversight of the computers.
computer network Arrangement whereby more than one computer can access the same
data.
conacre Grazing licence in Northern Ireland.
concealment Deliberate hiding.

In accounting, this may refer to items which are deliberately hidden
from the auditor or tax authorities.
The term is also used for assets which are hidden from a liquidator
or credit. This is also known as squirrelling.
For money laundering, this is a specific offence under Proceeds of
Crime Act 2002 s327.
concealment case Case brought by a woman for equal pay where the employer has
concealed relevant information from the woman (Equal Pay Act 1970
s2ZA(2)).
concealment device Something which appears to be an ordinary item but which is designed
to conceal an item.
Such items have been primarily devised for espionage. The British
government had a department MI 9 producing such items during the
second world war. They have occasionally been used as a form of safe,
such as disguising a wall drawer to look like a power point.
concentration (1) Ability to think exclusively on a subject for a period.

(2) Extent to which a business has a significant market share.
concentric merger Joining together of two businesses, primarily to share their expertise.
concept Idea or principle.

In accounting, it is a general term for the principles and similar on
which accounting is based.
concept testing Testing the idea of a new product or service with a target audience
before making it generally available.
conceptual framework A statement of principles providing generally accepted guidance for the
development of new reporting practices and for challenging and
evaluating the existing practices.
concern (1) General term for any type of business or organisation.

(2) Expression that something may not be right. It is usually the first
stage to investigation. Expressing a concern is not a statement that the
person believes something is wrong.
concert party Group of people acting together, such as in acquiring shares with a view
to mounting a takeover bid.
concert party agreement Secret agreement between members of a concert party.
concertina order Sequence of orders obtained together in an IVA.
concession (1) Right to use someone else’s property, such as a retailer who is
allowed to operate in a large store.
(2) Exclusive right to sell a particular product, perhaps subject to
conditions, such as in a defined area or to a defined category of
customers.
(3) Yielding a point, and not proceeding with enforcing a right. It is the
first of the three Cs in dispute resolution.
concessionaire Person or business which has a concession, namely the exclusive rights
to sell particular goods in a particular place.
concessionary fare Fare which is reduced for a particular category of person, such as
children and the elderly.
concierge Warden, janitor, porter.
conciliar Pertaining to a council, particularly an ecclesiastical council.
Conciliation Board Body formed in 1893 to mediate in industrial disputes. They were
largely ignored, as employers established their own forums. Today the
work is done by ACAS.
conciliation officer A person designated under Trade Union and Labour Relations
(Consolidation) Act 1992 s221 to assist in resolving workplace issues.
conciliation Process of dispute resolution. It is the second of the three Cs.

Conciliation usually involves either mediation or arbitration,
using starting with the former.
COND Part of the FSA handbook in the section of High Level Standards that
deals with Threshold Conditions.
condition Element of a contract.

A condition is a provision in a contract which must be carried out as
part of the contract.
conditional access Computer technology which is designed to prevent unauthorised users

for viewing material which requires a payment.
conditional bid Term used particularly in takeovers. The offer price of the shares to be
bought is on condition that sufficient shares are offered to acquire a
controlling interest. If insufficient shares are offered, the bid fails.
conditional caution Caution given by the police to someone over 18 who admits a criminal
offence for which a trial is considered inappropriate, where the caution
has conditions which the person must obey (Criminal Justice Act 2003
s22).
conditional indorsement When a bill of exchange has been indorsed subject to a condition. The
condition may be ignored (Bills of Exchange Act 1882 s33).
conditionality In international finance, principle under which the International

Monetary Fund supports member states if the state takes appropriate
action to deal with the cause of the economic problem which prompted
the request for the loan.
conditionality threshold Minimum requirement regarding earnings and hours to qualify for
universal credit.
conditionally exempt transfer

Transfer of property that appears to be pre-eminent for its national,
scientific, historic or artistic interest (Inheritance Tax Act 1984 s31).
The Treasury must be satisfied that this condition is met. Such a
transfer is exempt from inheritance tax.
Note that this provision is completely different from potentially
exempt transfers.
Also note that there is a separate scheme for accepting works of art
and similar in payment of inheritance tax.
conditional order In investment, an order to a broker to be followed only if a condition is

met, such as a share being bought for no more than £2 each.
conditional sale Sale which is subject to conditions.

The most common example is a sale of goods where the price is
payable in instalments, such as a hire purchase agreement. The goods
remain the property of the seller until the full price is paid or the
customer meets another condition.
conditional sale agreement

Sale under which payment is made by instalments to a finance company
which pays the supplier. If the finance company refuses to lend the
money, the sale fails.
conditional share award “An award of a number of shares of which the employee will become
the owner at a future date if specified conditions are met”
(Inspectors’ Manual at BIM 44001).
conditioned fear In psychology, process of learning by which people, babies and even
animals can be taught behaviour in learning that certain conduct will
avoid pain or discomfort.
condition for door supervision

Condition that may be attached to any of the various types of premises
licence for gambling (Gambling Act 2005 s178).
conditions of employment
Provisions in a contract of employment which regulate that
employment.
Such provisions are only legal to the extent that they comply with
company law, do not contravene the Unfair Contract Terms Act ??? and
are not contrary to public policy.
The conditions must be agreed by the employee in advance. They
may be contained in the contract itself or otherwise made known to the
employee such as in a separate book or on a notice board.
conditions of sale Provisions in a contract for sale, where such provisions regulate that
sale.
conduit case Tax avoidance arrangement where money is paid out soon after being
paid in. An example is Herman v IRC [2007] STC 571.
confectionery For VAT, confectionery is generally standard-rated as it is explicitly

excluded from the scope of zero-rated food. The exact scope is set out
in VAT notice 701/14.
Confederation of Asian and Pacific Accountants (CAPA)

Large body of accountants based in Asia and Pacific Rim countries.
Confederation of British Industry (CBI)

Body formed in 1965 from the amalgamation of several older bodies. It
represents the views of employers in national dealings, such as with

government.
confidential Description of information received subject to conditions about

disclosure.
In law, a document or information is only confidential if:
● it was received confidentially, that is the person who was
told the information accepted that he did so confidentially;
● the information has the nature of confidentiality, which
means that it has some sensitivity which prevents its disclosure; and
● the document or information is not already in the public
domain or otherwise known to the recipient.
Confidentiality is different from privacy and secrecy, where
separate conditions apply.
HMRC keep taxpayer details confidential until a matter is heard in a
tribunal or court.
confidential report Report where the right to read is restricted.
confidentiality An agreement between two parties that information is provided subject

to restrictions imposed by the provider.
confidentiality clause Clause in a legal agreement that neither party will disclose certain
details to any third party. Such clauses are commonly found in contracts
of employment and agreements to settle a dispute.
confidentiality hallmark Condition agreed between a promoter of tax avoidance schemes and
the tax authorities that the promoter will not disclose details of the
scheme to any third party. Normal professional advice is not included.
confined In relation to statutory maternity pay, “is to be construed accordingly

[to definition of confinement], and where a woman’s labour begun on
one day results in the issue of a child on another day she shall be taken
to be confined on the day of the issue or, if labour results in the issue of
twins or a greater number of children, she shall be taken to be confined
on the day of the issue of the last of them” (Social Security
Contributions and Benefits Act 1992 s171(1)).
confinement (1) Restriction, such as imprisonment.

(2) Time of childbirth. This term is used in some regulations about
statutory maternity pay.
For this purpose, confinement “means —
(a) labour resulting in the issue of a living child, or
(b) labour after 24 weeks of pregnancy resulting in the issue of
a child whether alive or dead” (Social Security Contributions and
Benefits Act 1992 s171(1)). See also confined.
confirmation (1) Statement which accepts the truth of a statement already made. An
example is a written order confirming a purchase already made by
telephone.
(2) In Scotland, a court order confirming the validity of a will and the
identity of executors. It is the equivalent of probate under English law.

(3) A church service where a person assents to their baptism as a child.
Under canon law B27(6), a person may legally change their Christian
name or names at this service.
confirmation code In computing, a code sent to a customer’s e-mail address.

This term is particularly used for the code which indicates that a
person will communicate with HMRC at that e-mail address.
confirmation of acceptance of studies

Form of certificate of sponsorship given to overseas students.
confirmatory resolution Resolution of the House of Commons on a motion from the Chancellor
of the Exchequer for the renewal of a tax (Provisional Collection of
Taxes Act 1968 s5(3)).
confirmatory value In accounting, ability of a user of accounts to confirm or correct their

previous evaluation or assessment of an entity.
With predictive value this is one of the two elements that comprise
relevance. This, in turn, is one of the four qualities of accounting
information required by Statement of Principles.
confiscation Remove someone’s property as a punishment.
confiscation order Order made to confiscate property and wealth which has been acquired
by crime (Proceeds of Crime Act 2002 s6).
confiscation risk Risk that assets may be confiscated by a foreign power.
confiscatory taxation Taxation at such a high rate, it is equivalent to confiscation of property.

An example was the 98% rate of income tax that applied to
investment income between 1975 and 1979.
conflict management Management of disputes in the workplace. Procedures usually try to

avoid resolving the underlying disputes, but instead find ways for
workers to work together despite the disputes.
conflict of interest When a person who has roles in two organisations finds that those
interests conflict.
A director of a company must avoid such conflicts (Companies Act
2006 s175).
conforming loan US term for a mortgage which conforms to GSE (government-

sponsored enterprise) guidelines. The main providers of such loans
were provided by Fannie Mae and Freddie Mac working together.
confounding variable In statistics, a feature that is not controlled but could affect an outcome.
congestion charge Charge imposed on road users in an area with a view to reducing traffic
in that area.
It widely refers to a scheme introduced in central London on 17
February 2003 operated by Transport for London. It applies to travel

between 7am and 6pm on working days. A western extension was
added on 19 February 2007 and removed on 4 January 2011.
The system requires no prepaid tickets or toll booths. Cameras read
number plates of vehicles. There is a standard charge that is reduced for
prepayment or for registered fleet vehicles. It is increased for payment
the following day. A penalty rate is applied when no payment has been
made. In 2011, the standard rate was £10.
Some vehicles are exempt. These include taxis, motorcycles,
emergency vehicles, alternative fuel vehicles and small three-wheelers.
Residents in the zone receive a 90% reduction.
Transport for London claims that the charge is a toll and not a tax.
The significance is that embassies are exempt from taxes but not from
tolls.
For tax purposes, the charge is regarded as a travel expense and is
therefore deductible if the travel is business travel rather than
commuting.
If an employee is provided with a company car and the employer
pays the congestion charge, the employee is not regarded as having
received any further taxable benefit. The value of having the congestion
charge paid is in effect covered by the car benefit charge.
conglomerate Group of businesses. In particular the term is used to indicate a group

of companies where the subsidiaries make very different products.
conglomerate discount Difference between the separate values of the businesses which make
up the conglomerate and the lower price at which the conglomerate
trades.
conglomerate merger Merger between two firms purely for creating a bigger entity,
particularly when there is no commonality in expertise or product
range.
conjoined arrestment One of three types of arrestment of earnings orders which may be
made by a Scottish court. It is a combination of the other two, the
earnings arrestment and current maintenance assessment. Each of
these two elements is collected under its own rules.
Con LR Construction Law Reports, reports of court cases published from 1985.
connected brewery Brewery that has a trade connection with another.

Such a connection can disallow entitlement to the lower rate of beer
duty for small brewery beer (Customs notice 226).
connected person Person with whom another person has a close relationship. This is
usually either a family relationship (eg wife, brother) or a business
relationship (employer or fellow director).
Many provisions of law and tax have specific provisions relating to
connected persons. Company law, for example, requires disclosure of
any dealings with a connected person.
consensus ad idem Latin: agreement to the same thing.

This is one of the elements of a contract under English law.
consensus facit legem Latin: custom makes the law.
consensus pro lege servatur

Latin: custom is held as law.
consent order Order given by a court or tribunal to which both parties have agreed.
For tax tribunals, the procedure is given in The Tribunal Procedure
consequential loss A financial loss occurring as the result of some other loss. Also known
as an indirect loss.
The loss of the building, stock etc is a direct loss. The loss of a
building destroyed by fire is a direct loss. The loss of profit because of
the inability to continue trading is a consequential loss.
It is possible to insure against consequential loss.
consequential loss policy Insurance policy which pays for losses sustained when a business is
Such policies are also known as loss of profits policy or business
interruption policy.
conservatism See prudence. Sometimes used with a stronger meaning of

understating assets and overstating liabilities.
consider Give serious thought to.

There are some provisions of law and accounting practice which
require a matter to be considered. This means that the business or
person must be able to show that a matter was properly considered.
consideration A benefit provided or a detriment suffered in return for a consideration

from the other party.
For a contract to be valid under English law, either each party must
provide a consideration or the contract must be under seal.
Consideration must be real but need not be adequate. A gift is not
usually a contract but a sale for a nominal sum is.
Consideration must not be past. Although it is legal to agree to pay
someone for what they have already done, that does not create a
contract.
In most contracts, the considerations are that one person provides
goods or services and the other person pays money. However, that is
not a legal requirement. Barter transactions are contracts, as are
agreements to settle disputes.
An agreement with a tax authority may create a contract.
A legal definition is “a valuable consideration, in the sense of the
law, may consist either in some right, interest, profit, or benefit

accruing to the other party, or some forbearance, detriment, loss, or
responsibility given, suffered or undertaken by the other” (Currie v
Misa [1875]).
consignation Act of consigning goods.
consignee Person to whom goods are consigned.

For Customs purposes, the consignee is the person to whom duty
suspended goods are consigned and who accounts for those goods in the
Member State of destination. This may be: a warehousekeeper who is
approved to store the goods in duty suspension; a registered trader who
accounts for duty on arrival or a non-registered trader who must have
accounted for the duty to his fiscal authority before the goods are
despatched.
consignment accounts Financial records which record goods sent and received.
Such accounts are now rarely kept, as these functions are
administered through the normal ledgers and stock control.
consignment note Document stating that documents have been sent.
consignment record The record of an import or export consignment held on a computer

inventory system.
consignment stock When stock belonging to one person is stored on the premises of
another (a dealer) who is allowed to sell it in the normal course of
business, and who returns any unsold items to his supplier, usually the
manufacturer. Such arrangements are widely used by car manufacturers.
The main element of consignment stock is that legal title does not
pass to the dealer until a specific transaction takes place. The
commonest is selling the stock to a customer, but other examples can
include taking the item for the dealer’s use.
The accounting treatment is explained in Appendix A to FRS 5.
Broadly this involves identifying the nature of the arrangement between
dealer and supplier, particularly in regard to commercial risk. If this
leads to the view that the consignment stock represents the dealer’s
stock, that is how it is accounted under the substance over form
accounting concept.
For VAT, consignment stock is regarded as a supply even though
the goods have not moved from the supplier’s premises. However such
stock is not normally regarded as an export or removal to an EU state
until the goods have left the UK.
consignment Goods sent to someone.
consignor For Customs purposes, the authorised person from whose premises
goods are dispatched in duty suspension.
consignor Person who sends goods.
consistency One of the two elements of comparability (the other is disclosure),

which in turn is one of the four qualities of accounting information
required by Statement of Principles. The consistency concept is also a
fundamental accounting principle.
Consistency requires that businesses adopt the same accounting
policies from one period to the next.
consistency concept Fundamental accounting principle that the same accounting policies
are used each year unless there is a good reason to change and that is
stated in the accounts.
consistory court Church court.

In England, they still exist in the Church of England, but are now
limited to dealing with accusations against clergy and applications to
modify church buildings.
CONSOB Commissione Nazionale per le Società e la Borsa, supervisory body

of the Italian stock exchange.
consolidate Put together to make one, particularly when the accounts of a holding
company and its subsidiaries are consolidated as group accounts or
consolidated accounts.
The process involves adding together the accounts of all companies
after deleting transactions between them. So if A had £100,000 of sales
including £1,000 to B; and B had £50,000 of sales including £2,000 to
A, their consolidated figure for sales would be £147,000 comprising
their combined sales less the sales to each other.
consolidated accounts Accounts for a group of companies prepared as if they were one
company.
consolidated annuities Government securities that pay interest but have no redemption date.
They are commonly known as consols.
consolidated balance sheet

Balance sheet of a group of companies prepared as if they were one
company.
consolidated cashflow statement

Cashflow statement for a group of companies prepared as if they were
one company.
consolidated financial statements

”The financial statements of a group prepared by consolidation” (FRS 2
para 4).
consolidated fund Money held by the government in its Exchequer Fund. It comprises
receipts from taxation and is used to pay for government spending. The
Fund started in 1787.
Consolidated Fund Act Law which is passed each year detailing application of public funds for
spending.
consolidated income statement

Income statement for a group of companies prepared as if they were
one company.
consolidated profit and loss account

Profit and loss account for a group of companies prepared as if they
were one company.
Consolidated Quotation Service (CQS)

Service provided by NASDAQ offering details on all securities listed
on the New York Stock Exchange and a selection of other securities.
consolidated shipment When goods from different suppliers are shipped together.
consolidation Process of putting things together to make one.

In shipping, it is a procedure whereby a number of small
consignments are loaded together to form a single, larger consignment.
This must be carried out as part of a contract to transport the goods.
In accounting, it is the process whereby you consolidate the
accounts of a group of companies and present them as if they were one
company.
In company law, the term means reducing the number of shares by
issuing one new share for a number of old shares, such as issuing one
share with a nominal value of £1 for ten shares with a nominal value of
10p. The law is in Companies Act 2006 s618. The opposite process is
called sub-division.
consolidation act Act of Parliament that consolidates older Acts into a more coherent and
logical order. Most current taxes are consolidations.
consolidation adjustments
Accounting adjustments made to the financial statements of companies
in a group before consolidating them.
The adjustments include removing intra-group transactions and
adjustments necessary for the accounts to be on the same basis.
consolidation cargo Another term for groupage. This is when freight from more than one
supplier is put together as a single consignment to another country.
There are implications for Customs and VAT records.
consolidation difference The amount by which the price paid to acquire a subsidiary differs from
the assets and liabilities acquired.
consolidation loan Loan made to pay off other loans.
consolidation of mortgages
The right of a mortgagee (lender) to require a mortgagor (borrower) to
redeem all mortgages held between them if the mortgagor wishes to

redeem any mortgage (Law of Property Act 1925 s93).
consolidation of shares When shares of a very low value are replaced by fewer shares of higher
value. Such as when 1p shares are replaced by 25p shares.
consolidation order Order of a court that combines separate legal actions, so that the
decision is binding on all parties.
consols Government bonds which pay interest but have no maturity date. The
term is an abbreviation for consolidated annuities.
consort Partner or companion.
consortium claim Claim for consortium tax relief under Income and Corporation Taxes
Act 1988 s402(3)).
consortium company “In relation to a link company, means a company which is a member
of the group of which the link company is also a member but is not
itself a member of the consortium of which the link company is a
member” (Income and Corporation Taxes Act 1988 s406(1)).
consortium conditions Conditions that must be met to claim corporation tax loss relief in a
consortium. The three conditions are given in Corporation Tax Act
2010 ss132-133.
consortium relief Relief from corporation tax when a consortium makes a loss. Broadly,
the loss is claimed by each consortium owner in the same ratio as their
holding.
conspiracy theory Idea that events are all part of an organised plot.
In reality, most supposed plots are fanciful interpretations on
random events. Human nature is too unpredictable for all but the
simplest of conspiracies to be reliable. Simple and obvious explanations
are usually the correct ones.
Once a conspiracy has been established in a workplace they can be
very difficult to shift as every subsequent event can be made to fit the
conspiracy. For example, if a workforce believes there is a conspiracy
to make them redundant, a boss not saying good morning can be seen as
hiding his embarrassment. A boss who says good morning can be seen
as covering up.
constant In mathematics, a number which does not change.

In the formula:
y = 2x + 7
only the number 7 is a constant, as the other two numbers change
according to the value of x.
constant currency Currency value where fluctuations have been removed. This figure is
often used to quantify sales and profit.
constant-dollar plan American term for pound cost averaging.
constant exchange rate Adjustment made to accounts to strip out day-to-day fluctuations in
exchange rates in sales and profit figures.
constantia et virtute Latin: by constancy and virtue.
constant purchasing power

Another term meaning current purchasing power.
constat Latin: it appears.
constituent wines Two or more wines which are blended to make a saleable alcoholic
drink. Alcoholic liquor duty is charged in accordance with Alcoholic
Liquor Duties Act 1979 s54(3A).
constitutional documents Documents that a member of a company has a right to receive on

request from the company (Companies Act 2006 s32).
The constitutional documents are:
● up-to-date copy of articles of association;
● any resolution relating to the company’s constitution;
● court orders about the constitution;
● certificate of incorporation;
● current state of share capital (or guarantee for a company
limited by guarantee).
constitutional monarchy Form of monarchy, where the monarch’s position is largely one of
prestige and influence, and the government of the country is left to an
elected parliament, as in the UK.
constrained discretion “A principle which applies to the situation in which policymakers have
some freedom (discretion) to vary policy instruments, such as taxes or
interest rates, but within well-defined limits (constraints). A well-
designed policy framework gives policymakers sufficient freedom to
respond flexibly to shocks and sufficient constraints to ensure that they
do not exercise their discretion in a way that could undermine the long-
term stability of the economy.” (HM Treasury Guidance).
constraint Restriction which prevents a person doing something. The restriction is

usually a limit on resources, such as having insufficient funds, labour,
space or time. A constraint can be created in other ways, such as by law
or practical considerations.
In management accounting, a constraint is used in opportunity
costing. The alternatives are considered according to which activity
fully uses the constrained resource. The desired outcome (usually gross
profit) is considered for each alternative to choose that which achieves
the best result, such as the largest gross profit. The opportunity cost is
the cost of the second best alternative which has been foregone.
In decision-making, a constraint is that which restricts the ability to
maximise an objective. For example, health and safety is usually a
constraint.
Construction Industry Scheme (CIS)

System of collecting provisional amounts of income tax from self-
employed subcontractors in the building trade.
construction For VAT purposes, new construction may be zero-rated under Group 5.
However, the VAT provisions are very complex so advice should
usually be sought.
constructive dismissal When an employee resigns because it is unreasonable to continue

working. This is treated as a dismissal. This provision prevents an
employer avoiding a claim for wrongful dismissal or unfair dismissal
by not dismissing the employee but just making life so unpleasant that
the employee is forced to resign.
constructive notice When someone is made aware of a matter which legally requires them
to investigate.
constructive removal Early payment of excise duty so that goods move from being duty
suspended to duty paid.
This is sometimes used by brewers for commercial reasons. It is
explained in various Customs leaflets, such as 226 for beer.
constructive trust Trust created by a court.
consuetudo est altera lex Latin: a custom has the force of law.
consuetudo est optimus interpres legum

Latin: custom is the best interpreter of the laws.
consul “Means a person recognised by Her Majesty as being a consul-general,

consul, vice-consul or consular agent” (Income Tax (Earnings and
Foreign consuls in the UK are exempt from UK income tax.
consular employee “Includes any person employed for the purposes of the official business
of a consular officer at —
(a) any consulate,
(b) any consular establishment, or
(c) any other premises used for those purposes”
consular officer “Has the meaning assigned by Article 1 of the Vienna Convention set
out in Schedule 1 to the Consular Relations Act 1968” (Interpretation
Act 1978 Sch 1).
consultation HMRC and HM Treasury published their policy in the document Tax
Consultation Framework in March 2011.
Consultative Committee of Accountancy Bodies (CCAB)

Body established in 1974 to co-ordinate matters of common interest
between the main accounting bodies.
consulting actuary Independent actuary who advises large pension funds.
consumable goods (1) Goods which are used in the daily activities of a person or business,
such as food, detergent and paper.
(2) Another name for consumer goods.
consumables Overhead expense of goods that are consumed through use, such as
stationery, light bulbs and cleaning materials.
consumer A person who makes a transaction other than in the course of business.
See dealing as consumer.
Consumers have additional rights in contract to those enjoyed by
businesses. These relate to cooling-off periods, unfair contract terms
and unsatisfactory goods.
“A person who purchases, uses or receives, in Great Britain, goods
or services which are supplied in the course of a business by the person
supplying them, or a person who uses or receives relevant postal
services in Northern Ireland” (Consumers, Estate Agents and Redress
Act 2007 s3(2)). “Consumer includes both an existing consumer and a
future consumer (ibid s3(3)).
Consumer Advisory Council

American body which represents consumer interests in a similar manner
to the UK’s Consumers’ Association.
Consumer Council for Postal Services

Body established to oversee postal services, and commonly known as
Postwatch. It is abolished by Consumers, Estate Agents and Redress
Act 2007 s30 and replaced by the National Consumer Council.
Consumer Council for Water

Body corporate established by Water Industry Act 1991 s27A as
inserted by Water Act 2003 s35.
consumer credit Financial facilities provided by banks, finance companies, retailers and
others to enable consumers to buy goods which they may not be able to
afford to buy directly.
Such arrangements are strictly regulated by Consumer Credit Act
1974.
Consumer Credit Act 1974

Major piece of consumer legislation which radically changed the
provision of credit facilities to consumers. It does not apply to business
loans, nor to overdrafts.
The main new provisions of the Act are:
● requirement that all credit agreements must be in writing;
● requirement that the interest rate must be clearly stated, and
calculated as the APR;

● a cooling-off period during which the borrower may change
his mind without penalty; and
● making the lender liable for any failure to provide the goods
for which the credit was obtained.
Consumer Credit Appeals Tribunal

Tribunal established under Consumer Credit Act 1974 s40A to hear
appeals against consumer credit agreements.
consumer credit business

“Any business carried on by a person so far as it comprises or relates to:
(a) the provision of credit by him, or
(b) otherwise his being a creditor,
under regulated consumer credit agreements” (Consumer Credit Act
1974 s189(1)).
Consumer Credit Protection Act 1969

American law, whose functions are broadly similar to the UK’s
Consumer Credit Act 1974.
consumer-credit register Register kept by the Director-General of Fair Trading under Consumer
Credit Act 1974. It lists all those who all licensed to carry on a
consumer credit business.
consumer goods Goods bought by individuals for their personal use and not for business
use. Examples include food and clothing.
consumer hire business “Any business carried on by a person so far as it comprises or relates to:
(a) the bailment or (in Scotland) the hiring of goods by him, or
(b) otherwise his being an owner,
under regulated consumer hire agreements.” (Consumer Credit Act
1974 s189(1)).
consumer instalment loan

American term for hire purchase.
consumerism Economic state which is driven by consumer spending.

The UK is generally regarded as having finally moved from post-
war austerity to consumerism around 1954 when rationing ended.
consumer magazines Marketing term for a publication aimed at the general public covering a
broad range of topics.
consumer matters “The interests of consumers and any matter connected with those
interests” (Consumers, Estate Agents and Redress Act 2007 s3(5)).
consumer panel Group of consumers who report on products to provide information to

manufacturers and suppliers.
Consumer Panel Panel established by the Legal Services Board under Legal Services
Act 2007 s8 to represent the interests of consumers.
Consumer Price Index (CPI)

Measure of inflation.
consumer protection Laws, regulations and activity designed to protect consumers against
unscrupulous traders.
consumer research Marketing term for studies into why customers are likely or not likely
to buy a particular product.
consumers Persons who user services or have rights or interests in them (Legal
Services Act 2007 s207(1)).
Consumers’ Association (CA)

Charitable organisation established in 1957 to champion the causes of
the consumer. This includes testing products and services, and
publishing the result in the magazine Which?
consumer spending Spending by individuals in their capacity as against spending by

businesses.
consummate As an adjective, the term means the best, not just someone who is good.
consummation In marriage, sexual relations between the parties.

A marriage without consummation can be annulled, which means
that it is legally regarded as never having existed.
There is no duty of consummation in a civil partnership.
consumption tax Tax charged on the use of an item. Such taxes are usually levied to
reduce demand.
consumption Spending money or otherwise using up the value of a current asset.
Contact Committee Advisory body established by the European Union to oversee the
application of European accounting directives and to make
recommendations about such directives.
contact details List of how a person may be contacted. The details may include name
and postal address, telephone numbers, mobile phone number, fax
number and e-mail address.
container For Customs purposes, this “includes any bundle or package and any
box, cask or other receptacle whatsoever” (Customs and Excise
contango Charge made by stockbroker for carrying over a position from one
account to another without paying for or delivering the stock. These are
often arranged on contango day.
contango day In trading in shares and other securities, the last dealing day of an
account, when customers may arrange a contango rather than pay for
purchases or deliver stock for sale.
contemnor Person who has been found guilty of contempt of court.
contemplative religious communities

Monks, nuns and others who belong to such orders are subject to the
usual rules of taxation. If the members transfer all their assets and
income to the community, the tax liability is transferred to the
community which is subject to corporation tax on any profit.
The tax treatment is set out in Income Tax (Earnings and Pensions)
Act 2003 s508A as inserted by SI 2010 No 157 with effect from 1 April
2010. Previously these arrangements were made by extra-statutory
concession. They are generally exempt from corporation tax under
Income and Corporation Taxes Act 1988 s508A.
contemporanea exposito est optima et fortissima in lege

Latin: the best way to construe a document is to read it as it would have
read when made.
contested takeover When a company attempts to take over another company which resists
such attempts. It is also known as a hostile bid.
continental (1) Pertaining to a continent, particularly mainland Europe.

(2) Worthless paper money, such as that issued by the American
Continental Congress during the War of Independence, and which was
declared worthless in 1780.
continental depositary receipts (CDRs)

Bearer document which allows trading in certain British, American
and Japanese shares to take place on certain European exchanges.
Continental Shelf Sea area extending beyond UK territorial waters sub-divided and
allocated to a number of Countries including certain European Union
(EU) Member States. Areas designated to the UK are called the UK
Continental Shelf.
National insurance provisions are given in Social Security
Contributions and Benefits Act 1992 s120.
contingency Uncertain sum, or a sum of money put aside to pay a contingent

liability.
The term is used in financial accounting to refer to an asset or
liability (usually the latter) whose existence is known but where the
amount is not. Examples include the outcome of a legal action, an
insurance claim, a claim against the business and damage of unknown
scale. The accounting requirement is to state the contingency at the
worst basis which could reasonably happen and to disclose details in the
notes to the accounts.
The terms contingent asset and contingent liability are no longer
used in financial accounting.
contingency fund Sum put aside to meet a contingent liability.
contingency planning Planning which certain statutory bodies must make to deal with an
emergency (Civil Contingencies Act 2004 s2).
contingency principle For stamp duty, the rule that if the consideration cannot be ascertained
at the time of stamping, the maximum figure should be used (Stamp Act
1891 s56).
contingent agreement In finance, an arrangement for the acquisition of a business or

significant shareholding in it for an initial fee, plus a further fee if an
agreed target is met by a specified date.
contingent annuity Annuity whose payment depends on a contingency, such as a person

being alive.
contingent asset Asset whose existence is known but where a value cannot be quantified.
contingent discount A discount granted by a seller to a buyer subject to the buyer satisfying
certain conditions. For example, a discount might be dependent on the
buyer making a certain minimum level of purchases within a stated
period.
contingent expenses Expenses which will only be incurred if an uncertain event happens.
contingent gain Gain which will only accrue if an uncertain event happens.
contingent gift Bequest to which a beneficiary is entitled only if a contingency

happens. A common example is leaving everything to one’s husband or
wife, but to your children if the husband or wife predeceases you.
contingent legacy Legacy that is subject to a condition, such as the beneficiary reaching
the age of 21.
contingent liability Liability whose existence is known but where the amount cannot be
quantified.
For capital gains tax, a contingency is ignored in determining the
disposal proceeds. If a contingent liability is later enforced, the taxpayer
may make a claim for the tax to be adjusted. This must be done within
four years (five before 6 April 2010) after 31 January following the end
of the tax year in which the disposal was made.
contingent loan Term used in relation to the taxation of life insurance companies.
Details are found in Finance Act 1989 s83ZA.
contingent loss Loss which will only be suffered if an uncertain event happens.
contingent policy Insurance policy which only pays if an uncertain event happens, such as
one person dying before another.
contingent work Provision in a building contract which allows building work to be

charged if certain conditions are encountered.
continual Refers to something that happens repeatedly, as against continuous

which means continuing in time. Tax returns are continual, interest on
late tax accrues continuously.
continuation option Allows employees to continue their group insurance coverage under
certain conditions after their employment has terminated (much less
common today).
continuation sheet A second or subsequent sheet of a document.

It is good practice to number the pages, possibly with a reference
typed at the top of each continuation sheet. A continuation sheet should
normally start with a new sentence, even if this means leaving a gap at
the end of the previous sheet.
continuing commitments Regular outgoings by someone claiming a budgeting loan from the
Social Fund.
continuing operations Term used in a profit and loss account where the trading figures have
separated those which derive from discontinued operations. This means
that acquired businesses are included but disposed of businesses are
excluded (though shown separately). The reason for this separation is
because continuing operations show users of accounts where future
profits will be earned.
continuing professional development (CPD)

A formal procedure by which a professional body ensures that its
members keep their expertise up to date with current developments.
Applies to doctors, lawyers, accountants, financial advisers etc.
continuous Description of an item which continues rather than a series of items,

which may be continual.
continuous compounding Assumption made in some compound interest calculations that interest
is being added continuously and not at set intervals.
continuous credit account Another name for a budget account.
continuous disclosure Accounting term used in Canada to mean the duty a company has of
disclosing its financial position to its members.
Continuous Improvement (Kaizen)

requires employees to constantly seek ways of improving the quality of
the product or service.
continuously offered intermediate note (COIN)

Form of medium-term euronote.
continuously offered longer-term securities (COLTS)

Bonds of various types offered by the World Bank.
continuous net settlement Daily settlements on a net basis by a clearing house.
continuous supply of goods

Where the supply goods in the form of water, gas and electricity on a
continuous basis and receive payments regularly, or from time to time.
If this happens, there's a tax point every time a tax invoice is issued or a
payment is received - whichever happens first.
continuous supply of services

For the supply of services on a continuous basis and receipt of regular
payments or payments made from time to time, there is a tax point
every time a VAT invoice is issued or a payment is received, whichever
happens first.
continuous Part of a single continuing item, as against a continuing series of items

which is said to be continual.
continuous supply of goods

Goods whose nature means that they are continuously supplied, such as
water, gas and electricity. For VAT, the tax point is the earlier of when
the invoice is issued and the bill is paid.
continuous supply of services

Services whose nature means that they are continuously supplied, such
as insurance. For VAT, the tax point is the earlier of when the invoice is
issued and the bill is paid.
continuously compounded rate

Where interest rates are regarded as being continuously compounded
rather than compounded at frequent intervals, such as annually or
monthly.
The formula for calculating the discount rate when compounding
more frequently than annually is:
rate = [1 + (r/m)]m
where r is the annual rate and m is the number times of compounding in
a year. So if compounded monthly, m = 12.
If continuously compounding, m approaches infinity. At this point
the formula becomes
rate = er
where e is the number approximately 2.718 which is the basis of natural
logarithms. Rates can be calculated by using tables or a financial
calculator.
contra (1) Latin: against.

(2) An entry made to reverse another entry, usually when a mistake was
made on the first entry. In manuscript accounts, the two entries may
be indicated by the contra symbol ¢ .
contra account Account which offsets another account.

Such an account may be used when another business is both a
supplier and customer, and they agree to offset debts to each other.
Such offsets are effected in the journal with the other side going to the
contra account. At the end of the accounting period, the contra account
should equal zero.
contraband Goods which are prohibited by law, particularly when procured

illegally.
contraband of war Goods which neutral countries may not supply to belligerents at war.
contra bonos mores Latin: against good morals.
contract Legally enforceable agreement between two or more people.

In English law most types of contract may be made either in
writing, verbally or inferred from the conduct of the parties.
In general terms, the elements of a contract are:
● all parties must have capacity to contract;
● the parties must agree to the contract voluntarily;
● there must be an intention to create legal relations between
the parties;
● the contract must be legal, moral and possible;
● each party must provide a consideration.
contract costing Method of determining costs of a contract which is expected to run

across more than one accounting period.
contracted-out money purchase scheme (COMPS)

Occupational pension scheme where the amount contributed is
determined in advance, and the pension determined according to the
size of the fund to which contributions are made.
Before 6 April 2012, earnings of a member of such a scheme
attracted a lower rate of class 1 national insurance.
contracted-out salary related scheme (COSRS)

Occupational pension scheme where the amount of pension to be paid is
determined in advance, and the amount contributed is determined
according to the amount needed to fund the pension. The employee’s
contribution is usually defined, so the variable element is usually paid
by the employer.
Earnings of a member of such a scheme attract a lower rate of
national insurance.
contract for difference (CFD)

A contract to pay a sum for the amount by which a stated security or
index moves, such as paying £1 for each 1 point added to the FT-SE
100 index. A CFD is similar in purpose and form to a futures contract
except that it has no tangible form.
contract for sale
contract for service A contract made by a self-employed person as against a service

contract which indicates employment.
The different is that a contract for service requires a person to
ensure that work is done, but generally does not require the person to do
it personally, does not pay according to the hours work, and requires the
person to correct any poor work at his own expense.
contract grade Quality of a commodity as specified in a contract.
contract guarantee insurance

Insurance policy protecting against the insolvency of a contractor.
contract note Document which shows that shares have been bought or sold but not
necessarily yet paid for.
contract of employment Written agreement of terms of employment which the employer must
provide within two months.
contract of sale “A contract of sale of goods is a contract by which the seller transfers
or agrees to transfer the property in the goods to the buyer for a money
consideration, called the price”. (Sale of Goods Act 1979 s2(1)).
contract of service Legal agreement between an employer and employee. A distinction

must be made between such a contract and a contract for services,
where the latter indicates that the person is self-employed.
For social security, the term specifically includes a contract of
apprenticeship (Social Security Contributions and Benefits Act 1992
s122(1)).
contract work Work done according to a written agreement, as against work for any
other reason, such as statutory duty or necessity.
contracted-out rebate
contracting party Person or business which is one of two or more people making a
contract.
contractionary fiscal policy

Government economic policy which is designed to contract the
economy.
contractionary monetary policy

Government monetary policy which is designed to contract the
economy.
contract of insurance For tax purposes, this is defined in Financial Services and Markets Act
2000 (Regulated Activities) Order 2001.
contractor Someone other than an employee who you engage directly to work for
you. Most contractors are self-employed.
contractual holiday The amount of holiday leave to which an employee is entitled under the
contract of employment.
From November 1999, the Working Time Directive requires this to
be at least four working weeks plus eight working days. For someone
working a five-day week, the minimum is 28 days..
contractual liability Duty owed by one contracting party to the other.
contractual obligation An existing obligation that arises under a contract already made.
When a new tax provision is introduced, it may contain an
exemption for a contractual obligation that existed before the date the
new provision takes effect.
contractual pay Pay and benefits a person is entitled to receive from their employer.
contractual remuneration Amount an employee is entitled to receive under the contract of

employment rather than from operation of law (such as guarantee
payment or statutory sick pay) (Employment Rights Act 1996 s32).
contractual Sunday hours

The amount of work an employee in a shop or betting office is required
to work on a Sunday.
An employee may serve a notice on the employer refusing to work
on a Sunday. The employee’s pay is then reduced by only the pro rata
figure representing the fewer hours worked (Employment Rights Act
1996 s39).
contractual Description of a legal provision found in a contract.
contracyclical Against the current cycle.
contra entry Entry made in the accounts to reduce the balance in an account to zero.
contra formam collationis Latin: against the form of a gift.
contra formam statuti Latin: against the form of the statute.
contrahent Entering into a contract; a contracting party.
contra jus gentium Latin: against the law of nations.
contra mundum Latin: against the world.
contraplex Having messages flowing both ways simultaneously.
contra prefentem rule In law, principle that an ambiguity in any rule must be resolved against
the person who seeks to rely on it.
contrarian Someone who goes in the opposite direction to everyone else, such as
investor who is buying shares when others are selling them.
contrarian investing Following an investment strategy which is the opposite of most other
people’s.
contrary Contradicting of another statement.

Care should be made in distinguishing this word from converse and
opposite. The converse is when the parties are reversed, and the
opposite is where the main verb or sentiment is re-expressed as the
opposite extreme.
Consider the statement “I love you”.
The contrary is: I do not love you
The converse is: You love me.
The opposite is: I hate you.
contra-trading Form of carousel fraud that involves a clean chain and a dirty chain.
It is part of the missing trader fraud.
The dirty chain seeks to recover VAT input tax fraudulently by
offsetting it against output tax from the clean chain of honest
transactions. As this does not trigger a repayment claim, it is less likely
to arouse the suspicions of HMRC.
contribution (1) Payment towards an expense.

(2) Payment of national insurance.
(3) In management accounting, the difference between the sale price
and direct cost. The difference is said to be the contribution to meeting
the fixed costs. The method is explained in breakeven point.
contribution conditions Rules governing what classes of national insurance entitle a person to
contributory social security benefits. They are set out in Social Security
contribution income statement

Income statement where fixed costs are shown as deductions from total
contributions. Such a statement is sometimes used in management
accounting.
contribution margin Amount which an individual product or service contributes to the

overall profitability of a business. This may be expressed as an amount
or as a percentage.
contribution notice Notice which the Pensions Regulator may send under Pensions Act
2004 s38 to the trustees of a final salary (or defined benefit) pension
scheme where there is evidence of an attempt to prevent recovery of a
debt from the employer. This is also known as a section 38 notice.
contribution of capital Money provided to a business to provide additional capital to run the
business.
contributions legislation In relation to national insurance for IR35 companies, “means any Part
of this Act or provision of such a Part” (Social Security Contributions
and Benefits Act 1992 s4B(13).
contribution to the firm Amount which a limited partner or non-active partner has
contributed to the partnership plus his share of retained profits (Income
Tax Act 2007 s105; Corporation Tax Act 2010 s57). This figure is used
in determining such a partner’s maximum tax loss relief from the
partnership.
contribution to the LLP Contribution made by a company to a limited liability partnership.

Corporation Tax Act 2010 s60 explains the tax implications.
contributions avoidance arrangement

Scheme to avoid paying national insurance.
Such a scheme must be disclosed under Social Security
Administration Act 1992 s132A with effect from 30 March 2006.
contributions committee A corporate group, particularly in the USA, organized to make grant
decisions usually with the guidance of a corporate foundation or
contributions administrator. Typical responsibilities include setting and
interpreting policy, approving an annual budget, and reviewing grant
requests.
contributions return Information that may be required by HMRC in respect of national

insurance contributions (Social Security Contributions and Benefits Act
1992 Sch 1 para 7(1)).
contribution year For national insurance, a year for which contributions are appropriated
even when the national insurance is paid in another (usually later) year.
contributor concerned For entitlement to contributory social security benefits, “means the
person by whom the [contribution] condition is satisfied” (Social
Security Contributions and Benefits Act 1992 s21(5)).
contributory Description of a person which contributes to something, particularly

certain classes of national insurance.
In finance, the term can mean someone who provides some of the
funding.
contributory benefit Social security benefit where entitlement depends on having paid
sufficient national insurance.
contributory ESA Employment support allowance based on the claimant’s national

insurance record, as against income-related ESA.
contributory pension scheme

Occupational pension scheme which is partly funded by employees who
are scheme members.
contrived arrangement One of the hallmarks of a tax planning scheme of which taxpayers are
advised to be wary.
control (1) For company accounting, control is “the ability of an undertaking to

direct the financial and operating policies of another undertaking with a
view to gaining economic benefits from its activities” (FRS 2 para 5).
An almost identical definition appears in FRS 5 para 8.
The Statement of Principles expresses it a little differently as “the
ability to deploy the economic resources involved and the ability to
benefit (or to suffer) from their deployment. To have control, an entity
must have both these abilities” (Para 2.8).
Such control usually comes from being able to exercise more than
50% of the voting rights. Before 1 November 1990, company law
determined control according to share ownership.
Where one company controls another, the latter is usually regarded
as the subsidiary of the former. This means that consolidated financial
statements must be prepared as if the two companies were one (also
including any other companies that meet the same conditions).
Company law and FRS 2 allow a subsidiary not to be consolidated if
there are legal restrictions which prevent that control from being
exercised.
For most tax purposes, company A or person A is said to control
company B if any one of three conditions are met:
• A owns more than 50% of the ordinary shares of B,
• A controls more than 50% of the voting rights in B, or
• A is entitled to more than 50% of the assets of B in a
winding-up.
(2) In employment, the ability of one person to control the activities of
another. This is an important factor in determining whether the other is
an employee.
control account Any form of account which keeps a control on the bookkeeping, such as
a total account.
control and independence requirement

Conditions which must be satisfied for a subsidiary to come within the
scope of such tax-advantaged schemes as Enterprise Investment
Scheme (Income Tax Act 2007 s139 and s185) or VCT relief (ibid
s296). The term is also used in relation to share loss relief in
control group Group of people who are used to compare results on an experimental
group in experimental design.
controllable variance Difference between a budget figure and the actual figure where the
difference is within the control of the manager responsible for the
budget.
controlled activity Activity where a person can be alone with a child or vulnerable person.
Such activity is regulated by Safeguarding Vulnerable Groups Act
2006. If the activity is such that a relationship of trust could develop
between the parties, it is called a regulated activity.
controlled company Company where one person owns at least 50% of the voting rights. (In
the USA, the figure is 25%.)
controlled drug “Any drug which is subject to control under the Misuse of Drugs
legislation” (Customs notice 4). This notice sets out the condition for
importing such drugs.
controlled foreign company (CFC)

A company that operates overseas but which is controlled by UK
residents. There are special tax provisions to prevent such companies
being used for tax avoidance. These are set out in Income and
Corporation Taxes Act 1988 ss747 to 756. Consideration is being given
to amending these provisions.
controlled observation In psychology, observations of reactions in a specific situation, as

against natural observation where the people are in a natural
environment.
controlled waters “(a) Tidal water and parts of the sea in or adjacent to Great Britain up to
the seaward limits of territorial waters; and
(b) any area designated by order under section 1(7) of the Continental
Shelf Act 1964” (Mineral Workings (Offshore Installations) Act 1971
s12).
controller In USA, chief accounting executive of an organisation.
controlling interest Interest in a company which gives its holder control of the company.
This is usually anything above a 50% holding.
control order An order imposed on a person under Prevention of Terrorism Act 2005.
control panel In computing, an icon representing a basic function of the computer that
the user can access for certain purposes, such as to change the date or to
select a different modem.
control panel The main menu for a piece of software.
control period Period over which a matter is particularly examined or an idea tested,
often in relation to other periods.
In accounting, a control period is usually part of a year for which
separate budget figures are produced.
For statutory sick pay, a control period is the maximum number of
weeks for which an employee may be expected to be absent. A list of
periods is given in HMRC booklet E14.
contubernal Living together; in a state of companionship.
contumacious Opposing lawful authority with contempt.
conurbation Area where two large but separate areas have expanded into each other,
such as Bradford and Leeds. There is no such thing as a small
conurbation.
convalescence Period after surgery or an illness while a person regains their normal
health.
For statutory sick pay, absence for convalescence is allowable.
For income tax, expenditure on convalescence, such as in a home,
are not tax deductible are discussed in the Inspectors’ Manual at
BIM37950. A leading case is Murgatroyd v Evans-Jackson [1966]
43TC581.
convection heater Heater which sits on a floor and convects heat.
convenience goods Category of household goods which may be suddenly needed. Items
include most household consumables such as sugar, light bulbs and
rubbish sacks.
convenience yield Price which users of a commodity are willing to pay to avoid risk of not
being able to obtain supplies.
convention country Country which has signed a particular convention affording

international co-operation in a defined area of law or administration.
Convention in the Execution of Foreign Arbitral Awards

Convention agreed by the King on 26 September 1927 relating to
international arbitration (Arbitration Act 1950 Sch 2).
Convention Marchandises Routiers

Conditions for the international carriage of goods by road.
Convention on International Trade in Endangered Species

Regulatory body and its rules which oversees the international
movement and trade of endangered species.
conventional basis Method of determining taxable income from trading activities, as

explained in Income and Corporation Taxes Act 1988 s103.
convergence Movement of two moving figures towards the same figure. In

particular, the term is used to mean when futures prices move towards
the spot price in a futures contract.
convergence criteria The convergence criteria were the five conditions set that countries had
to meet if they wanted to take part in full economic and monetary union
in the European Union. They were:
● Inflation - no more than 1.5% above the average inflation
rate of the lowest 3 inflation countries in the EU
● Interest rates - the long-term rate should be no more than 2%

above the average of the three countries with the lowest inflation rates
● Budget deficit - no more than 3% of GDP
● National debt - no more than 60% of GDP
● Exchange rates - currency within the normal bands of the
ERM with no re-alignments for at least 2 years
converse With the parties reversed. The converse of “you must pay HMRC” is
“HMRC must pay you”. It is not the same as the contrary or opposite.
converse fallacy of accident

In logic, a false reasoning from moving from a special case to a general
rule. For example, saying (possibly correctly) “every appeal against a
tax penalty I have known has been successful” and thus concluding that
all appeals will succeed.
conversion Making something into something else, particularly turning preference

shares into ordinary shares or when money is changed from one
currency to another.
Note that there is conversion only if there has been an actual
exchange, such as changing a pile of pounds for dollars. If a value is
simply restated in a different currency, the figure is said to be
translated.
conversion costs Cost of changing one thing to something else. In accounting, the term
usually refers to the cost of converting raw material to components or
finished products.
conversion decision In social security, a decision on whether an existing recipient of a

means-tested benefit is entitled to employment support allowance.
Such decisions are made between 2011 and 2014.
conversion exposure Risk attached in converting one currency to another.
conversion of funds Using someone else’s funds for a not intended purpose.
An example is when a client’s account is invested to earn interest
for the service provider.
conversion of securities When a share or other security is converted to another type of security.
conversion period Period when one thing may be converted to another.

In finance, the term usually means a period when convertible loan
stock (or similar) may be converted to ordinary shares.
conversion premium Cost of converting a share at current market price into a convertible
security.
conversion price Rate at which one item may be converted to another, such as the
amount of ordinary shares offered for loan stock or the rate of exchange
for a foreign currency.
conversion ratio Expression of how many of one item are to be regarded as the
equivalent of another. In finance, the term particularly means the
number of units of security for which a convertible security may be
exchanged.
conversion value Value of convertible stock, which includes any extra value of the
ordinary shares to which it is converted.
convertibility The extent to which one thing may be converted to another, particularly
the extent to which loan stock may be converted to ordinary shares.
convertible Something which may be converted to another. In finance, the term is

sometimes used as a noun to mean either a preferred stock which may
be converted to equity, or a government bond which may be converted
to another bond without any encashment or further payment.
convertible adjusted-rate preferred stock

A form of elaborate debt capital. It comprises adjusted-rate preferred
stock which can be converted to equity capital.
convertible arbitrage Form of arbitrage using convertible bonds. It requires specialist

knowledge and can be risky.
convertible bond Any type of bond which may be converted to ordinary shares before the
bond matures. Such a financial instrument is the equivalent of a straight
bond with a warrant.
convertible capital bonds

”Debt instruments on which interest is paid periodically, issued by a
special purpose subsidiary incorporated outside the UK. Prior to
maturity they may be exchanged for shares of the subsidiary which, at
the option of the bondholder, are either immediately redeemed or
immediately exchanged for ordinary shares of the parent. The bonds
and payments in respect of the shares of the subsidiary are guaranteed
by the parent. The parent has the right to issue convertible redeemable
preference shares of its own in substitution for the bonds should it wish
to do so” (FRS 4 application notes).
The notes describe the above as “typical” provisions as it is possible
for other provisions to apply.
FRS 4 require such bonds to be treated as debt capital.
convertible currency Currency which may be easily exchanged for another currency. The
opposite is blocked currency.
convertible debenture Debenture, loan stock or similar which may be converted to ordinary
shares at a future date.
convertible debt with a premium put option

“Convertible debt with a premium put option contains an option for the
holder to demand redemption (either at maturity of the debt or at some

earlier date) for an amount that is in excess of the amount originally
received for the debt. At the time the debt is issued, it is uncertain
whether the debt will be converted before the redemption option may be
exercised, and hence whether the premium on redemption will be paid”
(FRS 4 application notes).
Such an instrument is accounted for on the basis that the holder
exercises the redemption option on the earliest possible date.
convertible debt with enhanced interest

A variation on convertible debt with a premium put option. The
terms are that the interest will be increased at a future date.
This is treated as debt capital assuming that the enhanced rate is
paid.
convertible loan Loan finance for a business that is later converted into share capital.
convertible loan stock Money lent to a company under a financial instrument which may be
converted to ordinary shares at a future date.
convertible revolving credit

Insurance policy which allows its holder to widen the policy terms to
become a whole life policy or endowment policy without having to
produce any further evidence of good health.
convertibles Collective term for all forms of financial instrument which are capable
of being converted to ordinary shares.
convertible term assurance

Another name for convertible term insurance.
convertible term insurance

Term insurance which can be changed into a permanent policy
without further evidence of insurability or medical examination.
convertible unsecured loan stock (CULS)

Unsecured debenture which allows the holder to convert the debenture
to ordinary shares at a future date.
convexity In investment, the mathematical relationship between how the life of a

bond can change according to its yield.
conveyance (1) Legal document which transfers ownership of property.

(2) Term sometimes used in law to mean a vehicle.
conveyance on sale Document that gives effect to a conveyance of property.

Such a document is subject to stamp duty. Finance Act 1898 s6
includes a document of foreclosure. It is further defined in Finance Act
1900 s10.
conveyancer Person who draws up a conveyance document.
conveyancing The legal process in buying and selling a property.
convince Means to bring someone to believe, as against persuade which means

to bring someone to act. You may convince someone that they owe tax
and then persuade them to pay it.
COO Country of Origin.
cooking test A test that may determine whether a claimant is entitled to the lower
rate of care component when claiming disability living allowance.
The test is that the person is unable to cook an ordinary meal on a
standard cooker on at least some days. A person may be eligible even
though they can use a microwave cooker.
A person will demonstrate entitlement under this test if, for
example, they are unable to peel and chop vegetables, use a tap, lift hot
pans, use cooking utensils, drain vegetables or determine when a meal
is properly cooked.
cook the books Colloquialism: falsify the accounts.
cooling-off period Period where the law allows someone to change their decision. There
are many cooling-off periods in consumer law.
There is a six-month cooling period for the option to tax provisions
relating to charging VAT on rent.
co-operative Income Tax Act 2007 s401 contains tax provisions for investment in a
co-operative. For this purpose it is defined according to Industrial
Common Ownership Act 1976 s2.
copyright The right to take copies of an original literary, dramatic, artistic or

musical work. Copyright generally lasts to the end of the 70th year after
the creator’s death. The composer Benjamin Britten died on 4
December 1976, so his works remain in copyright until 31 December
2046 (unless the law changes before then).
Customs may seize goods that appear to breach copyright law, such
as pirated copies of films or music albums.
cor Abbreviation of coram, Latin for “in the presence of”.
coram Latin: in the presence of.
coram domino rege Latin: before our lord the king.
coram judice Latin: in the presence of the judge.
coram non judice Latin: in the presence of one who is not a judge.
core and satellite Investment strategy that combines a large portfolio of conservative
investments, such as blue chip companies, with smaller investments of
a more speculative nature.
core business The main commercial activity of a business as against its peripheral
activities.
core competencies Basic skills and activities of a business.
core inflation Measure of inflation which excludes increases in volatile items.

In the USA, this usually excludes oil. Sometimes the term also
excludes food.
core section In tax, part of a form that applies to all taxpayers. For example, self-
assessment form SA100 has a core section to be completed by all
taxpayers. This section is supplemented by specific pages for different
types of income and for particular circumstances.
cornage Historic feudal due calculated according to a person’s cattle ownership.
Corn Laws Series of enactments from 1360 designed to regulate the import and
export of grain. A particularly important law was passed in 1815 which
banned import of corn until its price reached 80 shillings per quarter.
This kept the price of bread high, and led to an uprising. It also lead to
political controversy between protectionism and free trade.
The provisions were softened by laws in1828 and 1842. A vigorous
Anti-Corn Law League was formed in 1839. From 1846 to 1869, the
corn law existed as a nominal duty of one shilling per quarter.
corn tax Excise duty levied from the Tudor period to 1846, as part of the Corn
Laws.
Corn imports were controlled from Tudor times to protect British
suppliers, mainly by import duties.
Adam Smith’s The Wealth of Nations (1776) first suggested their
abolition as a move to free trade. Soon an Anti Corn Law League was
formed to campaign against a tax which raised the price of bread, the
staple diet of the poor.
The Irish potato famine, which led to huge imports of corn, finally
prompted its repeal. It was replaced by the second re-introduction of
income tax.
corona For VAT, gold investment coin issued by Austria and listed in VAT
notice 701/12A.
corporate (1) Description of any collective activity however constituted.

(2) Common term for any event organised by a business, including staff
training or marketing.
corporate bond Debt instrument issued by a company.

Companies issue bonds to raise money and pay interest on the
bonds. Usually bonds expire on a fixed date, when the company repays
the borrower. Such bonds can be bought and sold easily (like shares).
Bond prices tend to change when interest rates change and are
usually not as risky as shares because a company will pay off all its
debts (including bonds) before the shareholders get anything.
corporate foundation American term for a body that receives its income from a profit-making
company but is a legally independent entity.
Usually this type of foundation carries the name of the parent
company. Corporations may fund these foundations with a donation of
permanent assets or with periodic contributions. (Also called a
company-sponsored foundation.)
corporate giving programme

In the USA, funding that is distributed directly by a company, rather
than through a foundation.
Such a program is often handled by the company’s Public Affairs or
Public Relations office.
corporate haven Territory where it is advantageous to establish a company or

corporation because of generally favourable climate of minimal
regulation and compliance, and low taxation.
The British government has striven to make the UK a corporate
haven. In the USA, the states of Delaware and Nevada are seen as
corporate havens.
corporate loan Loan issued by a company or corporation.
corporate raider Person or company that buys a stake in a company before making a
hostile bid to take it over.
corporate rescue exception

Provision in Finance Act 2010 s44 and Sch 15 that disapplies the tax
treatment for impaired debt between connected parties for arms’
length transactions.
corporate sponsorship packages

When a company agrees to sponsor a sports club or other non-profit-
making body as a means of marketing itself or of improving its
reputation.
The extent to which such expenditure is tax-deductible is discussed
in the Inspectors’ Manual at at BIM 42555.
corporate veil Protection provided by company law to shareholders. This means that
any liability is incurred by the company and not by its shareholders.
This protection may be removed in very limited circumstances, such as
where the company is a sham or where the management has engaged in
fraud.
In the UK, removal is referred to as “lifting” the veil, whereas in the
USA, the term is “piercing” the veil.
corporate venture Provision of capital by one company to another.
corporate venturing scheme (CVS)

Scheme whose aim is to encourage established companies to buy shares
in new companies in the same trade under the Enterprise Investment
Scheme or other tax-advantaged scheme.
corporation (1) Company registered in the USA.

(2) Large company in the UK.
corporation sole The legal person represented by the office rather than the office-holder.
So “the Bishop of Durham” means whoever occupies that office at that
time.
corporation tax Tax payable by companies on adjusted profit.

The tax was introduced in 1965 before which companies paid
income tax and profits tax.
Corporation Tax Acts “means the enactments relating to the taxation of the income and
chargeable gains of companies and of company distributions (including
provisions relating to income tax)” (Interpretation Act 1978 Sch 1).
corporeal moveables Scottish term for chattels.
corpus Term sometimes used to mean the capital of a fund, as against its
income.
corpus dilecti Latin: body of the offence. The facts which comprise a legal offence.
correcting entry Entry which is designed to correct a mistake previously made in the
financial records. It has the same meaning as an adjusting entry, where
the bookkeeping requirements are set out.
correction In investing, a change in a value of a share or security which is seen as

bringing the value to what it should have been.
corregidor Chief magistrate of a Spanish town.
correlation Statistical measure of the relationship between two variables.
correlation coefficient In mathematics, a measure of how far one number is influenced by a

change in another. A coefficient of 1 means that the two numbers move
in tandem. A coefficient of -1 means that one numbers moves in an
inverse ratio to the other.
This concept is used in valuing shares and other securities. By
stripping out the correlation coefficient (or beta) which relates to the
market in general, it is possible to identify the changes which relate to
the particular security.
correlational method In statistics, methods designed to determine which differences are

relevant to the subject under study.
correspondent bank Bank which accepts deposits and performs other services for a bank
which is not represented in a territory.
corresponding bonus shares

“In relation to any shares, means bonus shares which:
(a) are issued in respect of those shares, and
(b) are in the same company, are of the same class, and carry the same
rights, as those shares” (Income Tax Act 2007 s151(1); Corporation
Tax Act 2010 s90(1)).
corresponding day rule Rule of legal interpretation that a time limit of one month means by one
less than the same day in the next month. An example in a tax case is re
O’Connor Utilities Ltd [2009] EWHC 3704 (Admin) where it was held
that the time of one month from 4 November 2008 meant by 3
December 2008.
corresponding retrospective tax provision

Term used in Social Security Contributions and Benefits Act 1992 s176
in relation to Parliamentary control of regulations regulating to
statutory payments.
corresponding shares Shares that correspond to original shares in a profit-sharing scheme

(Income and Corporation Taxes Act 1988 Sch 10 para 5).
corrupt Debased, spoiled, dishonest.

In human resources, description of someone who is dishonest, such
as by taking bribes or misappropriating property.
In computing, description of a disk which is physically damaged so
not all the data can be read.
corruption Where payment or other improper conduct is made to someone to

discharge their duty in a manner that shows undue favour or disfavour
to someone. This is a common law offence and is also outlawed by
various statutes.
Such payments are disallowed from trading expenditure as a
criminal payment (Corporation Tax Act 2009 s1304).
corset In finance, any regulation or procedure which has the effect of severely
constraining action.
COSA Cost of sales adjustment.
co-signatory Person who also signs a document.
cosmetic Description of something which changes the appearance but makes no

substantive change.
cosmetic surgery Surgery designed to correct a physical defect, mask the effect of ageing
or otherwise improve a person’s physical appearance.
The Inspectors’ Manual at BIM37945 states that this is not usually a

tax-deductible expense.
COSRS Contracted-out salary related scheme, a form of occupational

pension scheme.
COSRS service “Service in employment which qualifies the earner for a pension
provided by a salary related contracted-out scheme” (Social Security
cost Amount of money which must be paid for something.

On its own, the word is almost meaningless are there are so many
different costing methods.
cost accountant Accountant who provides management with information about the
business’s costs. A cost accountant is a particular type of management
accountant.
cost accounting Process of preparing figures to identify costs of products and services.
cost adjusting factor Amount by which a group insurance premium is adjusted in the light
of experience.
Such experience may include claims record, location, occupation
and workforce profile.
cost allocation Procedure for apportioning overheads to cost centres.
cost analysis Process of determining costs, particularly for a future product or

service.
cost apportionment Sharing out an overhead between cost centres.
cost assets ratio Accounting ratio used by banks. It is calculated as operating expenses
divided by average assets over the same period.
cost benefit analysis (CBA)

Process of comparing costs and benefits as a means of determining
effective use of resources.
cost centre Person, group, division or other part of a business to which costs can be
allocated in management accounting.
cost cutting Process of identifying savings which may be made.
cost-effective Description of an arrangement where the expense can be justified, such

as spending £100 to generate an additional profit of £300.
cost envelope Term used to define a range of acceptable costs.

The term was used from 2006 to indicate the acceptable cost of
operating the Local Government Pension Scheme.
cost factor Cost seen as one factor in making a decision.
cost income ratio Accounting ratio used by banks. It is calculated as operating expenses
over a period divided by operating income for the same period.
costing Method to determine how much expenditure is incurred on an item. It is

a significant element in management accounting.
At its simplest, the three common methods of costing are:
● direct costing;
● marginal costing;
● opportunity costing.
....
cost justification Argument that an expense is justified as it will overall improve a

person’s or business’s financial position.
Cost-justification usually requires a demonstration that the expense
will generate a greater sum of net income (as in advertising) or while
save a greater sum of expenditure elsewhere (as for security).
cost management Management accounting which is primarily concerned with identifying

and quantifying where costs are incurred.
cost of borrowing Expenditure in the form of interest on borrowed money.
cost of capital Equivalent interest rate for how much the company’s capital costs it.
cost of carry (1) Extent to which the cost of holding funds exceeds the return they
earn.
(2) In a futures contract, the cost of holding the underlying security.
cost of funds (1) In banking, cost of borrowing in the principal money markets. This
cost determines the interest rates charged to customers.
(2) In commerce, cost of raising additional finance for a business.
cost of generating funds Figure in a SOFA of a non-commercial body for the expenses of
generating income, such as the cost of a church stewardship campaign
or a charity’s fund-raising expenses.
cost of goods sold Materials, labour and other costs directly related to the goods or
services provided.
cost of living allowance Addition to normal earnings to pay for living expenses, such as when an
employee is temporarily relocated. When paid as a fixed sum, it is
added to gross pay and is subject to income tax and national insurance
under PAYE.
cost of living index Old term for what is now the retail prices index.
cost of provision “In relation to a non-cash voucher, the expense incurred in or in

connection with the provision of:
(a) the voucher, and
(b) the money, goods or services for which it is capable

of being exchanged
by the person at whose cost they are provided.”
cost of sales Direct cost of providing goods or services which are sold by a business.
cost of sales adjustment (COSA)

Adjustment made in current cost accounting to the usual cost of sales
figure to reflect inflation on the value of materials or stock consumed
during the accounting period.
cost of the new assets Term that has a specific meaning defined in Taxation of Chargeable
Gains Act 1992 s162(4) in relation to roll-over relief on the transfer of
a business.
cost per acquisition Another expression meaning cost per action.
cost per action (CPA) Method of paying for advertising on the Internet.
Advertisers pay only when an ad display leads to a completed sale,
registration, download, etc. Almost all affiliate network advertising can
be thought of as CPA.
cost per click (CPC) A performance-based pricing model for advertising sales.
CPC pays publishers based on number of clicks on a specific
advertisement, that is the number of times someone accesses the
advertisement.
cost-plus Method of pricing which simply adds a profit margin to whatever the
seller paid to buy or produce the goods.
cost-plus contract Contract in which the price paid is determined as the cost to the supplier
plus a margin.
Such contracts are common in the public sector. In the private
sector, such contracts are usually avoided as they provide insufficient
incentive for the supplier to control costs.
cost price Price which is the same as that paid by the seller, so the seller earns no
gross profit.
costs judge Court officer who settles disputes about legal costs. The office was
previously known as a taxing master.
cote officielle Official price of a security on the Paris Bourse. The term sometimes
means the Bourse itself.
cotset Lowly form of feudal bondsman. The term is found in Domesday Book.
cottage orné French: adorned cottage. Cottage to which embellishments are added to
indicate that its owner is prosperous.
cottaging Criminal offence of sexual activity in a public lavatory, which is illegal

under Sexual Offences Act 2003 s71.
cotter Peasant land-holder. The exact status has varied.
cotton Tradeable commodity.

It comes from the tufts of the cotton plant, where it can be cleaned,
spun and woven to make cloth.
Coumarin A colouring agent used to identify road fuel on which hydrocarbon oil
duty has not been paid.
council house Property owned, and often built, by a local authority and offered to
people who cannot afford market housing. The rent is controlled by
the council. Housing benefit exists to meet the cost for those who
cannot afford this rent.
In 1980, council house tenants were given the right to buy their
homes at a significant discount, depending on how long they lived
there. The discount was up to 60% on houses and 70% on flats. In the
same decade, many councils transferred their houses to housing
associations.
council of reference Body of people to whom the management of an organisation may refer
matters for advice. Typically such a council is established by a charity
or other voluntary body. Its members are people of eminence whose
inclusion is intended to reassure others with whom the organisation
deals about the integrity of the organisation. It is rare for anything to be
referred to the council. Also called a committee of reference.
council tax Local authority tax introduced on 1 April 1993 to replace the unpopular
community charge. The law is Local Government Finance Act 1992.
Its base is an equal mix of property and people.
Properties categorised into eight price bands indicated by the letters
A to H. If the house has been adapted for the disabled, it is
automatically reduced by one band.
The full rate for the band is payable if the household has two or
more adults. If it has only one adult, only 75% of the rate is payable.
Local authorities have a discretion on how much rebate to provide
for empty properties and second homes.
The council tax is not payable until the local authority has sent the
household a bill. The household may pay in a single payment, two
equal payments, or 10 equal monthly payments from April to February.
If an instalment is not paid within seven days, the right to pay by
instalments is lost, and the whole sum becomes payable.
If an employer pays an employee’s personal council tax bill, this
creates a taxable benefit in kind on the pecuniary liability principle.
This is explained in the inspectors’ manual at EIM00585.
There is a special social security benefit, known as council tax
benefit, to assist the poorest people. Those who do not pay the tax can
have it deducted from their pay under a council tax attachment of
earnings order (CTAEO).
Members of the armed forces may receive a special relief. This is

not a taxable benefit (Income Tax (Earnings and Pensions) Act 2003
s297B).
council tax attachment of earnings order
council tax base An assessment by each billing authority of the number of converted to
Band D equivalents (the average band), after properties, allowing for
non-collection and new properties, on which a tax can be charged.
council tax benefit (CTB) Means-tested social security benefit introduced with council tax. To
claim the benefit, the claimant must have a sufficiently low income,
capital of less than £16,000 and be resident in a premises for which he
or she is liable to pay council tax.
The benefit may be supplemented by a second adult rebate if a
second adult lives with the claimant.
The allowance is paid under Social Security Contributions and
Welfare Reform Act 2009 proposes to rename this benefit council
tax rebate.
council tax rebate Name by which council tax benefit will be known under Welfare
Reform Act 2009.
council tax surplus (or deficit)

The amount by which the actual council tax collected exceeds (or falls
short of) the estimated figure.
A council’s tax base is calculated using an estimated collection
rate.
The surplus or deficit is shared by the billing authority and any
other authorities who serve a precept on the billing authority. These
surpluses or deficits increase or reduce the spending capacity of the
authority.
counsel (1) To provide emotional support.

Certain types of counselling for employees are exempt from tax
(2) Barrister or equivalent legal representative.
counsel’s opinion Written advice from a barrister, usually a senior specialist barrister.
Such advice is often sought before commencing larger tax appeals or in
promoting a tax avoidance scheme.
count Simple method for determining a quantity by adding up.
countenance (1) Appearance, outlook.

(2) Consider, view as an option.
counterbalance Any device which prevents ad adverse effect by administering an

opposing force, such as the weight used to offset the arm of a crane.
The term is also used figuratively to mean any procedure which
automatically comes into effect to check the exercise of authority.
counterbid Bid which is offered as an alternative to a previous bid.
counterclaim Claim which is made by one party in response to a claim from the other
party.
For example, A sues B for an unpaid bill. B may make a
counterclaim for A for loss suffered by poor goods from A.
counter-cyclical Description of businesses or policies which do well when the general

economy is performing badly.
counter-cyclical demand management policies

In Keynesian economics, the demand management policies which a
government should follow when the economy is in difficulties.
counter-evidence Evidence which is produced to rebut evidence already provided.
counterfeit Forgery, particularly of coins or consumer goods.

Making such goods is a criminal offence. Customs may seize such
goods brought into the country.
counterfeit coins Coins made other than by proper authority with a view to being passed
as currency. It is a criminal offence.
countermand Order which cancels a previous order, such as asking a bank not to pay
a cheque which you have issued.
countermark Additional mark put on a quantity of goods to indicate restrictions on

those goods, such as who may open them or collect them. The term
particularly applies to the mark put on standard metal by the London
Goldsmiths’ Company.
counter-offer In contract law, an offer which is made as an alternative to a previous

offer.
A counter-offer negates all previous offers. In the case Hyde v
Wench [1840] a man offered to sell his farm for £1,000. The claimant
said he would pay £950, which was rejected. He then said he would pay
£1,000 but the seller now refused. He was entitled to do so, as the
counter-offer had negated the original offer.
counterpart Equivalent person, such as the person doing the same job as yourself in
another company.
counterparty The other party in a contract or deal.
counterparty risk Risk to a business that a counterparty will fail to perform his duties.
counterplead Plead the opposite to what is being alleged.
counter-productive Description of something which reduces productivity, particularly when

it was intended to improve productivity.
counter-proposal Alternative proposal to one already made.
counter-revolution Revolution which reverses or negates the effects of a previous one.
countersign Second signature on a document.
countersignatory Person who provides a countersignature.
countersignature Second person who signs a form or letter. The term is particularly used
on passport application forms and similar, when the countersignatory
confirms that he has known the person personally for at least two years.
counter staff Workers in a retail business directly engaged in serving customers.
counter-statement Statement made to contradict an existing statement.
countertrade Another term for barter.
countertrading Barter, particularly on an international scale.
counter-view An opposing point of view.
countervailing charge Charge which may be imposed by the European Commission either on
certain goods from specified European Union (Member States during
some months of the year or as part of a minimum import price system.
countervailing credit Another name for back-to-back credit.
countervailing duty Customs duty imposed on imported goods to negate the effect of a
subsidy from the government of the exporter.
country identifier Another name for country prefix code.
country prefix code Two-letter code that identifies the member state that issued a VAT
invoice. This code must be shown on a UK invoice when goods are
supplied to a customer who is registered in another member state. The
code for the UK is GB (even for Northern Ireland). This code is
sometimes called the country identifier.
county court Court which hears most civil disputes, such as unpaid bills.
county court “means—

(a) in relation to England and Wales, a court held for a district
under the County Courts Act 1984;
(b) in relation to Northern Ireland, a court held for a division under
the County Courts (Northern Ireland) Order 1980” (Interpretation Act
1978 Sch 1).
county court bailiff Person responsible for enforcing orders from the county court.
county court judgment Legal recognition that a person owes a debt.
coup Blow or stroke, particularly a clever move. The term has a range of
meanings from the forced replacement of a government to a
surprisingly successful achievement at work.
coup de foudre French: sudden happening. The term can mean love at first sight.
coup de grâce French: blow of grace. A final blow to end the existence of a person,
animal or business, and thus end its suffering.
couple For purposes of national insurance and social security, “means —

(a) a man and woman who are married to each other and are
members of the same household;
(b) a man and woman who are not married to each other but
are living together as husband and wife otherwise than in prescribed
circumstances;
(c) two people of the same sex who are civil partners of each
other and are members of the same household: or
(d) two people of the same sex who are not civil partners of
each other but are living together as if they were civil partners
otherwise than in prescribed circumstances”
(Social Security Contributions and Benefits Act 1992 s137(1) and State
Pension Credit Act 2002 s17).
For age-related benefits, “a man and a woman who share a
household and who are, or who live as, husband and wife” (Age-
Related Payments Act 2004 s8(1)).
couple relationship Term used by HMRC in Agent Update of 24 February 2010 to describe
a relationship where two people live together, whether married or not.
Such a relationship can trigger changes to entitlement to tax credits.
Non-marital relationships are sometimes referred to as living together
as husband and wife or LTAHAW.
coupon (1) Any document which is provided for the recipient to use to obtain a
financial benefit.
(2) A slip of paper attached to a bond or other document which is
submitted by the holder to obtain a dividend or similar payment. From
this meaning, the word is sometimes used to mean the rate of interest
payable on a loan.
coupon rate Fixed interest rate paid on a government bond or debenture.
coupon security Government security which has a coupon and pays interest, as against a
security which pays no interest but is sold at a discount to its face value.
coupon stripping Financial process in which the coupon is removed from a bearer bond
and sold as a separate financial instrument. The bond then becomes a
zero-coupon bond.
court (1) Enclosed space in a building.

(2) Set of flats, maisonettes or similar dwellings on a single site.
(3) Place where legal issues are resolved.
(4) Entourage of a monarch or prince.
court-baron Assembly of freehold tenants of a manor under its lord.
court card In gambling, a jack, queen or king in a pack of playing cards. The word
is a corruption of “coat card” as the pictures show them so dressed.
court cases Under English law, Scots law, American law and many other legal
systems, a court case establishes a precedent. This must generally be
followed in any subsequent decision where the facts are the same. A
precedent can be overturned by a higher court, or can be reversed by
legislation.
court circular Daily press statement saying what royal members are doing.
court cupboard Sideboard or similar piece of movable furniture on which chinaware is

displayed.
court-day Day on which a court sits.
court-dress Special clothes which are required when appearing at the court of a
monarch or price. Sometimes the term is used for special clothing worn
by those who appear in a court of law.
courtesan Mistress or whore kept as part of a court by a monarch or prince.
Court Martial Court for hearing offences committed by military personnel. It may sit
anywhere in the UK or outside (Armed Forces Act 2006 s154).
Court Martial Appeal Court

Court from which an appeal may be made against a court martial.
[Note that its name has changed from Courts-Martial Appeal Court
by Armed Forces Act 2006 s272).
Court of Appeal “means—

(a) in relation to England and Wales, Her Majesty’s Court of
Appeal in England;
(b) in relation to Northern Ireland, Her Majesty’s Court of Appeal
in Northern Ireland” (Interpretation Act 1978 Sch 1).
Court of Cassation Highest appeal court in France.
court of last resort Court from which there is no appeal.
court of law Court which hears legal matters, as against any other meaning of the
word court.
Court of Protection Court which deals with the affairs of those who lack mental capacity.
It is constituted under Mental Capacity Act 2005 s45.
Court of Protection Visitor

Person appointed by the Lord Chancellor under Mental Capacity Act
2005 s61 to check the treatment of those who lack mental capacity.
There are Special Visitors and General Visitors; the former must be
doctors.
Court of Protection Court where issues are decided relating to people who have a mental
incapacity.
Court of Session Supreme court of Scotland, established in 1532. It is the highest civil
tribunal in Scotland.
The Court comprises 26 judges. Four of these, including the Lord
President, sit in the first division. Four others sit in the second division.
These two divisions comprise the Inner House. The other judges
comprise the Outer House.
court order Order issued by a court.
courts board Board to oversee courts for a defined area of England or Wales (Courts
Act 2003 s4). Their duty is to scrutinise, review and make
recommendations regarding how the Lord Chancellor discharges his
functions in relation to the courts in the area.
court security officer Person so appointed by the Lord Chancellor under Courts Act 2003 s51.
coûte que coûte French: cost what it may.
covenant Term for various forms of one-sided agreements, in particular:

(1) a condition imposed on land restricting its use by the present and
future owners; or
(2) unilateral promise to pay money for which no benefit is received in
return, such as a parent supporting a child or a payment to charity.
covenantee Beneficiary of a covenant.
covenant Unilateral promise.
covenant-lite Description of loans where there are few covenants or conditions. As

such, these loans are usually high-risk though that risk is mitigated by
such loans often being syndicated.
The term “lite” means “light” in the sense of not heavy. This novel
spelling was adopted by the drinks industry in the 1990s for products
without sugar, and has been adopted by the finance industry.
covenantor Person who makes a covenant.

cover (1) In accounting, number of times an amount could be paid.

In particular, the term is often used to mean dividend cover, which
is the number of times the dividend cover could have been paid from
net profit. So if a company pays dividends of £100,000 from profits of
£430,000, its dividend cover is 4.3.
(2) Spread, put on as clothing for a person or a jacket for a book.
(3) Place in a restaurant and the order for food from the customers who
sit there.
(4) Envelope with a stamp, as in first-day cover.
(5) Provide temporary replacement of work during a short absence, as
when a worker covers for a colleague who briefly leaves his workplace.
[The word has acquired many other special meanings.]
coverall American term for an overall.
coverage In USA, amount of protection provided by insurance.
cover charge Charge per person made by a restaurant or similar establishment in

addition to the charge for the food and drink provided.
cover crop Crop which is grown partly to protect the soil.
covered Description of a trading position where any risk is protected by another

investment or position. This is similar to hedging. The opposite is
known as an uncovered or naked position.
covered bear Person acting like a bear but who holds the stock he is selling.
covered call writing Selling a call option on assets that you own.
covered interest arbitrage

Form of arbitrage which exploits inconsistencies between currency
depreciation and differences in interest rates.|
covered interest rate parity

The principle that the interest rates paid on two currencies should be
equal to the differences between the spot rates and forward rates. If
there is any disparity, there is an opportunity for arbitrage.
covered position In investment, position in which all risks are hedged.
covering letter Letter sent with a document to explain or comment on those documents.
cover note A temporary certificate confirming that an insurance policy is in force.

Used in motor insurance for taxation/registration purposes and in some
other contexts such as life assurance to confirm that cover is effective
on a temporary basis while further information is being gathered.
cover price Price of a newspaper or magazine.
cover pricing The practice of submitting a high price in a tender document for work
the tenderer does not want to do. Submitting a high price rather than
refusing to tender means that the tenderer will stay on the customer’s
tender list. This practice is particularly common for building contracts
and for tenders in the public sector.
In itself, cover pricing is not illegal. It can become illegal when
there is any collusion with other tenderers, as in bid-rigging. Public
sector customers may be willing to tolerate cover pricing as it means
that they have received more than one tender which makes it easier for
them to justify accepting the lowest bidder.
cover shorts Buy in stock to sell what a person has already committed to sell.
cover-up Deliberate concealment of the truth, particularly of a scandal.
cover version Recording of a song which has already been recorded by a different
artist.
cowrie shell Seashell that has been used as a currency in Africa and Asia. It is the
shell of a mollusc from the Cypraea genus.
CP (1) Commercial paper

(2) Common Pleas. Series of Law Reports published between 1865
and 1876.
CPA (1) Cost per action or cost per acquisition. (They mean the same.)
(2) Certified public accountant, a US term.
CPAG Child Poverty Action Group.
CPC (1) Customs Procedure Code

(2) Cost per click.
CPD Continuing Professional Development.
CPE Continuing Professional Education.
CPEI Customs Procedures with Economic Impact -
CPI Consumer price index, the official measure of inflation since

December 2003.
Cpl Corporal (military rank)
CPL Cost per lead.
CPM Cost per thousand.
CPP Current purchasing power.
C2 principles Code of practice developed by Thomas Dunfee and David Hess of

Pennsylvania University. It sets out how a company and its employees
should deal with improper offers of payment.
CPS Crown Prosecution Service
CPTDA Central Police Training and Development Authority (Centrex)
CPU (1) Central Processing Unit of a computer.

The CPU is the main part of the computer, where most calculations
take place.
(2) Central Planning Unit, of HMRC
CPVO Community Plant Variety Office.
CQS Consolidated Quotation Service.
cr Abbreviation for credit.
CRA Canada Revenue Agency.
cracking Process of breaking down molecules, particularly of oil. The first

process was invented in 1855.
The term is also used for the process of cracking ethylene gas to
make potable spirits (Customs notice 39).
[The term has many other many meanings that are not relevant for tax.]
cran Traditional measure for herrings landed at port. It is 37½ gallons.
Cr App R(ep) Criminal Appeal Reports. Series of law reports first published in 1908.
crawling peg Method of providing limited stability in exchange rates. The principle is
to allow frequent small adjustments of a fixed rate, rather than a fixed
rate with occasional large adjustments, or a currency floating freely.
CRC Carbon Reduction Commitment.
CRC Energy Efficiency Scheme

Mandatory scheme previously known as Carbon Reduction
Commitment (CRC). It was introduced in April 2010.
It requires large public and private sector organisations to reduce
carbon dioxide emissions. This excludes reductions already coved by
Climate Change Agreements and the EU Emissions Trading Scheme.
The scheme covers all organisations that use more than 6,000
megawatts of electricity a year. The scheme works by requiring
organisations to buy allowances to cover emissions in the previous year.
This arrangements starts in 2012.
CRD (1) Central Registration Depository.

(2) Capital Requirements Directive, of EU.
creatine Naturally occurring organic substance. For VAT, products made from
creatine are generally standard-rated and not zero-rated as food. Further
details are set out in VAT notice 701/14.
creation price Cost to managers of a unit trust in creating units.
creative accounting Adaptation of financial instruments to give an impression that the

company is doing better than is the case.
Common methods include off-balance sheet accounting,
anticipating profits, capitalising expenditure and overvaluing assets.
credit Bookkeeping entry which indicates that an asset has decreased, such as
when money is taken out of an account.
In the nominal ledger (or trial balance), a credit balance represents
a liability, income, reduction of asset value or a profit.
credit account Account with a business, usually a shop, which allows the customer to
pay for goods later, such as at the end of the month.
credit balance Balance on an account which shows that it holds funds.
credit brokerage Business of arranging credit for individuals.
credit card Payment card allowing you to spend up to a credit limit and to make
payments in instalments if you wish.
credit column Column in a journal or similar book which records the credit entries of
financial transactions. Traditionally this is to the right of the debit
column.
credit control Functions in a business which are designed to ensure that a company’s
invoices are paid.
In general, credit control has two parts. The first part is vetting new
customers and monitoring existing customers to ensure that they are
creditworthy.
The second part is chasing up debts by letters and telephone calls.
The received wisdom is that telephone calls are particularly effective if
you follow the three Ps of being persistent, polite and patient.
credit controller Person in an organisation responsible for credit control.
credit crunch Period when it is difficult to borrow money, usually triggered by fears
about the national or world economy.
The term was used to describe the problems in the financial markets
which arose in the late months of 2007 and continued into 2008.
The problems were caused by defaults on sub-prime lending in the
USA, particularly on mortgages. This resulted in liquidity problems as
bank became reluctant to lend funds to each other. This was a particular
problem for British bank Northern Rock which was nationalised in
2008.
The term was used in Auditing Practices Board Bulletin 2008/1
which described the audit implications, primarily of financial

institutions. The main concerns are whether all such institutions may
still be accounted for as a going concern, and whether investments are
properly valued.
HM Treasury glossary defines the term as “Situation where banks
across the economy significantly reduce lending to each other due to
falling confidence that loans will be repaid. This restricts the flow of
money around the economy. It can result in less credit being available
for consumers and businesses, resulting in an increase in the cost of
obtaining credit.”
credit default option Option in which the payoff is related to the credit rating of the
underlying security.
credit derivative Any financial derivative where the return is related to the credit rating
of the underlying security.
credit enhancement Techniques for improving the credit-rating of a person, business or for a
security, particularly an asset-backed security.
credit entry Entry on the credit side of an account.
credit excluded Description of people who cannot borrow money through the normal
channels.
credit facilities Arrangement which a bank makes with a customer allowing him to
borrow money, or which a shop makes with a customer allowing him to
take goods for payment later.
crédit foncier French: lending money secured on property.
credit freeze When it is difficult or impossible to borrow money, particularly from

restrictions imposed by the government.
credit guarantee Any form of third party guarantee or insurance for a liability incurred or
incurrable by another party.
credit insurance Insurance policy against the risk of non-payment by a customer.
credit ladder Informal description of ranks of credit facilities with main financial
institutions at the top and loan sharks at the bottom. Typically a
borrower climbs down the ladder as the interest rates get higher.
credit limit Maximum amount a financial organisation will allow a customer to

incur, such as on a credit card or bank account.
credit line Extent to which funds are made available to a borrower.
credit memo American term for a credit note.
crédit mobilier French: lending money on the security of moveable property.
creditnota Dutch: credit note
credit note A document that a supplier issues to a customer to cancel or reduce the
value of an invoice previously issued.
Common reasons for issuing a credit note include:
● when goods have been accepted back;
● to correct a mistake on the invoice;
● to cancel an incorrect invoice so that a correct invoice may
be issued;
● to provide a retrospective discount or similar price reduction;
● to cancel a charge, such as for delivery;
● to remove a disputed item from an invoice to allow the rest
of the invoice to be paid. (An invoice is issued for the same amount as
the credit note.)
Provided the credit note is issued for a bona fide reason, any VAT
may be added to the amount, which is then deducted from the output
tax payable for that period.
crédito Portuguese: credit
creditor Person to whom you owe money.
creditor days Number of days it takes a business to pay its creditors. This is
calculated as creditors (from balance sheet) divided by purchases,
multiplied by 365 or 366.
creditor sheet Another name for a debt statement.
creditors’ committee Body of creditors who meet to oversee an insolvency.
creditors’ meeting When creditors meet to decide whether to agree to the terms of an IVA
or bankruptcy.
creditors’ petition Request by creditors that a person be made bankrupt.
creditors’ voluntary liquidation

Winding-up of a company by a special resolution of members with the
agreement of the creditors.
crédit par acceptation French: acceptance credit.
credit purchase A business entity takes delivery of goods or services and is allowed to
make payment at a later date.
credit rating Indication of how reliable a person is considered to be for the purpose
of lending money.
credit reference Record of a person’s credit record, noting loans and cards used.
credit repair Improving a person’s credit record.

This usually involves challenging all adverse entries on a person’s
credit record.
credit report Information about a person or business which is relevant in determining

whether to provide credit facilities.
credit risk The extent to which it is considered that a person may not pay his bills
or repay a loan.
credit risk insurance Insurance to protect a company against credit risks, such as non-
payment by customers.
credit risk premium Excess of yield earned by a risky investment over that earned by an
investment seen as risk-free.
credit sale The sale of goods, which immediately become the property of the
customer, but where the price is payable by instalments.
credit sale agreement Another name for a hire purchase agreement, or similar.
credit scoring Reducing a person’s credit record to a number (usually out of 1000)
from which a lender decides whether to lend and at what rate.
credit side The side of a journal or other book which records the credit entries.
Traditionally this is on the right of the debit entries.
credit spread Different yield from different levels of credit risk.
credit squeeze Period when funds for borrowing are restricted, particularly when
imposed by the government.
credit-token “Credit card, debit card or other card, a token, a document or other
object given to a person by another person (“X”) who undertakes:
(a) on the production of it, to supply money, goods or services on
credit, or
(b) if a third party (“Y”) supplies money, goods or services on its
production, to pay Y for what is supplied.” (Income Tax (Earnings and
Pensions) Act 2003 s92(1)). The remainder of s92 qualifies this
definition.
credit transfer Electronic system of payment which allows funds to be transferred via a
bank or post office.
credit transaction In company law, this includes hire purchase, mortgages, conditional
sale agreements and similar.
If a company enters into a credit transaction with one of its
directors, this may require members’ approval under Companies Act
2006 s201.
credit union Mutual body which provides opportunities for a defined group of
people to lend and borrow between themselves.
creditworthiness Ability of a person or business to meet their liabilities.
creeping takeover Slow accumulation of a company’s shares as a preliminary step to a

takeover bid.
crefft Welsh: trade.
crescendo Musical term for getting louder. It is often used figuratively to refer to
any situation where something is increasing. Note that nothing “reaches
a crescendo”; the reaching is the crescendo.
CREST Electronic share dealing system established in 1996, after the failure of
the TAURUS system.
Under CREST, shareholdings are held electronically without the
need to produce a share certificate.
crew “In relation to a ship or aircraft means all persons actually employed in
the working or service of the ship or aircraft, including the captain”
(Immigration Act 1971 s33).
cricket club The issue of whether it is a mutual trade is discussed in the Inspectors’
Manual at BIM24345.
crime Offence which is seen as deserving punishment by the state, as against a

civil offence where the wronged party must bring any legal action.
crimen falsi The old common law of forgery, now replaced by statute.
crime sheet Record of criminal offences committed by a person.
criminal Pertaining to crime, or a person who commits a crime.
criminal conduct “Conduct which:

(a) constitutes an offence in England and Wales, or
(b) would constitute such an offence it occurred in England and Wales.”
(Proceeds of Crime Act 2002 s76(1) and s340(2)).
criminal court “Means:

(a) the criminal division of the Court of Appeal;
(b) when dealing with any criminal cause or matter —
(i) the Crown Court;
(ii) a magistrates' court.”
(Courts Act 2003 s68).
criminal damage Crime committed when a person “without lawful excuse destroys or
damages any property belonging to another intending to destroy or
damage such property or being reckless as to whether any such property
would be destroyed or damaged” (Criminal Damage Act 1971 s1(1)).
criminalise Make into a criminal offence. Recent examples include fox-hunting and
smoking at work.
criminal law Law relating to public offences rather than between people.
criminal lifestyle Lifestyle which appears to be funded from the proceeds of crime.
An order may made to confiscate property belonging to a person
enjoying such a lifestyle under Proceeds of Crime Act 2002 s10. A
more detailed definition appears in s75.
criminal payments Payments involving crime such as bribery and extortion.

From 11 June 1993, such payments are disallowed for tax purposes
even if they otherwise meet the conditions of a business expense. The
object is “to stop indirect subsidies to criminal activities” and to
encourage people not to submit to extortion.
The legislation is now contained in Corporation Tax Act 2009
s1304. This gives three categories of disallowed expenditure:
• where the payment itself is an offence (such as to buy illicit
drugs or arms) under s1304(4)(a)
• where a payment is made outside the UK but would be illegal
if made in the UK (even if legal where made) under s1304(4)(b)
• (from 30 November 1993) for blackmail or extortion, under
s1304(5).
The matter is discussed in the Inspectors’ Manual at BIM 43101
and following sections.
crime-related payments Term used in Corporation Tax Act 2009 s1304 for criminal payments.
Criminal Procedure Rules

Rules introduced from 3 April 2006 under Courts Act 2003 s69.
criminal proceedings Proceeding against someone under criminal law.
Crim LR Criminal Law Review, law repots from 1954.
Cripps, Sir Stafford English Labour politician (1889-1952) who was Chancellor of the
Exchequer from 13 November 1947 to 19 October 1950. He raised
taxes and tried to reduce imports to deal with the severe post-war
economic crisis. He supported nationalisation of heavy industry.
crisis loan Immediate interest-free loan from the Social Fund to meet a pressing
short-term need.
crisis management Management during a period of crisis. This can apply to a government,
business or a person.
Crisis management requires a sure touch, determination and
intuitive skills.
crisis of confidence Mental anguish when a person doubts his ability to do a required task,
particularly when this occurs just before doing it and when the person
previously was confident of doing it.
crisis of conscience Mental anguish experienced by someone who is obliged to do

something he believes to be wrong.
criteria Plural of criterion. Therefore there cannot be one criteria.
criterion Mean or standard against which performance may be measured. The

plural is criteria.
crith Unit of mass, that of one litre of hydrogen.
critical event The point in the business cycle at which revenue may be recognised.
critical illness policy Insurance policy to provide a lump sum payment should the insured be
diagnosed as having one of a number of specified illnesses, conditions
or diseases. Also known as dread illness policies.
critical path analysis Management accounting method which is used to determine which
activities of an organisation are essential to its success.
critical period In psychology, a period in which a specific event must happen for a
person to develop normally.
CRM Customer relationship management.
CRN Customs Registered Number
CRO Companies Registration Office.
crock (1) Large pot. In mythology there is a crock of gold at the end of a
rainbow.
(2) Anything or any person which is old and in a poor state. The term
was originally restricted to horses.
croft Small piece of arable land, particularly which adjoins a dwelling and
which is farmed by the dweller.
There are some special provisions that relax stamp duty for croft
transactions.
Crofters Commission Body established to regulate and develop crofting in rural communities
in the Highlands and Islands of Scotland. It is regulated by the Crofters
(Scotland) Act 1993 amended in 2007.
crofting community “All the persons who (either or both):

(a) occupy crofts within a township which consists of two or more
crofts registered with the Crofters Commission;
(b) hold shares in a common grazing associated with that
township.” (Crofters (Scotland) Act 1993 s61(1)).
CROIC Cash returned on invested capital
cronfa Welsh: fund.
crony Close friend, particularly in the context of someone who is helped by

his friends.
cronyism Form of management which involves appointing, promoting and

supporting one’s friends just because they are one’s friends.
crop (1) Yield, particularly the harvest from arable farming.

(2) Cut, particularly in the context of cutting pictures to fit a piece of
artwork.
crop-lifting Old term for the crime of stealing unharvested crops.
crore Ten million. This rare term is believed to be of Hindu origin.
cross action In law, when a defendant brings an action against the claimant.
cross and pile Either the front and back of coins, or the game of pitch and toss. The
expression comes from old French coins which bore either a cross or
pillar (pile).
crossbencher Person who sits in Parliament, particularly the House of Lords, but is
not a member of a political party.
cross-bill Old term for a legal action in Chancery where the defendant brings an
action against the claimant. [A crossbill is also a type of finch.]
cross-border Applying to more than one country.
cross-border listing Practice of listing shares in a company on the stock exchanges of more
than one country.
cross-casting Process of analysis in a cash book.
cross-category activity Term used in Gambling Act 2005 s16 to describe an activity which has
elements both of betting and gaming.
cross-check Process of checking numbers in an accounts book.
cross-claim In law, action brought by a defendant against a claimant.
cross-country interest-rate swap

Swap of two interest rates in two currencies. Typically this involves
swapping a floating rate for a fixed rate.
cross-division Classifying people into categories which are not mutually exclusive, so
that a person may appear in more than one, or possibly in none.
crossed cheque Cheque which bears the marks of either of general crossing or special
crossing. This means that the cheque may only be paid into a bank
account, and cannot be exchanged for cash as an open cheque can.
cross-hedge Hedge created by selling a forward contract or futures contract in a

different security or commodity from the one being hedged. For a
cross-hedge to be effective, the two underlying securities should have
similar price movements.
cross-holding Situation in which two companies each hold shares in the other. This is
sometimes done to cement a working relationship, but the commonest
reason is usually to frustrate a takeover bid.
crossing Additional marks added to a cheque. Depending on what is written or

drawn on the cheque, a crossing may be a general crossing or a special
crossing (Bills of Exchange Act 1882 s76). This takes the form of two
parallel lines drawn or printed on a cheque to restrict how the cheque
may be paid. Almost all cheques are now crossed.
cross-interleaved Reed-Solomon coding

System used for reading data stored on a compact disc.
cross elasticity In economics, change in the supply or demand of one product as a

result of a change in another.
cross holding Where two companies each hold shares in the other. This is sometimes
done to frustrate a takeover bid.
cross out Draw a horizontal line through as a means of indicating that the item is
deleted.
This is not good practice in manuscript accounts. Instead, the
incorrect entry should be negated by a reverse entry, and then the
correct entry made, with sufficient narrative to explain what has
happened.
cross-over (1) In charting, a term for the point when a line denoting share prices
crosses another line. A common example is when the short-term price
crosses below a price for the moving average of the same share. This
may be an indicator to buy the share.
(2) In marketing, where goods of one type take on the nature of another,
offering additional marketing opportunities. The term is commonly
applied to classical music rendered in a form likely to appeal to lovers
of other types.
cross rate Exchange rate for two currencies expressed in terms of a third currency.
cross-reference Reference in a text to another place where further details may be found.
crossroads Literally a junction of four roads. The term is used figuratively to mean
any circumstance where a decision must be made on further direction.
Cross’s Act Law passed in 1875, named after a government minister. It gave local
authorities power to clear whole areas of slum houses. The biggest such
scheme started in Birmingham in 1876.
cross-section (1) Diagram which shows the internal structure of a physical object as if
it had been cut in the middle.
(2) Figuratively, a selection of people who are believed to be
collectively representative of the population.
crowding out Any financial effect caused by excessive activity in another financial
area. An example is when high levels of government borrowing depress
the returns available from competing investments.
crown (1) The monarch, state or government (where the word is used with a
capital C).
(2) Coin first issued 1544. Those issued before 1990 are legal tender for
five shillings (25p); those issued from 1990 are legal tender for £5.
crown agent Scottish solicitor who prepares criminal prosecutions.
Crown Court Criminal court established by Courts Act 1971 s4 as a replacement for
Assizes.
The term “means—
(a) in relation to England and Wales, the Crown Court
constituted by section 4 of the Crown Courts Act 1971;
(b) in relation to Northern Ireland, the Crown Court constituted
by section 4 of the Judicature (Northern Ireland) Act 1978.”
Crown employment Working for the government. Generally such workers have the same
rights as other workers though some of these are contained in separate
legal provisions. The trade union rights are contained in Trade Union
and Labour Relations (Consolidation) Act 1992 s273.
For tax, this is “Employment under the Crown:
(a) which is of a public nature, and
(b) the earnings from which are payable out of the public
revenue of the United Kingdom or of Northern Ireland” (Income Tax
Provisions for national insurance are contained in Social Security
Crown Estate Commissioners

”means the Commissioners referred to in section 1 of the Crown Estate
Act 1961” (Interpretation Act 1978 Sch 1).
crown jewels The most valuable asset of a business. The term is often used in the
context of what a bidder is seeking in a takeover bid.
crown-land Land which belongs to the monarch or the state.
crown-lawyer Lawyer who acts for the state in criminal proceedings.
Crown Office Office for the Queens Bench Division of the High Court.
Crown option Provision contained in Taxes Management Act 1970 s9D, now
repealed. This allowed a choice between different cases of Schedule D
for particular types of income.
For a discussion about the successor provisions, see Barnetts v
HMRC. TC00575 [2010]. It is discussed in the Inspectors’ manuals at
BIM14035.
Crown Proceedings Legal action against the government which became permissible under
Crown Proceedings Act 1947 that became law on 31 July 1947.
Crown set-off In an insolvency, when debts owed to the government (such as all
taxes) may be offset against any sums owed by the government to the
same person or company. HMRC has confirmed that there is no Crown
set-off in a Time to Pay arrangement.
crown witness Witness for the prosecution in a criminal law case.
CRR Community and Race Relations.
cruciform shields Design on the reverse of florins for the reign of George V from 1910 to
1935. It depends four shields arranged as a cross.
crude oil Petroleum oil as it comes out of the ground before being processed. It is
a mixture of organic compounds of which the hydrocarbons provide
most forms of oil for fuel.
The oil industry usually classifies crude oil according to where it is
extracted, eg Brent, Oman, West Texas. It is further classified as light
crude oil or heavy crude oil. The first is more valuable as it contains
more hydrocarbons that can be used as fuel.
crude petroleum Raw petroleum oil which has not yet been processed. Another name for
crude oil.
cruise Holiday travel on a liner.

For VAT, the general rule is that goods supplied on the journey are
regarded as supplied from the country where the cruise starts. However
in the case Kholer (C-58/04), the European Court of Justice held that
goods sold in non-EU ports were to be regarded as being supplied from
those ports, even though the journey was from Germany to Italy.
crusade taxes Tax imposed in 1625 for the Protestant crusade.
crystallise Process by which a charge is created or a similar provision is brought

into effect.
Examples include a liability for capital gains tax when an asset is

disposed of , or a crystallised right from a pension fund.
crystallised rights Rights and benefits under a pension scheme, such as payment of a
pension, annuity or similar income. These provisions are discussed in
the Inspectors’ Manual at RPSM03301005.
CSA Child Support Agency.
CSA reference number Number once used by the Child Support Agency to identify non-
resident parents who are liable to pay parents with care.
From 3 March 2003, the CSA uses the national insurance
number.
CSCE Coffee, Sugar and Cocoa Exchange Inc of New York.
CSCI Commission for Social Care Inspection
CSE Certificate of Secondary Education.
CSFA Children, Schools and Families Act 2010.
CS(ID)A 1985 Company Securities (Insider Dealing) Act 1985.
CSG Community Safety Group
CSO Child support order.
CSP Community systems provider
CSR (1) Customs Statistical Reference

(2) Corporate social responsibility
CT (1) Common Transit, or Community Transit

(2) Corporation tax.
CTA Corporation Tax Act. There are two, in 2009 and 2010. They contain
the corporation tax provisions previously in Income and Corporation
Taxes Act 1988 and subsequent Finance Acts.
CTAEO Council tax attachment of earnings order.
CTB Council tax benefit.
CTC Child’s tax credit.
CTQU Central Tariff Quota Unit.
CTSA Corporation tax self-assessment.
Ct Sess Court of Session.

cucullus non facit monachum

Latin: the cowl does not make the monk.
A maxim quoted in Twelfth Night by Shakespeare, not to judge by
external appearances.
cue Indication to do something, such as a mark on a document or a prompt

on a computer screen.
cui bono? Latin: to whose benefit?
cujus est dare ejus est disponere

Latin: he who gives anything can also direct how the gift is to be used.
cujus est instituere ejes est abrogare

Latin: he that institutes may also abrogate.
cujus est solum ejus est usque ad coleum

Latin: whose is the soil, his is also that which is above it.
culminate Means to reach a high point. Its meaning is more precise than simply
stating a result or consequence.
culpable officers For national insurance, directors and other company officers who are
responsible for a failure to pay contributions required by the company
(Social Security Administration Act 1992 s121C(1)). The officer can be
made personally liable to pay the contribution.
culpa levis Latin: a small wrong.
cum Latin: with.

The word is used in expressions such as cum div¸ which refers to a
share where the purchaser will receive the next dividend. The opposite
is ex.
cum all With all advantages attached to a share. This term is not often used
now. The opposite is ex all.
cum capitalisation With all rights of capitalisation being offered to a new purchaser of the
share.
cum coupon Description of a security where the coupon for the current period is still
attached (literally or figuratively) so that the dividend may be obtained
for the current period.
cum div With dividend. The term is used to denote a share where the next
dividend will be paid to a purchaser. A share remains cum div until the
registrar closes the register for the dividend run. The share then goes ex
div. If a share is bought ex div, the dividend is paid to the previous
owner. This is reflected in the price paid. Cum div is sometimes further
abbreviated to cd.
cum grano salis Latin: with its grain of salt.

Term used to allow for an abatement of grain to allow for the
inevitable small quantity of other material it contains.
cum hoc, propter hoc Latin expression which means that one event is not necessarily the
outcome of the other just because they happen at the same time.
cum multis allis Latin: with many other things.
cum new Description of share offered for sale with the right to acquire further
shares in a rights issue or bonus issue.
cum notis variorum Latin: with notes of various [critics or commentators].
cum privilegio Latin: with privilege.
cum rights When a share is offered for sale with all the rights attached to the share.
cum testamento annexo Latin: with the will annexed.
cumulation period For inheritance tax, period during which lifetime gifts are cumulated for
the purposes of seeing if the nil rate band has been exceeded. The
period has been seven years for transfers from 17 March 1986,
previously from 1981 it was ten years, before which (under capital
transfer tax) it was indefinite.
cumulative Description of the total so far.
cumulative interest Interest which is added at regular periods.
cumulative preference share

Form of debt funding for a company where interest is paid for each
period, except that if the company cannot pay interest for a period, it is
added to amounts payable in a future period.
cumulative preferred stock

In USA, stock in which the dividends are rolled over if not paid for a
period.
cumulative principle Principle that potentially exempt transfers are aggregated chronically
and cumulatively for inheritance tax during the cumulation period.
cumulative threshold A threshold which increases as time passes. A cumulative threshold was
used before 27 March 1980 to determine whether a business needed to
register for VAT.
cumulative weighted average cost

The average cost, particularly of shares and other securities, when
purchases are made at different times for different amounts.
cumulative Term applied to any form of running total.

In accountancy, it often refers to a ledger figure giving a running
total of some figure.
In investment, the term is often used for investments such as
preference shares and other form of debt equity. It means a financial
instrument where any unpaid amount from one period is added to
subsequent payments. So a cumulative preference share has any unpaid
dividend added to further dividends. These must be paid in full before
dividends may be paid on shares.
Cunliffe Committee Body that reported in 1918 on the necessary policies to ensure
economic stability after the first world war. It was chaired by Lord
Cunliffe who was then governor of the Bank of England.
cur adv vult Abbreviation of curia advisari vult, the court wishes to be advised.
curia advisari vult Law Latin: the court wishes to be advised.

The term is used in law reports to indicate that judgment was not
delivered immediately, but after time for consideration.
currency The means of exchange for a territory. This is usually controlled by a

central bank which oversees the printing of banknotes and minting of
coins. In primitive societies, currency was often naturally found items
such as gold or cowrie shells.
Corporation tax has a basic rule that accounts must be prepared in
sterling (Corporation Tax Act 2010 s5) but has provisions for accounts
in other currencies (ibid ss6-17).
currency backing Gold or government securities which maintain the strength of a national
currency.
currency band Exchange rates expressed as upper and lower limits relative to other
currencies. The term was used during the life of the exchange rate
mechanism of the European Union.
currency basket Group of currencies, which are weighted and then used to determine the
value of a new invented currency. The green pound, special drawing
rights and ECU are examples of currency baskets.
currency clause Clause in a contract which seeks to avoid problems relating to exchange
rates, by stating the rate at which payment will be made, or by stating
the method by which such rate is determined.
currency contract Contract made with a view to hedging a risk from foreign exchange.
There are broadly three types of such contract:
• forward currency contracts
• currency options
• currency swaps.
The tax implications are discussed in the Inspectors’ Manual at
BIM39523.
currency exchange (1) .... foreign exchange

(2) Arrangement between two companies in different countries to agree
to cover specific currency needs by matching loans in the national
currencies. This avoids the need for any exchange of currency between
the countries with a saving of charges and, possibly, an automatic hedge
for currency differences.
currency futures Purchase of foreign currency for delivery at a future date.
currency hedging Any financial arrangement designed to mitigate the effects of changes
in exchange rates.
currency mismatching Activity of borrowing money in a country where interest rates are low
and depositing it in a country where rates are higher.
currency movements Changes in the exchange rates between two currencies.
currency note Bank note or other document which is used as currency. The term is
particularly used for notes issued by the Treasury between 1914 and
1928.
currency option Contract to buy or sell a specified currency at a fixed exchange rate
within a certain period.
BIM39523.
currency restrictions When an overseas debt is not paid because of restrictions or a shortage
of currency.
This does not make the debt a bad debt. To the extent that the debt
has not been insured by ECGD, tax relief may only be obtained under
extra-statutory concession B38.
currency school Body of economic opinion following banking crises from 1825 to 1837
on the best method of controlling the issue of bank notes.
The banking school believed that the issue of notes should be
flexible to meet circumstances while the currency school believed that
notes should be restricted and fully backed by gold. Bank Charter Act
1844 came down in favour of the currency school.
currency swap (1) Agreement to use a certain currency in exchange for another
currency under a contract.
BIM39523.
(2) Buying or selling a fixed amount of currency on the spot market,
and selling or buying the same amount on the forward market.
current (1) In accounting, this term means other than capital. So a current
account is one where the funds are readily available, unlike a capital
account or deposit account.

(2) In general use, the words “current” and “currently” simply refer to
the present. If the present tense is used for the verbs, it is usually
unnecessary to use the words.
current account Bank account for day-to-day expenditure, usually where a cheque book
is provided
current address Where a person is believed to be currently living.

For the purposes of sending copies of accounts, the current address
of a shareholder is one which has been notified to the company and
which the company believes is where documents sent will reach the
shareholder (Companies Act 2006 s423(3)).
current asset In financial accounting, cash, debtors and any other asset which is
expected to be consumed within the next 12 months.
current assets ratio Accounting ratio of current assets divided by current liabilities.
In general, a ratio of 2 is considered adequate, but this must always
be considered against the nature of a business. A building firm probably
requires a higher ratio, whereas a supermarket can manage on a lower
one.
current claim Amount of group relief being claimed in respect of a current period
current cost Amount it would cost at current prices to replace an asset.
current cost accounting (CCA)

One of two methods of accounting designed to reflect inflation. The
other method was current purchasing power. This was succeeded by
CCA, which was given force by SSAP 16 in 1975. This accounting
standard was widely ignored and finally abandoned in 1985.
current expenditure Expenditure incurred or planned in the current accounting period.
current funding level valuation

In pensions, consideration as to whether the assets are sufficient at the
valuation date to meet all current and future liabilities of the fund.
current liability Liability which must be met within the next 12 months. It appears on
the balance sheet, where it is the antithesis to current assets.
A liability which does not have be met within the next 12 months is
called a long-term liability.
current liquidity ratio Current liabilities minus current assets divided by net profit (or
sometimes cashflow) and multiplied by 365 days.
current maintenance arrestment

One of three types of arrestment of earnings which may be ordered by
a Scottish court. The other two are earnings arrestments and conjoined
arrestments. Current maintenance arrestments are ordered for arrears of

child maintenance.
The court specifies a daily amount which must be collected. This is
multiplied by the number of calendar days (not working days) since the
previous payslip. The employer is entitled to deduct a further £1 for
himself to cover the cost of administering the arrestment.
current profit Halfway house between gross profit and net profit. It comprises gross
profit minus the production, administration and sales costs but without
subtracting other overheads. This figure is widely used for Japanese
companies.
current purchasing power (CPP)

Former of two systems of accounting to reflect the effects of inflation.
The latter system was current cost accounting.
CPP was introduced by SSAP 8, which was withdrawn before it
came into force, making it the only SSAP that was never applied.
current purchasing power (CPP)

One of two accounting methods designed to reflect the effects of
inflation in accounts. The other method is current cost accounting.
current rate of exchange Rate of exchange for a currency which applies now.
current ratio Accounting ratio, calculated as the current assets divided by current
liabilities. It is now more commonly called the liquidity ratio, or
sometimes working capital ratio.
current service cost The increase in the value of a pension scheme’s future liabilities arising
from an employee’s on-going membership of the pension scheme.
current spending The yearly running costs of local authorities, not including specific
grants and the cost of buying assets.
current use value The current value of development land. This was used in one of the
three ways to calculate base value for development land tax.
current value A method of valuing assets and liabilities which takes account of
changing prices, as an alternative to historical cost (FRS 15)/
current year basis (CYB) Method of determining the trading period for which a business is taxed
in any particular year. CYB was introduced in 1994, prior to which the
previous year basis was used. There were transitional provisions when
the basis was changed.
Under CYB, a person is subject to income tax on the profits of the
trading year which ends in the tax year. So if a business makes up its
accounts to 30 June, the profits subject to tax in (say) 2010/11 are the
profits earned in the year to 30 June 2010.
For all but the smallest businesses, income tax is paid in three
instalments:
● half the estimated income by 31 January in the tax year;
● the other half of the estimated income six months later on 31

July, after the tax year (which ends on 5 April); and
● any balance (or refund) on the following 31 January, when
the first instalment of the next year is due.
The estimated income is assumed to be the same as the actual
income for the previous year, unless the taxpayer declares that the
figure is likely to be significantly different.
Special provisions apply to the opening and closing years of the
business. For the first year, the business is taxed on the profits actually
earned in that year. This means that some profit will be taxed in two
consecutive years. This amount is called overlap relief and may be
claimed when the business ceases.
For the final year, profits are taxed from the end of the last basis
period used to cessation of business, with the overlap relief deducted.
current year Accounting period in which the present falls.
current yield The annual return an investor would receive from investing in a specific
security paying a known dividend. It is calculated as:
current yield = annual dividend rate x nominal value
price
It is a flat yield as opposed to the running yield.
cursor A point on the computer screen identifying an icon on the screen or the
point in a text or other file from which newly entered data will appear.
A cursor is usually marked with a flashing line or block. Text typed
into the computer will usually appear at the cursor.
curtailment costs Amounts paid to a new pension scheme when a defined group of staff
transfer from one pension scheme to another. The costs represent the
value of the pension rights accrued by the transferring staff. .
curtate annuity Annuity where payment is only made at the end of each year a person
survives.
curtilage Boundary of land on which a building stands.

All land within the curtilage is usually regarded as being part of the
property with the main building, such as for council tax and capital
gains tax.
curve Line on a graph which arcs. The shape of the curve can help identify the
nature of the relationship between the two factors being plotted.
CUS Company’s unapproved surplus. The abbreviation is used in Income

and Corporation Taxes Act 1988 s444AK in relation to the taxation of
mutual life assurance business.
cushion In finance, a buffer or financial arrangement which mitigates adverse

circumstances.
cushion gas Volume of gas retained in a storage facility to maintain pressure. Under
Finance Act 2010 s28, cushion gas is treated as plant.
CUSIP Committee on Uniform Securities Identification Procedure.
custodian Person who looks after something or someone. In finance, the term
often means a trustee who looks after assets but who may not have
other trustee responsibilities.
custom (1) Habit which has become so established that it takes on the force of
law. In extreme cases a custom can become a law.
Custom may be quoted as extrinsic evidence in defining the terms
of a contract. In the case Hutton v Warren [1836], a court accepted the
custom that a tenant farmer may claim a fair allowance for seeds and
labour when given notice to quit.
(2) Practice of using a particular shop for purchases.
customary payment Payment that a person is not legally required to make, but usually does
so. The term is particularly used in the inspectors’ manual at EIM00640
in relation to payments made in employment. A customary payment is
taxed on the same basis as a contractual payment.
customer Person who buys goods or services from someone in the course of their
trade. HMRC has started to refer to taxpayers as customers, even
though they have no choice to take their “custom” elsewhere.
customer lottery Lottery where a free ticket is given to retail customers, one of whom
periodically wins a prize (Gambling Act 2005 Sch 11 para 20). Such a
lottery is exempt from most provisions of the Act.
customer relationship management (CRM)

Manner in which a business deals with its relationships with its
customers. This includes processing orders, dealing with complaints,
and monitoring sales. There is specialist CRM software.
customer service Department in a business designed to answer questions from customers,

such as expediting orders or answering technical questions.
customers' collection period

Average number of days credit taken by customers.
custom-house Place at a port where customs duties were paid.
customise Change something to fit a person’s specific needs.
customize menu In computing, an option which allows the user to define some basic
functions of the computer.
Customs Action Code (CAC)

Code which indicates the action taken by Customs on either an entry or
a request for removal.
Customs Action Text Expanded description of Customs Action Code.
Customs and Excise Body which collected indirect taxes and performed other duties until
merged into HMRC.
customs and excise acts “means the Customs and Excise Acts 1979 and any other enactment for
the time being in force relating to customs or excise” (Customs and
Customs and Excise Acts 1979

“Means-
this Act,
the Customs and Excise Duties (General Reliefs) Act 1979,
the Alcoholic Liquor Duties Act 1979,
the Hydrocarbon Oil Duties Act 1979,
the Tobacco Products Duty Act 1979”
customs and excise airport

“An aerodrome for the time being designated as a place for the landing
or departure of aircraft for the purposes of the customs and excise Acts
by an order made by the Secretary of State with the concurrence of the
Commissioners which is in force under an Order in Council made in
pursuance of section 60 of the Civil Aviation Authority Act 1982”
Customs and Excise Warehouse

A warehouse separately approved for the deposit of goods liable to
customs duty and excise duty.
Customs Approved Treatment Or Use

The placing of goods under a customs procedure; their entry into a free
zone; their re-exportation from the customs territory of the European
Union (EU); their destruction or their abandonment to the Exchequer.
customs barrier Customs duty which is imposed with the intention of making trade
between two countries difficult.
customs broker Person who takes goods through Customs for a shipping company.
customs clearance Passing goods through Customs on import or export, or a document

which states that they have been properly passed.
customs declaration Statement saying what goods have been imported and what duty is
payable on them.
customs duties Tax charged on imports (and, at least in theory, on exports). It was
originally imposed in 1055 and is still imposed, making it Britain’s
oldest tax.
It was originally collected in a kind, such as by a “take” of one cask

from each ten in the cargo. By 11th century this was already regarded
as a “custom”, hence its name. This mirrored similar duties sometimes
charged to merchants at city gates. The first system to establish customs
duties on all goods was imposed by King John in 1202 at the rate of one
fifteenth. It was extended to all merchants in 1204, and briefly
abandoned between 1207 and 1210 to allow free trade between Britain
and France. Local customs duties persisted until 1274.
The success of income tax’s reintroduction in 1842 led to the
reduction or abolition of duties on glass, vinegar, currants, coffee and
wool. In 1860, all duties were abolished but 14: spirits, sugar, tea,
tobacco, wine, coffee, cocoa, currants, timber, chicory, figs, hops,
pepper and raisins.....
customs duties Tax charged on goods imported to the UK from outside the European
Union. In theory, these duties can also be imposed on exports. No
duties are imposed on imported services except to the extent that the
price for those services is included in the price of tangible goods.
The administration of customs duties also acts as a check on
preventing prohibited goods entering the country.
The duty is charged at the point of importation, usually a port or
airport. There are relaxations for free zones and customs warehouses.
Calculation of the duties involves classifying the goods and
identifying the country of export from volumes of tables. This is known
as the Customs Tariff.
Customs Duty A tax charged on goods imported into the European Union (EU). It is
based on the value of the imported goods (see - Ad Valorem duty) and
the description of the goods. Remember that imported goods may be
liable to other charges, such as Anti-Dumping Duty (ADD) or Common
Agricultural Policy (CAP) charges. They may also be liable to Excise
Duty and VAT.
Customs entry point Place at a border between two countries where goods are checked.
Customs examination Inspection of baggage by a Customs officer to see if it contains any

prohibited goods or items on which duty should be paid.
Customs formalities General term for all Customs procedures when exporting or importing
goods.
Customs Hotline Number that can be called to inform Customs of suspected smuggling
or tax fraud. The number is 0800 595 000. It is open for 24 hours a day
on every day. Information may also be passed on the website
www.hmrc.gov.uk/customs-hotline, or by writing to Customs Hotline,
Freepost SEA 939, PO Box 100, Gravesend, Kent DA12 2BR, or by
faxing to 0800 528 0506, or e-mailing to
customs.hotline@hmrc.gsi.gov.uk.
custom-shrunk Term used by Shakespeare to mean having fewer customers.
Customs News Publication briefly produced by Customs and Excise in 1995. It was
replaced by Business News which has itself been replaced by other
publications.
Customs officer Employee of the relevant department of HMRC, particularly one who
has investigative powers.
Customs procedure One of the outcomes for imported goods presented to Customs. By far,
the most common procedure is release for free circulation (RFC)
which means that the duties have been paid and the imported goods
may be used in the UK as the importer wishes.
The full list of Customs procedures are:
● release for free circulation;
● transit (to another destination);
● Customs warehousing;
● inward processing;
● outward processing;
● processing under Customs control;
● temporary importation; or
● exportation.
Such a procedure follows a decision by Customs regarding their
treatment or use. Alternative treatments are entry into a free zone or
warehouse, re-export, destruction or abandonment to the Exchequer.
Customs Procedure Code

A six-digit code used on entries at import and export to identify the type
of procedure for which the goods are entered and from which they
came.
Customs procedure with economic impact (CPEI)

blanket term describing a number of Customs procedures which are
specifically designed to aid European Union (EU) companies. The
procedures involved are Customs Warehousing; Free Zones; Inward
Processing Relief (IPR); Outward Processing Relief (OPR); Processing
under Customs Control (PCC); and Temporary Import Relief (TI).
Customs procedure with economic impact

Term for some of the Customs procedures which may be followed
when imported goods are presented by the importer.
The relevant procedures are:
● Customs warehousing;
● inward processing;
● outward processing;
● processing under Customs control;
● temporary importation; or
● exportation.
Customs Registered Number

A unique 5 digit number assigned by HM Customs and Excise to an
exporter or agent approved to use one or more of the following export
procedures: Simplified Clearance Procedure (SCP); Local Export
Control (LEC) and Period Entry.
Customs Release The approval given by Customs that authorises a transit shed operator
to deliver goods from the transit shed subject to such conditions the
Commissioners may impose.
Custome restricted until Endorsement that appears on the registration document of certain
vehicles that have been imported under schemes that do not require
their immediate registration on import. The endorsement gives the date
which is the earlier of when any VAT and duty has been paid and one
year after importation. An unendorsed document can then be issued.
Customs seal Seal attached by a Customs officer to a box or other container to

indicate that it has passed through Customs.
Customs Statistical Reference (CSR)

Code which identifies both the type of export consignment and the type
of documentation that goes with the consignment.
Customs Tariff Set of volumes used to calculate customs duties on goods imported
into the UK from outside the European Union.
The calculation considers the nature of goods, the country of origin
and their value.
Customs Union Group of countries which agree not to charge customs duties or other
import taxes on each other’s products.
Various such unions have been formed. The most important is the
European Union. In 1992, it was agreed that member states would
abolish all remaining duties for other member states. This also includes
imports to and from Iceland, Liechtenstein and Norway. Under the
Ankara agreement (1995), customs duties are also not imposed on
imports from Turkey.
Customs Union The Customs Territories of the European Union (EU), Turkey, San
Marino and Andorra. The unions between the European Union and
these countries enable most goods in free circulation to move freely
between them without the need to claim import duty relief; subject to
the production of any necessary preference or Community Transit (CT)
documentation. VAT is still due on imports from Turkey; San Marino
and Andorra, however, unless the goods are eligible for relief.
Customs value The value of imported goods for customs purposes.
Customs warehouse A place approved by HM Customs and Excise for the storage of goods
without payment of import duty. Import VAT is also suspended during
storage of warehoused goods. There are several different types of
Customs warehouse. While most approvals are for specific locations, in
some cases approval can be given to a company and its commercial
accounting and stock control systems. In these cases the approval is not
linked to a specific location.
Customs warehouse Store approved by Customs and under its control. One of the Customs
procedures which may be applied to imported goods is Customs
warehouse. This is where goods are placed in a Customs warehouse.
There are two types of Customs warehouses: private and public. A
private warehouse may only be used for goods belonging to the
warehouse keeper, whereas a public warehouse may be used by anyone.
Customs warehousing One of the Customs procedures which may be applied when goods are
presented to Customs on importation.
A Customs warehouse is any store approved by Customs and
under their control. Goods remain in the warehouse until assigned
another Customs procedure.
custos rotulorum Latin: keeper of the rolls.
cut (1) Reduction in amount, such as in pay or prices.

(2) Share of proceeds.
cut and shut Vehicle created from welding together two pieces of written off
vehicles. This is not illegal, though such vehicles often have their nature
concealed and can be dangerous if the work is not done properly. Such
a vehicle is usually allocated a number plate starting Q (if DVLA know
about it).
cutback Reduction in expenditure, particularly one achieved by discontinuing

services.
Strictly this term is tautological as it is not possible to cut forward
to increase anything. However the word “cutback” for “cut” has now
become established.
cut-off Date or other point when something must cease. For a date, the term
“cut-off point” is sometimes used.
cut-off procedures Procedures applied to the accounting records at the end of an

accounting period to ensure that all transactions for the period are
recorded and any transactions not relevant to the period are excluded.
cut off with a shilling Old term that means disinherited.

The testator would leave this coin to demonstrate that a person had
not been forgotten, and therefore had less basis to challenge the will.
The expression subsequently evolved to “cut off without a shilling”
to mean treated even worse.
Cutter’s law Not to see a person in want while you have money to spend.
cuvée French term for a vat of blended wine of uniform quality.
CVA (1) Company Voluntary Arrangement.

(2) Cerebrovascular accident. Common abbreviation for sick notes
(HMRC leaflet E14).
CVC Certificate of Veterinary Clearance, a document issued by the official

Veterinary Officer at a Border Inspection Post (BIP) controlling
Products Of Animal Origin (POAO) and live animals entering the
European Union (EU).
CVM Commissåo de Valores Mobiliaros, the Brazilian regulator for

securities.
CVS Corporate venturing scheme.
cwmni Welsh: company.
cwt Hundredweight, an imperial unit of weight equal to 112 pounds or 8

stone. There are 20 hundredweight to a ton.
cycle to work Various incentives to encourage employees to cycle to work. These

include tax exemptions for use of bicycle, showers and changing rooms
and the cost of breakfast.
CY Country prefix code for Cyprus.
cycles The term is used to mean bicycles in Income Tax (Earnings and
cyclical deficit One of the two elements of the Budget deficit. The other is the
structural deficit.
HM Treasury glossary says that cyclical deficit “occurs as a result
of a downturn in economic activity when tax receipts fall and spending
on social security increases. It can be subsequently eliminated by a
period of economic growth”.
cyf Cyfyngedig, Welsh for “limited”.

A limited company which is not a public limited company and is
registered in Wales must put either “ltd” or “cyf” after its name unless
exempted (Companies Act 2006 s59(2)).
cylinder For VAT, the supply of a gas cylinder is standard-rated and does not
come within the scope of the reduced rate for domestic fuel.
When a cylinder is refilled with reduced-rate gas, the supply may
come within the scope of reduced rating. Further details are given in
VAT notice 701/19.
cy pres French: so near. Used in English as a term of charity law.

This is the requirement that where a donation cannot be used for the
stated charitable purpose, it shall be applied for a charitable purpose as
near as possible to that intended.
Cyprus EU member state, for which purpose the territory includes the British
sovereign base areas of Akrotiri and Dhekelia. It excludes the United
Nations buffer zone, and parts of Cyprus to the north of the buffer zone
where the Republic does not exercise effective control.
CZ Country prefix code for Czech Republic.
D
D (1) Special type of tax code used for PAYE. There are two tax codes of
D0 and D1 (letter and number). D0 indicates that all the employee’s
earnings are subject to 40%; D1 indicates that they are all subject to
50%. These codes are commonly used for second jobs of high earners.
(3) Dunlop, Scottish law reports from 1838 to 1862.
(4) National insurance contribution letter for an employee contracted
out in a COSRS pension scheme.
(5) For council tax, the average value of property, thus:
• in England, between £68,001 and £88,000 in 1993;
d (Old) penny. The letter is an abbreviation of denarius. It was used

before decimal currency was adopted in 1971.
D/A Documents against acceptance.
dagger money Sum once paid to certain judges to buy weapons for their protection.
Dail Eireann Lower house of parliament in the Republic of Ireland.
daily average agreement Agreement between an employer and a worker engaged in unmeasured
work to ensure compliance with national minimum wage (NMW)
regulations.
The agreement must be made before the work states. It is an
estimate of how many hours the worker reasonably expects to work
each day. The worker must be paid the NMW for those hours.
daily cover Material used to cover a waste disposal site at the end of each day to
prevent nuisance from odour and wildlife. Material so used is not
subject to landfill tax.
daily grind Monotony of routines in life.
daily gross takings Amount of daily income received by an organisation before any
expenses have been paid. This is a figure which may be calculated by
HMRC for the purposes of issuing a tax assessment, particularly when
it believes that VAT has been understated.
daily high Highest price reached by a share or security during a particular day.
daily low Lowest price reached by a share or security during a particular day.
Daily Official List (DOL) The daily record of all trades in shares and other securities on the
London Stock Exchange.
daily trading limit Limit that may be imposed on a trader’s transactions for one day.
daimyo bond In Japan, bearer bond issued by supranational bodies.
Dairy Farmers of Britain A UK milk co-operative owned by dairy farmers that was responsible
for about 10% of all milk production in the UK. The co-operative
bought milk directly from farmers which it either sold or converted in
its factories to other dairy products. It went into receivership on 3 June
2009. HMRC provided particular guidance on the taxation of milk
retentions and on other aspects of the insolvency.
dais Part of a building which is raised to make it easier for a person speaking
there to be seen and heard. Care should be used not to use this term for
lectern, podium or rostrum.
daisy chain (1) Series of transactions created to produce an allusion of trading

volume. Such a chain is usually self-cancelling.
(2) In USA, a certification process for euromarket transactions.
daisywheel In older computer printers, a metal wheel where each spoke ends with a
different character. The printer hits the end of the relevant spoke against
a ribbon to print the character.
daisywheel printer Computer printer which uses a daisywheel.
Daiwa Leading Japanese company dealing in securities.
dak Indian term meaning the mail or a letter.
dalasi Currency of Gambia.
Dalmyo bond Type of Japanese bond that can be cleared in Europe.
Dalton, Hugh Welsh Labour politician (1887-1962) who was Chancellor of the
Exchequer from 27 July 1945 to 13 November 1947. He nationalised
the Bank of England.
He was obliged to resign after an off-the-cuff remark about his
Budget was printed in an evening paper before he had finished his
speech. He was later exonerated.
damages Money paid in compensation from a legal claim, such as for breach of
contract.
The tax treatment of such payment by a business is discussed in the
Inspectors’ Manual at BIM 42951.
damnosa haereditas Latin: an inheritance of debts.
damnum absque injuria Latin: loss without wrong.

Loss or damage for which there is no legal remedy. A modern
example is Smith v Scott [1973].
damnum sentit dominus Latin: the lord suffers the damage.

The legal principle that loss falls on the owner.
damnum sine injuria esse potest

Latin: loss without injury.
An example is when someone loses trade to a competitor.
DAN Deferment Approval Number - a unique reference number issued to a

trader by the Central Deferment Office (part of HM Customs & Excise)
to identify the trader's duty deferment account.
Danegeld An ancient tax levied to appease or fight the Danes.

From the conquest of 1066, William the Conqueror appropriated the
tax for himself. It was a feudal duty charged on lords of the manner,
who charged it to his villeins. From 1066, it was an annual tax of 2s,
which was sometimes charged two or (as in 1084) three times. Its yield
progressively fell as more exemptions were granted, until replaced in
1162 by scutage.
danger money Additional money paid to someone in respect of the dangerous

conditions in which they are expected to work. It is taxable as normal
gross pay.
Daň z přidané hodnoty (DPH)

Czech for “value added tax”.
Darling, Alistair Scottish Labour politician (1953- ) who was Chancellor of the
Exchequer from 28 June 2007 to 11 May 2010 in the government of
Gordon Brown. Darling had to deal with a serious banking and
economic crisis from 2007. He introduced the car scrappage scheme,
and the 50% additional income tax band.
DAS Pipeline Duty Adjustment Statement - issued by a pipeline operator to

the shippers. Also known as Pipeline Adjustment Statement (PAS).
DAS Debt Arrangement Scheme.
dash for growth Term used for the 1963 Budget of Reginald Maudling that sought to
stimulate the economy with tax cuts and led to currency instability
between 1964 and 1967.
data Plural of datum, a piece of information. So “the data are sent to the tax
office”.
database Data organised to make retrievals easy. The commonest database

program is Microsoft Excel.
A database can be seen as a large table of data which can easily be
sorted by any criterion or can easily be searched.
data capture Process of obtaining information which may be stored as data on a

computer. An example is scanning a bar code.
data cartridge Cassette designed to store data for use on certain types of computer
equipment. From 6 April 2009, HMRC will not accept tax data on these
media.
data et accepta Latin: expenditures and receipts.
data highway Link which connects computers so they may all share the same data.
data mining In computing, an application of artificial intelligence to solve marketing

problems and aiding forecasting and prediction of marketing data.
It works by the user defining the criteria needed for a purpose and
the computer seeking examples that meet those criteria.
data processing Processes performed by a computer with regard to data.
data revenue Income which is generated by a cable company from carrying data
rather than voice traffic.
date Means of recording a particular day. It is traditionally expressed as

three data: day, month and year. This is often expressed numerically as
either six or eight digits, so 1 April 2009 may be expressed as either
01.04.09 or 01.04.2009 (sometimes without dots, or with / used
instead).
It should be noted that the American convention is to put the month
before the day, so 01.04.09 means 1 April 2009 in UK but 4 January
2009 in USA.
In law generally, parts of a day are considered indivisible. So a
person born on 19 November celebrates his birthday at midnight of the
start of the new day, regardless of the time of day when born.
For tax tribunal hearings, a duty to do something by a particular
date means by 5pm on that day (The Tribunal Procedure (First-tier
Tribunal) (Tax Chamber) Rules SI 2009 No 273 rule 12(1)).
dated security Security that has a fixed redemption date.
date of acquisition “The date on which control of the acquired entity passes to the acquirer.
This is the date from which the acquired entity is accounted for by the
acquirer as a subsidiary undertaking under FRS 2 ‘Accounting for
Subsidiary Undertakings’” (FRS 7 para 2).
date of bill Date on which a bill of exchange will mature.
date of record Date on which a shareholder must own a security to be entitled to

receive a regular payment.
date of registration When a person or business was registered. This is particularly important
for companies and VAT registration.
date on which the financial statements are approved

Date on which the directors formally approve the accounts for an
accounting period. SSAP 17 requires the accounts to disclose
significant post-balance sheet events that happened between the end of
the accounting period and this date.
Davek na dodano vrednost (DDV)

Slovenian: value added tax.
dawn raid (1) In law, a raid of premises early in the morning before people have
either arrived for work or got out of bed. The purpose is usually to seize
material without giving anyone the chance to destroy it.
(2) Sudden purchase of a large amount of security in a particular
business. The name derives from the practice of such purchases often
being at the start of business.
Dax Abbreviation of Deutsche Aktienindex, a share index on the Frankfurt

Stock Exchange.
day (1) Period of 24 hours.

(2) Day of the week.
(3) That part of each day when the sun is shining, as against night.
day book Book of prime entry for recording financial transactions on a daily
basis.
day-labour Arrangement where a worker is paid each day for the work he has done.
day labourer Person who works for a day at a time. Such arrangements were
common for unskilled manual work until the mid-20th century.
daylight saving Old term for British Summer Term when the clock is advanced to
allow for more work during hours of daylight.
daylight exposure limit Limit set by a bank on foreign exchange dealings in a given currency
with a particular counterparty.
day off Day on which a person is not expected to work.
day of reckoning Time when someone is obliged to account for their actions. The term
comes from the religious concept of a day of judgment.
day order Instruction to a stockbroker to buy or sell on a specific day.
day out Day on which a person visits a place for recreation. The term can be
used for a servant’s free day.
day-release Arrangement whereby an employee is allowed to attend a college for

one day a week.
day-return Ticket on public transport which pays for the fare to a destination and
return from there on the same day.
days’ grace Additional days from a stated deadline in which no penalty is imposed
for non-compliance, particularly the three days allowed to pay a bill of
exchange.
day-shift Hours of work during normal daylight hours.
day trader Person who buys shares with a view to selling them on the same day.
days convention Simplification of interest rate calculations by assuming a fixed number

of days in a month or year, usually 30 days a month and 360 days a
year. With modern computers, there is no longer any need for such a
convention, but many have become established.
day’s grace Extra day allowed for something, such as payment of a debt or
submission of a form.
daysman Person who appoints a day to hear a complaint.
days of grace Another term for days’ grace.
day-to-day money Money lent between banks overnight. It is sometimes called overnight
money.
DB Defined benefit (pension scheme).
DB scheme Defined-benefit pension scheme.
DC Defined contribution (pension scheme).
D&C Dilation and curettage. Common abbreviation for sick notes (HMRC
leaflet E14).
DCF Discounted cashflow.
DCF valuation Value calculated from a discounted cashflow.
DC scheme Defined-contribution pension scheme.
DD Abbreviation for direct debit.
D/D Direct debit.
D-day (The day that the UK adopted decimal currency, 15 February 1971.
[It is also used for day of allied invasion of Europe on 6 June 1944.]
DDV Davek na dodano vrednost, Slovenian for “value added tax”.
DE Country prefix code for Germany.
dead account Account which is no longer used, even though it may still contain
funds. It is more accurately called a dormant account.
dead cat bounce Brief rally in a price of a security which is otherwise losing most of its
value.
dead freight That part of the freight that is not regarded as cargo.
dead letter Law or regulation that is no longer followed.
dead pays Old term for fictitious people used to pad out a payroll.
The term originated in the English army in the 15th century when
the muster-rolls were artificially increased.
dead reckoning Calculation based on a previous reliable calculation.

The term originally referred to plotting a ship’s position at sea.
dead’s part In Scots law, part of a man’s estate which may be left in his will and is
not automatically transferred to a surviving spouse or children.
deal (1) Bargain, agreed transaction.

(2) In gambling, issue cards from a pack.
deal comps Method of valuing different types of deal by comparing with equivalent
deals. This method is particularly used in company takeovers.
dealer Someone who trades in a particular item.
dealer Person who trades for a living. The term has also acquired some
specific meanings in particular circumstances.
dealing as consumer “A party to contract ‘deals as consumer’ in relation to another party if:
● he neither makes the contract in the course of a business nor
holds himself out as doing so;
● the other party does make the contract in the course of
business, and
● ... the goods passing under or in pursuance of the contract
are of a type ordinarily supplied for private use or consumption.”
(Unfair Contract Terms Act 1977 s12(1)).
The rights acquired under this Act for such a contract restrict the
business’s ability to avoid liability under its standards terms.
deal making Form of management which involves pairs of management making

private deals, such as agreeing to support each other’s pet projects.
deal with Term used in Companies Act 2006. A person deals with a company “if
he is a party to any transaction or other act to which the company is a
party” (Companies Act 2006 s49(2)(a)).
A person who deals with a director of a company may assume that
the director has authority to act for the company.
dean Term used for various senior positions in the church, colleges and
courts.
Dean of Faculty In Scotland, the barrister who presides over the Faculty of Advocates.
deaner Old slang term for a shilling.
dear (1) Expensive.

(2) Precious, description of something or someone held in affection.
dear bought and far brought

Old expression of gentle reproof for making an extravagant purchase.
Dearing Report (1) Report published by Sir Ronald Dearing in 1988 on accounting
standards. It led to the establishment of the Accounting Standards
Board and Financial Reporting Council in 1990, among other
changes.
[There have also been Dearing Reports in 1997 and 2001 on schools.]
death The point at which life becomes extinct.

Death must be certified by a doctor. Exceptionally, it may be stated
by the High Court when someone has disappeared for seven years.
Fewer than ten such applications are made each year.
On death, a person’s property passes to a personal representative
who is responsible for paying any outstanding debts of the deceased,
arranging the funeral and distributing the deceased’s property to either
those named in the will or those who inherit under the laws of
intestacy.
Personal debts remain payable on death, but personal legal actions
die with the person.
A person is entitled to the full personal allowance for income tax in
the year of death. No national insurance is payable for the pay period in
which a person dies. Entitlement to social security benefits are noted
under bereavement.
Inheritance tax may be payable on the estate of someone who has
died. For this purpose, any lifetime transfers may be added. Death may
also bring into scope any potentially exempt transfers made in the
previous seven years.
Property passing on death is not a disposal for capital gains tax.
The personal representative is regarded as having received the assets
from the deceased on a no gain/no loss basis (Taxation of Chargeable
Gains Act 1992 s62-63A).
death-bed State when a person knows he is about to die. The person is said to be
“on his death bed”. A confession at this time can be given significant
weight by a court.
death benefit A life insurance payment made upon the death of an insured person.
death certificate Document confirming that a person has died, and stating the date and
cause of death.
death duties Tax or taxes charged on the estate of someone who died between 1694
and 1975.
They were considerably amended until consolidated into estate
duty in 1894. Legacy duty and succession duty were finally abolished
in 1949. Estate duty was replaced by capital transfer tax in 1975,
which was replaced by inheritance tax in 1986.
death estate For inheritance tax, the total amount of property a person owned just
before death other than excluded property. Not all the death estate
may be taxable.
death in service benefit Term life insurance often provided as part of an occupational pension
scheme.
If a member dies while still an employee, the scheme will pay a
lump sum. The law limits this pay-out to four times salary.
death on active service Death caused by a wound, accident or disease while on active military
service. Such death exempts the estate from inheritance tax (Inheritance
Tax Act 1984 s154).
It is not necessary for the person to die immediately — the estate of
the fourth Duke of Westminster was exempted under this provision
after he died in 1967 from a wound sustained 23 years earlier in 1944.
Nor is it necessary for the wound, accident or disease to be the sole
cause of death.
The deceased must have been either a member of the armed forces,
or a civilian “subject to service discipline” (Inheritance Tax Act 1984
s154(2)). The death must be certified by the Defence Council or
Secretary of State as being on active service.
death rate (1) For inheritance tax, the rate of tax that applies for transfers on death.
The rate has been 40% since the tax was introduced in 1986.
(2) In statistics, proportion of a defined population that die.
death-valley curve Curve on a graph showing share value against time of a start-up
business. The curve indicates the decline in the value as the company
uses the initial capital before generating sufficient profit to become self-
sustaining.
debar Exclude, such as not permitting a person to do something.
debase Reduce the value, as when a silver coin is replaced by a cupro-nickel

one.
debate Ordered argument which follows a structure designed to reach a

conclusion.
close family “Close members of the family of an individual are those family
members, or members of the same household, who may be expected to
influence, or be influenced by, that person in their dealings with the
debenture Loan for a fixed period to provide capital to a business.

Typically the debenture is for at least five years and is secured on
the assets of the company. They usually pay a fixed rate of interest.
debenture trust deed Legal document that usually creates a debenture.
deception Deliberate telling of false or misleading statements with a view to

making a person believe something other than a fair summary of the
truth.
DEB Denatured Ethanol B - 999 parts by volume of spirits (of a strength not
less than 85% by volume) and 1 part by volume of Tertiary Butyl
Alcohol. Bitrex is added to resulting mixture in the proportion of 10
microgrammes per millilitre.
declared strength For beer duty, the alcoholic content of beer as declared by the brewer
at the duty point (Customs notice 226).
Where beer continues to ferment after the duty point, beer duty is
charged on the expected strength at consumption.
debase When a coin is replaced by one of the same value but in a cheaper
metal.
The half crown was debased from gold to silver in 1551; the penny
was debased from silver to copper in 1797.
de Beers Case that established rules on company residence. The company was
registered in South Africa but conducted most of its business from the
UK and was therefore considered UK resident.
The full name of the case is De Beers Consolidated Mines v Howe
[1906] 5TC198. The matter is discussed in statement of practice
SP1/90.
de bene esse In law, to act provisionally or in expectation of an event.
debenture A written acknowledgement of a debt – a name used for loan financing

taken up by a company.
The legal provisions are set out in Companies Act 2006 Part 19
from s738. The term includes debenture stock, bonds and other
securities of a company.
debenture bond An unsecured loan. In USA, the term can also mean a certificate issued
for such a loan.
debenture capital Capital borrowed by a company, using its fixed assets as security.
debenture holder Person who owns a debenture.

The rights of debenture holders are set out in Companies Act 2006
ss743-754.
debenture stock Another term for debenture capital.
debenture to bearer Form of debenture in Scotland. It is legal under a law made in 1696 by
the Scots Parliament. For the avoidance of doubt, it is also declared
legal under Companies Act 2006 s742.
debit Bookkeeping entry which indicates that an asset has increased, such as
when money is added to an account.
The term may be used either as one side of a double entry, where it
is matched by an equal and opposite credit.
The term can also be used to indicate the nature of an account. In
the nominal ledger or trial balance, a debit balance indicates an asset,
an expense, a loss or a reduction of a liability.
debit balance Balance on an account which shows that more money is owed than
owing.
debit card Payment card which allows money to be paid directly from a bank
account.
debit column Column in a journal or similar book for recording debit entries of
financial transactions. Traditionally it is on the left of the credit entries
and to the right of the narrative.
debit entry Entry of the debit side of a financial transaction.
debit note Document stating that a customer owes money. It has broadly the same
function as an invoice or statement. It is sometimes used instead of an
invoice when goods are removed to a branch of the same business in
another EU state. The note meets the requirements of VAT law, without
creating an invoice.
debit side The part of a financial transaction which records the debit entry.
debitor non praesumitur donare

Latin: a debtor is not presumed to give.
debitum connexum Latin: connected debt.

Such a debt gives rise to a lien.
debitum in praesenti, solvendum in futuro

Latin: owed at the present time, payable in the future.
de bonis asportatis Latin: of goods carried away.
de bonis non Latin: of goods not administered.

The term is used when an administrator of an estate is appointed to
complete the administration of another.
de bonne grâce French: with good grace.
Debrett Directory of the peerage first published in 1784 by John Field Debrett.
debrief Gather information about a person’s experience about a mission,

exercise or event.
debt (1) Amount of money owed to someone else.

(2) That part of a company’s capital which is not equity. This includes
preference shares, debentures and loans. The ratio of debt to equity is
known as gearing.
FRS 4 defines “debt” as “capital instruments that are classified as
liabilities.” (para 6).
debt adjusting Negotiation of a debt with the creditor. This may require a consumer
credit licence.
debt advice agency Body which gives advice to individuals with debt problems.
Debt Arrangement Scheme (DAS)

Scheme used in Scotland to allow debtors to pay their creditors under
Debt Arrangement and Attachment (Scotland) Act 2002 s1. This is
separate from the arrestment of earnings scheme which may be
ordered by a Scottish court.
Under DAS, the employee authorises the deduction under a standard
form as part of a package designed to help the person recover from
debt. An employer must comply with a notice issued under DAS. The
employer may deduct a further to cost to cover his administration costs.
debt buy-back Transaction which allows an issuer to repurchase securities he has sold,
often at a discount.
debt cap Another term for worldwide debt cap.
debt capacity Ability of a person or organisation to borrow funds.
debt collecting Process of recovering money which is owed. This is usually part of
credit control.
debt collection Procedure or business of collecting money that is due. As a business it

is exempt from VAT. The exact scope of the exemption was clarified in
AXA UK plc. ECJ. Case C-175/09.
debt collection period Time it takes a business to collect sums owing to it.
debt collection agency Business which collects debts for its customers. This activity requires a
consumer credit licence.
debt consolidation Turning many debts into one debt.
debt counselling Assisting a person getting out of debt. It is not counselling in a strict
sense, as it necessarily involves the giving of advice.
debt counsellor Someone who helps a debtor solve his problems
debt covenant Agreement made between a company’s creditors and its bank on the
levels of debt in which the company should operate. They are also
called banking covenant.
debt diet Debt management plan which is constructed on a similar basis as a food
diet. The term was popularised in 2006 on the Oprah Winfrey Show on
television.
debt discounting Purchase of a business’s debt at a discount with the intention of

recovering a higher share of the debt than the business would.
debt equity Money which a business has borrowed to fund its activities, as against
equity capital, such as shares. The ratio of debt capital to equity capital
is known as gearing.
debt equity ratio Ratio of debt equity to capital equity, more commonly known as
gearing, or (in the USA) leverage.
debt factoring Commercial arrangement whereby a bank or finance company will

advance money against a business’s invoicing.
debt-for-equity Scheme whereby a creditor takes a shareholder in a business in return

for a debt owing.
debt forgiveness Voluntarily releasing a person, business or country from a debt.
debt instrument Form of capital which is not equity.
Debt Management and Financial Analysis System (DMFAS)

System produced by United Nations to manage a debt owed by a
country to any of the G10 members.
debt management plan (DMP)

Informal agreement between a debtor and creditors.
debt market Market in financial instruments which sell other people’s debts.
debt minimisation Processes to reduce the amount of debts, such as by challenging

invoices or offering to return goods.
debt negotiation Discussion with a creditor, usually restricted to the amount repayable
and when it will be repaid.
debt of nature Life seen as a loan from God. The debt is repaid at death.
debtor (1) Person who owes money.

(2) In Scottish insolvency law, a person whose property may be
sequestered in settlement of a debt (Bankruptcy (Scotland) Act 1985
s73(1)).
debtor days Average time it takes a debtor to pay. This is calculated as debtors
(from balance sheet) divided by turnover and multiplied by 365 or 366.
debtors control account

Account used to summarise balances on the sales ledger. It is not part of
the double entry bookkeeping system, though it should reconcile to the
debtors account which is.
The account may analyse the debt in columns according to the age
of the debt or how overdue it is.
debtors ledger Name sometimes used for sales ledger.
debtors turnover ratio Average time it takes a debtor to pay. It is the same as debtor days.
debt overhang In economics, arrangement where an indebted nation that cannot afford
to meet its debt repayments, carries forward some of the debt on terms
that are affordable.
debt payment programme Debt payment programme which operates in Scotland under Debt
Arrangement and Attachment (Scotland) Act 2002 s2.
debt problem When debt is not easily repayable
debt ratio Ratio of a company’s debts to its capital (including loan capital).
debt recovery Formal process of recovering from debt.
debt relief General term for the policy of relieving people, businesses or countries
of debt which they have no realistic likelihood or paying. The term
particularly applies to debt forgiveness of insolvent countries which
cannot escape as there is no national equivalent to bankruptcy.
Debt relief was first considered in the Latin-American debt crisis
from 1982.
In the 1990s, a debt relief campaign called Jubilee 2000 was
launched by Christian and other groups. It helped lead to the HIPC
programme.
In 2005, there was another high profile campaign called Make
Poverty History. This led to the MDRI initiative.
debt rescheduling Reordering of a person or business’s debts to make it possible or easier

for the debts to be repaid.
debt restructuring Adjustment of a debt to make it easier for the debtor to repay. This
arises either by a court order or by agreement between the debtor and
creditor.
debt security Financial instrument used to borrow funds, and on which interest is
paid.
debt service ratio (DSR) Proportion of annual expenditure needed to service a company’s
external debts, that is sums owed other to holders of debt capital.
debt snowball method Debt reduction method commonly used when a person has large
balances on several credit cards. The method involves paying the
minimum on each card, and then using spare funds to pay off the
smallest debt first. When that is paid off in full, funds are used to pay
what is now the smallest debt.
The term comes from the fact that the largest debt grows like a
snowball rolling down a hill.
The method reduces the number of debts quickly and has the
psychological advantage that the debtor sees fewer bills each month.
The better practice is to use spare funds to pay off first those debts
which attract the highest rate of interest. The size of the debt is
considered only between two balances attracting the same rate of
interest.
debt written back When a bad debt is reversed. In practice, this only happens when a debt
that has been written off is subsequently paid.
The tax treatment follows the accounting treatment of reversing the
write-off. If the debt was a trade debt, the write-back is regarded as
trading income for the period in which it was written back.
In the case British Mexican Petroleum Co Ltd v Jackson [1932], a
company was able to avoid the tax charge by writing the debt back to
reserves. On 14 December 2001, Inland Revenue made clear that this
was not acceptable.
decapitalisation Loss of available capital for industry.
decarbonisation Process of reducing the amount of carbon dioxide when producing

energy. The term is used in Energy Act 2010 s5.
deceased estate Estate of someone who has died.

It represents all the net assets of the deceased. These pass to others
in accordance with the will, or in accordance with the laws of intestacy
if there is no will.
decimal (1) Pertaining to the base of 10, as in normal numerology where 23

means 2 x 10 plus 3 x 1.
(2) A number which is not an integer, expressed without fractions, such

as 7.25.
decimal currency The monetary system whereby one pound is divided into 100 pence.
It was introduced in Britain on 15 February 1971. Previously the
pound was divided into 20 shillings, each of which were divided in 12
pence, so there were 240 pennies to the pound. See also pre-decimal
currency.
decimalisation Process of turning a unit into a decimal form.

This term is in practice restricted to currency. Conversion of other
units is usually referred to as metrication.
decimate Inflict heavy damage, but not wipe out.

The term originally referred to the practice of executing every tenth
member of a defeated army.
deck-cargo Cargo stored on the deck of a ship rather than its hold.
declarant A person who declares something, particularly the person responsible to

Customs for the importation of goods into the UK.
declaration A declaration made in the appropriate form to Customs indicating the

intention of the declarant to declare goods to the export or import
procedure.
declaration Part of a form which a person must sign to confirm that the information
on the rest of the form is true to the best of the person’s knowledge and
belief. Such forms are required on tax returns and similar formal
documents.
declaration day Last day but one of an account on the London Stock Exchange. On this
day all traditional options must be declared.
declaration of bankruptcy
Official statement that a person is now bankrupt.
declaration of dividend Statement made by the directors of a limited company on the dividend
they recommend to be paid to the shareholders.
declaration of insolvency Document lodged with Companies House which states that the
company is seeking voluntary liquidation.
declaration of interest Where a person who has to make a decision on a matter has another
role which is relevant to the matter, but that role is not sufficiently
serious to amount to a conflict of interests.
An example is where someone serves as a director of two
companies which trade with each other. A director must generally
declare any interest in any proposed transaction or arrangement
(Companies Act 2006 s177). This declaration is not required “if it
cannot reasonably be regarded as likely to give rise to a conflict of
interest” (ibid s177(6)(a)) or where the directors are already aware of it

(ibid s177(6)(b)).
Provisions relating to existing transaction and arrangements are
covered in Companies Act 2006 s182.
declaration of law Statement by a court on what a particular law means. This is sometimes
used as an alternative to an action for mandamus. Such an example is
Laker Airways v Department of Trade [1977].
declaration of solvency Declaration made by the directors of a company which is being put into
voluntary liquidation that they expect to repay all debts within 12
months (Insolvency Act 1986 s89(1)).
declaration of trust Operation by which a trust is created.
declared value Value of goods as stated on a Customs declaration.
declassify Remove the classification, such as when a previously secret document

is made public.
declination The rejection of an application, particularly by an insurance company.
declining balance method Another name for the reducing balance method used to calculate
depreciation.
The value of the asset reduces each year according to the residual
value rather than the original value.
declining grant A grant provided to a non-commercial body over several years, where
the amount reduces each year in the expectation that the body will find
funds from other sources.
decode Turn a code into something intelligible. The term is used in computing.
decommissioning cost Cost of taking something out of use.

In some cases, these costs can be considerable, particularly with
regard to mineworking and nuclear power stations.
The case Nuclear Electric plc v Bradley [1995] established that
setting aside a sum for decommissioning was not a business expenses.
decontrol Remove from control.
Decoration Day 30 May. The traditional day when Americans decorate the graves of
their war dead.
decoupage Craft of applying cut-out paper to surfaces, such as in 18th century

furniture.
decrease Reduction of an amount, quantity or figure.
decreasing term insurance

Life insurance which pays out a lump sum if you die within the term,
but where the insurance sum assured reduces during the term. Therefore
your estate receives a smaller sum, the longer you live
decree Another name for a summary warrant issued in Scotland.
decree absolute Decree that has taken effect, particularly in a divorce.
decree nisi Latin: decree unless. A provisional decree which take effect unless
something intervenes before becoming a decree absolute.
decrescent Gradually becoming less.
decretal Pertaining to a decree
decriminalise Pass a law so that something ceases to be a criminal offence. During

20th century abortion, adultery, champerty, gambling, homosexuality
have all been decriminalised.
de die in diem Latin: from day to day.
dedimus Latin: we have given. A writ commissioning someone to be a judge.
deductibility provisions Those sections of Income Tax (Earnings and Pensions) Act 2003 that
relate to the deduction of expenses from taxable earnings (ibid s332).
deductible Something which may be deducted, particularly an expense which may

be deducted from taxable income.
deductible VAT VAT payable on goods and services intended for immediate
consumption or for capital assets to be used in the business. Such VAT
may be deducted as input tax.
deduction (1) Removal of an amount from a total by subtraction.

(2) Conclusion which is reached on the basis of what explanation most
readily fits the available facts.
deduction at source Where an amount is deducted at source before the person receives a
payment. The deduction is often of tax, and includes such arrangements
as PAYE on wages and deductions on share dividends.
deduction notice Notice that HMRC may serve on a company requiring it to recalculate
its tax less advantageously in certain arbitrage arrangements (Taxation
(International and Other Provisions) Act 2010 ss236-242).
deduction rate Amount of a person’s pay taken to pay a debt when an attachment of
earnings order has been imposed.
deduction scheme Scheme that operated from 1940/41 until PAYE was introduced in 1943
to collect income tax on workers’ pay.
deductions from specified earnings

Expenses of employment that may be deducted only from that
employment (Income Tax (Earnings and Pensions) Act 2003 s328(5).
Sections 336 to 342 give details of these deductions.
deductive reasoning System of logic that moves from one premise to another, such as “if a,
then b”. In tax appeals, it tends to be more persuasive than inductive
reasoning.
deed Legal document which gives effect to a transaction.

To be effective the deed had to be sealed, that is a seal had to be
attached. This could turn a gift into a legally obligation without
consideration.
Under Law of Property (Miscellaeous Provisions) Act 1989, deeds
no longer need a seal, but must be signed and attested by two witnesses.
Such a deed is then said to be executed.
deed of assignment Legal document which assigns a right to another person.
deed of covenant Legal arrangement for assigning income. This has the effect of that
income being regarded as that of assignee for all purposes except tax.
For donations, it has now been replaced by Gift Aid.
Deed Of Gift A legal document which transfers ownership of the special stamp to
Customs whilst Local Export Control (LEC) traders retain the stamp for
authenticating Community Transit (CT) documents.
deed of partnership Formal document which legally establishes a partnership.
deed of transfer Document which transfers ownership of shares or other security.
deed of undertaking Promise to make payment if a certain eventuality occurs.

Operators of enhanced remote transit sheds are required to sign
such a deed to the Customs authorities.
deed of variation Agreement made by all the beneficiaries of the estate of a deceased
person. If the agreement is made within two years of the death,
inheritance tax is assessed in accordance with the deed rather than of
the will or intestacy provisions. In effect, the beneficiaries may
unanimously rewrite the will.
deed poll Deed made by one party, not necessarily to change a person’s name.
deeds fee A charge made by lenders when you repay the mortgage to release the
deeds of the property. Also known as a sealing fee.
deem Regard something as true without evidence as to whether that is so.

Law and tax regulations have many deeming provisions.
deemed domicile Provision of inheritance tax law whereby a person who was resident in
the UK for at least 17 out of the last 20 is taxed as if UK-domiciled,
even if treated as not UK-domiciled for other purposes. The 20 years

apply to tax years ending with the tax year in which the transfer is
made. The law is contained in Inheritance Tax Act 1984 s267.
deemed employment payment

Additional sum of tax payable when a worker provides his services
through an intermediary on terms which would otherwise be regarded
as employment.
Tax rules, commonly known as IR 35, require an additional
payment of tax to be calculated in accordance with Income Tax
(Earnings and Pensions) Act 2003 s54 or 61E.
deemed release Release that is assumed under Finance Act 2010 s44 and Sch 15 in
relation to impaired debt between connected parties.
deemed surrender When a life assurance policy is regarded as having been surrendered.
Under Income and Corporation Taxes Act 1988 s271, a policy is
regarded as surrendered if a loan is made to the insured against the
policy.
deemed transfer Transfer assumed by the law, such as the deemed transfer of a person’s
entire estate on death.
Deemster Judge on the Isle of Man.
deep discount Very large discount, particularly on the nominal value of a security.
deep discount bond Loan issued at a relatively low price compared to its nominal value.
deep-drawing Description of ships which can only float in deep water.
deep-gain security Security which is either issued at a deep discount, or which is

redeemed at a large premium.
deep market Market in which a large volume of transactions may take place without
moving the price of the security, commodity or similar.
deep pocket Access to wealth which may be sought by others, such as disgruntled
investors seeking compensation from the investee’s auditors.
deep water anchorage Place outside a port where large ships may be anchored while goods are
transferred to smaller vessels which can use the port. This process is
known as lighterage.
de-equitisation Process of substituting debt capital for equity capital. This is usually
achieved by such means as share buybacks and debt-funded
acquisitions. De-equitisation reduces the cost of capital at the expense
of gearing up the balance sheet.
de executione facienda Writ of execution.
de facto Latin: in fact

The term is used when a situation is recognised as existing even
though it may not be legally constituted. An example is a de facto
government of a country after a coup.
The term is also sometimes used to mean a person of the same sex
with whom a person is living. Such people are better described as a
civil partner (if they have that status) or by being named.
defalcation Unlawful use of money by someone who was entrusted with its care.
defamation Making a statement which reasonably lowers a person’s reputation in

the eyes of others. If in writing or other permanent recorded form, the
defamation is libel. Otherwise, the defamation is slander. An action for
slander requires the claimant to show financial loss, whereas an action
for libel does not.
A defamation action is intended to compensate the victim, not to
punish the defamer. So a very offensive libel may result in nominal
damages if the victim has suffered no financial loss. The legal action
may have the undesired effect of propagating the defamatory
comments, as what is said in court may be publicised freely.
In practice, defamation must be a statement which is untrue, as a
true statement is generally regarded as reducing a person’s reputation to
where it should be.
default (1) Failure to meet a requirement, such as making payments as they fall
due or to attend court when required.
(2) A provision which is made unless someone deliberately choses an
alternative. This term is used in computing to mean the choices selected
by the programmer but which a user may change, usually by accessing
a preferences file.
default beneficiary Beneficiary who is entitled to the whole of a trust fund when the trust
period ends. The trust period is either 80 years or a shorter period as
stated in the trust deed.
default interest Interest HM Customs and Excise charge on VAT that has been
underdeclared or overclaimed, from the time the amount due has been
paid.
default paper case For tax tribunals, the simplest form of case where the matter is disposed
of without a hearing (The Tribunal Procedure (First-tier Tribunal) (Tax
Chamber) Rules SI 2009 No 273 rule 23(2)).
default position Position taken in the absence of any other.
default retirement age (DRA)

Age at which a person is obliged to retire in the absence of any contrary
provision. The government generally outlawed DRA between 6 April
2011 and 1 October 2011.
default setting In computing, a setting in a program made by the suppliers of the

program but which the user may alter as he wishes from the
preferences menu.
default sum Under consumer credit law, “in relation to the debtor or hire under a
regulated agreement, a sum (other than a sum of interest) which is
payable by him under the agreement in connection with a breach of the
agreement by him” (Consumer Credit Act 1974 s187A).
default surcharge A civil penalty used to encourage businesses to submit their VAT
Returns and pay the tax due on time. If the VAT Return and all tax due
are not received by the due date, a business is in default. Calculated as a
percentage of the VAT unpaid by the due date.
defeasance In finance, when a bond issuer places the underlying assets with a
trustee who uses them to pay interest on the bond and, eventually, to
repay the capital.
defective accounts In company law, published accounts which do not comply with
company law or accounting standards (Companies Act 2006 s456).
An order may be made to the court for revised accounts to be
prepared.
defence Reply to an accusation.
defence counsel Barrister who defends a person against an accusation.
defence mechanism Automatic mental process whereby a person shuts out painful or
unacceptable emotions.
Defence Regulations Regulations that imposed additional rules during the second world war.
They were issued under Emergency Powers (Defence) Act 1939 and
1940. They allowed property to be seized or controlled and for charges
to be imposed, and imposed many restrictions.
The main regulations were Defence (General) Regulations 1939.
Although the Regulations have long been repealed, some remnants
of them remain, such as in Finance Act 1944 s45.
defendant Person who is sued in civil proceedings.
defended takeover bid Takeover bid which the existing management resists.
deferment account Account underwritten by a bank or insurance company into which

import duties due are posted.
deferment trader Trader who is approved by HMRC to defer the payment of tax and
duties, subject to meeting various conditions.
deferral relief Relief from capital gains tax when a taxpayer sells shares and uses the
proceeds to buy new shares. The relief is given in Taxation of
Chargeable Gains Act 1992 Sch 5B.
deferred In pensions, an entitlement from a previous employer which grows until

being claimed in retirement.
deferred annuity Starting an annuity, such as a pension, from a later date to receive a
larger pension.
Each year of deferment provides a double benefit. There is one
more year for the fund to earn interest, and there is one less year for
which the pension provider can expect to pay the pension.
Deferred annuities have generally been available since 30 June
1995. Under this scheme, the annuitant may receive payments from the
fund before starting the annuity proper. From 6 April 2006, such
payments may be at any rate the annuitant chooses between 0% and
120% of the pension which would have been payable, as determined by
tables from the Government Actuary. Previously the payments had to
be between 35% and 100%.
deferred annuity contract Form of retirement provision that could be entered into before 6 April
2006.
Although such a contract was not an approved pension scheme,
existing ones are treated as registered pension schemes from 6 April
2006.
deferred asset Asset whose benefit is delayed beyond the period expected for a current
asset, but which does not meet the definition of a fixed asset.
deferred charges Local authority spending on assets that have a lasting value, for
example, land and buildings, which are not owned by the authority.
deferred consideration Any form of provision under a contract where the consideration of one
party is not provided immediately. A common example is the
acquisition of a subsidiary where some of the consideration may be
payable later on the basis of its performance.
deferred consideration Payment or other consideration that is not made in full at the time. The
most common example is payment in instalments.
For capital gains tax, the whole consideration is taxable provided
that the period of deferment does not exceed 18 months. For longer
periods, the tax may also be paid in instalments.
If the deferred consideration cannot be ascertained at disposal, a
value must be put on the right to receive deferred consideration. A
common example is an earn-out provision where consideration depends
on future profits. This provision was established in the court case
Marren v Ingles [1980].
deferred coupon note Bond on which no interest is paid until after a set date. The American
term is deferred investment bond.
deferred credit Item of income which has not been received but must be shown on the
balance sheet. A common example is a government grant. This is
shown as a separate item under creditors on the balance sheet. Amounts

are transferred from the profit and loss account each year until this
figure is reduced to zero.
deferred debit Item of expenditure incurred in an accounting period but where the
matching income relates to a later period. Under the accruals concept, it
is treated as an asset known as a prepayment.
deferred debt Debt which ranks after all other debts.
deferred expenditure Expenditure which has been incurred in the current period but which is
included in the accounts of a future period. The commonest example is
a prepayment. The tax treatment is discussed in the Inspectors’ Manual
at BIM42210.
deferred income Revenue, such as a government grant, is received in advance of

performing the related activity. The deferred income is held in the
balance sheet as a type of liability until performance is achieved and is
then released to the income statement.
deferred member Member of an occupational pension scheme who is no longer an

active member. This is usually a former employee who has neither
retired nor transferred his or her accrued benefits to another scheme.
Such a member is entitled to retain the benefits already accrued.
From 1 July 1988 such benefits must be uplifted each year by the rate
of inflation up to 5%.
deferred ordinary share Ordinary share where some right is deferred as against other ordinary
shares. The deferred right is usually that of dividend, which is only paid
to the holder of a deferred ordinary share after all other ordinary
shareholders have been paid. Such a share is usually issued to the
company’s founders. A deferred ordinary share occasionally means a
share where the right to a dividend is postponed for an initial period.
deferred payment Payment for goods after the due date, either by being late with the
payment or by making payment in instalments.
deferred payment agreement

Another name for hire purchase or a similar arrangement.
deferred pricing Arrangement where a sale is concluded before the price has been
agreed.
deferred revenue Revenue which is carried forward to a future accounting period, such as
when a customer has prepaid for goods not yet supplied.
deferred revenue expenditure

Another name for capitalised expenditure.
Such expenditure is still regarded as revenue for tax purposes
(Inspectors’ Manual at BIM42215).
deferred share Ordinary share which ranks after other shares. Founders’ shares are
often deferred shares. Such a share usually becomes worthless in a
liquidation.
deferred swap Any type of swap where the payments are deferred.
deferred taxation Taxation payable in a future year.

This adjustment is made in most accounts to reflect the difference in
timing between capital allowances and depreciation.
deficiency Shortfall in an account.
deficient Lacking in amount. It does not mean the same as “defective”.
deficit Excess of expenditure over income for a period of a non-commercial

organisation. In a commercial organisation, the equivalent is a loss.
In national economics, the term is also used to mean the Budget
deficit.
defined benefit scheme Pension scheme where the pension is based on the employee’s salary. It
is also known as a final salary scheme.
defined benefit A pension scheme where the amount received in retirement is fixed.
defined benefits arrangement

Any pension scheme which is not a money purchase scheme. It
includes, but is not restricted to, a final pension scheme. For example,
a pension which guarantees a payment of £5,000 for each year of
service regardless of earnings is a defined benefit arrangement.
defined benefits lump sum death benefit

Lump sum paid from a defined benefits arrangement in respect of a
member who dies before the age of 75. The rules are given in Finance
Act 2004 Sch 29 para 13.
defined contribution scheme

Pension scheme where the pension is based on the value of the fund
accumulated. It is also known as a money purchase scheme.
defined contribution A pension scheme where the amount of contribution is fixed but the
amount of pension ultimately payable is not yet known.
definitive (1) Final and conclusive, admitting no further argument. Its meaning is
stronger then “definite” which means precise and identifiable.
(2) Description of an ordinary postage stamp.
deflation “A persistent fall in the general price level of goods and services” (HM
Treasury glossary). The word is the opposite to inflation.
deflationary fiscal policy

Deflationary fiscal policy is using the level of government expenditure
and taxation to reduce the level of aggregate demand in the economy.

Deflationary fiscal policies could include: Increasing the level of
income tax
Reducing government expenditure
Increasing VAT and other indirect taxes
defrayed expenses Expenses which have been fully paid.
De G M & G De Gex, Macnaghten & Gordon’s Reports, law reports on Chancery

from 1851 to 1857.
degroup Remove a company from a group.
degrouping charge Tax liability that can arise when a company leaves a group.
If a company leaves a group holding an asset acquired from a fellow
group member in the previous six years. any gain or loss that had been
deferred is reinstated. This reinstatement is known as the degrouping
charge. The deferment is under Taxation of Chargeable Gains Act 1992
s171, and the charge arises under s179.
This charge was largely replaced by Finance Act 2011.
degrade Reduce the grade or value, such as of a material, company or person.
degree (1) Grade or step.

(2) Qualification awarded by a university or similar body.
(3) Measure of an angle, where there are 360 degrees in a circle.
degression Gradual decrease, particularly of tax rates.
dehors Latin: without.
dei gratia Latin: by the grace of God.

Legend that appears on obverse of coins, implying that the monarch
reigns by the grace of God.
dei judicium Latin: the judgment of God.
de jure Latin: by right.
DEL Departmental Expenditure Limits.
delayed remittance Relief from taxation when income remitted from overseas is delayed,
such as by exchange control provisions.
del credere Amount added to a charge to allow for the possibility of non-payment.
(It is pronounced “del cred-air”.)
del credere agent Agent who undertakes to make payment to the principal regardless of
whether the customer pays the agent. Such an agent typically receives a
higher rate of commission.
Delaware corporation Corporation incorporated in the US state of Delaware.

It is one of the two US states seen as a corporate haven; the other
is Nevada. Over half of US companies are incorporated in Delaware.
This status as a corporate haven dates back at least to 1899 when the
state adopted a policy of attracting businesses.
The state is popular because of its lenient laws on lending money,
its tax benefits and its better-defined company law. Against this, its
formation costs and annual fees are high.
delayed remittances Tax term for income remitted overseas which is delayed for factors
outside the taxpayer’s control, such as restriction by the foreign
government. Relief may be available for such remittances under Income
Tax (Earnings and Pensions) Act 2003 s35.
deliverable Description of something capable of delivery, particularly at the expiry

of a futures contract.
delivered price Price which includes the delivery charge.
delivery Completion of a contract when the property passes to the acquiring

party. Delivery may be actual, such as handing over the goods in a
shop, or constructive, such as giving the customer a key to the shed
where the goods are stored.
delivery factor Adjustment to the price of bonds delivered in a futures contract.
delivery month In a futures contract, month when delivery is due.
delivery note Document sent with goods to indicate what should be in the package. It
is not an accounting document.
delivery of a deed Execution of a deed, traditionally done by placing a finger on the seal
and saying “I deliver this as my act and deed”. This is no longer
necessary.
delivery vs payment Method of trading in securities where payment is required when the
security is delivered.
delta Rate at which the price of an option moves in relation to the underlying
security. The rate is expressed as a number between 0 and 1, so 0.5
means that a £2 move in the security price will move the option value
by £1.
delta hedge Hedging position that causes a portfolio to have a delta equal to zero.
demand “The need/desire for a product or service, backed by the ability to

purchase.” (HM Treasury glossary).
demand deposit In USA, instant access bank account.
demand note Communication from a collector of taxes requiring the tax to be paid.
Its provisions derive from Taxes Management Act 1970 s60.
demerger Separation of two parts of a business to make two businesses.
demesne Manor house with adjacent land not let to tenants.
Demibourne The legal decision relating to the tax liability of an employer when
someone is retrospectively found to have been an employee.
The decision is that the tax which the person paid when they
believed they were self-employed cannot be offset against the PAYE
liability of the employer.
This harsh decision was reached by the Special Commissioners in
Demibourne v HMRC. SpC 486 [2005]. It can mean that an employer
must pay tax on income which has already been taxed, so that income
tax is paid twice on the same income. In 2008, guidance was issued by
HMRC on how they address this obvious unfairness by providing a
measure of tax relief.
demijohn Large glass (or stone in past times) with a large body and small neck,
particularly used for storing wine. A common capacity is five gallons.
de minimis non curat lex Latin: the law does not concern itself with trifles.
de minimis Description of an amount below which a provision does not apply.

There are many such provisions in tax law.
demise (1) In law, the act of granting use of a property on a lease. Originally
the term was restricted to property which was transferred on the death
of the monarch.
(2) Colloquially, the term is extended to death generally. It is incorrect
to use the word to mean a decline, as in “the demise of British car-
making”.
demolition order Order that could be made under Housing Act 1957 for clearing slums.
Such an order justified relief from estate duty under Finance Act 1958
s33, now repealed by Finance Act 1975.
demonetisation Process by which a banknote or coin ceases to be legal tender.
demonstration car Car which an employee in the motor industry drives solely to allow him
to demonstrate the car to a potential customer. Generally, this is not
regarded as a taxable company car (HMRC leaflet 480).
demonstrative legacy Form of general legacy.
demurrage Charge paid for holding goods at a port or airport.
demutualisation The process by which a mutual organisation becomes a commercial

body. Examples include when certain building societies became banks.
The costs of demutualisation were held to be revenue expenditure in the
four cases tested (Alliance & Leicester, Halifax, Northern and

Woolwich). The matter is discussed in the Inspectors’ Manual at
BIM35645.
demutualisation surplus Surplus funds which arose from the demutualisation of a life insurance
business. The tax implications are considered in Income and
Corporation Taxes Act 1988 s444AF.
demutualisation transfer surplus

Surplus funds which arise from the transfer of a demutualised life
assurance business. The tax implications are considered in Income and
Corporation Taxes Act 1988 s444AG.
denar Currency of Macedonia.
Denarii St Petri Latin: St Peter’s pence. Traditionally the sum of one penny given by
each family to the Vatican.
denarius Roman silver coin, traditionally worth one penny. The “d” in £ s d
comes from this word. The plural is denarii.
denarius Dei Latin: God’s penny.

Traditionally a payment made to indicate a bargain. The recipient
gave it to the Church or to the poor.
denature Change the property of, such as changing the property of a substance by
burning it. There are tax consequences for denatured alcohol.
denatured alcohol Any form of liquid containing ethyl alcohol but which is made into an
undrinkable form. This has the effect of making the liquid exempt from
the excise duty on alcoholic liquor.
Denatured alcohol includes methylated spirits and industrial
alcohol.
deni One hundredth of a denar, currency of Macedonia.
de nihilo nihil fit Latin: you cannot make anything out of nothing.
de novo Latin: afresh.
Denmark Member of the European Union, for which purpose Faroe Islands and
Greenland are excluded.
de non apprentibus, et non existentibus, eadem est ratio

Latin: of things which do not appear and things which do not exist, the
rule in legal proceedings is the same.
denoting stamp For stamp duty, a stamp that indicates the amount of duty paid (Stamp
Act 1891 s11).
de novo Latin: anew.

densimeter Device for measuring the density in air of spirits. It must measure
density to five decimal places and be approved by HMRC.
density in air Density of spirits as measured by Spirits Regulations reg 18. It is not
permissible to measure the density in a vacuum and then convert it
deodand An item of property that should be given to God.

Before 1846, English law prescribed certain chattels as deodands.
de odio et atia Latin: of malice and ill will.
deo gratias Latin: thanks be to God.
deo juvante Latin: with the help of God.
deo volente Latin: if God be willing.
DEP Designated Export Place
department Part of an organisation, particularly one which has sufficient separate

identity to be able to produce some types of accounts for itself.
It is possible to register departments separately for VAT.
Departmental Expenditure Limits (DEL)

“The total spending limits for Government departments over a fixed
period of time, excluding demand led and exceptionally volatile items.
DELs are planned and set at Spending Reviews. This is split between
resource and capital budgets.” (HM Treasury).
Department for Business Enterprise and Regulatory Reform (BERR)

Government department that briefly existed between 2007 and 2009. It
was the successor body to the Department of Trade and Industry, and
the precursor body to the Department for Business, Innovation and
Skills.
Department for Business, Innovation and Skills (BIS)

Government department established on 6 June 2009 as the successor
body to BERR and DTI.
Its functions include company law, employment law, consumer law,
trade, business growth and economic development.
Department of Trade and Industry (DTI)

Government department which oversaw matters relating to business. It
was formed in 1970 from the merger of the Board of Trade with the
Ministry of Technology (which were again separated between 1974 and
1983). In 2007, the DTI was replaced by the Department for Business
Enterprise and Regulatory Reform (BERR). BERR itself was replaced
by Department for Business, Innovation and Skills on 6 June 2009.
departmental accounts Accounts for a department of a organisation.
departure (1) Point when a person leaves, particularly for a journey.

(2) Deviation from a regulation, or from agreement with a proposition
held by someone else.
dependant An individual who depends on another person for financial support in

their daily living. Dependants are usually a husband or wife, and
children.
For occupational and private pensions, a dependants is:
● a surviving husband, wife or civil partner;
● a child who is 22 years old or younger;
● a child who is 23 years old or older and has a physical or
mental impairment which made the child dependent on the member;
● any other person who, in the opinion of the scheme
administrator, was in a financial arrangement of mutual dependence; or
● any other person who, in the opinion of the scheme
administrator, suffered from a physical or mental impairment which
made them dependent on the member.
[Note that the word “dependant” spelled with an A is the noun referring
to a person. The adjective ends ENT]
dependant benefits
dependant relative relief Additional tax allowance when a taxpayer has a dependant relative,
such as an aged parent, staying with them. It was abolished from 6
April 1988.
dependants’ alternatively secured pension

Payment of income withdrawals direct from a money purchase
arrangement to a dependant of a scheme member who is aged 75 or
over, that meets the conditions laid down in paragraphs 26 and 27 of
Schedule 28 to the Finance Act 2004.
dependants’ alternatively secured pension fund

Funds (whether sums or assets) held under a money purchase
arrangement that have been 'designated' after the death of a scheme
member to provide a particular dependant of that member (who is aged
75 or over) with a dependants' alternatively secured pension, as
identified in paragraph 25 of Schedule 28 to the Finance Act 2004.
Once sums or assets have been 'designated' as part of a 'dependants'
alternatively secured pension fund', any capital growth or income
generated from such sums or assets are equally treated as being part of
the 'dependants' alternatively secured pension fund'. Similarly, where
assets are purchased at a later date from such funds, or 'sums' generated
by the sale of assets held in such funds, those replacement assets or
sums also fall as part of the 'dependants' alternatively secured pension
fund' (as do any future growth or income generated by those assets or
sums).
dependants’ annuity An annuity paid by an insurance company to a dependant of a scheme

member following the death of that member that meets the conditions
laid down in paragraph 17, Schedule 28 to the Finance Act 2004
dependants’ scheme pension

A pension paid to a dependant of a member of a registered pension
scheme following the death of that member, the entitlement to which is
an absolute entitlement under the scheme and that meets the conditions
laid down in paragraph 16, Schedule 28 to the Finance Act 2004.
dependants’ short-term annuity

An annuity contract purchased from a dependants' unsecured pension
fund held under a money purchase arrangement that provides that
dependant with an income for a term of no more than five years (not
reaching to or beyond their 75th birthday), and which meets the
conditions imposed through paragraph 20, Schedule 28 to the Finance
Act 2004. This definition covers replacement assets purchased after the
initial 'designation' from such funds, or any capital growth from or
income generated by assets held in the fund (whether held at the time of
'designation' or where replacement assets).
dependants’ unsecured pension

Payments of income withdrawals direct from a money purchase
arrangement, or income paid from a dependants' short-term annuity
contract purchased from such an arrangement, to a dependant (who is
aged under 75) of the scheme member who established the arrangement
and that meets the conditions laid down in paragraph 20 and 23 to 24 of
dependants’ unsecured pension fund

Funds (whether sums or assets) held under a money purchase
arrangement that have been 'designated' after the death of a scheme
member to provide a particular dependant of that member (who is aged
under 75) with a dependants' unsecured pension, as identified in
paragraph 22 of Schedule 28 to the Finance Act 2004. Once sums or
assets have been 'designated' as part of a 'dependants' unsecured
pension fund', any capital growth or income generated from such sums
or assets are equally treated as being part of the 'dependants' unsecured
pension fund'. Similarly, where assets are purchased at a later date from
such funds, or 'sums' generated by the sale of assets held in such funds,
those replacement assets or sums also fall as part of the 'dependants'
unsecured pension fund' (as do any future growth or income generated
by those assets or sums).
dependency State where one person is financially dependent on another.
dependent child In relation to capital gains tax on an interest in a settlement, means a

child (including a step-child) who is under 18 and is neither married nor
in a civil partnership (Taxation of Chargeable Gains Act 1992
s169F(4A)).
depletion Using up an asset, such as minerals from quarries, mines and oilwells.
In accounting, a quarry, mine or oilfield is treated as a fixed asset,
and depletion is accounted as depreciation. This requires an estimate of
how much mineral remains.
In general use, the word should be reserved for an injurious
reduction, and not for a reduction generally. A stock item is only
depleted if replacements are not readily available, and you will suffer as
consequence.
deposit Money placed in a bank or other financial body for safe keeping, often
where it can earn interest.
deposit account (DA) Bank account where excess funds are held to earn interest.
deposit arrangements One of the five forms of alternative finance arrangement (Taxation
of Chargeable Gains Act 1992 s151L).
depositary American term for a person or business which can take funds or
documents for safe keeping. [Note that it is spelled with an A.]
deposit back arrangements

“Arrangements by which, an amount is deposited by the reinsurer under
a contract of insurance with the cedant” (Income and Corporation Taxes
Act 1988 s431(2)).
deposit insurance Protection against loss of deposits by a customer should the bank or
other financial institution fail.
deposit interest retention tax (DIRT)

Tax charged in Southern Ireland on bank account interest.
deposition (1) Act of deposing a person from an office or position.

(2) Declaration which is made by a person under appropriate conditions
which may be accepted as a witness statement, particularly in American
courts.
deposit note Type of medium-term note issued by a foreign bank in the American
market.
depositor Person who leaves documents or funds for safe-keeping.
Depositor in Warehouse The person bound by the declaration placing the goods under the
customs warehousing procedure or to whom the rights and obligations
of such a person have been transferred.
depository Person, business or place where money, documents or tangible assets

may be left for safekeeping. (Note that has a different meaning from
depositary spelled with an A.)
Depository Trust and Clearing Corporation (DTCC)

The American central depository for stock exchange securities. Writers
of options used DTCC as a means of facilitating delivery.
deposit premium The premium deposit paid when an application is made for an insurance
policy.
deposit slip Form completed when funds are deposited with a bank or similar body.
The deposit slip is usually stamped by the bank’s cashier. The
commonest form of deposit slip is a paying-in form.
depot Place of deposit where goods are kept, usually for delivery to shops.
deposit-taker Form of minor bank. It may accept deposits from members of the public
but may not offer the whole range of banking services.
depreciable Capable of having depreciation calculated for it.
depreciable amount Cost of a non-current (fixed) asset minus residual value.
depreciable asset Asset which will be used for more than accounting period and for
which depreciation should therefore be calculated.
depreciated replacement cost

Cost of replacing a fixed asset with an equivalent asset, but allowing for
the asset being at a similar position in its economic life.
depreciating asset For capital gains tax, an asset for which hold-over relief may be
claimed under Taxation of Chargeable Gains Act 1992 from s154.
depreciation Systematic allocation of the depreciable amount of an asset over its

useful life. The depreciable amount is cost less residual value.
In national economics, “A decrease in the value of an asset. Is also
used for currency: when the value of one currency falls in relation to
another.” (HM Treasury glossary)
depreciation rate Rate at which a fixed asset is subject to depreciation.
depreciation threshold An asset value below which a fixed asset is not depreciated as the
depreciation is immaterial.
depreciatory transaction Transaction between a trust and a beneficiary that has a gratuitous
element and reduces the value of the trust. Such a transaction usually
creates a tax liability. Examples include a sale at undervalue, a loan at
less than commercial interest, or a lease at less than market value. An
arm’s length bargain is not a depreciatory transaction.
depredate Lay waste, plunder.
depress Reduce something, usually intangible such as demand.
depressed area Region which is suffering particularly badly from adverse economic
conditions.
depressed market Market where there are insufficient customers for available goods and
services.
depression (1) In economics, a severe sustained recession.

(2) In medicine, a disorder of mood, a protracted and disproportionate
melancholy.
deprival Dispossession or loss of something a person has had as a consequence

of a deliberate act by someone else.
de profundis Latin: from the depths. [The term is also used for Psalm 130.]
deputy Under Mental Capacity Act 2005, a person the court may appoint to
look after the assets and interests of a person who has lost mental
capacity.
deputy First Minister (dFM)

Position in Northern Ireland Executive. The dFM has equal authority
to the First Minister.
de recte Latin: of right
deregistration Process by which someone is removed from a register.

For tax, the two commonest examples are removal of a person from
the VAT register and deregistration of a pension scheme.
deregistration threshold Amount of annual turnover below which a business may apply to have
its VAT registration cancelled.
de règle French: according to rule.
deregulation Removal of regulation or government control.
dereliction A property is exempt from council tax if it is so derelict as to be

uninhabitable. A leading case is Z Munter Farms Ltd v Pettitt.
de rigueur As a matter of course. Note that the second word contains two Us.
derisory Likely to prompt a contemptuous response, as in a ludicrously low

offer. The conveying of such contempt is “derisive”.
derivate pension “A pension which:

(a) is not payable in respect of the pensioner’s own services, and
(b) is not attributable to the pensioner having become entitled to a
pension credit.” (Pensions (Increase) Act 1971 s17(1)).
derivative Common term for a derivate instrument.
derivative claim Claim brought by a member of a company on behalf of the company.

Such claims are governed by Companies Act 2006 ss260-269.
derivative instrument A form of security based on another, often shares.

Common examples are futures, options and warrants.
derived units Units of measure which are formed from the seven base units.
Examples include hertz, newton, joule, pascal, watt, ohm, lux etc.
dernier French: last
dernier cri French: last cry, the latest fashion.
dernier ressort French: last resort.
derrick Crane, boom and similar devices for hoisting heavy loads.
derrière French: behind. [The word is also colloquially used to mean the
buttocks.]
der Tag German: the day. The day on which Germany intended to take over the
world.
DERV Diesel Engine Road Vehicles - heavy oil which carries a higher rate of
excise duty than other heavy oils. In general usage it has now been
replaced by Ultra Low Sulphur Diesel (ULSD).
dervish Muslim who leads a life similar to a monk, professing poverty and
leading an austere life.
désagrément French: disagreement.
descendant Person who is a son or daughter, or the son or daughter of another

descendant.
description Words which convey more than a title but less than a definition.
Descriptions are sometimes used for computer data.
desecration Remove the status of consecration from land or other asset.
desegregation End the separation of people according to a characteristic, particularly

racial group.
desertion Leaving a position in a manner intended to be permanent, particularly

from the armed forces.
desert rat Soldier from the British 7th Armoured Division, so called from its
service in North Africa in 1941-42.
deserving poor Term coined in the 1880s in the context of relief from poverty. Those
who had worked and not gambled or drunk were permitted some
indulgencies in the workhouse, such as a separate sleeping cubicle, a

locker, and some tea and chocolate.
desexualise Remove the sexual characteristics of.
desiccant Silica gel or similar product which is intended to remove the water or
prevent water building up. It is commonly used as packaging for
electrical goods. The spelling should be noted.
design and build Form of simple building contract where the same person that designs
the building actually builds it. If the building is zero-rated as a new
construction, the design element may also be zero-rated for VAT.
Design work is standard-rated when supplied separately.
designated account Account in a person’s name but which contains further identification,
such as a second name or an indication of the purpose of the account.
designated area In relation to tax on oil and gas, means “an area designated by Order in
Council under section 1(7) of the Continental Shelf Act 1964” (Finance
Act 1973 s38(2)(e)).
designated export place (DEP)

Customs-approved inland location where certain export procedures (full
and simplified declaration procedures, low-value and statistical
declarations) may be used and where all customs declaration must be
made electronically to the Customs Handling of Import and Export
Freight (CHIEF) system.
designated fund Unrestricted fund which the organisation has set aside for a particular
purpose.
This term is particularly used by charities, churches and other non-
commercial organisations. It is a halfway house between a restricted
fund which may only be used for the purpose for which the funds were
provided, and a general fund which may be used for any purpose.
A designated fund is an amount of general fund which the ruling
body has allocated for a specific purpose, such as to acquire a new
building, and which may not be used for any other purpose until the
ruling body decides otherwise.
designated investment exchange (DIE)

A stock exchange or other investment exchange operating outside the
UK but which the Financial Services Authority accepts as working to
the required standard.
designated order turn-around (DOT)

In USA, an electronic system on the New York Stock Exchange which
facilitates automatic buying and selling of securities.
designated premises supervisor

Person named in a licence in respect of particular premises (Licensing
Act 2003 s15).
designated religious body Term used in Scotland for a church which is excused some compliance
provisions for charities.
designation of origin or geographical indications

Customs notice 34 refers to these as being prescribed by EC or UK law.
Customs may seize goods that are falsely designated.
designatory letters Letters a person is entitled to put after his or her name, also known as
postnominal letters.
designer rate tax System of taxation where a company may apportion its taxable profits
into two parts of whatever size it wishes. For example, one part is taxed
at a low rate, and the other at a high rate, such as 2% and 80%.
This curious arrangement is designed to exploit the UK tax rules on
controlled foreign companies. For example if such a company would
be liable to UK tax if the local tax was less than 20%, the profits could
be apportioned to reach exactly 20%.
This is now generally prevented by Income and Corporation Taxes
Act 1988 s750A for accounting periods that start after 5 October 1999.
design paper Paper which includes a simple background design and on to which
other material may be printed.
design weight In the context of determining whether a vehicle is a van for taxing an
employee provided with one, “the weight at which a vehicle is designed
or adapted not to exceed when in normal use and travelling on a road
laden” (Income Tax (Earnings and Pensions) Act 2003 s115(2) and
s235(6)).
desilver Remove the silver from, such as turning a mirror into plain glass.
desk Item of furniture, similar to a table, but intended for working. It often
has drawers.
desk accessory Any item designed to sit on a desk for use or convenience of the user.
desk calculator Calculator which is designed to sit on a desk, with particularly large
display of figures.
desk diary Diary designed to be kept on a desk.
desk lamp Any form of light designed to be used on a desk.
desk mat Mat designed to sit on a desk either to protect it or to provide a better
surface for writing.
desktop Computer system which can be operated from a computer that sits on a
desk. The term has faded from use from around 2000 as most functions
can now be performed on such a computer.
desktop In computing, the screen which appears when the computer is in normal
use and no other screen has been chosen. The desktop displays icons
representing commonly used programs and files.
de son tort demesne Latin: of his own wrong.
despatches In the context of trade within the European Union (EU), the removal of
goods from the UK and their acquisition in another European Union
(EU) Member State by a person registered for VAT in that State.
destination Place where something is intended to arrive.

In accounting, the geographical area to which products or services
are supplied, and which may be reported under segmental reporting
(SSAP 25).
In computing, this means a file to which data are transferred.
In law, this means the place in a consolidation Act where an
existing provision is re-enacted.
destination store Retail unit which attracts its own custom wherever it is located. For
such a store, location is less important than for shops which depend on
footfall or passing trade.
destitution Extreme poverty.
destruction Process of destroying or making useless. There are various legal

processes which can order destruction.
Note that destruction is not easily qualified. Properly may be partly
destroyed or almost destroyed, but not somewhat destroyed.
For customs purposes, destruction of goods means that they are
made unusable by the owner or importer. Duty may still be payable on
the scrap value. An alternative is abandonment.
desuetude Disuse, discontinuance.
detached national expert Person engaged under the European Union scheme established on 26
July 1988.
The daily subsistence allowance paid to such an expert is exempt
from tax under Income Tax (Earnings and Pensions) Act 2003 s304.
detain Hold against a person’s will.
detained cash Funds which have been seized under Proceeds of Crime Act 2002 s295.
detained resident “A person detained in a hospital or care home — for the purpose of
being given care or treatment — in circumstances which amount to
deprivation of the person’s liberty” (Mental Health Act 2007 Sch 7
clause 6).
detent Position into which a control knob clicks, as opposed to one where it
rotates freely.
détente (Relaxation of strained relations between two countries. The term

comes from French.
détenu Political prisoner, particularly in India. The term comes from French.
detention and training order

Order which may be imposed on military personnel under 18 for
committing an offence (Armed Forces Act 2006 s211).
detention officer Civilian who is so designated by a chief officer of police under Police
Reform Act 2002 s38(2).
determination The process by which any amount becomes known. In tax, this may
arise from one of several processes. Further information is contained in
Taxes Management Act 1970 s28C-28E.
Determinations Panel Panel established by the Pensions Regulator under Pensions Act 2004
s9. Its functions are to exercise various regulatory functions of pension
schemes.
determinism In psychology, the view that behaviour is determined by factors outside

the person’s control, such as the weather and our natural make-up.
detersion Process of cleaning.
detest In old documents, this term means to witness against, rather than to
hate.
detinue Obsolete civil offence of interfering with someone else’s property. It is

now replaced by Torts (Interference with Goods) Act 1977.
detriment Damage, loss, disbenefit or something else which is suffered. Agreeing

to a detriment is adequate consideration for a contract.
detritus Mass of fragments worn off rick. By extension, any collection of

rubbish.
de trop French expression which means more than enough.
dettes actives French: accounts payable.
detur digniori Latin: let it be given to the more worthy.
deuce In gambling, the two of any suit in a pack of cards.
deuce-ace In gambling, a throw of two dice which shows a 1 and a 2.
de uitvoer Dutch: export.
Deus avertat Latin: God forbid.
Deus dat Latin: God grant
deus ex machina Latin: a god let down by a machine.

The expression means an unlikely intervention which extricates a
person from difficulty, such as an unexpected inheritance which
removes problems for a debtor.
Deus vobiscum Latin: God be with you.
Deus vult Latin: God wills it.
deuterogamy Second marriage.
Deutsche Aktienindex (Dax)

Share index of the Frankfurt stock exchange.
Deutsche Terminbörse Futures and options exchange which opened in Frankfurt in 1990.
Deutschmark (DM) Unit of currency of Germany until it adopted the euro in 2002. It was
divided into 100 pfennigs. [The term can be expressed as Deutsche
Mark.]
Deuxième Bureau French: Second Department. French Department of Military

Intelligence.
devaluation Reduction in the value of a currency relative to other currencies.

The term usually means a specific reduction as determined by the
government, rather than the day-to-day fluctuations.
The UK pound was devalued from £1 = $4.03 to £1 = $2.80 on 18
September 1949, and from £1 = $2.80 to £1 = $2.40 on 19 November
1967.
devastation State of a place which has been plundered or laid waste, either
deliberately or by natural forces.
devastavit Latin: he has wasted.

A violation or neglect of duty by a personal representative in
administering an estate of the deceased. A writ of devastavit can make
the personal representative personally liable to those who have a claim
on the assets. The law is now contained in Administration of Estates
Act 1925 s29.
development In financial accounting, expenditure of turning research into a saleable

product.
Provided strict conditions are met, development spending may be
capitalised as a fixed asset and not written off as expenses in the profit
and loss account.
developing countries “A term generally used to describe countries that have a low national
income.” (HM Treasury glossary).
development area
development assistance Assistance provided by the British government to any person or body
with a view to reducing poverty in another country (International
Development Act 2002 s1).
development gains tax Tax charged between 17 December 1973 and 31 July 1976 on the gain
when selling any land other than a person’s main residence. It was
replaced by development land tax.
The taxable gain was calculated by taking the lowest figure from
using three methods. The first £10,000 was exempt. Tax was charged at
80% on the balance.
development land tax Tax charged between 1 August 1976 and 19 March 1985 on the
development value of land. It replaced development gains tax.
The tax was calculated on the consideration less deductible
expenses and base value. The base value was basically the cost plus
15% (10% before 26 March 1980), though there were three different
bases (A to C) which could be used to calculate this.
There was an annual exemption, which was £75,000 in the year
before abolition.
The tax was charged at 80% until 10 June 1979 and then at 60%
until abolition.
development plan The strategies which determine planning policy in a particular area
(Planning and Compulsory Purchase Act 2004 s38).
development psychology Branch of psychology which is particularly concerned with how people
develop throughout their life.
development rate Rate of national minimum wage for workers aged 22 and above who
were undergoing training.
This rate was abolished from 1 October 2002, since when such
workers are paid at the reduced rate.
development value Additional value of land because it may be used for a more valuable
purpose, such as when farming land has planning permission for homes.
Devil’s advocate Person who argues a case solely as a means of testing its veracity.
The term originated in the Church.
devils Colloqialism for Counsel of the Treasury, answerable to the Attorney-

General.
devise Gift of land and buildings in a will.
devisee Someone who receives a devise.
dew-cup Old term for an early morning allowance given to harvest workers.
dFM Deputy First Minister, of Northern Ireland Executive.
DGN Dangerous Goods Note.
DHP Discretionary housing payment.
diabetic food For VAT, diabetic food generally follows the same treatment as the
mainstream equivalent (VAT notice 701/14).
dialogue box In computing, a message which appears on a computer while running a

program. The dialogue box may invite the user to think again or warn
the user of something significant, such as low memory.
Dialogue of the Exchequer

Treatise on the English Exchequer written in late 12th century.
diamond Jewel made from carbon. Rough diamonds may only be imported into
the UK from outside the UK if they have a valid Kimberley Process
Certificate (Customs notice 1).
diarchy Government by two people. The Northern Ireland Executive is a

diarchy.
diastase “An enzyme, developed by the malting process, which converts starch
to sugars during mashing” (Customs notice 39).
diastatic Description of seeds that contain an enzyme for turning starch into
sugar. Diastatic barley is within the scope of inward processing relief
for the Whisky Export Refund Scheme. It may qualify for a similar
relief when used to make gin or vodka.
dibs Colloquialism for money, particularly used for gambling. The word
originally meant the knuckle-bones of sheep so used.
dicta probantis Latin: proof texts.
diddle To cheat on a small scale. The expression is believed to be a contraction

of “hey diddle diddle” which is rhyming slang for “fiddle”. Another
explanation is that the term comes from Jeremy Diddler in Kenny’s
farce Raising the Wind.
For legal and tax purposes, it is regarded as theft or fraud and
treated accordingly.
die For stamp duty “includes any plate, type, tool or implement whatever
used under the direction of the Commissioners for expressing or
denoting any duty, or any rate of duty, or the fact that any duty or rate
of duty or penalty has been paid, or that an instrument is duly stamped,
or is not chargeable with any duty or for denoting any fee, and also any
part of any such plate, type, tool or implement” (Stamp Act 1891 s27).
DIE Designated investment exchange.
dies Latin: day.
diesel Usual term for diesel oil that may be used as a road fuel in an engine
built for that purpose. The word comes from the German engineer
Rudolph Diesel (1858-1913) who invented the engine. Originally the
word meant the engine rather than the fuel.
For excise duty, diesel is subject to hydrocarbon oil duty.
For income tax, an employee with a company car that has a diesel
engine pays tax on a higher figure than for a car with an equivalent
petrol engine. This is usually calculated by adding 3 percentage points
to the percentage by which the car’s list price is multiplied.
diesel car “Car which is propelled solely by diesel” (Income Tax (Earnings and
diesel oil Heavy fuel oil used in diesel engines.
dies non Day on which no legal business may be transacted. These are Sundays,
Good Friday, Christmas Day and any bank holiday.
dietary supplement For VAT purposes, a dietary supplement does not come within the
scope of zero-rated food. Further details are given in VAT notice
701/14.
Dieu et mon droit French: God and my right. Royal motto, first used by Richard I in 1198.
difference Arithmetical term, as against the geometric term differential. The

difference between £1.00 and £1.10 is 10p; the differential is 10%.
difference clause An agreement in swaps, forward rate agreements and similar to net off
the sums owed and only pay the difference owing between the parties.
difference on consolidation
Difference between fair value of the payment for a subsidiary and the
fair value of net assets acquired, more commonly called goodwill.
difference option An option which pays the difference between the prices of two assets.
different A writer should always ask if this word is necessary, as in “three

different sets of accounts”.
Most grammars say that “different from” is preferred to “different
to” and “different than”, though there are many examples of the latter
forms in literature.
differential Difference expressed as a ratio rather than an amount. The difference

between 7 relative to 5 is 2; the differential is 40%.
differential tariff Arrangement whereby a higher rate of Customs duty is imposed on

some goods from one country compared with other goods from the
same country.
differentiation For income tax, rules that taxed income at different rates according to
its source.
The term was used between 1907 and 1920, though aspects of
differentiation can be found in current income tax law.
digest (1) To dissolve food in the stomach. By extension, this means to

assimilate an idea or information. This means that the hearer needs time
to consider the implications of what is being suggested.
(2) Summary of documents, a synopsis or summary; an abbreviated
text. The term originally meant a body of laws.
digit A finger or toe. As there are 10, the term came to mean any of the
symbols from 1 to 9 and 0. So 47 contains two digits.
digital In computing, representing data in binary digits as against an analogue

form. Digits have the two advantages that:
● sufficient digits may be used to ensure great accuracy, which
translates into better quality pictures and recordings, and more reliable
data; and
● data may be copied indefinitely with no loss of quality.
digital certificate A Digital Certificate is used for some government transactions that
require high levels of security and data integrity. A certificate contains
encrypted information about the user’s identity and can establish the
user’s authority to perform a particular task.
digital computer Computer where data is handled digitally. All computers from the
1980s onwards have been digital.
digital native Colloquialism for a person who grows up in a world of modern digital
devices.
digital projector Computer peripheral which allows images from a computer screen to be
projected on to a screen.
digital safe Piece of software loaded on to a customer’s computer containing PIN

numbers, user names and passwords. This allows the customer to use
account aggregation without disclosing such details to the aggregator.
digital signature Electronic signature based on encryption and the use of sender's private
key.
It has a similar function to a written signature in confirming that
the document transmitted is from the signatory.
digitise Reduce a piece of information to digits, such as expressing the date 25

March 2012 as 25032012.
digs Colloquialism for temporary accommodation. The term comes from

such accommodation provided to gold diggers.
dii penates Latin: household gods. The term came to mean such household items as
the lady of the house particularly prized.
dilapidations Term once used in accountancy to mean the cost of reinstating leased
premises to their condition at the start of the lease.
“Works of repair or re-instatement for which a lessee is liable if the
lease provides that:
• the lessee is responsible both for repairs, and
• for delivering up the leased property at the end of the lease in
the state in which it was at the beginning of the lease”
dilemma Situation when faced with two undesirable choices. The term is more
precise than just a difficult situation.
diligence Conscientious work, one of the requirements implied in all contracts of

employment.
dilution (1) Effect (usually on earnings per share) if everyone who could
acquire shares did so.
(2) For beer duty, adding water to beer to reduce its alcoholic strength.
Customs notice 226 explains that this requires Customs approval.
diluvion Loss of land through flooding.
diluvium Deposit of sand, mud, gravel and similar from flooding.
dime US ten cent coin, and hence any small amount.
diminished responsibility “Such abnormality of the mind (whether arising from a condition of
arrested or retarded development of mind or any inherent causes or
induced by disease or injury) as substantially impaired his mental
responsibility for his acts and omissions in doing or being a party to
[murder]” (Homicide Act 1957 s2).
diminishing balance Another name for reducing balance, a method of calculating

depreciation.
diminishing returns Diminishing returns refers to a situation where a firm is trying to

expand by using more of its variable factors, but finds that the extra
output they get each time they add one gets progressively less and less.
This usually arises because their capacity is limited in the short-run and
the combination of the fixed and variable factors becomes less than
optimal.
diminishing shared ownership arrangements

One of the five forms of alternative finance arrangement (Taxation
of Chargeable Gains Act 1992 s151K).
diminution of value Reduction in value, particularly of an estate in respect of inheritance

tax.
The transfer of value is of the loss in value of the estate, not the
increase in value to the recipient. This is likely to be of most relevance
in shareholdings where a reduction from a 60% holding to 40% (and
thus loss of control) represents a greater diminution than the value of a
20% holding. It can also be relevant if a set of something is broken up.
dimissory In law, sending away or giving leave to appeal to a court in a different

jurisdiction.
dinar Currency of Iraq and some other Arab countries.
diners Gold coin issued by Andorra, that may be a gold investment coin for
VAT purposes.
di penates Latin: household goods.
diplex In computing, ability to transmit two messages at the same time down
one wire.
diploma Qualification awarded to a person to indicate their attainment in a

particular activity.
diplomat A UK or foreign diplomat; and or a member of staff working: in an

Embassy, Consulate or High Commission; the Foreign and
Commonwealth Office (FCO); any organisation working in support of
the FCO or in association with Embassies, Consulates and High
Commissions.
diplomatic bag Any container of any size or shape which is sent to an embassy. Under
international conventions, such a bag is free of all Customs controls and
taxes.
diplomatic cold Feigned illness to excuse a person from attending an awkward meeting.
The term was first used by Mr Healy MP in 1885 to refer to Lord
Hartington and Gladstone when they declined to speak at a public
meeting. The following day they were both “much better”.
diplomatic immunity In law, the right of ambassadors and other diplomatic staff not to be
prosecuted or sued by their resident country. This is set out in the
Vienna Convention 1961.
For this reason, businesses should be wary of accepting orders from
diplomatic premises without prior payment.
Goods for embassies and other diplomatic premises do not have to
pay customs duty.
diplomatic service code Code of conduct for the diplomatic service (Constitutional Reform and
Governance Act 2010 s6).
direct attribution The process by which supplies of goods and services are identified, and
are used exclusively in making exempt supplies.
direct benefit Any form of consideration provided directly to someone, such as a

benefit in kind provided directly from employer to employee.
direct control Accounting term to determine whether a body comprises a separate

entity and should therefore produce its own accounts. Guidance is
given in FRS 5. Control is separately defined.
The Statement of Principles provides this guidance “an entity has
direct control of an asset if it has the ability in its own right to obtain
the future economic benefits embodied in that asset and to restrict
others’ access to those benefits. An entity has direct control of its own
activities and resources but does not have direct control of any other
activities and resources” (Para 2.4(a)).
direct costing Method used to calculate the total cost of an item, sometimes known as
absorption costing.
The basis formula is:
direct cost = materials + labour + share of overheads.
Suppose a company plans to make 100,000 widgets. The material
for each widget costs £1.20, the labour costs 80p and the company’s
overheads are £100,000. The materials and labour comprise £2. The
overheads are apportioned or absorbed at the rate of £1 per item,
giving a total cost of £3.
Direct costing is appropriate for decisions on whether to sell an item
at all. If the price does not allow a reasonable profit over £3, the
company probably should not sell the item at all.
Care is needed with regard to the absorption element. If the
company sells only 50,000 widgets, the overheads equate to £2 per
item.
Once the overheads have been recovered, it is then appropriate to
consider the marginal cost. In this case, the marginal cost is just £2 for
materials and labour. So if the company received a large order for
widgets at £2.50, the company could accept the order and make a profit.
The other widely used methods of costing are marginal costing
and opportunity costing.
direct debit A procedure under which an organisation to whom a payment is due

claims the amount directly from the bank account of its debtor.
direct discrimination When discrimination is overtly made for an unlawful reason, such as
passing a rule which denies equal treatment to a person because they are
black or female. It is illegal under Sex Discrimination Act 1975 s1 and
.........
direct discrimination Where a person is treated less favourably on grounds directly related so
such a matter as their sex or race. This is usually illegal under English
law.
direct drilling Drilling and sowing in one operation.
direct expenses Expenses of selling a product or service, excluding the direct costs of
materials and labour. Direct expenses will include such matters as
storage, inspection and packaging.
direct export Refers to goods exported directly from the UK to a non-European

Union country.
directional testing Auditing technique of testing debits for overstatement and credits for
understatement.
directions In law, instructions from a judge on how a case should proceed.
directive A document issued by the European Union requiring all Member States
to adapt their national law to be consistent with the Directive.
direct labour Cost of labour in producing goods for sale.
directly contracted childcare

Arrangement where an employer buys childcare support from a
commercial nursery. This is a tax-free benefit up to £55 a week.
direct materials Cost of materials in producing goods for sale.
director Person who directs a company on behalf of the shareholders. In

company law, the word “director” includes any person who performs
such a function however known (Companies Act 2006 s250). This may
include a shadow director.
A private company must have at least one director (Companies Act
2006 s154(1)). A public company must have at least two (ibid s154(2)).
At least one director must be a natural person.
For the purpose of calculating the tax on benefits in kind, director is
as defined in Income Tax (Earnings and Pensions) Act 2003 s67(1).
There are special provisions relating to when a director’s tax is paid
other than by the director (Income Tax (Earnings and Pensions) Act
2003 s223).
A director who has a contract of employment with the company has
the same rights as any other employee. This includes payment if the
employer becomes insolvent, and the right to be paid at least the
national minimum wage.
directors’ dealings Sale and purchase of shares by directors of listed companies. These
dealings must generally be disclosed publicly. The reason is that
directors are in a special position to see what is happening to the
company. Any large sale or purchase is therefore significant,
particularly if it appears that the directors are acting in concert.
director’s employment “In relation to a person who is employed as a director, means that
employment” (Income Tax (Earnings and Pensions) Act 2003 s223(8)).
directors’ fees Amounts paid to directors, particularly for attending board meetings.
directors’ interests Interests which the directors of a company have in the shares,
debentures and similar of their company. Such interests must be
disclosed in the accounts.
directors’ remuneration report

Statement which must be provided by a quoted company under
directors’ report Duty to prepare Companies Act 2006 s415. Content s416.
directors’ service contract

Contract between a company and one of its directors as defined below.
Under company law, all such contracts must be available for
inspection under Companies Act 2006 s228.
The statutory definition is “A contract under which:
(a) a director of the company undertakes personally to perform
services (as director or otherwise) for the company, or for a subsidiary
of the company, or
(b) services (as director or otherwise) that a director of the company
undertakes personally to perform are made available by a third party to
the company, or to a subsidiary of the company” (Companies Act 2006
s227(1)).
directorship Position of being a director.
directory (1) Any book which provides information about people or businesses.
(2) In computing, a group of files usually stored together for
organizational purposes. It is also known as a folder.
directory enquiries Law under Communications Act 2003 s69.
directory entries A person cannot be charged for an entry in a directory unless the person
has signed a written order for such entry and other provisions of
Unsolicited Goods and Services Act 1971 s3 are followed.
direct payment scheme For inheritance tax, a scheme that allows the tax to be paid by a direct
transfer from funds held in the deceased’s bank account. Guidance on
this is given in HMRC’s IHT400 help notes.
direct placing When shares are placed directly with investors, without the use of
underwriting and without a public subscription.
direct product profitability (DPP)

Management accounting method which involves apportioning
overheads to products and services, to estimate the net profit for these
each items, in addition to the gross profit.
direct quote Exchange rate expressed as the number of units of domestic currency
equal to one unit of the comparison currency.
direct representative A third party who makes a Customs declaration in a trader's name, on
the trader's behalf.
directory Rarely used word meaning a female director.
direct selling Marketing method of selling to a customer without using a third party,
such as a shop or agent.
direct share ownership Ownership of shares by private individuals rather than through a
collective investment scheme such as a unit trust.
direct speech Quoting a person’s exact words, as in “John said ‘I shall buy the car’”
as against indirect speech which summarises the words, as in “John
said that he would buy the car”.
direct subsidy Form of a parliamentary grant imposed in 1489 and 1450.

There has been seven such grants before 1485, none successful.
This subsidy was to fund an expedition by the Duke of Brittany. The
rate was one tenth of freeholders’ income after deductions for rents,
fees and services. Collectors had wide powers of discretion. Some of
the principles for income tax on property income are evident.
direct taxes (1) Taxes charged on earning rather than spending.

Direct taxes include income tax, corporation tax, capital gains
tax, inheritance tax, national insurance, windfall tax and petroleum
revenue duty.
(2) Various taxes imposed by Edward III in 1340 and 1341.
direktör Swedish: director
diretor Portuguese: director
direttore Italian: director
dirham (1) Currency of Morocco, comprising 100 centimes.

(2) Ancient Persian coin.
(3) Old Oriental unit of weight.
dirgist Pertaining to control of social and economic matters by the state. The
word may also be spelled with a final E.
diriment In law, process of nullifying.
DIRT Deposit interest retention tax.
dirty chain Series of fraudulent transactions involving missing trade fraud that are
run in conjunction with a clean chain of honest transactions. The
practice is known as contra-trading.
The VAT input tax from the dirty chain is in effect washed by offset
against the output tax from the clean chain. As this does not trigger a
repayment from HMRC, it is less likely to arouse suspicion.
dirty float Floating a currency where the government intervenes to regulate the
exchange rate.
dirty money Money that has been illegally gained, such as from selling drugs or
stolen goods.
The process of turning it into clean money is known as money
laundering.
dirty price Price of a bond which includes the accrued interest. When the accrued
interest is deducted, you have the clean price which is usually used for
comparison purposes.
disability Inability to perform normal functions.

For the purposes of discrimination, disability is “physical or mental
impairment which has a substantial and long-term adverse effect on his
ability to carry out normal day-to-day activities” (Disability
Discrimination Act 2005 s1(1)).
For insurance purposes, disability is usually as expressly defined in
the policy.
disability “A physical or mental impairment which has a substantial and long-

term adverse effect on [a person’s] ability to carry out normal day-to-
day activities” (Disability Discrimination Act 1995 s1(1)).
Tax law contains many provisions intended to help the disabled.
These include:
• disabled trusts that allow a discretionary trust for a
disabled person to be treated for inheritance tax under the more
favourable rules of an interest in possession trust
• certain appliances for the disabled, and talking books for the
blind are zero-rated for VAT
• company cars are taxed more leniently as a benefit in kind for
employees. The rate of carbon dioxide emission for a manual car may
be substituted for an automatic car that a disabled person must drive.
Any accessories added for a disabled person are excluded from the list
price used to calculate the taxable benefit
• commuting expenses may be reimbursed to an employee
without this creating a taxable benefit in kind
• a blind person may claim the blind person’s allowance for
income tax
• for council tax, a house adapted to accommodate a disabled
person is taxed at one lower band.
disability case Case brought by a woman for equal pay where the woman was under a
disability during her employment and for up to six months afterwards
and where the employer concealed relevant information from her

(Equal Pay Act 1970 s2ZA(2)).
disability discrimination This arises when one person treats another less favourably than other
people and the reason is because of that person’s disability (Disability
Discrimination Act 1995 s55(1)).
disability living allowance (DLA)

A social security benefit payable for disabled claimants under the age of
65. When a claimant is 65 or older, attendance allowance may be
payable instead. The benefit is not means-tested and does not depends
on national insurance having been paid. It is not taxable. Payments of
DLA are ignored when considering income for tax credits.
DLA has two components, a mobility component and a care
component.
The mobility component is paid at a higher or lower rate to
claimants who have difficulty walking according to severity.
The care component is paid at a higher middle or lower rate
according to the severity of the disability.
The allowance is paid under Social Security Contributions and
disability reduction For council tax, a reduction when the property is the sole or main
dwelling of a disabled person.
The reduction is given by reducing the property band by one place,
so a band C property is taxed as a band B property. From 1 April 2000,
a band A property is reduced to a special band equal to one ninth of the
amount payable for an average band D property.
disabled driver relief Reduction in the tax charge when a disabled employee is provided with
a company car.
Where an employee is given a car with automatic transmission
because of their disability (for which they have a blue badge), the
employee is subject to tax on the benefit in kind based on the carbon
dioxide emissions for the equivalent manual transmission car, which is
less.
disabled employee In relation to taxation of company cars, “means an employee who, at

the time when the car is first made available to the employee, holds a
disabled person’s badge” (Income Tax (Earnings and Pensions) Act
2003 s172(2)).
Certain transport assistance to a disabled employee is not a taxable
benefit in kind (Income Tax (Earnings and Pensions) Act 2003 s246-
247).
disabled person “A person who has a disability” (Disability Discrimination Act 1995
s1(2)).
For inheritance tax, “a disabled person is someone who, because of
a mental disorder, is not capable of managing their own affairs or
administering their own property or someone who is in receipt of

attendance allowance or a disability allowance because they are entitled
to the care component at the higher or middle rate” (HMRC
inheritance tax glossary).
There are some tax provisions for a disabled employee.
disabled person’s badge The blue badge provided to disabled people. This may be displayed in
any car being used by the disabled person. It allows the car to be parked
in disability bays and in other restricted areas.
The badge can also be a factor in reducing the taxable benefit of a
company car, for which purpose the badge is defined in Income Tax
disabled person’s interest “A trust where more than half of the assets in the trust are applied for
the benefit of a disabled person. Or, for trusts set up on or after 22
March 2006, a trust set up for their own benefit by a person who is
suffering from a condition which can be expected to lead to them
becoming disabled” (HMRC inheritance tax glossary).
disabled trust Discretionary trust for disabled beneficiaries.

For inheritance tax, such a trust has the advantage of being taxed as
an interest in possession trust and not as a discretionary trust.
disadvantaged area Defined areas of the country where the rates of stamp duty were
temporarily relaxed. This provision lasted from 30 November 2001 to
16 March 2005. A full list of the areas is given in SI 2001 No 3746.
disadvantaged customer Person who is treated less favourably in terms of paying for goods or
services. The term is used in Energy Act 2010 s26(1).
disaffection Persuading someone to abandon an affection or duty. Such action

against a serving member of the military is a criminal offence.
disafforestation Clearing forests. [The term disafforestment is also correct.]
disaffiliation Ending an affiliation or similar relationship, such as when a company

leaves a representative body.
disaggregation Splitting an organisation into artificially small parts, particularly when

this is done to avoid registering for VAT. HMRC has a power to order
that disaggregated businesses register as one business.
disallowance Not permitting something, such as not allowing something to be

deducted from taxable income.
disallowed expenses Expenses that are not tax-deductible. When these are included in the
profit and loss account, they must be added to the net profit per the
accounts. This category includes non-trade expenses, capital
expenditure (including depreciation), expenses barred by law (such as
bribes and customer entertainment) and dividends.
disannul To annul completely. [The term is not the opposite of annul.]
disapply Remove from the scope of a regulation. There are many such provisions
in tax law where a regulation is disapplied in certain circumstances.
disappropriate Take away from the state of being appropriated. This usually means to
take back or prevent from being taken in the first place.
disarray State of lacking order, array or clothing.
disassemble Take apart.
disaster area Area which has been badly affected by a disaster, such as a hurricane or
flooding. Government funds are usually provided to relieve suffering.
disaster fund Fund established to relieve the consequences of a disaster. Care must be
taken to ensure that the purpose comes within the scope of public
benefit to claim charitable relief, as explained under Aberfan.
disavow Disclaim knowledge of or deny, particularly having previously

acknowledged the matter.
disband End a group or organisation, particularly when the individual people are
then free to continue the group’s work on their own or in a new group.
disbar Deprive a barrister of the right to plead in court.
disbench Deprive from the privilege of being a bencher in the Inns of Court.
disburden Relieve of a burden of any kind, such as physical or financial.
disburse Pay money, often to pass on a cost which a person has already borne.
disbursement Paying someone the amount they have spent on your behalf.
disc Another spelling of disk, which spelling is usually preferring for

computing.
discard Throw away; dispose of for no consideration.
disc brake Brakes on a vehicle which work by applying hydraulic pads against a
disc on the wheel.
discernment Ability to distinguish, judge and evaluate.
disc file In computing, file of data stored on a disc.
discharge In finance, pay a debt or release from an obligation.
discharged bankrupt Person whose bankruptcy is over. He may still be subject to certain
restriction orders and have difficulty borrowing money.
disclaimer (1) Renunciation of a claim, denial of responsibility or dissociation

from a statement by another. A disclaimer of liability is usually
sufficient to avoid a claim under the tort of negligence.
(2) Refusal to accept something, such as a legacy, liability or gift. If a
legacy or devise is disclaimed within two years of death, the estate is
assessed for inheritance tax as if it had not been made. The disclaimed
must be in writing by the original beneficiary or beneficiaries. From 1
August 2002, it is no longer necessary to notify HMRC also.
disclosure (1) In accounting, the requirement to provide certain information and to

state what accounting polices have been followed.
Disclosure is one of the two elements of comparability (the other is
consistency), which in turn is one of the four qualities of accounting
(2) In insurance, the duty of any person applying for an insurance
policy to tell the insurer all relevant information affecting the risk.
(3) In investing, the duty of an intermediary to inform his client if
commission is being paid (and, if so, how much) in respect of the
business being placed.
disclosure Revealing or making known a fact. Disclosure is a significant element

in accounting and tax reporting.
disclosure of services provided by auditor

Detail of any services other than auditing provided by an auditor to a
company. These must be disclosed by the company under Companies
Act 2006 s494.
disclosure of tax avoidance schemes (DOTAS)

Statutory duty to disclose a tax avoidance scheme.
disclosure of shareholding
Legal requirement for a company to disclose in its annual report all
shareholders with a sufficiently large shareholding. In the UK, this is
3%.
disconto Portuguese: discount
discount Reduction of the full amount.
discountable Able to be discounted, particularly a bill of exchange.
discount account In traditional bookkeeping, there was often a separate account for
discounts on sales. Today it is normal not to have such a separate
account, but simply to net off the discounts and record the net amount
receivable in sales.
discount broker Broker who charges a lower commission than other brokers.
discount broking Share dealing service which charges a low commission and offers no
advice or portfolio service.
discounted cashflow Cashflow statement which is adjusted to allow for inflation or for the
cost of capital.
Discounted Gift Scheme An inheritance tax avoidance scheme.

It operates by making a lifetime gift while allowing the giver to
receive an income from the gifted asset. They are widely used for
inheritance tax planning where there is sufficient cash to buy the
investment bond.
The scheme works by the donor buying a single premium
investment bond, this is given to the desired beneficiary, the donor
receives an income from the bond. This is calculated as 5% of the initial
actuarial value of the bond, so the bond is typically finished after 20
years.
The tax advantages are:
● the bond ceases to be part of the donor’s estate, so the
normal seven-year rule applies for lifetime gifts;
● if the donor dies within the seven years, the value of the
bond is likely to be less than the sum paid, creating a potential
inheritance tax saving immediately;
● the withdrawals from the bond are tax-free income under the
normal rules for bonds.
discounted option “A share option which gives the option-holder the right to buy shares
at an exercise price lower than the market value of the shares when the
option was granted” (Inspectors’ Manual at BIM 44001).
discounted rate An arrangement whereby a person receives a set reduction from a price
otherwise charged. This rate may for a specified period of time.
Discounted rates are widely used to market mortgage rates and credit
cards. Discounted rate mortgages often have penalties for leaving
before an agreed date.
At the end of the specified period, the rate changes to the standard
rate in force at the time. |
discounted selling price Method of stock valuation.

This works by calculating the sales price of items held in stock and
deducting an amount equal to the profit margin. This method is often
used in retail trades, particularly when a large range of goods is
stocked. Provided the method is followed properly and gives a
reasonable answer, it is acceptable for both accounting and tax
purposes. The matter is discussed in the Inspectors’ Manual at
BIM33135.
discounted value Different between the market value of a share and its lower market
value.
discounter Person or business which either discounts bills or invoices, or sells

goods at a reduced price.
discount factor Figure between 0 and 1 (exclusive) which represents a rate of interest
used to calculate discounted cashflow or present value. The interest rate
is calculated as 1/(1 + r) where r is the interest rate expressed as a
decimal (that is a percentage divided by 100). So for an interest rate of
5%, the discount factor is 1 ÷ 1.05 = 0.952.
discount house Financial company which specialises in discounting bills of exchange.
discount price Price after allowing a discount.
discount rate (1) Rate charged by a central bank on loans made to other banks.
(2) Rate of interest used to calculate the discount factor.
discount received A supplier of goods or services allows a business to deduct an amount called a
discount, for prompt payment of an invoiced amount. The discount is
often expressed a percentage of the invoiced amount.
discount store Retailer who sells goods at less than the usual price.
discounting Accepting a lower amount on a bill of exchange in return for having it

redeemed or encashed later.
discovery In tax, becoming aware of an understated tax liability. Discovery

usually allows the tax authorities to reclaim the tax even if the normal
limitation period has passed.
discovery assessment Assessment made on a taxpayer after discovery of unpaid tax. The
assessment is made under Taxes Management Act 1970 s29. The
taxpayer has a right of appeal.
discrete Separate, discontinuous.

[Note that this spelling must be distinguished from “discreet” which
means circumspect and prudent.]
discrepancy Situation where financial reality does not accord with the financial
records.
discretion Exercise of a choice, such as how trust funds are to be used.
discretionary account Client’s account with a stockbroker where he can invest the funds as he
sees fit without obtaining approval from the client.
discretionary broking Share dealing service where the portfolio is managed; the broker has
discretion on buying and selling without reference to the client each
time.
discretionary client Client whose funds are in a discretionary account.
discretionary entrant A member of a group insurance plan who did not have an automatic
right to membership under the eligibility terms of the policy.
discretionary fiscal policy

“ Discrete changes in tax and public spending over and above what
would result from the impact of the economic cycle through the
operation of the automatic stabilisers. This can include fiscal measures
taken to lower inflation, stabilise the business cycle or reduce
unemployment” (HM Treasury Guidance).
discretionary fund Fund which may be used for a payment approved by a fund holder.
Such a fund is often held by a church minister to meet sensitive
expenditure such as to relieve poverty of a church member
discretionary payments
Payments made at the discretion of the fund holder, particularly social
security benefits from the Social Fund.
discretionary registration
Term once used for voluntary registration for VAT. The term reflects
the fact that Customs once had the power to decline voluntary
registrations.
discretionary trust Form of trust where trustees exercise judgment on how much to pay
the beneficiaries.
A discretionary trust may allow the trustees not to make any
payments for a year but to allow funds to accumulate. The trust deed
may impose a limit on such accumulation, failing which is there is an
absolute legal limit of 21 years. Such accumulations are added to
capital and not to income.
The trustees also have discretion over what to do with the capital,
such as the funds in which may be invested, subject to any restrictions
in the trust deed. A discretionary trust may have capital beneficiaries
who are different from income beneficiaries.
Because of their obvious use in tax planning, such trusts are the
most heavily taxed. There is usually an inheritance tax charge at the
lifetime rate when assets are settled on the trust, a periodic charge
every ten years, and an exit charge.
discrimination In employment law, the imposition of a bar or restriction on a person

because of some characteristic. Some forms of discrimination are
illegal.
discriminator Term used in Sex Discrimination Act 1975 s4 for an employer or other
person who discriminates against a person because of their sex, marital
status or gender reassignment.
discriminatory advertisement
“An advertisement which indicates, or might reasonably be understood
as indicating, an intention by a person to do any act which is or might
be unlawful” under the Act (Sex Discrimination Act 1975 s38(1)).
Subsection (3) explains that this includes such terms as “waiter”,
“salesgirl”, “postman” or “stewardess”.

For disability, Disability Discrimination Act 1995 s16B makes it
illegal to offer a job contrary to the Act.
disendowment Removal from an endowment.
disguised interest Tax avoidance scheme which seeks to disguise interest payable as a tax-
free payment. Legislation was introduced in 2008 to counter this.
dishonesty Lack of honesty. It is a significant factor in determining penalties. It is

also one of the requirements for the crime of theft.
dishonour In terms of cheques, when a bank refuses to pay a cheque for any
reason, usually because there are neither funds nor overdraft facility.
disincentive Something which makes it less likely that a person will do what is
desired.
disincorporation Removal of incorporated status, such as when a limited company

becomes an unlimited company.
disinflation In economics, a return to normal conditions after a period of inflation.

[Note the term does not mean the same as deflation.]
disinherit Remove from an inheritance, such as making a new will where the
person is no longer a beneficiary.
disintermediation Removal of an intermediary from any process, market or supply chain.
disinvest Reduce investment, such as by selling shares or not replacing a fixed

asset.
diskette Term sometimes used for the 5¼-inch computer disc that became
standard in the 1980s, but now replaced by other media. From 6 April
2009, HMRC will not accept tax returns on diskette.
dismemberment Loss of an arm or leg.

Dismemberment may attract a payment under a life insurance policy
even though the person has not died. In this context, dismemberment
includes loss of sight.
dismissal Termination of employment by the employer.

An employee may bring an action if the dismissal is either unfair or
wrongful (or both).
Unfair dismissal is when an employee is dismissed for an improper
reason; wrongful dismissal is when an employee is dismissed in an
improper manner (such as through a lack of notice).
Unfair dismissal arises under employment law. A claim must
usually be made within three months of the employment ending, and is
usually heard by an employment tribunal. Wrongful dismissal is a
breach of contract. Some cases may be heard by an employment
tribunal, though otherwise a claim may be brought before the county

court.
A claim for unfair dismissal usually requires the employee to have
one year’s qualifying service, though there are exceptions such as for
dismissal on grounds of illegal discrimination when there is no
qualifying period. There is no qualifying period for wrongful dismissal.
An employee may claim constructive dismissal if the employer
makes the working conditions such that an employee cannot reasonably
be expected to continue working there.
disobedience Failure to obey an order.

Disobedience is usually grounds for dismissal provided the order
was lawful.
disoblige Release from an obligation.
disorder Lack of order; chaos.
disorderly conduct Criminal offence under common law of any minor infringement which
may lead to a breach of the peace.
DISP Dispute Resolution, a complaints sourcebook produced by Financial

Services Authority.
dispatch Send goods to customers.

For VAT, the term has a specific meaning in relation to Intrastat
statistics. The scope of a dispatch is wider than removals for the EC
Sales List.
Dispatch Pack Documentary system used by couriers and similar carriers when
moving goods to another country. The pack contains the necessary
documentation for moving one package. The use of these packs is now
becoming rare as most couriers have computer-based commercial
evidence of removal that is adequate for Customs purposes. The matter
is explained in VAT notice 725.
dispatch rider Person who carries documents in dispatch boxes, originally by horse
but now usually by motorcycle.
dispensation “Notice stating that an officer of Revenue and Customs agrees that no
additional tax is payable by virtue of the listed provisions by reference
to the payments, benefits or facilities mentioned in the statement”
dispenser Person who dispenses, particularly a pharmacist.
displaced person Person who has been displaced by war or similar disruption.
dispone In Scots law, process by which one person’s property is made over to
another.
disposable barbecue Meat and other items sold on a disposable tray in which the food may
be cooked.
From 19 October 2006, the whole of such supply is standard-rated.
disposable income Income people have left after they have paid their tax. It is the money
that they can choose how they wish to spend.
disposable personal income

Another term for disposable income.
disposal Loss of possession of an asset by any means. In capital gains tax, this
can trigger a tax liability.
A disposal can be a sale, gift, theft, destruction or discarding of the
item. The term is more exhaustively defined in Taxation of Chargeable
Gains Act 1992 s21. In particular a disposal includes a part disposal.
disposal benefits and expenses

Expenses incurred by an employee selling his or residence to relocate.
An employer may make a tax-free payment of relocation expenses
in accordance with Income Tax (Earnings and Pensions) Act 2003 s279.
disposition The disposal of any part of a person’s estate. A disposition can trigger
a liability to inheritance tax unless it comes with the scope of an
exemption, such as being made more than seven years before death,
normal payments of income, a disposition not intended to confer a
gratuitous benefit to the recipient, and any disposition which is subject
to a specific relief.
“A disposal or transfer of property or cash, including both the
creation and release of any debt or right” (HMRC inheritance tax
glossary).
disposition by omission In inheritance tax, a disposition that arises because a person does not
something, such as exercising an option.
disposition not intended to confer gratuitous benefit

Term used in Inheritance Tax Act 1984 s10 to exclude from inheritance
tax, any sums that the transferor transferred in the seven years before
death and which were not gratuitous by nature. This has the effect of
excluding payments for goods or services or to settle claims. Under
section 10(2), this provision only applies to unquoted shares or
unquoted debentures if they were sold at an arm’s length price.
dispositions allowable for income tax or conferring retirement benefits

Term used in Inheritance Tax Act 1984 s12 to define dispositions that
are excluded from liability to inheritance tax. These dispositions
include any payments that are allowable for income tax (such as
expenses of a trade), charitable donations and pension contributions.
dispositions by close companies for benefit of employees

Term used in Inheritance Tax Act 1984 s13 to define dispositions that
are excluded from liability to inheritance tax.
dispositions for maintenance of family

Term used in Inheritance Tax Act 1984 s11 to exclude from Inheritance
Tax Act 1984 transfers of value made to a partner or child as normal
family maintenance, such as housekeeping or pocket money.
dispossess Remove from possession.
disproportionate Out of proportion, such as when a penalty is too great for the offence.
disprove Demonstrate the incorrectness of.
dispute resolution Procedures for settling a difference which has arisen between two
people or businesses.
This typically involves the three Cs of concession, conciliation
and confrontation. Conciliation typically involves meditation and
arbitration.
disputed debt Sum owed where there is a genuine disagreement over the amount
owed, or if anything is owed.
disqualification Removal of a qualification or right, such as a court banning a person

from acting as a director, or someone being banned from driving.
disqualifying arrangements
In tax, arrangements which members of a group may enter into in an
attempt to make a business eligible for annual investment allowance
to which it would not otherwise be entitled.
Disraeli, Benjamin English Conservative politician (1804-1881) who was Chancellor of the
Exchequer for three periods between 27 February 1852 and 29 February
1868. He was prime minister for two periods between 1868 and 1880.
disregard (1) Ignore, take no notice of.

(2) In social security, source of income which is excluded from
consideration in determining entitlement to a means-tested benefit.
dissolution Cessation of an institution, particularly of a partnership or the removal

of a company from the register at Companies House.
A distribution of profits in the form of a dividend is treated in the
same way as any other dividend. A distribution of capital is a capital
receipt in the hand of the shareholders, except that a dis of up to £4,000
may be made under extra-statutory concession C16.
Historically, the term also applies to the dissolution of monasteries
by Henry VIII in 1538.
distance selling Any arrangement whereby a consumer makes a purchase away from
the seller’s premises. Examples include mail order and Internet sales.
Such sales are subject to the Distance Selling Regulations (DSR)
which give the consumers additional rights, such as being allowed to
return goods within seven days.

For VAT, a distance sale to an unregistered customer (such as a
consumer) bears VAT at the rate applicable to the supplier’s state. So a
UK supplier providing goods to an individual in France must charge
UK VAT on the sale.
Also if the customer’s purchases reach a limit, the customer must
register for VAT in that state. For the UK, the limit is the same as the
VAT registration threshold. In other EU states, the limit is much
lower.
distance selling When a taxable person registered in one European Union (EU) Member
State supplies and delivers goods to a non-taxable person in another EU
Member State (most common in mail order).
Distance Selling Regulations (DSR)
Distance Selling Threshold The VAT due on distance sales is accounted for in the country of
despatch, until the value exceeds a specified annual limit. The limit is
based on a calendar year and varies between Member States.
distillation Process of increasing the amount of alcohol in drinks. The process

involves boiling the liquid to remove water. Alcohol has a lower boiling
point.
Drinks which have been distilled are liable for excise duty as spirits
which is charged at a higher rate than for beer, cider or wine.
distillation period Period for which the attenuation charge is calculated on a distiller in
respect of his capacity to distil spirits. Customs notice 39 defines them
as “accounting periods for the manufacture of spirits”.
All manufacturing must be carried out in a distillation period.
distilled water For VAT, this is standard-rated. It does not come within the scope of
zero-rated water (VAT notice 701/16).
distiller “A person holding a licence to manufacture spirits” (Customs notice

39).
distiller’s licence Licence required to operate a distillery. A licence may be revoked if the
largest still has a capacity below 18 hectolitres or the distiller ceases
manufacturing spirits.
distiller’s warehouse “Place of security for the deposit of spirits manufactured at that
distillery” (Alcoholic Liquor Duties Act 1979 s15(1)). The warehouse
must be approved by HMRC. The term is so defined in ibid s15(3).
“An Excise Warehouse approved by us [HMRC] under section 15
of ALDA, for the storage of the spirits produced at the distillery. A
limited range of operations, such as racking, can be carried out in a
distiller’s warehouse” (Customs notice 39).
distillers’ licence Licence which is required before anyone may legally distil spirits
(Alcoholic Liquor Duties Act 1979 s12(1)). In general, the distillery
must have at least one still with a capacity of at least 18 hectolitres.
distiller's warehouse An Excise warehouse approved by HM Customs and Excise under

Alcoholic Liquor Duties Act 1979 s15, for the storage of the spirits
produced at a distillery. A limited range of operations, such as racking,
can be carried out in a distiller's warehouse.
distillery “Premises where spirits are manufactured whether by distillation of a

fermented liquor or by any other process” (Customs notice 39).
distillery “Means premises where spirits are manufactured, whether by

distillation of a fermented liquor or by any other process” (Alcoholic
Liquor Duties Act 1979 s4(1)).
distillery return Quarterly return that must be made on form W21 by a distillery.
distinguish In law, process whereby factors in a current court case are shown to be
different from those in a previous case, so that the precedent
established in that case need not be followed.
distrain Seize goods to pay debts.
distraint Process of seizing goods to be sold to pay a debt.
distress In law, the process of seizing goods to raise funds to pay a debt.
distressed For VAT purposes, a person is distressed if “suffering pain, grief,

anguish, severe poverty etc” (VAT notice 701/1).
An organisation providing relief from such distress may be regarded
as not making a business supply.
distressed securities Security issued by a company that is in receivership, administration or

similar adverse financial position.
distress finance Funding for a business in trouble, usually at a very high rate.
distress merchandise American term for goods sold cheaply to raise quick funds to clear
debts.
distress sale Sale designed to generate a quick income, usually because the person is
desperate.
distress warrant Order by a court authorising bailiffs to seize goods for non-payment of
a debt.
distributable profits Profits which the directors may decide to share out between
shareholders as a dividend.
In relation to financial assistance to buy shares in a company, a
definition is given in Companies Act 2006 s683(1).
distributed profits The element of profits which has been given to shareholders as
dividend and not kept as retained profit.
distributing In insolvency, sharing proceeds among creditors.
distribution (1) Dividend, or similar payments from company to shareholders.

(2) Equivalent payment from a collective investment fund.
distribution Dividend or similar payment made by a company to its members. A full

definition for tax purposes is given in Income and Corporation Taxes
Act 1988 s209(2)).
For company law, the term means “every description of distribution
of a company’s assets to its members, whether in cash or otherwise,
subject to the following exceptions” (Companies Act 2006 s829(1)).
The exceptions are:
• issue of bonus shares
• reduction of share capital
• redemption of shares from capital
• distribution of assets on winding up.
distribution cost Expenditure relating to warehousing, packing and delivery of goods.
distribution network Series of warehouses or depots from which goods may be sent.
distribution rights In relation to corporation tax and distributions, means “rights in relation
to dividends or interest or assets on a winding up” (Corporation Tax
Act 2010 s169(2)).
distributor Company which arranges the sales of goods for another company.
divan Counting house where accounting records were kept. The modern term
for a type of bed is an allusion to the style of bench in a divan.
diversification Portfolio policy that seeks to reduce risk by spreading investments over
a suitably wide range.
diversion For excise duty, the release of goods from an excise warehouse to the
market without the excise duty having been paid.
divide Mathematical function to determine how many times one number must
be multiplied to reach another.
dividend (1) Payment to shareholders by company from its profits.

A dividend payment to a director is not tax-deductible by the
company (Eyres v Finnieston Engineering Co Ltd [1916] 7TC74).
(2) An amount returned to the holders of certain types of policy, by the
insurance company, out of its earnings
An annual payment by a company to its shareholders out of
accumulated profits
dividend cover Net profit divided by dividend.
dividend discount model

Method of valuing companies by using the discounted value of future
dividends.
dividend forecast The amount of dividend a company is expected to pay.
dividend income Income from dividends and other distributions from companies. It is
subject to a special rate of income tax. The full definition is given in
Income Tax Act 2007 s19.
dividend irrelevance Theory that dividends are irrelevant in determining the value of a
company. To the extent that profits are not distributed, they are retained
and are therefore reflected in the share value.
dividend maintenance Policy of paying the same dividend even though a company’s profits
fluctuate.
dividend mandate Authorisation by a shareholder to a company to pay the dividends into a

stated bank account.
dividend ordinary rate Rate of income tax charged on dividends to basic rate taxpayers.
dividend per share Amount of dividend as a cash figure payable for one share.
dividend policy Policy followed by directors when determining the size of the dividend.
dividend reinvestment plan

Scheme whereby investors may use their dividends to buy further
shares rather than receive cash. The plan is typically offered by larger
companies to private investors.
dividend trust rate Rate of income tax payable by relevant property trusts on their
dividend income. The rate has been 42.5% from 6 April 2010, prior to
which it was 32.5%. This means that, allowing for the dividend tax
credit, the effective tax rate is the same as the highest marginal rate of
income tax. Other income of such trusts is taxed at the rate applicable
to trusts.
dividend upper rate Rate of income tax charged on dividends to higher rate (40%)
taxpayers. The rate is 32.5%.
dividend warrant Document entitling a person to claim a dividend.
dividend yield Dividend per share divided by current market price.
dividend yield basis Method of valuing shares. The dividend per share is divided by the
dividend yield.
Divisia money supply index

Measure of money supply based on the M4 measure. The characteristic
of this index is that it uses weighting for different types of money.
Notes and coins score 1. Other less liquid forms of cash attract a lower
weighting. The name comes from its inventor François Divisia.
Divisional Court Court comprising at least two judges from a division of the High Court.
There is a divisional court for each of the three divisions of the High
Court. The divisional court hears appeals in various matters prescribed
by law. They also exercise some supervisory jurisdiction over the High
Court.
divisional registration For VAT, a facility that allows a corporate body, which carries on its
business through a number of self accounting units, to register each of
those units or divisions separately for VAT. Allowed only at the
discretion of HM Customs and Excise.
divisor Operand to divide a dividend in division.
divorce The legal process which ends a marriage even though both parties are
still alive. A person who is divorced is called a divorcee.
divorcee Person who has been divorced.
divorcement Old term for a bill of divorce.
divorce order Final order made in granting a divorce under Family Law Act 1996. It
replaces the former decree nisi and decree absolute.
Divorce Registry Section of the Family Division of the High Court that deals with
divorce.
dix Old slang for a US ten-dollar bill.
DIY builder Person who builds a house for his own use. He may be able to claim
back input tax on the building materials even if he is not registered for
VAT.
DIY Builder Someone who constructs or converts, or organises the construction or

conversion of, a new dwelling for personal occupation, ie not for a
business reason.
DK Country prefix code for Denmark.
DLR Dominion Law Reports, series of Canadian law reports from 1912.
DM Deutschmark.
DMA Direct Marketing Association.
D-mark Deutschmark.
do Ditto, same as in the line above.
DO Term for a letter addressed from one officer to another.

The letters stand for demi-official, and originated in the British War
Office.
dock (1) Place where ships berth for loading and unloading of goods, or
embarkation and disembarkation of passengers.
A dock is specifically included in the definition of industrial
building.
(2) Cut, remove, reduce, such as to subtract from wages.
(3) Place in court where an accused person stands trial.
dock brief When a barrister already in court is directed by a judge to defend a

person otherwise without legal representation. The court pays the
barrister’s fee.
doctor (Dr) (1) Medical practitioner.

(2) Holder of a doctorate awarded by a university.
(3) Adjust to give a false outcome, such as amending equipment.
doctors’ co-operative Mutual trading organisation. They started in 1995 to provide out-of-
hours medical cover for GPs’ patients. Their tax treatment is discussed
doctrine of incorporation In international law, the legal principle that international laws are
automatically incorporated into every country’s domestic law. It differs
from the doctrine of transformation.
doctrine of transformation
In international law, the legal principle that international laws are only
incorporated into a country’s domestic law if that country has so
decided by its own law or a decision of its own judges.
document Any record in any form, particularly an official record.

The term is also used in computing to mean a computer file which
has similar properties to a paper document.
For tax appeals, document “means anything in which information is
recorded in any form, and an obligation under these Rules to provide or
allow access to a document or a copy of a document for any purpose
means, unless the Tribunal directs otherwise, an obligation to provide
or allow access to such document or copy in a legible form or in a form
which can be readily made into legible form” (The Tribunal Procedure
(First-tier Tribunal) (Tax Chamber) Rules SI 2009 No 273 s1(3)).
document box Box which can be locked for secure custody of documents.
document wallet Wallet, usually of card or plastic, designed to contain documents.
documentary bill Bill of exchange attached to the shipping documents of parcel of goods.
Typically the documents include the bill of lading, insurance policy,
dock warrant and invoice.
documentary credit Credit document, particularly used in the export trade. It involves a
bank issuing a letter of credit against shipping documents.
documentary evidence In law, evidence in written rather than oral form. The admissibility of
the document depends upon both the proof of the authenticity of the
document and the purpose for which it is offered.
documentary proof Evidence in the form of documents.
documentation fee Fee charged by a lender to cover the cost of producing the loan
documents.
document of title to goods Document, such as a bill of lading that states the terms under which a
person has possession of goods.
documents against acceptance (D/A)

Means of payment in international trade. The exporter sends the
shipping documents with a bill of exchange to the bank or agent at the
destination port. The bank or agent releases the goods when the bill of
exchanged has been accepted by the consignee.
documents against presentation (D/P)

Another expression for cash against documents.
dog Colloquialism for a poorly performing share where the investor should
consider whether it is worth continuing to invest.
dog licence Licence needed to own a dog, collected by local authorities. Separate
licences are still needed for certain dangerous dogs.
In Great Britain, this requirement was introduced in 1878 and
abolished in 1988. The rate was then 37p, the equivalent of the pre-
decimal 7s 6d. By this time, the licence cost more to administer than it
collected. About half of all dog owners did not have a licence.
In Northern Ireland, a licence is still required under Dogs (Northern
Ireland) Order 1983. Dog licences are also required in the Irish
Republic, Isle of Man and in many other countries.
dog tax This tax became formalised in 1769 though annual charges had
previously been made at times of rabies scares. In 1867, it was replaced
with the annual dog licence.
DOL Daily Official List.
dole Colloquial name for jobseeker's allowance, previously unemployment

benefit. The term literally means a portion given (or “doled”) to
someone.
doli capax Latin: capable of crime.
doli incapax Latin: incapable of crime.

Generally, the law assumes that a child under 10 cannot commit a
crime, and that one between the ages of 10 and 14 has limited capacity.
dollar Currency of the USA, indicated by the symbol $. It also refers to a

different currency of other countries such as Australia, Bermuda and
Canada.
dollar area Geographical area where the US dollar is the main trading currency.
dollar balance Country’s trade balance expressed in US dollars.
dollar cost averaging The same as pound cost averaging.
dollar pool Before 1979, fund of dollars from which UK residents could buy
foreign securities, domestic property etc. It was abolished with
exchange control regulations.
dollar stocks Shares in US companies expressed in dollars.
dollarization Linking a currency to the US dollar.

This is often done by a soft currency, or to recover from
hyperinflation. Ecuador did this in September 2000.
domain name Internet address. This can be protected as a trade name.
domal Pertaining to a house.
Domesday Book Record of all property in most of England compiled by 1086 and used
to raise tax.
domestic Relating to the home. This term is sometimes used in relation to tax
provisions on the supply of goods, such as the reduced rate of VAT for
energy supplies. The meaning of the term for tax was considered in the
purchase tax case Attorney-General v Milliwatt [1948] 1 All ER 331
which held that electric blankets could be classified as domestic, even
though they were a luxury and also had medical use (the latter of which
was much more common in 1948).
domestic belongings In relation to relocation expenses, means “belongings of the employee

or of members of the employee’s family or household”
domestic consignment Goods not under Customs control moving within the UK.
domestic currency The currency of a particular country, as opposed to a single currency

or international currency.
domestic economy Principles of efficient ordering of a household’s finances.
domestic fuel This item is subject to the reduced rate of 5% VAT from 1 September
1997.
domestic goods (1) Goods produced by a country for its own use, as against imported
goods.
(2) Goods used within a home.
The extent to which an employee may claim for such goods as
relocation expenses is set out in Income Tax (Earnings and Pensions)
Act 2003 s285.
domestic market Collective term for customers in the same country as the seller.
domestic microgeneration
Defined in Income Tax (Trading and Other Income) Act 2005 s782A
(as inserted by Finance Act 2007 s20) as a microgeneration system in
domestic premises.
domestic premises In law, a private residence, complete with garden, yard, drive and
related buildings.
“Premises used wholly or mainly as a separate private dwelling” (re
microgeneration, Income Tax (Trading and Other Income) Act 2005
s782A (as inserted by Finance Act 2007 s20)).
domestic production Production of goods for use in the home country.
domestic staff People employed to work in a private household, such as gardeners,

chauffeurs, cleaners, cooks and maids.
domestic tribunal Body that deals with discipline in a particular area, such as a
professional body disciplining its members.
domicile The one country a person regards as his natural home. A person may
have only one domicile, even though he has dual residence or dual
nationality.
There are three types of domicile:
• domicile of origin
• domicile of choice
• domicile by operation of law
For inheritance tax purposes only, it is possible to have a deemed
domicile.
domicile by operation of law

When a person’s domicile is established by operation of law.
This applied when a woman married; her domicile of origin was
replaced by her husband’s domicile. This provision was abolished by
Domicile and Matrimonial Proceedings Act 1973 s1, but women who
had already established a domicile by operation of law keep that
domicile.
domicile of choice Where a person has given up their domicile of origin and established
another country as their domicile. In practice, this is difficult to
demonstrate and requires significant steps to be taken to show that the
domicile of origin has been abandoned. An example for tax is IRC v
Bullock [1976]. If a domicile of choice is abandoned, the person reverts
to their domicile of origin (Tee v Tee [1973].
domicile of origin Domicile established at birth. This is, by far, the most common form. A
legitimate child takes the domicile of his or her father (Domicile and
Matrimonial Proceedings Act 1973 s3). If the parents are separated, and
the child lives with the mother, the child takes her domicile (ibid s4).
domiciliary visit (1) Visit made under legal authority to search the premises. This term is
now rarely used.
(2) Visit by a doctor to a patient at his home.
domiciliate Establish a domicile or permanent residence.
dominance Where one company, person, product or policy is so powerful that it

dictates to others.
dominant influence “Influence that can be exercised to achieve the operating and financial
policies desired by the holder of the influence, notwithstanding the
rights or influence of any other party” (FRS 2 para 7).
dominant person Person who has the more responsible role in a fiduciary relationship.
dominant trading strategy

Portfolio that costs the same as another but which is structured always
to outperform the other.
domination Relationship where one person, body or activity determines all others.
dominical Belonging to the lord, particularly referring to Jesus in Christian

theology.
domitae naturae Latin: of tame disposition.

The term is applied to animals.
Domus Procerum Latin: House of Lords.
domus sua cuique est tutissimum refugium

Latin: to every one his house is his surest refuge.
This principle was expounded in Semayne’s Case [1604].
donated goods Goods given to a charity or organisation to sell to raise funds. Such an
activity is not usually regarded as taxable under extra-statutory
concession C4, as explained in the Inspectors’ Manual at BIM24795.
donatio mortis causa Latin: given in anticipation of death.

To be valid, such a gift must be made in contemplation of the
donor’s death, to take effect on death, and to be completed by delivery

on death.
donation Gift, such as to a charity.
donator Person who donates something, though the word donor is more
generally used.
donee Individual or organisation that receives a grant. Also called a grantee.
donor Individual or organisation that makes a grant. Also called a grantor.
doorstep lending Another name for a home credit company.
DORA Defence of the Realm Act 1914. It imposed severe wartime restrictions.
dormant No longer active or in use, such as a company which is not trading or an

account which is not being used.
dormant account An account in a bank or building society which has not been used by its
owner for at least 15 years. Many such accounts are in the names, or
false names, of individuals long dead and whose descendants cannot be
traced.
Under Dormant Bank and Building Society Accounts Act 2008,
these dormant accounts may be taken and used to improve youth
services. A rightful owner may claim the funds at any time.
dormant company Company which still exists but is not trading. Such a company is
generally exempt from audit (Companies Act 2006 s480).
dormant partner Another term for sleeping partner.
dormie Person who has already achieved enough to win even though the game
or contest has not finished. The term literally means a sleeper in
allusion to the fact that the person will win even if he now falls asleep.
[The term is widely used in golf.]
dotal Pertaining to a marriage dowry.
DOTAS Disclosure of tax avoidance schemes.
douane Custom house.
douanier Officer at a Custom house.
double (1) Twice as much or twice as many. Unlike the number 3, there is no
distinction as between treble and triple as the latter equivalent of
“duple” has largely fallen from use.
The word has acquired many specific meanings, of which the more
relevant are noted below.
(2) Produce twice as much money, such as in terms of turnover, profit
or winnings.
(3) Perform two roles, particularly in the performing arts. This includes
acting two parts in a play or playing two instruments in an orchestra.
(4) Description of any activity that requires two people, as in double act
or doubles game.
(5) Combined bet on two races where any winnings on the former are
staked on the latter.
(6) Coin worth ⅛ of an old penny, once issued in Guernsey.
double assessment When income has been assessed to tax twice. Under Taxes
Management Act 1970 s32, an appeal may be made to reduce the
amount of the duplicate charge.
double auction Auction in which bids and offers compete. An example is the outcry
where buyers and sellers shout the price at which they are prepared to
trade.
double cab pick-up Type of vehicle which is a hybrid of car and van. HMRC has produced
a list of which models are regarded as cars or vans in their manuals with
effect from 6 April 2002. The classification of such a vehicle for VAT
also determines its treatment for income tax if one is provided for use
by an employee.
double charge To charge a person either twice or to charge them once at twice the
price. The former is usually a criminal offence.
double check To check something twice, where each check is independent of the
other.
double counting Including an item twice when it should only be included once.
In tax, the term is used in connection with certain loss reliefs
(Income Tax Act 2007 s63).
double death duties Situation that existed in the early decades of 20th century where an
estate in Ireland could be subject to death duties twice. This was
relieved by Government of Northern Ireland Act 1920 s28 and Irish
Free State (Consequential Provisions) Act 1922 s5. The former Act was
repealed on 2 December 1999 as no longer needed, but the latter
provision remains in force.
double-decker bus Unofficial measure of length, even though this is not fixed under
transport law.
Most UK double-deckers are between 9.5 metres (31 feet 2 inches)
and 11 metres (36 feet 1 inch) long. Some three-axle buses are 12
metres (40 feet) long. The maximum permissible if 15 metres (49 feet 3
inches).
double deduction When a claim is made twice for the same expenditure.
This can arise when there is a change of accounting basis, such as
from accrual accounting to cash accounting. HMRC maintains that a
second deduction is not permissible.
For direct tax purposes, the matter is discussed in the Inspectors’

Manual at BIM42220.
For employment income, such deduction is specifically disallowed
in Income Tax (Earnings and Pensions) Act 2003 s330.
double-digit Ten or more, as in “double-digit inflation” to mean inflation of at least

10.0%. The term has the same meaning as double figures.
double entry System of bookkeeping which acknowledges that every transaction

affects two accounts. For example buying stock increases the stock but
decreases cash.
Double-entry bookkeeping therefore ensures that every transaction
is recorded by a debit and an equal and opposite credit. The debit
records an increase in an asset.
double entry bookkeeping

System of bookkeeping where every transaction is recorded by debits
and credits of equal amounts. This was first written down by Luca
Pacioli, a Venetian monk, in 1496.
double florin British coin minted between 1887 and 1890 with a face value of four
shillings. It was overlooked when pre-decimal currency was
demonetised and therefore remains legal tender for 20p.
double groat Old silver coin minted in the reign of James VI of Scotland (1601-04)
worth eight old pence.
double grossing up Requirement that can arise under inheritance tax when the residue of an
estate is shared between exempt and non-exempt beneficiaries (such as
a charity). The procedure is required by Inheritance Tax Act 1984 s38
and is explained in the inspectors’ manual from IHTM26152. The
matter was considered in the case re Benham Will Trust [1995] STC
210, and again in the case re Ratcliffe [1999] STC 262.
The issue relates to who bears the liability for IHT when a legacy is
said to be after tax or net of tax, and also how much tax is paid.
double indemnity Payment of twice the policy normal benefit for specific kinds of losses
under certain conditions. Such a provision is sometimes contained in
life insurance for such eventualities as accidental death.
double insurance When a property is insured with more than one insurer and, in
consequence, the property has total insurance greater than its value.
The general rule is that the insured may claim against the policies in
whatever order he wishes, provided the total claim does not exceed the
value. This is specifically stated in Marine Insurance Act s32(2).
double manning Having two people to do a job. This may arise because:
● the job itself requires two people such as because of the
weight to be carried or the need to be in two places at once;
● the need for there to be a witness or second opinion:
● one person could be at risk, such as from violence;
● to allow one of the two people to be trained;

● to provide companionship. (This is unlikely to be a sufficient
reason in itself, but could be a deciding factor in otherwise marginal
cases.)
Management consultants will often look to reduce double manning
as an efficiency measure. All the above factors should be considered
before reducing to single manning.
double option Combination of a put option and a call option where neither may be
sold separately.
double taxation Being taxed on the same income in two countries.

The UK taxes income which arises in the UK or which is earned in
another country by a UK-resident. Many other countries have similar
provisions. This can mean that income is taxed twice. To avoid this
there are double taxation agreements with many countries. Where
there is no treaty, unilateral relief may be available.
There are different provisions regarding national insurance.
Typically a person pays national insurance in their country of residence
for 12 months and then switches to the country of working, though
there are many exceptions to this typical provision.
double taxation agreement

Agreement between two countries to avoid double taxation. The usual
arrangement is that the tax is limited to the amount payable in the
higher taxing country, and that tax is shared between the countries.
The UK has such agreements with more than 100 countries. Each
one is a statutory instrument.
double taxation relief Relief from UK income tax or corporation tax when the income has
already been taxed in another country.
The terms are usually governed by a double taxation agreement. If
not, the taxpayer may be able to claim unilateral relief.
double tenth This and similar taxes of various amounts were voted by Parliament to
Henry V between 1415 and 1421 to fund the Battle of Agincourt.
double time Rate sometimes paid for working overtime. It is twice the employee’s
normal hourly rate.
double witching Date when two derivatives expire together. It creates a period of
volatility.
doubtful debt Amount of debts the company expects not to be paid but has not
written off in its accounts.
It should be noted that a doubtful debt is still included with debtors
but with a provision. The provision is subtracted from the value of the
debts when determining the value of current assets.
If the debt is actually written off, it is called a bad debt. The
company then no longer records that as a sum owing to it, even though
the debt may still be legally payable.

A doubtful debt need not be specifically identified, as a bad debt
must. A business may, for example, make a provision for 1% of all its
debts as doubtful without identifying those debts it expects to go bad.
There is no tax relief or VAT relief for a doubtful debt, but there
usually is for a bad debt.
doubtful loan Loan which is not expected to be repaid.
douceur French term taken into English to mean a gratuity for a service
promised or rendered.
dove In investment, someone that promotes low interest rates.
Dovers Old Stock Exchange colloquialism for South-Eastern railway shares.

The railway ran to Dover. The company was formed in 1839.
Dow, Charles H American economist (1851-1902) who helped to establish the Dow
Jones index.
dowager Term used to describe a titled widow to distinguish her from her son’s
wife who may have the same title. Originally the term meant a widow
who has an endowment to maintain her.
dowelling money Medieval form of church rent.
dower Another term for a dowry or endowment, particularly paid to a widow

to support her in widowhood.
dower-house Old term for a property provided to a widow when her husband’s estate
has passed to his son or other heir.
down and out Colloquialism which has various meanings. These include “blatant” as
in a “down and out lie”, and a term (usually hyphenated) for a vagrant.
down-at-heel Description of someone with a shabby appearance, literally with the

backs of their shoes pressed down through excessive and careless use.
downgrade Reduce the importance or status of something or some person.
downhill Direction of travel which is down a gradient. The term is used for any
situation which is deteriorating, such as when the graph of performance
looks like a hill going down.
Downing Street London Road where the prime minister lives, and is thus seen as a
euphemism for the executive of the government.
Dow Jones index Main stock market index of the USA. It is their equivalent to the FT-SE
100 index.
The index was established by two American economists, Charles H
Dow (1851-1902) and Edward D Jones (1856-1920).
down payment Initial payment, usually in a credit sale agreement.
downsizing (1) Human resources euphemism for reducing the size of the workforce.
(2) Moving from a larger home to a smaller one to raise funds.
down time Period when production stopped, such as because of a strike or machine
breakdown.
DPA Data Protection Act 1998.
DPH Daň z přidané hodnoty, Czech for “value added tax”.
DPO Documentary Proof of Origin – a control requiring the provision of

appropriate documentary evidence of the country of origin for certain
textile products imported into the European Community. The object of
this control is to prevent abuses of trade, ie misdeclaration of the
country of origin.
dr Abbreviation for debit, from the Italian “dare” meaning to give.
Dr Doctor, as in a medical practitioner or holder of a doctorate.
DRA Default retirement age.
drachma Currency of Greece until it adopted the euro in 2002. It was divided
into 100 lepta. The plural is either drachmae or drachmas.
draft Provisional version of a document, such as accounts or a report. The

draft is amended to a final version.
dragon bond Bond issued on one of the Asian bond markets.
dram Currency of Armenia.
dramatis personae Latin: characters in a play or story. The term is sometimes used in
tribunal or court judgments when listing the people involved.
draw (1) Remove funds, such as from a bank account.

(2) In relation to lotteries “includes any process by which a prize in the
lottery is allocated” (Gambling Act 2005 s255).
drawback Repayment of duty or other taxes paid on goods satisfying certain

conditions. The most common forms of drawback relate to excise duty
paid on goods which are subsequently removed from the UK (whether
to another European Union (EU) Member States or to a destination
outside the EU); supplied as ship's or aircraft's stores; or used in the
manufacture of certain eligible products. Inward Processing Relief
(IPR) drawback is a procedure under which customs duty and VAT are
paid on import and reclaimed when the goods are re-exported.
drawback goods “Goods in the case of which a claim for drawback has been or is to be
made” (Customs and Excise Management Act 1979 s1(1)).
drawback system One of two methods by which Customs administers inward processing
relief. The other is suspension system.
Under the drawback system, the duty is paid and then refunded
when the goods are re-exported.
drawdown (1) Movement of funds against a credit line.

(2) In banking, movement of a customer’s funds from one account.
Note that the noun is usually given as a single word, but the verb
“draw down” is usually given as two words.
drawdown lump sum death benefits

Lump sum payment to a pension scheme member (or beneficiary)
while either:
• in receipt of income drawdown by an unsecured pension
before 6 April 2011, or
• in receipt of a drawdown pension after 5 April 2011.
For deaths from 6 April 2011, such a benefit attracts an income tax
charge of 55%. Previously it was 35%.
drawee A person to whom a bill of exchange is drawn.
drawer (1) Person who draws a bill of exchange or draws funds from an
account.
(2) Part of a desk.
drawing account Account that record how much profit has been withdrawn by a sole
trader or partner.
For tax purposes, this is not allowed as an expense and is generally
ignored, as the trader or partners is taxed on the whole profit and not
just on the amount that is drawn out.
drawing rights Right to draw funds. The term was particularly used by the
International Monetary Fund for special drawing rights which had the
status of a currency.
drawings Cash taken for personal use, in sole trader or partnership business,
treated as a reduction of ownership interest.
Drawings are not allowed as a taxable deduction, and must be
added back to taxable profits.
drawings account In a partnership, account which shows how much has been drawn by
each partner.
draw straws To select at random. Strictly the practice is people each draw a straw
from the fist of a neutral person. One straw is significantly shorter than
the others. The person who draws that straw is selected.
dread disease policy Another name for dread illness insurance.
dread illness insurance Insurance policy against contracting certain illnesses. It is sometimes
called a critical illness insurance policy or a dread disease policy.
drengage Ancient form of land tenure.
drinks For VAT purposes, a drink is “a liquid commonly consumed to increase

bodily liquid levels, to slake thirst, to fortify or to give pleasure” (VAT
notice 701/14). Most drinks are zero-rated as food. Exceptions are
alcoholic drink, purgative and laxative teas, carbonated and sparkling
drinks, barley water and similar, fruit cordials and squashes. The exact
scope is set out in VAT notice 701/14.
Alcoholic drink is also subject to excise duty under Alcoholic
Liquor Duties Act 1979.
DRIP Dividend re-investment plan.
drive A computer device for storing or retrieving data.
driving licence Document which authorises a person to drive a motor vehicle. The
document is also widely used as an identity document.
In Great Britain, licences are issued by the Driver and Vehicle
Licensing Agency (DVLA).
drop-dead fee Fee paid by a person or company that is bidding for another company.
The fee is paid to the would-be lender if the bid fails and the loan is not
required.
drop lock Bond which is issued with a variable rate of interest, but which
becomes a fixed rate if an index or rate falls below a predetermined
figure on a set date. The fixed rate is known as the trigger and the date
is the coupon reset date.
droplock bond Floating rate bond which converts to a fixed rate of interest if interest
rates fall to a predetermined rate.
drug pipeline Drugs which a pharmaceutical company is currently testing. This is a

significant factor in valuing the company.
drugs Many drugs are banned from personal import to the UK and are liable
for seizure by Customs. These include heroin, morphine, cocaine,
amphetamines, barbiturates, LSD and cannabis.
Non-prescription drugs may be imported freely. Prescription drugs
and controlled drugs may usually be imported in quantities sufficient
for 15 days’ supply. Further guidance is given in Customs notice 4.
Use and supply of illegal drugs are criminal offences under Misuse
of Drugs Act 1971 and other law.
Payments for illicit drugs are not tax-deductible as a criminal

payment.
Drugs Freefone Hotline Number that may be called to give Customs confidential information
about drug smuggling. The 24-hour number is 0800 595000.
dry goods Clothes and household goods.
dry goods buyer In marketing, term for a person who simply places orders as he is
instructed to do. A sales person usually spends little time with such a
buyer and looks elsewhere in the organisation to find buying
influences.
dry inch Unit of measure used to calculate the freight charge for canal barges,
where goods are charged at so much per ton per mile, the ton mile.
The weight of the cargo is determined by putting a long ruler into
the water at four points round the barge, and counting the average
number of dry inches to see how far the boat had sunk in the water.
Each boat was calibrated when built using standard weights. Cargo
weights could subsequently be determined by reading from a chart.
Typically each extra ton caused the barge to sink another inch.
dry lodgings Sleeping accommodation without board.
dry natural gas Natural gas after removal of liquefiable hydrocarbons and most non-
hydrocarbon gases.
DS Disseminated multiple sclerosis. Common abbreviation for sick notes

(HMRC leaflet E14).
DSMEG Duty Suspended Movements of Excise Goods - the Excise Duty Points
(Regulations 2001).
DSP Director of Service Prosecutions.
DSR Debt service ratio.
DTB Deutsche Terminbörse.
DTCC Depository Trust and Clearing Corporation.
DTI (1) Department of Trade and Industry, a UK Government

department, now known as Department for Business, Innovation and
Skills (BIS)
(2) Direct Trader input, term used for Customs purposes.
DTI community Direct Trader Input community an arrangement where traders using
Direct Trader Input (DTI) transmit data to the Customs entry processing
system via one of the community linked networks.
DTI system Direct Trader Input system, a Customs-based trade computer system
that supports a network of trade users and provides Human Computer
Interface (HCI) and Electronic Data Interchange (EDI) access to the
Customs Handling of Import and Export Freight (CHIEF) system.
Inventory systems are usually associated with a Direct Trader Input
system (DTI system).
DTI-CHIEF Direct Trader Input, an arrangement under which traders can input data
from their own computer terminals to the Customs Handling of Import
and Export Freight (CHIEF) system via a Trade System Operator.
DTLR Department for Transport Local Government and the Regions, a former
UK Government department. Its powers were transferred to the
Department for Transport (DFT) and Office of the Deputy Prime
Minister (ODPM).
DTR (1) Double taxation relief.

(2) Disclosure Rules and Transparency Rules, a sourcebook produced
by the Financial Services Authority.
DU Duodenal ulcer. Common abbreviation for sick notes (HMRC leaflet

E14).
dual capacity system System of trading where stockjobbing and stockbroking are performed
separately. This system operated on the London Stock Exchange until
Big Bang in October 1986.
dual currency bond Bond which is repayable in one of two currencies.
duality Term used in relation to the deductibility of expenses where the

expenditure has two or more purposes.
An expense is allowable is wholly and exclusively incurred for a
trade, ignoring incidental benefit. If the expense is not so allowable but
a definite part of the expense is wholly and exclusively incurred, that
part is deductible. This concept is discussed in the Inspectors’ Manual
at BIM37007.
dual listing Description of a share or other security listed on more than stock
exchange.
dual motive transaction Transaction undertaken for more than one objective. This can determine
whether a transaction is trading, as explained in the Inspectors’ Manual
at BIM20410.
dual pricing Description of product or service to which different prices are charged
depending on the market in which it is sold.
dual purpose expenditure Spending which is for both business and personal use. Such items have
several specific tax provisions.
Where expenditure is incurred on such items, the whole expenditure
is usually disallowed as it does not meet the “exclusively” requirement
to be tax-deductible. The is discussed in the Inspectors’ Manual at

BIM37007. A leading case is Mallalieu v Drummond.
dual residence State of being resident in more than one country at a time.
dual resident settlement Capital gains tax provisions are given in Taxation of Chargeable Gains
Act 1992 s88.
dual resident trustee Capital gains tax provisions are given in Taxation of Chargeable Gains
Act 1992 s84.
dual running Operating two systems side by side as a means of moving from one
system to another. It is also known as parallel running.
dubitante Latin: doubting.
ducat For VAT, gold investment coin issued by Austria and listed in VAT
notice 701/12A.
duck (1) For VAT, ducks for eating are zero-rated, but ornamental birds are
standard-rated.
VAT leaflet 701/15 states that the former includes Aylesbury,
Campbell, Indian Runner, Muscovy, Pekin and derivatives and
crossbreeds of these.
(2) In cricket and colloquially, a score of zero.
due date Date by which a payment should have been made, particularly of tax.
due diligence Process of examining a prospective investment to see if it is

creditworthy and credible.
due regard Required amount of attention to a matter. Failure to pay due regard,
particularly in the areas of employment discrimination, can lead to a
claim against the employer.
dues Colloquial term for money which is owed, particularly as a subscription

to a trade union or club.
Duke of Westminster principle

Principle that upheld the legality of tax avoidance in the case Duke of
Westminster v Inland Revenue [1935].
The Duke paid his domestic employees by annual payments which
were a deductible expenses against his surtax. Although these payments
in reality were wages, which were not deductible, the court looks to the
form rather than substance.
The case is famous for Lord Tomlin’s statement that “every man is
entitled if he can to order his affairs so that the tax attaching under the
appropriate Act is less than it otherwise would be”.
This principle has subsequently been modified by the Ramsay
principle and Furniss v Dawson.
dum bene se gesserit Latin: during good conduct.

A judge in the High Court holds office dum bene se gesserit.
dum casta vixerit Latin: while she lives chastely.
dum fuit infra aetatem Latin: while he was within age.
dum fuit non compos mentis

Latin: while he was not of sound mind
dummy UTR Unique tax reference (UTR) number which could be issued to a UK-
resident partner before 31 January 2009 to allow the partnership’s tax
return to be completed on time when the proper UTR is not known.
dump code Code for items for which there is no other code. In an EPOS system,
this will be for an item which is sold for which no barcode has been
allocated, such as if a display item is sold. For VAT purposes, there
must be one dump code for each rate of VAT.
dumping Process of selling goods very cheaply. This is done either to be rid of
excess stock or to kill off competition to capture a market.
A Customs duty known as anti-dumping duty may be imposed to
protect a domestic market from unfair foreign competition.
dum sola Latin: while single.
duopoly When two people or companies together have a monopoly.
duplicate Copy of a document.
durante absentia Latin: during absence.
durante bene placito Latin: during the pleasure of the Crown.
durante minore aetate Latin: during minority.
durante viduitae Latin: during widowhood.
durante vita Latin: during life.
duration In investment, the time it takes a bondholder to receive his money.
duration gap Difference in the life between assets and liabilities. This is also known
as an asset liability mismatch. If the life of assets exceeds that of
liabilities, the duration gap is positive.
The term is commonly used by banks, pension funds and similar
financial institutions to measure their risk to changes in interest rates.
duration matching Process of matching the life of assets to that of liabilities.

This is most commonly considered by banks and similar financial
institutions as a means of hedging the duration gap. An extreme
example would be a bank that only accepted deposits for a fixed period
of one year, and only lent money for a fixed period of one year.
duress Forcing someone to make a contract. Such a contract is invalid.
DUS Distinct, uniform and stable. The three conditions required for plant
variety rights.
dust Slang term for money, based on the moral view that ultimately all
money is worthless.
Dutch auction Auction where the price is successively reduced for each bid, and where
the purchase is the first person to bid.
Dutch bargain Agreement settled over a drink, from the traditional reputation of the
Dutch as drinkers.
Dutch treat Meal or other occasion where every participant pays their own bill.
dutiable alcoholic liquor Alcoholic liquor which comes within the scope of spirits, beer, wine,
made-wine or cider (Alcoholic Liquor Duties Act 1979 s1(1)).
dutiable gaming Gaming for which a licence under the Gaming Act 1968 is required;
gaming that may be considered by the Gaming Board to be outside the
scope of the Gaming Act 1968 (for example a casino on a ship sailing
in inshore waters); and unlawful gaming.
dutiable goods Other than for dutiable or restricted goods means “goods of a class or
description subject to any duty of customs or excise, whether or not
those goods are in fact chargeable with that duty, and whether or not
that duty has been paid thereon” (Customs and Excise Management Act
1979 s1(1)).
dutiable pool bets Bets made in pool betting and which are therefore subject to pool
betting duty. This does not include pool betting on horse racing or dog
racing, nor on bets for community benefit.
duties of auditor Obligations imposed on an auditor by statute, particularly Companies

Act 2006 s498.
duty (1) Tax on goods.

(2) Responsibility of a job or office.
There are two main types of duty collected by HM Customs and Excise:
one is 'import duty', which is duty charged on goods imported into the
European Union (EU); and the other is 'excise duty', which is a UK tax
on certain types of goods, such as alcohol or tobacco.
duty and tax Customs duty, Common Agricultural Policy (CAP) charges, excise duty
and VAT, as applicable.
duty-free Colloquial term for personal import allowance.
duty free shop Shop at an airport on a ship where duty free goods may be purchased.
duty paid Description of goods where a duty has been paid, particularly when an
excise duty has been paid which is lower than the duty otherwise
payable in the UK.
duty paid fuel Oil for use in vehicles on which hydrocarbon oil duty has been paid
(Customs notice 75). With a few exceptions, it is an offence to use other
oil in vehicles.
duty paid terminal Oils terminal where all of the oils in storage have borne excise duty.
duty point The time and place where excise duty becomes payable.
duty representative A person authorised and registered by HM Customs and Excise to act
as an agent for non-UK owners of excise goods who wish to deposit
goods in a UK excise warehouse.
duty stamp Adhesive label or equivalent mark which shows that a duty has been
paid.
Such stamps had largely disappeared by 1 April 2006 when they
were revived for bottles of spirits.
duty suspended Status of excisable goods that are subject to duty but where the law
does not require duty to be paid yet.
Duty-Suspended Installation
A warehouse, where oils are stored in Duty Suspension before delivery
to home use. These are normally attached to the producer's premises, or
are import warehouses. These premises used to be referred to as
Bonded Warehouses.
duty suspension An arrangement which allows excise goods to be produced, processed,

held, received and dispatched without payment of duty. The duty
chargeable on the goods is held in suspense. Duty suspension ends
when the goods reach a legal point, ie the 'excise duty point', at which
the duty becomes due.
duty to secure In relation to seized property, the duty to ensure that the property is not
examined, copied or put to any use other than with the consent of its
owner or the court (Criminal Justice and Police Act 2001 s61).
D&V Diarrhoea and vomiting. Common abbreviation for sick notes (HMRC
leaflet E14).
DVD Abbreviation of either Digital Versatile Disc or Digital Video Disc.

A type of optical disk of the same size and appearance as a compact
disc, but with much greater storage capacity. This is achieved by
reading the disc using a much narrow laser beam.
A DVD holds a minimum of 4.7GB of data, enough for a full-length

movie. Almost all DVD drives are backward-compatible with CD-
ROMs, so they can play old CD-ROMs, CD-I disks, and video CDs.
DVD-R (1) DVD-Recordable. A description of a DVD drive which allows the

operator to write on to a DVD as well as read it.
(2) One of the forms of a blank DVD disk indicating how it data may be
written on it.
A disk described as “-R” or “+R” may have data written to it, but
this data cannot be erased and the disk re-used. A disk described as “-
RW” or “+RW” may have data written which can be erased and the
disk reused. Most such disks say that they may be erased and used up to
1,000 times. RW disks are more expensive.
The + an – designations simply indicate the software used for the
writing. The user must make sure that the equipment used has the
necessary software for the disc.
DVLA Driver and Vehicle Licensing Agency - is an Executive Agency of the

Department for Transport (DFT).
DVP Delivery vs payment
dwelling “A building or part of a building occupied or intended to be occupied as

a separate dwelling” (Housing Act 2004 s99).
For council tax, the definition is given in Local Government
Finance Act 1992 s3(1).
dwelling-house “Means a building or part of a building occupied or intended to be

occupied as a separate dwelling (and includes ones that is being or is to
be constructed” (Housing Act 2004 s148(1)).
DWP Department of Work and Pensions, the government department

responsible for paying state pensions and social security.
dwt Pennyweight.
DWT Driving while texting.
dyled Welsh: debit
dyvour Old Scottish term for a bankrupt.
Dyzemas Day Old term meaning day on which tithes are to be paid.
E
E (1) For council tax, the band immediately above the average band. It
applies for properties with these values:

between £66,001 and £90,000 before
A band E property pays council tax at 11/9 of the rate for an average
band D property.
(2) National insurance contribution letter for a married woman eligible
to pay reduced rates and who is a member of a contracted-out salary-
related pension scheme.
e- Prefix indicating an electronic equivalent of a non-electronic document

or activity, such as e-mail or e-filing.
E85 Mixture of 85% bio-ethanol and 15% unleaded petrol.

From 6 April 2008, a company car which can run on E85 attracts a
further two percentage points in the percentage used to calculate the
fuel benefit tax charge for the employee. An E85 car is indicated as
type G on form P46(car).
E101 Certificate issued to individuals travelling to another EU country. It

demonstrates that the individual is paying national insurance in the UK
and therefore is not liable in the host country. From 1 May 2010, the
form is replaced by the A1 form, though E101 forms issued before 1
May 2010 remain valid until their expiry date.
E&B Ellis and Blackburn’s Reports, law reports of the Queen’s Bench of the
High Court from 1851 to 1858.
E&F Error and Fraud. Term used in setting targets for tax credit
management.
ea Abbreviation of each.
EA Education Act (such as 1996, 2002 or 2005).
EAA European Accounting Association.
each way In investing, commission earned by a broker on both the sale and
purchase of a security.
EAEC European Atomic Energy Community.
EAGGF European Agricultural Guidance and Guarantee Fund.
earlier tax calculation currency

“The tax calculation currency of the company in the accounting period
to which the carried-back amount is to be carried back” (Corporation
Tax Act 2010 s12(3)).
Earl of Oxford’s case Court case from 1615 which established that the principles of equity
prevail over common law.
early bargains In trading securities, a deal which is agreed before the relevant
exchange has officially opened for business.
early childhood services Term used in Childcare Act 2006 s2 means various provisions to assist
the parent of a young child up to the age of four.
early exercise Provision in an option which allows the owner to exercise it at any time
before its expiration date.
early leaver Someone who leaves an employment before retirement. The term is
often used in connection with rights under an occupational pension
scheme.
An early leaver may leave their accrued benefits in the scheme and
become a deferred member. This means that the deferred member will
receive a pension based on those contributions when the member
eventually retires, in addition to any other pensions.
Alternatively, the early leaver may transfer the benefits to another
pension scheme, such as one run by the new employer. This is usually
done by calculating a figure for “years’ service”. If the two schemes are
identical in benefits provided, n years’ service in one scheme should
buy n years’ service in the new scheme. If there are differences, the
transfer may result in more or fewer years’ service.
If an employee leaves within two years of joining the scheme, there
is a third alternative of having a refund of the employees’ contributions
less 20% income tax. No sum is refunded in respect of the employer’s
contributions.
early redemption Redeeming a mortgage or policy earlier than the agreed date. Most such
policies impose a financial penalty for doing so or offer a lower return.
early retirement Retirement before normal age; usually as a way of making older
employees redundant.
early tax year “In relation to an individual carrying on a trade:

(a) the tax year in which the individual first started to carry on the trade,
(b) one of the next 3 tax years” (Income Tax Act 2007 s112(6).
early withdrawal Removal of funds before the due date.
Early Years Foundation Stage

Requirements for earning and development requirements and welfare
requirements for young children (Childcare Act 2006 s39).
early years register Register kept of everyone who provides early childhood service
(Childcare Act 2006 s32(2)).
earmarked reserves Money set aside for a specific purpose, such as for a specific objective
by a charity or other non-commercial body. The term more generally
used is designated funds.
earn Acquire funds by working.
EARN Euro Area Reference Note.
earned income Income which is regarded as neither tax-free nor unearned for the
purposes of income tax.
This distinction has become of little importance since the abolition
of investment income surcharge on 6 April 1984.
Earned income includes salaries, trading profits, income-
replacement benefits and similar items.
earned premium The portion of an insurance premium for which protection has already
been provided by the insurer.
earner For national insurance, someone who has earnings (Social Security
Contributions and Benefits Act 1992 s3(1)(b)).
earnest In trading, a term sometimes used to describe an initial payment by a

buyer to seller to show commitment to a contract.
earning capacity Amount a person is capable of earning.
earning potential Amount a person has the potential of earning.
earning power Amount a person should be able to earn.
earnings Total income of a person.

For national insurance, “includes any remuneration or profit derived
from employment” (Social Security Contributions and Benefits Act
1992 s3(1).
earnings arrestment One of three forms of arrestment of earnings which may be awarded
by a Scottish court. The other two are current maintenance arrestment
and conjoined arrestment.
The court states a total amount to be collected. Tables are produced
determining how much must be collected from each payslip until the
total has been reached. The employer is entitled to deduct a further £1
for himself to cover the administrative costs.
earnings before interest, taxes, depreciation and amortisation (EBITDA)

Earnings generated by a business’s operations. EBITDA is a halfway
house between gross profit and net profit. It can indicate the underlying
fundamentals of how a business is trading.
In practice, EBITDA is sometimes used by commentators to
represent a net loss as a form of profit by excluding costs which are
properly the responsibility of the business.
earnings cap From 1989 to 2006 there is an upper limit on the amount of salary that
can be taken into account when calculating pensions arising from and
contributions payable under an approved arrangement.
earnings charged on receipt

Income from employment that becomes taxable when received (Income
earnings charged on remittance

Income from employment that becomes taxable when remitted (Income
earnings factor (EF) Figure used to determine eligibility for contributory social security
benefits.
It is broadly the earnings on which classes 1, 2 or 3 have been paid
or are treated as having been paid. For class 1 only earnings up to the
upper earnings limit are counted.
(Social Security Contributions and Benefits Act 1992 s22).
earnings for ordinary shareholders

Profit after deducting interest charges and taxation and after deducting
preference dividends (but before deducting extraordinary items).
earnings limits For national insurance, the lower earnings limit, primary threshold,
upper earnings limit and secondary threshold (Social Security
earnings-only exemption “Means an exemption from income tax, which —

(a) prevents liability to tax arising in respect of earnings, either by
virtue of one or more particular provisions (such as a Chapter of the
benefits code) or at all, and
(b) does not prevent liability to tax arising in respect of other
employment income”
earnings or amounts treated as earnings

Term used in Finance Act 1969 s58 which relates to the calculation of
statistics by HMRC. This section allows HMRC to disclose these
figures to other government bodies to allow statistics to be compiled.
earnings per share The amount of net profit earned by the company for each issued
ordinary share.
It is calculated as earnings for ordinary shareholders divided by
the number of shares which have been issued by the company.
earnings performance Way of viewing the dividends earned by shares.
earnings related Description of anything which is related to a person’s earnings, such as

a final salary pension or a social security benefit.
earnings-related supplement
An addition to unemployment benefit and some other social security
benefits paid before 3 January 1982 if a claimant’s previous income had
been sufficiently high. There was a short transitional period to 30 June
1982 where entitlement had arisen before 6 April 1980.
earnings replacement Social security benefit which is designed to replace income, such as
jobseeker's allowance or statutory maternity pay.
earnings retained Another term for retained profit, though possibly more precise. It
refers to the amount of net profit after dividends and taxation which a
company keeps to fund further trading activities.
earnings threshold Amount of earnings above which an employee and employer become
liable to pay class 1 national insurance.
earnings yield Money earned as dividends per share expressed as a percentage of the
share’s current market price.
earnings-related pension “A pension computed by reference to a rate of emoluments (whether

actual emoluments or not) or payable at alternative rates one of which is
so computed, and includes a derivate pension computed by reference
to the rate of an earnings-related pension” (Pensions (Increase) Act
1971 s17(1)).
earn-out Financial arrangement allowing a business founder to use the business’s

profits to buy out an outside investor.
earn-out agreement Method of paying for the acquisition of a business where part of the
price depends on future performance.
Typically such an agreement comprises an amount paid on
acquisition with a further sum if a defined condition is met. This usually
relates to profits or sales for an initial period, often three years. Such
arrangements are most common in businesses which depend on people
rather than fixed assets, such as advertising agencies.
earn-out right Right of an individual, particularly a director, to earn additional shares

or securities in a company.
Chargeable Gains Act 1992 s138A.
ease Become less tight. In financial terms, this usually means a small
reduction.
easement Right enjoyed by the owner of land to a benefit from other land.
Easter Christian festival commemorating the resurrection of Jesus Christ.

It can fall on any Sunday between 22 March and 25 April
depending on the phase of the moon, based on the practice of the
Jewish Passover. This was adopted by the Church in 325 AD.
Easter Day is not a bank holiday, though large shops are not
allowed to open on that day (Sunday Trading Act 1994 Sch 1 para 2).
The following day, Easter Monday and two days earlier, Good
Friday, are both bank holidays.
The law determining the date is: “According to the rule prefixed to
the Book of Common Prayer of the Church of England Easter-Day is

always the first Sunday after the first full moon which happens next
after the one and twentieth day of March, and if the full moon happens
upon a Sunday Easter-Day is the Sunday after, which rule was made in
conformity to the decrees of the said council of Nice for the celebration
of the said feast of Easter” (Calendar (New Style) Act 1750 s3).
From 1752 the date of 21 March is determined by reference to the
Gregorian calendar.
Under Easter Act 1928, Easter changes to the first Sunday after the
second Saturday in April. This date is to be adopted when all churches
agree. So far they have not done so (making this the oldest
uncommenced Act) and are not expected to do so.
Eastern Region For purposes such as national insurance holiday, “means:

(a) the counties of Bedford, Cambridgeshire, Central Bedfordshire,
Essex, Hertfordshire, Norfolk and Suffolk, and
(b) the non-metropolitan districts of Luton, Peterborough,
Southend-on-Sea and Thurrock” (National Insurance Contributions Act
2011 s 11(1)).
easy money policy Government policy of making money easy to borrow as a means of
expanding the economy.
eat index sine die Latin: let him go without a day.

This is a form of dismissal of a defendant in a legal action.
e-banking Internet banking or similar computer-based banking. Most banks now

offer this service.
EBIT Earnings before interest and taxes.
EBITDA Earnings before interest, taxes, depreciation and amortisation.
EBRD European Bank for Reconstruction and Development.
EBT Employee benefit trust.
EBTI European Binding Tariff Information
e-business General term for business activities transacted by computer, such as by

using websites and e-mail.
EC (1) European Community.

(2) European Commission
ECA (1) European Court of Auditors.

(2) Electronic commerce activity.
ECAI External credit assessment institution.
ECB European Central Bank.
EC certificate of conformity
In relation to taxation of company cars means “a certificate of
conformity issued by a manufacturer under any provision of the law of
a Member State implementing Article 6 of Council Directive
70/156/EEC, as amended” (Income Tax (Earnings and Pensions) Act
2003 s171(1)).
ECD Electronic Commerce Directive (Financial Services and Markets)

ecce signum Latin: behold the proof.
ECGD Export Credit Guarantees Department.
ECHR European Court of Human Rights.
ECJ European Court of Justice.

ECOFIN Economic and Financial Affairs Council, of European Union.
e-commerce Electronic Commerce - the buying, selling and exchange of

information, products and services via computer networks.
E-Commerce Regulations (ECR)
econometric modelling Application of regression techniques in marketing analysis.
econometrics Study of statistics in economics. The discipline often uses computers to

analyse the results as a means of making forecasts.
economic Financially worthwhile, particularly in the terms of achieving the best

financial result.
Economic and Financial Affairs Council (ECOFIN)

“Council composed of the Economics and Finance Ministers of all 27
European Union member states. ECOFIN discuss and reach agreement
on how to take forward a number of economic and financial issues that
affect the whole of the European Union.” (HM Treasury glossary).
Economic and Monetary Union (EMU)

Process of harmonising the economic and monetary policies of the
Member States of the Union which led to the introduction of the single
currency known as the euro.
economic appraisal Method of capital budgeting that uses discounted cash flow.
economic benefits The positive consequences of a policy expressed in financial terms,

particularly when finance is not the primary motive.
The term is often used in the public sector where, for example, a
campaign to reduce accidents (which does not need cost-justification)
can be shown to have economic benefits such as the saving of lost days
at work and the provision of health treatment. Such benefits are often
calculated by an economic appraisal.
economic cannon fodder People considered of little economic worth and who may therefore be
regarded as more expendable in war. Such terms have become
unacceptable from the 1970s.
economic costs In economics, the projected costs of a particular course of action. The
term is particularly used when finance is not a primary motive in the
action. It is therefore common in the public sector.
The term is distinguished from financial costs in that the former
does not include transfer payments. For example, the economic cost of
building a hospital would exclude taxes paid back to the government.
economic crisis Situation where a country is in financial difficulties.
economic cycle Period during which trade expands and contracts before starting to
expand again.
economic development Expansion of a country’s financial and commercial situation.
economic environment Factors that affect spending decisions of consumers.

Such factors include inflation, interest rates, other aspects of the
national economy and economic perceptions.
economic exposure The possible effect on a business of economic factors, such as how a
company’s trade will be affected by inflation or interest rates. For a
company selling overseas, economic exposure also includes the effect
of exchange rate variations.
economic forecaster Person who gives an opinion of how they believe the economy will
perform.
economic growth Rate at which a country’s national income grows.

The term “typically refers to an increase in a nation's capacity to
produce goods and services” (HM Treasury glossary).
economic model Plan of a country’s economic system from which outcomes may be
determined for different scenarios.
economic order quantity (EOQ)

Quantity of items a business should order at a time.
The formula balances the cost of tying up capital in stock against
the cost of issuing an order.
economic rent Economic rent is the difference between what a factor of production is
earning (its return) and what it would need to be earning to keep it in its
present use. It is in other words the amount a factor is earning over and
above what it could be earning in its next best alternative use (its
transfer earnings).
economic resources In relation to terrorist assets, means “assets of every kind, whether
tangible or intangible, movable or immovable, but which are not funds
but can be used to obtain funds, goods or services” (Terrorist Asset-
Freezing etc Act 2010 s39(2)).
economic value The present value of expected economic cash flows.
economic value added Measure of how much a process or stage has added to the value of
something, as a means of comparing this with the cost of that process or
stage.
economic warfare Policies against an enemy designed to force them to surrender. The
policy involves destroying and blocking essential supplies.
economical Using little or less money and resources.
economics Study of the production, distribution, selling and use of goods and
services, and their effect on the national economy.
economies of scale Economies of scale occur when larger firms are able to lower their unit
costs. This may happen for a variety of reasons. A larger firm may be
able to buy in bulk, it may be able to organise production more
efficiently, it may be able to raise capital cheaper and more efficiently.
All of these represent economies of scale.
economies of scope Saving costs by making several products at the same time.
economising Reducing expenditure without compromising lifestyle.
economist Person who studies economics.
economy (1) General financial state, particularly of a country.

(2) Practice of obtaining value for money.
economy of truth When statements give an untruthful representation of the facts even
though every word and figure is itself true.
The expression was used when sentencing company chairman Lord
Kylsant in the Royal Mail Steam Packet case of 1931.
ECOS Employee car ownership scheme
ECP Euro commercial paper.
ECR (1) European Court Reports, law reports from 1954.

(2) Enhanced capital requirement.
ECSC European Coal and Steel Community
ECSL EC sales list.
EC type-approval certificate
In relation to taxation of company cars means, “a type-approval
certificate issued under any provision of the law of a Member State
implementing Council Directive 70/156/EEC, as amended” (Income
Tax (Earnings and Pensions) Act 2003 s171(1)).
ECU European Currency Unit. This was renamed the euro when it became
a real currency. An ecu is, coincidentally, also the name of an obsolete
French coin.
ED Exposure draft
ED(DP)R Excise Duties (Deferred Payment) Regulations 1992.
EDCS Electronic Data Capture Service - the transport mechanism for

Electronic Data Interchange (EDI) data between the trade and various
HMC&E systems. There are three methods of submission to EDCS;
SMPT email attachment, x400 email attachment and web.
Eddington Report Report on transport presented by Rod Eddington to the government on

1 December 2006. His many proposals included road-pricing at a
suggested tariff of up to £1.29 a mile.
EDF European Development Fund.
Edge Act American law passed in 1919. It allowed banks to set up edge
corporations to carry on international trade and investment activities.
edge corporation
EDIFACT Electronic Data Interchange for Administration, Commerce and

Transport - an EDIFACT message is the basic unit for communicating
information electronically. For example, a Supplementary Declaration
is submitted as a Customs Declaration (CUSDEC) to the Customs
Handling of Import and Export Freight (CHIEF) system.
EDR Effective date of registration, the date from which a person is

registered for VAT and must account for tax.
EDSP Exchange Delivery Settlement Price.
educational establishment For categorisation of earners for national insurance, “includes —

(a) a place where instruction is provided in any course or part of a
course designed to lead to a certificate, diploma, degree or professional
qualification; or
(b) a place where instruction is provided in any course being the
same as, or substantially similar to, any such course or part of a course
as is referred to in (a) above, but which is not designed to lead to a
certificate, diploma, degree or professional qualification”
(Social Security (Categorisation of Earners) Regulations SI 1978 No
1689 reg 1(2)).
education-linked living accommodation

In relation to removal expenses, where a child stays while having full-
time education (Income Tax (Earnings and Pensions) Act 2003
s281(2)).
Edward IV taxes Taxes charged between 1475 and 1483.

These include a tenth and fifteenth, and a poll tax on aliens.
Edwards v Bairstow Leading case setting out the limited grounds on which a court may
overturn a Tax Tribunal’s or Special Commissioners’ decision on a
point of fact.
The term comes from the House of Lords’ decision in Edwards v
Bairstow [1955]. This related to whether a single adventure could be
taxed as a trade. Generally the Tribunal’s or Commissioners’ decision is
final on a point of fact, so only a point of law may be appealed to the
courts. In Edwards v Bairstow, the Lords ruled that a point of fact could
be appealed where “the true and only reasonable conclusion contradicts
the determination”. In other words, the finding of fact was perverse.
EE (1) Country prefix code for Estonia.

(2) Enhanced exposure.
EEA European Economic Area.

This is the European Union plus Iceland, Norway and
Leichtenstein.
EEA accounting period “A period for which an EEA related company has a loss of other
amount” (Corporation Tax Act 2010 s112).
EEA agreement means the agreement on the European Economic Area signed at
Oporto on 2nd May 1992, together with the Protocol adjusting that
Agreement signed at Brussels on 17th March 1993, as modified or
supplemented from time to time.” (Interpretation Act 1978 Sch 1).
EEA amount Figure that may be used in claiming loss relief by a non-UK resident
company or by a company trading in the EEA. The basis of its
calculation is given in Corporation Tax Act 2010 s113(2).
EEA related company “A non-UK resident company that —

(a) is resident in an EEA territory, or
(b) is not resident in any EEA territory but is carrying on a trade in
an EEA territory through a permanent establishment”
EEA state “in relation to any time, means̶

(a) a state which at that time is a member State; or
(b) any other state which at that time is a party to the EEA
agreement” (Interpretation Act 1978 Sch 1).
EEA tax loss condition Conditions that must be met to claim loss relief (Corporation Tax Act
2010 ss115-120).
EEC European Economic Community.
EEIG European Economic Interest Grouping.

This abbreviation is commonly pronounced “earwig”. There are
special tax provisions.
EF Earnings factor, for national insurance.
effective annual rate Average interest paid on a deposit over 12 months expressed as a
percentage of the principal at the beginning of that period.
effective date Date on which some provision takes place, such as when an accounting
standard takes effect or when insurance cover starts under a policy.
effective date Date on which a provision takes effect.
effective demand Actual sales demand for a product.
effective exchange rate Rate of exchange of a currency against a basket of other currencies.
effective interest rate The rate that exactly discounts estimated future cash payments or
receipts through the expected life of the financial instrument.
effective price Price which has been adjusted to make it comparable, particularly a
share price adjusted to reflect a rights issue.
effective rate Rate of tax that is actually paid after allowing for an adjustment from
the headline rate. For example, the headline rate of income tax for a
higher rate taxpayer is 32.5%, but the effective rate is 25%.
effective yield Actual yield on a share or similar security after adjustments have been
made to make the yield comparable.|
Efficiency and Reform Group (ERG)

Body set up within the Cabinet Office to make government spending
more cost-effective (Budget 2010 Red Book para 2.7).
efficient frontier In investment, the point at which a diversified portfolio achieves the
maximum return for the investor’s defined risk.
EFRAG Electronic Financial Reporting Advice Group.
EFT Electronic funds transfer
EFTA (1) European Free Trade Association, members of EFTA are: Iceland;
Norway; Liechtenstein and Switzerland. With the European Union,
they form the European Economic Area.
(2) European Fair Trade Association.
Eftpos Electronic financial transactions at the point of sale.
eg Exempli gratia, Latin for “for example”.
EG (1) Enforcement Guide, published by the Financial Services Authority.

(2) Estates Gazette, series of law reports from 1858.
EGAD Excise Goods Accompanying Documents.

They are governed by Excise Goods Accompanying Documents
(EGAD) Regulations 2002.
EGDR Excise Goods (Drawback) Regulations - Excise Goods (Drawback)

Regulations (EGDR) Regulations 1995.
EGLR Estates Gazette Law Reports, a series of law reports first published in
1975.
Egyptian pound Currency of Egypt.
EIA Education and Inspections Act 2006.
EIB European Investment Bank
EIC Excise and Inland Customs - also referred to as Excise and Inland
Customs (E&IC).
E&IC Office Excise and Inland Customs Office - also referred to as Excise and
Inland Customs (EIC).
Eighth Directive An EU directive which deals with auditors and company accounts.
ei incumbit probatio qui dicit, non qui negat

Latin: the burden of proof is on him who alleges, and not on him who
denies.
eik Old term for a supplement to a document. The word is used in Stamp
Act 1870 s93, but has now disappeared from use.
EIK Eat-in kitchen.
Eileen Trust Trust established to provide ex gratia help to people who have been
infected with HIV through contaminated blood or blood products used
in the NHS.
Such payments are disregarded when determining payments of
means-tested social security benefits. They are also exempt from
income tax. Such payments are now made by MFET Ltd.
ei qui affirmat, non ei qui negat, incumbit probatio

Latin: the burden of proof is on him who affirms a fact, and not on him
who denies.
EIR Earned income relief for income tax (now abolished).
EIS Enterprise Investment Scheme.
EIS relief Tax relief under the Enterprise Investment Scheme. This term is used in
Income Tax Act 2007 s131 and is defined in s151 and s156.
either on his own or with one or more associates

Term used in Income and Corporation Taxes Act 1988 s417(5) and
defined in s417(6) in relation to who is a participator in a company.
ejectment Procedure for removing someone from freehold property. The

procedure was abolished by Common Law Procedure Act 1852.
EJRA Employer justified retirement age.
ejusdem generis Latin: of the same kind or nature.

This is a method of legal interpretation, which assumes that general
words which follow a specific list are assumed to be limited to words of
similar meaning. A leading case on this is Lane v London Electricity
Board [1955].
EL (1) Country prefix code for Greece.

(2) Expected loss.
elasticity Ability to expand or contract easily to accommodate changed

circumstances.
eldercare American term for provisions to look after elderly people.
elected representatives The extent to which their overnight expenses are tax-deductible is set
out in Income Tax (Earnings and Pensions) Act 2003 s293.
election to waive exemption

For VAT, another name for option to tax.
elective office Office obtained by winning an election, such as MP or councillor.

For national insurance, such office holders are treated as employed
earners (Social Security Contributions and Benefits Act 1992 s2(1)(a)).
electrical systems For capital allowance purposes, is treated as an integral feature, which
electricity For VAT, a supply of electricity is treated as a supply of goods (Value

Added Tax Act 1994 Sch 4 para 3). As such, supplies for residential use
are generally reduced-rated under ibid Sch 7A Group 1, but standard-
rated for other supplies. Details are given in VAT notice 701/19.
HMRC accepts that supplies up to 33 kilowatt hours per day or

1000 per month are domestic.
electricity interconnector Part of an electrical line or plant which connects a place in Great Britain
to another country or territory (Electricity Act 1989 s4(1)). Such an
interconnector must be licensed.
electroencephalgraphy In medicine and psychology, a non-invasive method of measuring

electrical activity in the brain from electrodes placed on the scalp.
electronic banking Carrying out banking transactions using a computer.
electronic communication
Sending documents by e-mail and similar means.
In company law this method may be used to send information to
members under the provisions of Companies Act 2006 s333.
electronic conveyancing Conveyancing of land using electronic filing. Provisions are found in
Land Registration Act 2002 ss91-95.
electronic data interchange (EDI)

Standard format used on the Internet for business documents such as
purchase orders and invoices.
electronic funds transfer (EFT)

Banking system for sending electronic messages to transfer funds
between accounts.
electronic lodgement service (ELS)

System used for filing tax returns by computer.
electronic monitoring requirement

Requirement that an offender subject to certain types of court order is
also subject to electronic monitoring (Criminal Justice Act 2003 s215).
electronic point of sale (EPOS)

Retail check-out system which typically comprises barcode scanner,
scales, till, credit card reader and invoice producing equipment. There
are some special VAT provisions for retailers who use EPOS
equipment.
electronic programme guide

An application which allows a viewer to see what television channels
are available, and makes it simple to access them.
electronic programme guide

On-screen guide about programmes being offered by a broadcaster.
Legal provisions are contained in Communications Act 2003 s310.
electronic signature In coins, the electronic reading which a vending machine can make to
establish that the coin is genuine.
electronic transfer of funds

Transfer of money between banks or financial institutions using
computer instructions.
electrum Alloy of gold and silver.
elements of financial statements

Term used in Statement of Principles to mean the seven categories of
financial information to be reported, namely:
• assets
• liabilities
• ownership interest
• gains
• losses
• contributions from owners
• distribution to owners.
elephant hunt When a local authority or similar body looks for a large business to
move into an area to stimulate the economy. This may be encouraged
by tax reliefs and other incentives.
eligibility Meeting the requirements for something.
eligibility date The date at which an individual becomes eligible for benefits under an
insurance policy or similar financial policy.
eligibility declaration Statement that a charity must make confirming that its services are
eligible for VAT relief as set out in VAT notice 701/1.
eligibility period Period during which potential members of a group insurance scheme
may join without evidence of insurability.
eligibility requirements Requirements imposed for eligibility for coverage, usually in a group
insurance or pension plan.
eligible employees Employees who meet the eligibility requirements for insurance set out
in a group policy.
eligible goods Excised goods on which excise drawback may be claimed.
eligible list List of banks entitled to discount acceptances at the Bank of England.
eligible paper (1) Any first-class security which is acceptable to the Bank of England.
Examples include Treasury bills and short-dated gilts.
(2) In USA, acceptances by American banks for rediscounting by the
Federal Reserve system.
eligible reserves In USA, cash held in an American bank plus its reserves held at the
Federal Reserve Bank.
ELM Electronic Money sourcebook, published by the Financial Services

Authority.
ELS Electronic lodgement service.
EMA European Monetary Agreement.
e-mail Electronic mail.

A means of sending text or files to other computers via an internet
connection.
embarras de richesse French: embarrassment of riches.
embedded derivative When a financial derivative is part of a contract, including one for
another financial derivative.
embedded value (EV) Accounting method used for life insurance business. It is basically
measures profit as net assets minus present value of future cash
outflows.
emergency “Means:
(a) an event or situation which threatens serious damage to human
welfare in a place in the United Kingdom,
(b) an event or situation which threatens serious damage to the
environment of a place in the United Kingdom, or
(c) war, or terrorism, which threatens serious damage to the security
of the United Kingdom” (Civil Contingencies Act 2004 s1(1) and
s19(1)).
emergency Budget Term used for the Budget of 22 June 2010, six weeks after the coalition
government was formed after the General Election, and three months
after the previous Budget by the outgoing Labour government.
emergency card Original name for the PAYE procedure now known as emergency
code.
emergency code Tax code used under the PAYE system when no other code has been
provided by an employee or the tax office, and the employee is not
subject to BR or 0T codes. The code is the equivalent of the personal
allowance for that year on a week 1 basis.
Emergency Coordinator Person appointed by a government minister to exercise special powers

during an emergency (Civil Contingencies Act 2004 s24(1)).
emergency power Authority granted by the King or Queen in Council to Parliament

allowing it to take emergency steps to deal “with the supply and
distribution of food, water, fuel, or light, or with the means of
locomotion or... the essentials of life” (Emergency Powers Act 1920
s1).
The order lasts for no more than one month but may be renewed. It
may not be used to outlaw a strike.
emergency prohibition order

Order which a local authority may serve in respect of housing under
Housing Act 2004 s43.
emergency regulations Orders made in council under Civil Contingencies Act 2004 s20 to deal
with an emergency.
emergency regulations Regulations made by Parliament under Emergency Powers Act 1920 s2
when a state of emergency has been declared.
emergency remedial action

Action which a local authority may take in respect of housing where it
is satisfied that a category 1 hazard exists and that this involves “an
imminent risk of serious harm to the health or safety of any of the
occupiers of those or any other residential premises” (Housing Act
2004 s40(1)).
emergency vehicle A vehicle which is used to respond to emergencies and either has a
permanent flashing light fixed or has facility for one. An employee who
is provided with such a vehicle as part of his job may avoid the charge
to income tax on a company car (Income Tax (Earnings and Pensions)
Act 2003 s248A).
This provision applies from 6 April 2004.
emergency worker Person whose job is to deal with emergencies. It is a criminal offence to
obstruct such a person under Emergency Workers (Obstruction) Act
2006. There are similar provisions in Scotland under Emergency
Workers (Scotland) Act 2005.
The Act defines such workers as fire fighters, ambulance staff,
coastguard, and lifeboat crew.
emerging markets Financial markets which are still in any early stage of development,
such as those of Asia and Eastern Europe.
emerging markets debt Debt instruments from emerging markets. They are usually
denominated in US dollars.
EMH Efficient markets hypothesis.
EMI (1) Enterprise management incentive

(2) European Monetary Institute.
[There is also a company called EMI.]
emolument “The payment that is made for work that has been done including
salary, bonuses and some other forms of benefit in kind” (HMRC
emoluments Collective term for all pay, wages, benefits, fees received, particularly
by a director.
The term originally meant that which came from a mill.
emoluments therefrom Term used in Income and Corporation Taxes Act 1988 s19(1) in
relation to Schedule E income. The term has disappeared following
Income Tax (Earnings and Pensions) Act 2003, of which s10(3) instead
refers to taxable specific income.
Notwithstanding this repeal, the term is still referred to in the
inspectors’ manual at EIM00600 in relation to the tax position that
earnings are not taxable unless they are from the employment. This
principle was clearly set out in the case Laidler v Perry [1965] where
Lord Reid said, “did this profit arise from the employment? The answer
will be no if it arose from something else”.
empanel Create and swear in a jury or a similar body. The term comes from the
old practice of writing the names on a piece of parchment called a
panel.
empannel Put a pack saddle on to a beast of burden.
empathy Relationship to another person whereby you are able to understand

what it is like to be in the other person’s position.
employ Engage someone for paid work where there is a master and servant
relationship.
employé Old word for employee, taken from the French. The form “employee”
was originally a female employee. This distinction is now lost.
employed earner For national insurance, “means a person who is gainfully employed in
Great Britain either under a contract of service, or in an office
(including elective office) with general earnings” (Social Security
Contributions and Benefits Act 1992 s2(1)(a)).
employee Someone who is under the control of an employer. Significant tax,

national insurance and pension liabilities follow from this status.
For tax purposes, an employee includes an office-holder (Taxes
For pensions, the term means “a person gainfully employed in Great
Britain either under a contract of service or in an office (including an
elective office) with general earnings (as defined by section 7 of the
Income Tax (Earnings and Pensions) Act 2003) (Pension Schemes Act
1993 s181(1)).
employee benefit Benefits offered to an employee by an employer and usually paid for at
least in part by the employer. Life, Health and Critical Illness insurance
obtained by an employer on a group basis are examples of employee
benefits.
employee benefit trust (EBT)

Body that provides benefits to employees from funds or benefits
provided by an employer.
“A trust set up by an employing company or its group parent
company to provide employees with benefits which may take a variety
of different forms” (Inspectors’ Manual at BIM 44001).
Provided certain conditions are met, the employer may claim tax
relief for such provision.
employee buy-out When the employees of a business collectively acquire a majority

interest. This is a form of management buy-out. Employees may do
this if they believe the business is basically sound, can prosper with
new management, and they can obtain the necessary finance.
employee contribution Amount paid by an employee, particularly towards an occupational

pension.
employee declaration A medical questionnaire issued to member of a group insurance scheme

when the members benefit level requires the member to provide
evidence of good health. This is usually the first stage of the Medical
Underwriting process.
employee indemnity insurance

This may be tax deductible under Income Tax (Earnings and Pensions)
Act 2003 s346.
employee involvement Human resources term for any arrangement whereby employees may
provide input into how the organisation is run.
employee loyalty Sense of commitment which staff feel toward their employer.
employee numbers Must be disclosed under Companies Act 2006 s411.
employee participation Involvement of employees in the management of a business.

The term is used to refer to employees who are not directly
employed to manage, such as “shop floor workers”. The participation
takes the form either of ownership of share, or of attending board
meetings or similar.
employee representatives Employees who are elected by their colleagues to negotiate with the
employer in lieu of a trade union. Their election is covered by Trade
Union and Labour Relations (Consolidation) Act 1992 s188A.
Employee Retirement Income Security Act (ERISA)

In USA, an Act passed in 1974. It regulates the operation of private
pension plans and employee profit-sharing schemes. It set up the
Pension Benefit Guaranty Corporation which protects employees’
contributions if a private scheme fails.
employee share ownership plan (ESOP)

Tax scheme which allows employees to own shares in their employer.
“A trust set up by an employing company or its group parent

company to provide employees with benefits in the form of shares or
options over shares in that company” (Inspectors’ Manual at BIM
44001).
employee share ownership trust (ESOT)

Trust set up under tax-advantaged provisions introduced in 1989.
ESOTs were renamed employee share ownership plans in 1990.
employee trusts A tax-advantaged trust where an employer can provide shares in itself
for the benefit of employees.
A donation to such a trust is exempt from inheritance tax
(Inheritance Tax Act 1984 s28).
employees’ assistance programmes (EAPs)

An arrangement whereby an employer pays for someone to provide
counselling and advice to employees as an employee benefit.
Typically, the employees and (usually) their families may call a
telephone number at any time of the day or night to discuss personal
problems in confidence. The employer does not know which employees
have discussed what matters, other than getting a regular report
indicating usage and the general areas of topics raised.
Provision of an EAP has been demonstrated to improve employee
loyalty which reduces turnover and absence, and can improve
productivity. It has been estimated that every £1 spent on an EAP leads
to savings of up to £14.
employer Person who engages someone to work for him in an employment

relationship.
employer CD-ROM Compact disc sent free by HMRC to all employers who are registered
for PAYE.
The scope of the CD has improved with successive years. It now
contains all the tax tables, forms, guidance, tutorials, calculators and
other support the payroll department can need. The one function the CD
does not have is calculation of payslips and recording of payroll data
for which a commercial package is still needed.
employer diary In computing, a facility provided by HMRC’s employer CD-ROM

which gives key dates the employer must observe.
Employer-financed retirement benefits scheme

This means a scheme for the provision of benefits consisting of or
including relevant benefits to or in respect of employees or former
employees of an employer. However, neither a registered pension
scheme nor a section 615(3) scheme is an employer-financed retirement
benefits scheme.
employer justified retirement age (EJRA)

Term used from 2011 in connection with the abolition of default
retirement age.
The main provision is that an employer cannot insist that a person

must retire at a particular age unless the employer can objectively
justify that age, which is often difficult in practice.
employers' national insurance (ENI)
employers’ association An organisation “which consists wholly or mainly of employers or

individual owners of undertakings of one or more descriptions and
whose principal purposes include the regulations of relations between
employers of that description or those descriptions and workers or trade
unions” or of a body comprising such organisations (Trade Union and
Labour Relations (Consolidation) Act 1992 s122).
employer’s housing scheme

An arrangement whereby an employer compensate an employee in
respect of a house transaction, such as when the employee is relocated.
A payment under such an arrangement may not be taxable as it has the
nature of compensation rather than earnings. Such a case is
Hochstrasser v Mayes [1959] 38TC673. The matter is discussed in the
inspectors’ manual at EIM00750.
employers’ liability insurance

Insurance cover which legally every employer must have to protect its
employees.
employer-supported childcare (ESC)

Any arrangement whereby an employer provides assistance in funding
childcare for an employee.
Three forms of ESC are tax advantaged: workplace nurseries,
directly contracted childcare and childcare vouchers.
employment State of working for another person.

For social security, the term “includes any trade, business,
profession, office or vocation” (Social Security Contributions and
Benefits Act 1992 s122(1)). The same definition applies for pensions
under Pension Schemes Act 1993 s181(1).
Employment Acts Laws passed at various times to regulate trade unions and other matters
relating to employment.
employment agency Organisation which finds work for its clients, either as a temporary
employee or as a permanent placement.
employment and support allowance (ESA)

Social security payment which replaces income support and incapacity
benefit. It is introduced by Welfare Reform Act 2007 s1. It was
introduced on 27 October 2008.
It is payable either as a contributory allowance or as an income-
related allowance.
employment benefit trust (EBT)

Trust set up (usually by the employer) for the benefit of employees.
Payments from the trust are generally regarded as taxable employment
income under Income Tax (Earnings and Pensions) Act 2003 s62.
A leading case was Brumby v Milner [1976] 51TC83. The matter is
discussed in the inspectors’ manual at EIM00740.
employment change Change of an employee’s residence caused by a change of workplace

An employer may make a tax-free contribution of up to £8,000
towards relocation expenses.
employment detriment Any action taken against an employee short of dismissal.
employment E Term used in Income Tax (Earnings and Pensions) Act 2003 s188 in
relation to the taxation of an employment-related loan that is released
or written off.
Employment Eligibility Verification (EEV)

American term for the form which (from 6 November 1986) the US
Department of Homeland Security requires job applicants to complete.
employment income Category of taxable income formerly known as Schedule E. It is

generally collected under the PAYE system.
The scope of employment income is defined in Income Tax
(Earnings and Pensions) Act 2003 s7(2) as meaning earnings as defined
in Chapter 1 of Part 3 of that Act, and other amounts which the Act
requires to be treated as earnings.
The section distinguishes between general earnings and specific
employment income. The difference is that some expenses may only be
deducted from specific employment income.
Employment income almost all forms of cash payment made to an
employee. This includes salaries, wages, fees, gratuities, profits,
benefits in kind, and statutory payments.
employment income amount

Term used in relation to calculating capital gains tax on employment-
related securities (Taxation of Chargeable Gains Act 1992 s120).
employment income exemption

“Means an exemption from liability to income tax in respect of
earnings” as listed in Income Tax (Earnings and Pensions) Act 2003
s227(4).
employment office Office which finds jobs for people.
employment protection entitlement

Sum paid to an employee who has been reinstated after a procedure
under employment law.
Social Security Contributions and Benefits Act 1992 s112 treats
such entitlement as earnings for class 1 national insurance.
employment-related benefit
“Means a benefit, other than an excluded benefit, which is provided in
a tax year —
(a) for an employee, or
(b) for a member of an employee’s family or household,
by reason of the employment”
employment-related loan Loan made to an employee or to a relative of the employee and which is
either interest-free or where interest is charged at less than a
commercial rate. It is taxable as a benefit in kind unless the loan is for
less than £5,000.
A full definition is given in Income Tax (Earnings and Pensions)
Act 2003 s174(2).
employment-related securities (ERS)

Shares and other forms of security provided through employment.
The definition is given in Income Tax (Earnings and Pensions) Act
2003 Part 7 Chapters 1-4.
For capital gains tax, Taxation of Chargeable Gains Act 1992
s119A uses the same definitions as for income tax.
employment tribunal panel

Panel of three members who hear cases at an employment tribunal.
They comprise a legally qualified chairman with two lay members, one
representing employers and one representing workers.
employment .....
For tax purposes, employment includes;
“(a) any employment under a contract of service;
(b) any employment under a contract of apprenticeship; and
(c) any employment in the service of the Crown.”
empowerment Strategy aimed to give people more control and responsibility for their
work
EMPS Handbook Guide for energy market participants, published by the

empty chance Term used by early Greeks and Romans to mean an eventuality
considered so unlikely as not to be worth betting on.
empty dwelling management order (EDMO)

Order which a local authority may issue under Housing Act 2004 s132
to bring an empty dwelling back into use. Such an order is either an
interim EDMO or a final EDMO.
empty spam Unsolicited e-mail message which seems to have no purpose. It may
include a passage from classical literature.
empty suit Pejorative term for a man who acts in a manner required of him but
makes no contribution to the organisation which engages him.
EMS European Monetary System
EMU European Monetary Union
enabling act Act of Parliament which allows laws to be made by someone else,
usually a government minister.
enabling letter Informal term used for a letter that HMRC to a particular group of
taxpayers, pointing out their responsibilities regarding tax. Such letters
commonly explain common errors, such as not claiming personal
expenditure from business profits.
The letter is not an enquiry into the taxpayer’s affairs, and does not
imply that there is any problem with them.
enactment does not include an enactment comprised in, or in an instrument made

under, an Act of the Scottish Parliament” (Interpretation Act 1978 Sch
1).
en autre droit Latin: in the right of another.
encash To turn a document, such as a cheque, into cash.
encouragement award Sum paid to an employee in respect of a suggestion that the employer
does not follow up. A sum of £25 may be paid tax-free (Income Tax
encumbrance Liability which attaches to property.
endangered species Plants and animals that are considered to be at risk of extinction. The
exact scope is determined by CITES.
Customs may seize any such plants or animals that are imported
into the UK. This includes goods made from such plants or animals,
even if legally acquired overseas. This includes caviar, ivory, coral,
shells and skins of crocodiles, alligators and snakes.
ending inventory American term for closing stock.
end-of-day sweep Automatic transfer of all funds in one bank account to another at the
end of each working day. The funds are transferred to an account that
pays interest.
endorse Make payable to someone else.
endorsed International financial reporting standards approved for use in Member

States of the European Union through a formal process of
endorsement.
endorsement (1) In insurance, an amendment of a policy that alters the provisions of

the contract.
(2) In banking, an alternative spelling for indorsement.
endowment A life assurance policy related to a mortgage designed to pay off the
amount originally borrowed at the end of the mortgage term. An
endowment policy will pay you a fixed amount on a set date or if you
die before that date, in other words it's both a way of saving and life
insurance. People often use endowments to repay interest only
mortgages. The drawback of them is that it is often unclear how much
you are having to pay in charges and the plans are often very rigid, so if
you start an endowment and then decide to cancel it, you might not get
back what you paid in.
endowment assurance Insurance policy where the proceeds are invested in shares and similar.
The proceeds are paid to the insured if he survives to a particular date,
or to his estate if he dies before then.
endowment fund Fund where, generally, only the interest may be spent.
endowment insurance Alternative though less accurate term for endowment assurance.
endowment mortgage Mortgage where the mortgagor only pays interest to the lender, with a
monthly premium for an endowment policy taken out with an insurance
company.
The endowment policy is designed to produce a lump sum either at
the end of your mortgage term or at your death if earlier, to repay the
capital you borrowed. You must remember though that the amount paid
out is not guaranteed and may not be sufficient to repay the capital
borrowed.
endowment policy Another term for endowment assurance.
enduring Term used in relation to the benefit to be derived from an asset for its
acquisition to be taxed as capital rather than revenue. The Inspectors’
Manual at BIM35901 explains that there is no formal time limit as the
matter must be determined by other criteria. It should be noted that the
life of the benefit is distinct from the life of the asset itself, which must
be at least two years.
enduring power of attorney (EPA)

Power of attorney which can continue after a person has lost the mental
capacity to act for himself.
From 1 October 2007, this is replaced by the lasting power of
attorney under Mental Capacity Act 2005. An existing EPA remains in
effect.
end use Arrangements which allow certain imported goods to be declared for
free circulation in the EU at a reduced or nil rate of duty, provided they
are put to a prescribed use under customs control.
end user Final user of an item. Value added tax is designed so that the ultimate
burden of the tax is borne by the end user.
end use relief Arrangement whereby goods may be imported without payment of
customs duty or at a reduced rate of duty because of the end use to
which the goods will be put.
enemy For purposes of Trading with the Enemy Act 1939 means a country
which is at war with the monarch. The statutory definition is that an
enemy “includes —
(a) all persons engaged in armed operations against any of Her
Majesty’s forces or against any force co-operating with any of Her
Majesty’s forces;
(b) all pirates; and
(c) all armed mutineers, armed rebels and armed rioters”
(Armed Forces Act 2006 s374).
enemy alien A citizen of a country with whom Britain at war. The term has the same
meaning as enemy subject.
An enemy alien cannot make a valid contract in the UK, and any
extant contract at the start of the war is suspended. An enemy alien
cannot inherit property.
Under Finance Act 1944 s42 and Sch 4, whoever holds property
than an enemy alien would otherwise inherit must accounted for estate
duty on it. This law remains in force.
enemy currency Currency of a country with which the UK is at war or of a country

controlled by an enemy. Purchasing such currency is an offence under
Trading with the Enemy Act 1939 s6.
enemy debt Debt owed to a country with which the UK is at war or owed to a
person or business resident or controlled by such a country. Such debts
are paid to custodians of enemy property under Trading with the Enemy
Act 1939 s7.
enemy debts Debts incurred by an enemy subject between 1 April 1939 and 31
December 1946 which were written off. There remains a special tax
provision under Finance Act 1950 s39.
enemy subject “Means —

(a) an individual who, not being either a British subject or a British
protected person, possesses the nationality of a State at war with His
Majesty, or
(b) a body of persons constituted or incorporated in, or under the
laws of, any such State”
(Trading with the Enemy Act 1939 s15).
enemy territory “Any area which is under the sovereignty of, or in the occupation of, a
Power with whom His Majesty is at war, not being an area in the
occupation of His Majesty or of a Power allied with His Majesty”

(Trading with the Enemy Act 1939 s15).
energy In terms of fuel poverty, means gas or electricity or both (Energy Act
2010 s29(5)).
energy costs Amounts spent on electricity, gas and other forms of energy.
These are generally deductible from profits assessable to income tax
or corporation tax.
energy drinks For VAT, these are generally zero-rated as food, though there are some
exceptions as set out in VAT notice 701/14.
energy efficiency Aspects of energy which relate to consumption of energy, conservation

of energy and generation of energy.
These are factors which are considered in deciding whether a
dwelling is a zero-carbon home as defined by Finance Act 2003 s58B
as inserted by Finance Act 2007 s19.
energy shares Shares in companies which provide energy, such as gas, electricity and
oil companies.
energy-saving item Expenditure which qualifies for a special allowance for corporation tax
under Income and Corporation Taxes Act 1988 s31 as inserted by
Finance Act 2007 s17.
The scope of what comprises such an item is given in Treasury
regulations.
Energywatch Popular name for the Gas and Electricity Council which is abolished
by Consumers, Estate Agents and Redress Act 2007 s30 and replaced
by the National Consumer Council.
en evidence French: to the fore.
enfant terrible Moral or social nuisance. The word literally means a terrible child.
enforced retirement When an employee is required to retire even though he or she may not
wish to.
enforcement Proceedings to make a person comply, particularly with a court

judgment.
enforcement officer Another term for a bailiff.
enforcement receiver Person appointed to recover property which is the subject of a

confiscation order (Proceeds of Crime Act 2002 s50).
engagement (1) Hiring a person for work, either as an employee or self-employed.

(2) Period when two people formally state their intention to marry.
engagement letter Letter sent by a professional person, such as an auditor, to a client

outlining the work to be done, setting out the terms for the work and
containing similar material.
engagement team In auditing “any person who is directly involved in the audit” (APB ES
1 para 16(a)). This comprises “
(i) the audit partners, audit managers and audit staff;
(ii) professional personnel from other disciplines involved in the
audit (for example lawyers, actuaries, taxation specialists, IT
specialists, treasury management specialists);
(iii) those who provide quality control or direct oversight of the
audit”.
Engels’ Law Peoples spending patterns change as their income rises.
England means, subject to any alteration of boundaries under Part IV of the

Local Government Act 1972, the area consisting of the counties
established by section 1 of that Act, Greater London and the Isles of
Scilly” (Interpretation Act 1978 Sch 1).
engineering psychology Branch of psychology which is concerned about the relationship

between people and machines.
English shilling Particular design of shilling minted from 1937, but legal tender
throughout the UK.
Englishman’s castle Poetic term for an English home, so-called because a bailiff does not
have the right to break into it when closed.
enhanced loss relief Loss relief for businesses where a loss earned in a year may be offset
against taxable profits for previous years. It was introduced in 2008.
enhanced remote transit shed

A transit shed which is not near to an approved wharf where imported
goods are unloaded.
Enhanced remote transit sheds were first allowed in 1993. They
allow goods to be held pending payment of customs duties. They are
subject to strict security arrangements. The operators of such facilities
are usually required to provide a financial undertaking in a deed of
undertaking.
enhanced television In marketing, interactive television applications, such as playing games

or responding to advertisements.
enlarge an estate Increase the scope of an estate, particularly for land, such as when a life
tenant buys out the rights of a remainderman.
enlightened shareholder value

Term used for the requirement in modern company law where the
directors must consider the interests of others as well as the interests of
shareholders.
en masse French: as the whole lot, as in moving en masse.
en pension French term used to describe a person paying for his board and lodging.
enquiry window Period in which the tax authorities may enquire into a tax return.
The period is usually 12 months. For corporation tax this runs from
when the return is received by HMRC; for income tax and capital gains
tax this runs from the due date.
HMRC may enquire after this date if fraud or negligence is
suspected, or where sufficient information has not been disclosed on the
tax return.
enrol A term used for the process of enrolling for VAT Online Services. Once
a trader has signed up for VAT Online Services he enrols by providing
information about his business.
ens legis Latin: legal entity.
entail Legal condition which passes ownership of property to another person.

The term originally meant a piece of property which was cut off
from a testator’s estate as it had to pass according to the law and could
not be left in a will. There is no such provision under English law, but
there is under French law.
enter (1) Make a record of a transaction in the accounts.

(2) Go into premises.
entered for home use Term used for purchase tax in relation to goods intended to be
consumed or used in a normal home.
Entered premises Premises and plant, pipes and vessels thereon described on an excise
entry delivered to an HM Revenue & Customs (HMRC) officer in
accordance with the Customs and Excise Management Act (CEMA)
1979, sections 108 to 111 or under the Hydrocarbon Oil Regulations
(HOR Regn 3).
entering short When bills of exchange are paid to a banker to receive the amount due.
enterprise General term for any business or commercial activity.
Enterprise Investment Scheme (EIS)

Form of investment which attracts generous tax relief. It was introduced
on 1 January 1994 as a replacement for the Business Enterprise
Scheme. The law is found in Taxation of Chargeable Gains Act 1992
s150A, Sch 5B and Sch 5BA.
enterprises for disadvantaged communities

These “include —
(a) enterprises located in disadvantaged areas, and
(b) enterprises owned or operated by, or designed to serve, members

of disadvantage groups”. (Income Tax Act 2007 s340(3)).
The term used in connection with community investment tax
relief.
enterprise management incentive (EMI)

“Option over shares in an EMI company which qualifies for tax
advantages under [Income Tax (Earnings and Pensions) Act 2003 2003
Sch 5, previously Finance Act 2000 Sch 14]” (Inspectors’ Manual at
BIM 44001).
enterprise zone (EZ) Area of the country where businesses are given special tax and other
incentives to run their businesses.
The first zones came into operation from 11 June 1981 to 21
October 1996. The main tax benefit was a 100% initial allowance for
industrial buildings in the first 20 years. There were some other tax
reliefs that lasted for 10 years.
enterprise zone allowance (EZA)

Special 100% initial allowance allows for industrial buildings in an
enterprise zone.
entertainer For categorisation of earners for national insurance, “means a person

who is employed as an actor, singer or musician, or in any similar
performing capacity” (Social Security (Categorisation of Earners)
Regulations SI 1978 No 1689 reg 1(2)).
The position for various types of entertainer was examined in the
case ITV Services Ltd. TC 836. As a result of this, HMRC issued Brief
10/11.
entertainment (1) In accounting, expenses of looking after people, particularly

customers.
In general, the cost of entertaining customers and others is generally
not tax-deductible
The cost of entertaining staff at parties is exempt from tax under
Income Tax (Earnings and Pensions) Act 2003 s264. Third party
entertainment is exempt under s265.
(2) In general, drama, music and similar. For national insurance, this is
defined by reference to the definition of entertainer.
entertainment allowance Amount which an employee is allowed to spend entertaining clients.
entertainment expenses Amount which an employee has spent entertaining clients.

Such expenses are generally disallowed for income tax, corporation
tax and VAT purposes. Before 15 March 1988, a deduction could be
made for entertaining overseas customers.
enthusiasm Keenness and self-motivation in a particular area. The word meant a

person’s belief that he was God.
entire contract Contract where each side’s consideration most be wholly performed or
provided. It is not possible for the contract to have partial performance.
entirety doctrine Method used to distinguish between revenue repairs and capital
expenditure for tax purposes. A leading case is Bullcroft Main
Collieries Ltd v O’Grady [1932] 17TC93. The matter is discussed in
entitled destinations Destinations within the EU eligible to receive Common Agricultural

Policy (CAP) export refunds.
entitled passenger A person travelling by sea or air to a country outside the fiscal/customs
territory of the EU and in possession of a valid transport document.
entitled vessel A vessel with authority from HMRC to receive duty-free stores.
entitlement category Letters on the face of a photocard driving licence which indicate the
categories of entitlement under the European Union directive.
entitlement Something which a person has a right to, however that right arises.
entity Something that exists independently, such as a business which exists

independently of the owner.
entrant “Person entering or seeking to enter the United Kingdom” (Immigration

Act 1971 s33).
entrenched provisions Provisions in a company’s articles of association which may only be

amended if certain conditions are met (Companies Act 2006 s22). The
existence of such provisions must be specifically notified to Companies
House.
Provisions may only become entrenched when the company is
formed by unanimous agreement of all members. Entrenched provisions
do not prevent an alteration to the articles if agreed by all members or
ordered by a court.
entrepreneur Person who engages in commercial activity of his own volition.
entrepreneurs’ relief Relief that reduces capital gains tax payable on the sale of a business. It
replaced taper relief.
The relief reduces the rate of tax to 10%. It was introduced on 6
April 2008 for an amount of £1m million, and increased to £2 million
from 6 April 2010, and to £5 million from 23 June 2010.
Details of the relief are set out in Taxation of Chargeable Gains Act
1992 ss169H-169S.
[Note that the apostrophe comes after the S.]
entry (1) Details of a transaction entered into the financial records.

(2) A declaration and request for customs release in respect of imports
or goods intended for export. It is usually made on a Single
Administrative Document (SAD). Traders approved to do so can submit
entries electronically.
entry clearance “Visa, entry certificate or other document which, in accordance with the
immigration rules, is to be taken as evidence of the requisite evidence
of a person’s eligibility... for entry into the United Kingdom”
entry fee A single payment to join something, such as a club.

The term is also used in other contexts such as to gain the tax
advantages of becoming a real estate investment trust.
entry price The value of entering into acquisition of an asset or liability, usually
replacement cost.
envelope Item of stationery for enclosing or posting documents.

Typically most envelopes are either of white paper or brown,
known as Manilla. Other types include cardboard-backed envelopes to
prevent folding of important documents.
There are window envelopes where part of the front is cut away
and covered in polythene or left open so that a typed address is visible.
The envelope usually has a layer of gum on the folded part or has a
self-adhesive there.
Envelopes have their own sizing scheme which use the letter C.
These are slightly larger than the corresponding paper A size, so a C4
envelope is just a little bigger than A4 paper, allowing sheets to fit
comfortably inside. Any envelope above C5 size is subject to a higher
postal charge.
There is a special DL size of 110mm x 220mm which allows a sheet
of A4 to be folded into three.
en ventre sa mère Latin: “in the womb of his mother”.

The term describes a baby which has been conceived but not yet
born. Such a baby may inherit under a will or be a beneficiary under a
trust.
environmental audit Review of an organisation’s impact on the environment. This covers

such areas as energy usage, recycling and transport plans for
employees.
EOE European Options Exchange.
eo instanti Latin: at that instant
eo nomine Latin: in that name.
EOQ Economic order quantity.
EOTC Equal Opportunities Training Centre
EOV Existence, ownership and valuation, the three traditional tests for an
auditor checking assets on a balance sheet.
EOY End of year.
EPA Enduring power of attorney.
EPE Expected positive exposure.
EPOS Electronic point of sale
EPP Executive Pension Plan.
eps Earnings per share
EPSS Excise Payment Security System.
EPU (1) Entry Processing Unit, a HMRC Entry Processing Unit (EPU)
where import, export and duty payment documents are processed.
(2) European Payments Union.
Eq (1) Equity Cases, a series of Law Reports published between 1865 and
1875.
(2) Equity Reports, a series of law reports published between 1853 and
1855.
EQIA Equality Impact Assessment
equalisation Any financial provision that attempts to even out larger differences
between accounts, particularly between accounting periods.
equalisation reserve Funds held by an entity for the purpose of reducing large fluctuations
between accounting periods. The reserve is used to top up low figures.
For mutual life assurance business, there is a special tax provision in
Income and Corporation Taxes Act 1988 s444BA.
equality (1) Mathematical status of two quantities being of the same amount.
(2) In law and human resources, the requirement for people to be
treated the same without regard to such factors as sex, race or age. In
this context, equality means “equality between individuals” (Equality
Act 2006 s8(2)).
equality clause Provision in a woman’s contract of employment which guarantees to

comply with the provisions of Equal Pay Act 1970. This term is defined
in s1(2) of the Act.
equality impact assessment (EQIA)

Systematic approach to determine whether a policy or practice affects
different groups of people in significantly different ways. The
assessment usually also consider whether any modification is needed.
equality statement Statement explaining the difference in pay between male and female
employees. Such a statement is voluntary. Plans to make such a
statement compulsory from 2013 were dropped in 2010 on the change
of government.
equal opportunities monitoring form

Form which people may be invited to complete to assist an employment
tribunal or other body in ensuring that its services are equally
accessible to all. Completion of the form is voluntary.
equal pay Legal obligation to pay women at the same rate as men.
In the UK, the main law is Equal Pay Act 1970 which took effect in
1975 with Sex Discrimination Act 1975. A claim for equal pay is made
by a woman establishing a male comparator who does the some or
equivalent work but is paid more. The employer must either equalise
their pay or justify the difference.
equal pay Teachers were equalised in stages between 1955 and 1961.
equal treatment rule A requirement which every occupational pension must follow, which
requires women to be treated equally to men (Pensions Act 1995 s62).
equal work content Requirement in assembly line work for each task to take the same time
to ensure that there are no bottlenecks or idle time.
equation Mathematical statement that two combinations of factors are of the

same amount.
equation of time Old term for the difference in time as recorded by a sundial and a clock.
The difference is greatest in November.
equilibrium State of balance in a company or country, where supply and demand are
equal.
equinox Point at which the sun crosses the equator and days and nights are of
equal length over all the world.
equipment to enable a disabled person to use a car

In relation to the taxation of company cars, “means equipment —
(a) which is designed solely for use by a chronically sick or disabled
person, or
(b) which is made available for use with the car because it enables a
disabled employee to use the car in spite of the disability”
equitable in all the circumstances

Fair when all relevant matters are considered.
The term is often used when there is not enough legal argument to
support a claim, but when all factors considered together comprise a
moral claim. Sometimes a refusal to accept that moral claim could lead
to bad publicity or a loss of goodwill and custom.
equitable interest Interest in property that is regarded both in equity and common law.
equitable liability Practice that applied until 31 March 2011, whereby HMRC could waive
its right not to pursue tax that was due solely because the deadline to
remedy an excessive assessment had passed. From 1 April 2011, this is
replaced by special relief.
Equitable Life Mutual insurance company that became insolvent.

The government may make payments to policy-holders under
Equitable Life (Payments) Act 2010. Under s3, such a payment is
disregarded for tax and social security purposes.
equitable mortgage Mortgage recognised in equity but not otherwise in law.
Equitas Insurance company created to cap the liabilities of Lloyd’s prior to

1993. The insurance market was severely hit by US claims relating to
asbestos, pollution, and hurricane damage.
equities Another word for stocks and shares.
equities analyst Person who investigates and writes reports on ordinary share
investments in companies (usually for the benefit of investors in
shares).
equities Ordinary shares of a company seen as investments.
equitable (1) Fair.

(2) Pertaining to equity.
equitable in all the circumstances

Expression which describes something which appears to be fair when
all relevant matters are considered, even though no single factor may
justify the desired result.
equitable owner Another name for a beneficial owner, namely the beneficiary of a
trust.
equity (1) Share capital, as opposed to debt instruments.

(2) The amount by which the value of a house exceeds the total of the
loans secured by mortgage(s) thereon.
(3) Branch of law which complements common law.
Where equity and common law conflict, equity prevails (Earl of
Oxford’s Case [1615]).
Equity is governed by the maxims of equity.
equity accounting Method of accounting used in reports in the balance sheet of the parent
or group’s share of the investment in the share capital and reserves of
an associated company.
equity approach to bank valuation

Valuation of a banking business on the basis of free cash flows to
equity holders, discounted at the required rate of return on equity.
equity capital Funding for a business in the form of ordinary shares rather than from
borrowed funds.
equity dilution Reduction in the relative value of a shareholding when new shares are
issued.
equity dividend cover Accounting ratio of distributable profits divided by actual dividends. In
general, the higher the number, the greater the chance of dividend
maintenance.
equity finance Funding for a business by selling shares in it, as against debt finance.
equity funding Funding a business by selling shares in it.
equity gap Amounts of equity needed for a business which are too large for a bank
loan and too small for equity funding.
equity gearing Ratio between a company’s borrowing and its ordinary share capital,
often known simply as gearing.
equity hedge Combination of long holdings of equities with short sales of shares or
share index options.
equity holder Tax term which means someone who is either a shareholder or loan
creditor of a company.
The term is defined in Corporation Tax Act 2010 s158 in terms of
defining who may be part of a group.
equity instrument Document that evidences a holding of equity, such as a share certificate.
equity kicker American term for equity sweetener, which is sometimes used in the
UK. The form is usually an option to buy shares at a preferential rate.
equity-linked notes Financial instruments that involve a guarantee of principal, and a return
based on a basket of equities.
equity-linked policy In insurance, a policy where a proportion of the premiums are invested
in shares. The surrender value of the policy is simply the amount for
which those shares may be sold.
equity method “A method of accounting for an investment that brings into the
consolidated profit and loss account the investor’s share of the
investment undertaking’s results and that records the investment in the
consolidated balance sheet at the investor’s share of the investment
undertaking’s net assets including any goodwill arising to the extent
that it has not been previously written off” (FRS 2 para 8).
equity multiplier In banking, accounting ratio of total bank equity to total assets.
equity portfolio A collection of equity shares.
equity release One of several types of scheme designed to produce money from the
value of a person’s home.
equity release mortgage Equity release scheme in the form of a loan.
equity release reversion Equity release scheme which involves selling an interest in the person’s
home.
equity risk Risk of owning shares, such as from company insolvency.
equity securities Under company law, the term “means —

(a) ordinary shares in the company, or
(b) rights to subscribe for, or to convert securities into, ordinary
shares in the company (Companies Act 2006 s560(1)).
equity share capital Company’s share capital as represented by ordinary shares of any class.
The statutory definition in relation to a company is “its issued share
capital excluding any part of that capital that, neither as respects
dividends nor as respects capital, carries any right to participate beyond
a specific amount in a distribution” (Companies Act 2006 s548).
equity shares Shares in a company which participate in sharing dividends and in

sharing any surplus on winding up, after all liabilities have been met.
“Shares other than non-equity shares” (FRS 4 para 7, and FRS 6
para 2).
equity swap Type of interest-rate swap where one party’s payment is related to a
share index, and the other party’s payment attracts a fixed rate of
interest.
equity sweetener Investment incentive whereby those who invest in a business have a
right to buy further shares at an agreed price. It is similar to a
traditional option.
equity warrant A tradeable call option on the shares of a company.
equivalence General term for something held to be of similar value or worth as

something else.
equivalence condition Condition that an EEA amount must meet to qualify for loss relief
equivalent bond yield Means for comparing yields on bonds with money market instruments
that have the same maturity date.
equivalent goods Goods which are exported under the inward processing scheme for
Customs duties.
Under inward processing, duty is paid when goods are imported for
a process such as assembly or repair. The duty is refunded when the
goods are re-exported. Such goods are known as compensating goods.
If those goods cannot be exported, duty may be reclaimed if identical
goods, known as equivalent goods, are exported in their place.
equivalent unit Management accounting term for a unit of unfinished production

according to a calculation or formula determined by when production
started.
ER English Reports. This is the citation for most reported court cases
before 1865. They started in 1220.
ERDF European Regional Development Fund.
ERG Efficiency and Reform Group.
ERISA Employee Retirement Income Security Act 1974, an American law.
ERL Export Reception List
ERM Exchange rate mechanism.
ERN Export Reference Number.
errare est humanum Latin: to err is human.
error or mistake In tax, a reason for asking for a tax assessment to be retrospectively
reduced under Taxes Management Act 1970 s33.
Such a request should be made within five years of 31 January
following the year of assessment.
ERS Employment-related securities.
Erse Old word for the language Gaelic.
ERTS Enhanced Remote Transit Shed, a place situated outside the appointed
area of an approved port or airport where non-European Union goods
may be held until they are assigned to a Customs approved treatment or
use.
ES (1) Ethical Standard, statement issued by Auditing Practices Board

(APB).
(2) Country prefix code for Spain.
ESA Employment and support allowance.
ESA 220 Linking letter provided to someone who has recently received
employment support allowance. Every new employee should be asked
if he or she has such a letter as this can affect the period of incapacity
of work for which statutory sick pay may be payable.
ESA in youth Employment support allowance payable to someone who is under the
age of 25. This relaxes some of the rules on national insurance
contributions for young claimants.
ESC (1) Extra-statutory concession

(2) European Social Chapter [or Charter]
(3) Employer-supported childcare
escalation Process by which a figure increases by a predetermined amount.

The term is commonly used for pensions. Escalation may mean that
a pension being paid increases each year by 3% regardless of the rate of
inflation.
If the pension is linked to the actual rate of inflation in any way, it is
said to be index-linked.
escalation clause Clause in a contract allowing for regular increases, such as in prices.
The clause usually states how these increases are to be calculated, such
as by reference to a prices index.
escalation of commitment In banking, increasing the financial assistance offered to a business or

person in difficulties. This is also called creeping commitment.
Such a policy is risky as it increases the amount the bank or other
body may lose should the business or person still become insolvent.
escalator clause American term for escalation clause.
escalators For capital allowance purposes, is treated as an integral feature, which

escape clause Clause in a contract which allows one of the parties to be released from
his obligations if a stated eventuality occurs.
ESCB European System of Central Banks.
escort officer Civilian who is so designated by a chief officer of police under Police
escrow Arrangement whereby funds are held by a third party to ensure

compliance with a contract.
A simple example is where A and B wish to trade but do not trust
each other, though they both trust C. B deposits the sale proceeds with
C, A delivers the goods to B, when C sees that the goods are paid he
pays A.
escrow account Account where funds are held relating to an escrow.
escudo Currency of Cape Verde.
ESD European Savings Directive.
ESL European Sales Lists - all businesses registered for VAT that supply
goods to businesses registered for VAT in other EU Member States
must send HMRC lists of their EU supplies. Other Member States use
the information provided on the European Sales Lists (ESL) to ensure
VAT has been correctly accounted for.
ESOP Employee share ownership plan.
ESOT Employee share ownership trust.
ESRA Ethical Standards for Reporting Accountants.
essence of the contract Provisions in a contract that are regarded as essential to its
performance.
essential commodity “Means any commodity described in the Schedule to this Act which
may be declared by order of the Board of Trade to be a commodity
which in the opinion of the Board would be essential for the vital needs
of the community in the event of war” (Essential Commodities Reserve
Act 1938 s6).
The schedule lists food, forage for animals, land fertiliser, fertiliser
materials, and petrol.
essential oils For VAT, these are standard-rated as they do not come within the scope
of food (VAT notice 701/14).
establishment (1) Commercial business seen as a single entity.

(2) Workforce seen as a single entity.
(3) Government and other ruling bodies seen as a single entity.
establishment charges Term for the costs of property and staff.
establishment fee Fee charged by a lender for the costs or arranging the loan.
estate Term which has acquired different meanings, of which the broadest is
simply everything that a person owns.
For inheritance tax, a person’s estate is defined as “the aggregate
of all the property to which he [the person] is beneficially entitled”
excluding interest in possession trusts, excluded property or foreign
works of art being exhibited in the UK (Inheritance Tax Act 1984
s5(1)).
From 22 March 2006, a person’s estate comprises:
• assets in the sole name of the deceased
• their share of any jointly owned assets
• assets held in a trust in which the deceased had an
immediate post-death interest, or a disabled person’s interest or a
transitional serial interest
• any nominated assets
• assets given away but where an interest has been retained (as
in a gift with reservation)

• value of an alternatively secured pension from which the
deceased benefited as an original scheme member, or as a dependant
who received benefits from the left over ASP fund of the original
scheme member.
Before 22 March 2006, a person’s estate comprised:
• assets in the sole name of the deceased
• their share of any jointly owned assets
• assets held in a trust in which the deceased had a right to
benefit
• any nominated assets
• assets given away but where an interest has been retained.
In trusteeship and executorship, the term is more usually limited to
what a person owns at the time of their death. It is thus distinguished
from a trust which is created during a person’s life.
Strictly, an estate is only an interest in land, but the term is now
generally used to mean the total assets (land, chattels, investments, etc)
owned by an individual.
estate administration Process of looking after an estate, particularly of a person who has
recently died.
In practice this involves obtaining probate or letters of
administration, disposing of the body, paying legacies, ascertaining and
distributing the residue, and paying inheritance tax.
estate duty The last of the death duties levied in the UK. It was introduced in 1894
under Finance Act 1894 s1. It was replaced by capital transfer tax on
13 March 1975 for transfers on death and on 26 March 1974 for
lifetime transfers, before being replaced by inheritance tax.
Up to 1969, estate duty was charged at a single percentage on the
value of the estate, depending on its size. From 15 April 1969, estate
duty was calculated on the slice basis.
At the time of its abolition, estate duty was charged at 25% for
estates worth at least £15,000, and up to 75% for estates worth
£500,000 or more. Rates had been as high as 85%.
estate planning bond Term for a financial product designed to help a person to avoid tax on
their death. The commonest form is the discounted capital gift.
estimate (1) Statement of how much a contractor or supplier expects to charge

for goods or services. An estimate is not legally binding on the
contractor or supplier. It is not legally binding, unlike a quotation.
(2) Figure in the accounts when the exact figure is not known.
In accounting, estimates are often required. Depreciation can only
be calculated by estimating the useful economic life of an asset.
Estimates are also used extensively in valuing assets and liabilities.
Estimates can also be needed when the cost of determining the exact is
disproportionate to the sum involved.
An estimate must be reasonable. In practice, this is often done by
keeping an exact record for a short period that may be regarded as
typical.
For tax, estimates properly allowed for accounting are accepted.

However, some estimates are replaced by specific provisions (eg
depreciation is replaced by capital allowances, and there is a separate
limit for personal incidental expenses of employees on business.)
Where an estimate has been used in accounts on which a tax
computation is based, details of this should be disclosed on or with the
tax return.
estimated collection rate The amount of sums owed which the organisation believes it will be
successful in collecting. This term is particularly used for council tax.
estimation procedure A procedure requiring HMRC approval, which allows for the
estimation of the VAT due for an accounting period.
estimation techniques In accounting, “the methods adopted by an entity to arrive at estimated

monetary amounts, corresponding to the measurement bases selected
for assets, liabilities, gains, losses and changes to shareholders’ funds”
(FRS 18 para 6).
Two common examples of estimation techniques are period for
depreciating fixed assets, and determining amount of bad debts.
estoppel In law, a rule of evidence which prevents a person from denying that
which he has already admitted.
estoppel by conduct Rule that a person whose conduct has caused another person to believe
in something cannot deny those things believed.
estoppel by deed Rule that a party to a deed may not deny the facts stated in the deed.
estoppel by record Rule that a person may not deny a judgment of a court against him.
estoppel in pais Rule that a tenant cannot deny that someone is the landlord when he has
paid that person rent.
et al Latin: and others.
et sequentes Latin: and those following. This is sometime abbreviated to “et seq”.
ET1 form Form used to start a claim before the employment tribunal.
ETC Exchange traded commodity.
ETF (1) Exchange traded fund.

(2) Electronic transfer of funds.
ethanol Alternative name for ethyl alcohol. It has the chemical formula
CH3CH2OH. It is the active ingredient in liquor, and creates a liability
to excise duty and VAT.
ethical dilemma Quandary experienced in business where there is a conflict between

what a person believes is best for business and what the person believes
is morally correct. An example is selling a product, knowing that it will

not benefit customers as they expect.
ethical investment Shares or similar investments (for example, holdings in unit trusts) in
companies supposed to conform to a particular set of moral or ethical
principles. Different ethical values have led to a proliferation of funds
of this nature with different principles & for example, some will avoid
investing in arms manufacture, and others will avoid tobacco
companies. There is ongoing debate as to whether the following of such
principles adversely affects the investment performance of ethical
funds.
Ethical Standards for Reporting Accountants (ESRA)

Documents issued by the Auditing Practices Board (APB) in relation to
investment circulars.
They were issued in December 2004. They are numbered as ES 1
etc.
ethics partner Member of auditing firm who is responsible for ensuring compliance
with auditing ethics (APB ES 1 para 21).
et hoc genus omne Latin: and all that sort of thing.
ethos Habitual character of a place, group, activity etc.
ethyl alcohol The clear liquid whose chemical formula is CH3CH2OH.

This occurs naturally in drinks made by fermenting organic matter.
It is the alcohol which acts as an intoxicant in such drinks.
ethnocentric In psychology, description of something which favours one race of

people as against others.
etiology American spelling of aetiology.
ETL Expected tail losses.
et seq Latin: and the following. (Abbreviation of et sequens.)
et sequens Latin: and that which follows.
et sequentia Latin: and those that follow.
et sic de similibus Latin: and so of the like.
EU European Union.
EU Emissions Trading Scheme

Scheme introduced in the European Union in 2005 as a means of
reducing greenhouse gas emissions.
Eurex Electronic derivatives exchange formed in 1998 from the merger of

existing exchanges in Germany and Switzerland.
euro Currency of many members of European Union.

The European currency unit used by twelve members of the European
Union (EU): Austria; Belgium; Finland; France; Germany; Greece;
Ireland; Italy; Luxembourg; Netherlands; Portugal and Spain, all of
which have joined Economic and Monetary Union (EMU) and now use
the Euro in place of their old national currencies.
The currency was introduced in the form of bank notes and coins on
1 January 2002, having previously existed as an accounting currency.
Euro notes are common to all countries, and are produced in value
from 5 euros to 500 euros. Euro coins have a common obverse but a
national reverse. They are minted in value from 1 cent to 2 euros. Coins
issued by any EU state are accepted in all euro states.
The symbol for the euro is €.
A UK company may publish its accounts in euros, in addition to
accounts in pounds (Companies Act 2006 s469).
euro account Bank account denominated in euros.
Euro Area Reference Note (EARN)

Bond denominated in euros, first issued in 1999 by the European
Investment Bank.
eurobank Financial intermediary that deals in the eurocurrency market.
eurobond Long-term bearer bond denominated in euros. It is usually issued by an

international corporation or by a government.
eurobond market A market in which bonds are issued in the capital market of one country
to a non-resident borrower from another country.
euro certificate of deposit Certificate of deposit denominated in a eurocurrency.
Eurocheque Cheque which may be cashed at any European bank. The Eurocheque
system is based in Brussels.
Euroclear One of two settlement houses for clearing eurobonds. The other is
Centrale de Livraison de Valeurs Mobilières.
Eurocommercial paper Short-term borrowing in Eurocurrencies.
eurocommunism Form of Communism advocated in western Europe and more

pragmatic than Eastern Communism.
Euroconversion Redenomination of a domestic currency into the euro.
Eurocrat Bureaucrat from an European body.
eurocredit Bank loan in a eurocurrency, typically provided by a group of banks to

a large commercial business.
eurocurrency Any currency used for trading in Europe but outside its currency of
origin. The Eurodollar is the commonest example.
eurocurrency market Market for trading in eurocurrency.
eurodeposit Deposit of Eurodollars outside the US.
Eurodollar US dollar when trading in Europe as a Eurocurrency.
euroequity Share of an international company traded on a European stock market

outside its country of origin.
Euro Inter Bank Offered Rate (Euribor)

The inter bank offered rate for loans denominated in euros.
Euroland Another term for Eurozone.
Euromarker A yellow dye used in all EU member states to indicate that

hydrocarbon oil duty has not been paid.
euromarket Market that developed during the 1950s to provide finance for Europe-
wide projects.
euro-MP Member of the European Parliament.
Euronext NV Company established in September 2000 to incorporate the futures

exchanges of Amsterdam, Brussels and Paris. In 2002, it acquired the
London International Financial and Futures Exchange (LIFFE) and
the Portuguese futures exchange.
euronote Short-term Eurocurrency bearer note.
euro-option Option to buy a European bond.
Europa website Website that allows a registered VAT agent to check the VAT number
from another EU state. From 1 January 2010, it also allows the name
and address to be checked.
Europe Geographical area to the west of Asia, often taken to extend from
Russia to Ireland. Its exact border is not defined, so there is some
debate as to whether countries such as Israel, Russia and Turkey are
included.
European Accounting Association (EAA)

Organisation formed in 1977 for teachers and researchers of
accountancy.
European Agricultural Guidance and Guarantee Fund (EAGGF)

Fund established under the EU Common Agricultural Policy to buy
produce from EU farmers at a minimum price to sell when prices have
risen.
European Binding Tariff Information (EBTI)

System for implementing the Common Customs Tariff. The
information is issued to economic operators by the customs authorities
of the European Union (EU) Member States. Thus, traders will know,
in advance, the tariff classification of the goods they intend to import or
export.
This information is introduced into a data-base run by the European
Commission and is legally valid in all Member States, regardless of the
Member State which issued it.
European Central Bank (ECB)

Central bank for those countries which have adopted the euro as their
currency.
European Commission (EC)

One of the three main governing bodies of the European Union.
The Commission drafts proposals and is responsible for
implementing policy. It is also responsible for ensuring that EU
legislation is carried out. European Community - European Community
and European Economic Community (EEC) are now referred to as the
EU.
European Community Association of European states, originally known as the Common

Market. Since 1991, it has been known as the European Union.
European Community margin of solvency

Margin of solvency required for insurance companies that operate in the
European Union. It is calculated according to the aggregate of its assets
and liabilities in the EU. This is enacted in the UK in Insurance
Companies Act 1982 s32(5)(b).
European Court of Auditors (ECA)

Body composed of 15 members appointed for 6 years by unanimous
decision of the Council of the EU after consulting the European
Parliament. It checks EU revenue and expenditure for legality and
regularity, and ensures that financial management is sound.
European Court of Justice (ECJ)

Highest court of the European Union (EU). Its job is to ensure that EU
legislation is interpreted and applied in the same way in each member
state. The Court has the power to settle legal disputes between Member
States, EU institutions, businesses and individuals.
European Currency Unit (ecu)

The currency formed in 1979 from a basket of EU currencies, weighted
according to the relative sizes of their economies. In 1999, the ecu
became a real currency known as the euro.
European Development Fund (EDF)

Fund administered by the European Union to make grants and loans to
help countries develop infrastructure projects.
European Economic Area (EEA)

Organisation formed in 1992 comprising the European Community
(now the European Union) and members of the European Free Trade
Association (EFTA) except Switzerland. It came into being in 1994.
European Economic Area (EEA) investment portfolio manager

This means an institution which is an EEA firm of the kind mentioned
in paragraph 5(a), (b) or (c) of Schedule 3 to the Financial Services and
Markets Act 2000 (certain credit and financial institutions), or qualifies
for authorisation under paragraph 12(1) or 12(2) of that Schedule, or
has permission under the Financial Services and Markets Act 2000 to
manage portfolios of investments.
European Economic Community (EEC)

European “Common Market” established in 1957 by the six states that
had already formed the European Coal and Steel Community
(ECSC), namely Belgium, France, West Germany, Italy, Luxembourg
and Netherlands.
The EEC was merged with ECSC and Euratom in 1967 to form the
European Community. In 1992, this was renamed the European
Union.
European Economic Interest Grouping

A body formed in accordance with EC directive 2137/85 of 25 July
1985. Special tax provisions are set out in Taxes Management Act 1970
s12A.
European Fair Trade Association (EFTA)

Body comprising 11 fair trade organisations based in various European
countries.
European Financial Reporting Advisory Group (EFRAG)

Group established in 2001 to advise on whether an International
Accounting Standard is suitable for the European Union.
European Free Trade Association (EFTA)

Trade association formed in 1960 between Austria, Denmark, Norway,
Portugal, Sweden, Switzerland and UK. None of these countries were
then members of the European Community (now European Union).
Finland, Iceland and Liechtenstein subsequently joined, while
Austria, Denmark, Finland, Portugal, Sweden and UK left when they
joined the European Commission or European Union.
In 1984, all tariffs between EFTA and EC/EU countries were finally
abolished.
In 1992 (with effect from 1994), the European Economic Area
was formed which comprises all EU and EFTA countries except

Switzerland.
European Investment Bank (EIB)

Financial institution whose purpose is to provide regional assistance
within the EU by financing capital projects.
European Monetary Agreement (EMA)

Agreement made in 1958 by the Organisation for European Economic
Cooperation (as it was then known). This allowed member states to buy
and sell each other’s currencies freely.
European Monetary Cooperation Fund

Fund organised under the European Monetary System by which
members of the European Union deposited reserves to form a pool to
stabilise their currencies and to fund balance of payment support.
Member states deposited 20% of their gold and gross dollar reserves
for which they were given access to the fund. It ceased operation in
1999 when the adoption of the euro made the fund otiose.
European Monetary Institute (EMI)

Organisation established in 1991 under Maastricht Treaty to co-
ordinate economic policies of EU member states as a precursor to the
adoption of the single currency or euro in 1999.
European Monetary System (EMS)

First stage of European Monetary Union. It started in March 1979 by
linking national currencies within fixed bands. If a currency started to
move outside that band, EMS members were required to take action to
bring it back.
EMS was replaced by the single currency or euro in 1999.
EMS was colloquially known as the snake.
European Monetary Union (EMU)

Process by which many European countries adopted the single
currency or euro as a replacement for their national currencies. The
Union came into force on 1 January 1999.
European option Another name for a euro-option.
European Options Exchange (EOE)

Market established in Amsterdam in 1978 to trade in traded options. In
January 1987 it merged with the Amsterdam Stock Exchange to form
the Amsterdam Exchanges.
European Parliament Body established by electing representatives from EU member states,

commonly known as MEPs. It has advisory and supervisory powers,
but no executive authority.
European Savings Directive

EU agreement set out in directive 2003/48/EC. It is transposed into UK
law as Reporting of Savings Income Information Regulations SI 2003

No 3297 which came into force on 1 July 2005.
European Social Chapter (ESC)

Another term for European Social Charter.
European Social Charter (ESC)

Charter of employment rights first drawn up on 18 October 1961 and
revised on 3 May 1996. It covered such matters as fair wage, collective
bargaining rights, provision for disabled workers, freedom of
movement and training opportunities.
In 1989, the European Union decided to adopt it as part of the
Maastricht Treaty, but the UK secured an opt-out when this Treaty
was otherwise adopted in 1991. The UK adopted the Charter on a
change of government in 1997.
It is sometimes called the European Social Chapter.
European travel expenses In relation to MPs’ expenses, “means the cost of, and any additional
expenses incurred in travelling between the United Kingdom and
relevant European location” (Income Tax (Earnings and Pensions) Act
2003 s294(2).
European Union An economic association of European countries founded by the Treaty

of Rome in 1957 as a common market. It was known as the European
Community (EC) before 1993. The EU Member States are: Austria;
Belgium; Bulgaria; Cyprus; Czech Republic; Denmark; Estonia;
Finland; France; Germany; Greece; Hungary; Ireland; Italy; Latvia;
Lithuania; Luxembourg; Malta; Poland; Portugal; Romania; Slovakia;
Slovenia; Spain; Sweden; The Netherlands and the United Kingdom.
euro symbol The sign €, which is placed before the number to indicate an amount in
that currency.
Eurovision European television network.
euroyen Japans yen deposited in a European bank for use outside Japan.
Eurozone European countries which adopted the single currency or euro as their
currency. It is also known as Euroland.
EVA Economic value added
evade Avoid, usually illegally. The term is often used for the illegal avoidance
of paying tax.
evaluation Process of ascribing a value to a product, service, job, asset or business.
evaporation Process by which a liquid turns to vapour. This may need accounting
for when valuing liquids. The terms means loss of assets from other
causes.
event day Day where a charity holds an event to which the public is admitted
(Income Tax Act 2007 s421(4)). Such a day may be excluded from
considering whether a right of admission to a charitable donor restricts
the tax relief for the donation.
event-driven investing Investment strategy that responds to events, such as proposed mergers.
Eversden Case that allowed an inheritance tax avoidance scheme which used the
spouse exemption to override the gift with reservation rules by using a
trust. The case was IR Commissioners v Eversden (as executors for
Greenstock deceased) [2003]. This scheme has now been closed by
legislation.
everyday wardrobe Term used in the Inspectors’ Manual at BIM37910 to identify clothing
that is not tax-deductible.
Such clothing is not deductible even where it can be shown that it is
worn only for work, that it is a legal or contractual requirement to wear
such clothing, that the cost is greater than for normal clothing, or that
the nature of the work means that the clothing gets extra wear or
requires additional cleaning.
evidence Documents, testimony and other means by which facts are adduced.
The courts have developed many rules of what constitutes acceptable
evidence.
For tax cases, there are rules of evidence in The Tribunal Procedure
(First-tier Tribunal) (Tax Chamber) Rules SI 2009 No 273.
The general principle has been clarified in these words: “the
presumption must be that all relevant evidence should be admitted
unless there is a compelling reason to the contrary” (per Mobile Export
365 Ltd v HMRC [2007]).
In the case Megantic Services Ltd v HMRC [2009], it was ruled that
late evidence could be accepted even after a date when a direction had
been given that no further evidence was to be admitted.
The acceptability of evidence is broadly a two-stage process:
whether the evidence is relevant, and whether there is any reason to
exclude it.
evidence of removal Evidence that goods have been removed to a customer in another EU
member state. Having sufficient evidence is a condition of being able to
zero-rate the supply. Guidance on what constitutes such evidence is
given in VAT notice 725. Basically the documentation must identify:
• the supplier, and the consignor if different
• the customer
• the goods, accurately described
• an accurate value
• the mode of transport and route taken by the goods
• the EC destination.
evidence to correct a false impression

Term used in Criminal Justice Act 2003 s105 in relation to evidence in
criminal proceedings.
EVR Electronic Version of the Tax Return.
EWER Excise Warehousing (Etc) Regulations.
ex Latin: without
EX46 Standard beer duty return form.
ex abundanti cautela Latin: from excess of caution.
exact interest Term sometimes used to describe method of calculating interest on the
basis of 365 or 366 days in a year, as against ordinary interest where it
is calculated on the basis of 360 days.
ex aequo et bono Latin: in justice and good faith
ex all Without any advantages attached to the share. The opposite is cum all.
examination Interrogation of a witness in court.

Examination by the witness’s own counsel is called examination-
in-chief.
Examination by the opposing counsel is called cross-examination.
Further examination by own counsel is called re-examination.
examination-in-chief Initial examination of a witness by the witness’s own counsel in court.
examination station Place at an airport where Customs officers may examine imported
goods.
ex ante Before the event. The term often describes a budget prepared before the
budgeted activity commences.
ex capitalisation With all rights of capitalisation being given to the current shareholder
and not to any purchaser of the shares.
excepted asset For inheritance tax, “an asset on which business relief is not available
because it is not used wholly or mainly for the purposes of a business
throughout two years before a transfer” (HMRC inheritance tax
glossary).
excepted charity Church that need not submit accounts to the Charity Commissioners.
excepted estate An estate that does not have to be reported to HMRC as no inheritance
tax is likely to be payable (Inheritance Tax Act 1984 s256).
The values are given in statutory instruments. Since 6 April 2004,
there have been three types of such estate|:
• low value estates
• exempt estates
• foreign estates.
A low value estate is one with these limits

• total gross value: no more than nil rate band,
• total gross value of property outside UK: £100,000
• total value of settled property: £150,000
• total value of specified transfers: £150,000.
If any of these limits are exceeded, a return must be made.
Specified transfers include chargeable transfers made within seven
years of death of cash, quoted shares or securities, and certain land
interests and chattels if made at the same time to the same person.
excepted transfer Transfer of assets that need not be reported to HMRC. From 6 April
2007, these are transfers below the nil rate band for inheritance tax.
excepted vehicles Vehicles that may used fuel on which hydrocarbon oil duty has not
been paid (Customs notice 75).
They include tractors, light agricultural vehicles, agricultural
material handlers, agricultural engines, agricultural processing
vehicles, mowing machines, snow clearing vehicles, gritters, mobile
cranes, mobile pumping vehicles, digging machines, works trucks,
road construction vehicles, road rollers, road surfacing machines,
tar sprayers and unlicensed vehicles not used on public roads.
exception confirmat regulam

Latin: the exception proves the rule.
This means that the wisdom of a rule is determined when it gives a
just answer to an unforeseen problem.
exceptional item Normal trading transaction which is particularly large or unusual. It

must be noted in the accounts.
It should be distinguished from an extraordinary item which is
outside normal trading activities and must be shown separately in the
profit and loss account.
exceptional rate Rate of vehicle excise duty for the heaviest goods vehicles.
exception proves the rule Common saying that means that the value of a rule is demonstrated
when it gives the right answer in exceptional circumstances not
considered when the rule was formulated.
excess (1) The amount by which one amount is greater than another.
(2) In insurance, the amount of loss which the insured bears himself so
the claim is restricted to the loss which exceeds this figure. For
example, a motor insurance policy may have an excess of £200. This
means that the policy holder bears all losses up to £200 without making
a claim. If a loss of, say, £500 is made, the insurance company will pay
the excess of £300.
excess adjusted life assurance trade profits

Term that is defined in Finance Act 1989 s85A(2).
excess policy Policy in respect of matters that are covered by another policy.
The insurer of an excess policy has no liability until the claim has
been met on the first policy.
excess profit Profit which is greater than expected.
excess profits duty Tax charged between 1915 and 1921 at 50% of profits earned above a
pre-war standard.
excess profits tax Tax charged between 1946 and 1954 as an addition to other taxes. It
was broadly charged at 100% on the amount by which a business’s
profits during the war exceeded its profits before the war.
excess reserves American term for reserves which are greater than amounts required by
a regulatory authority.
excess shares Shares in excess of the number prescribed under rules for profit-
sharing. The term is defined in Income and Corporation Taxes Act
1988 Sch 10 para 6(2).
excessive remuneration Remuneration that is paid for a non-trade purpose and is therefore not
taxable by a trade. Payment significantly above market rates may
indicate excessive remuneration but is not conclusive.
The situation commonly arises when family members are
employed. A leading case is Stott & Ingham v Trehearne [1924]
9TC69. The matter is discussed in the Inspectors’ Manual at
BIM37707.
excessive set-off When a taxpayer has claimed too much tax relief under a tax credit
received with a dividend payment. The procedure for claiming back the
tax is set out in Income and Corporation Taxes Act 1988 s252.
exchange Giving up one asset for another, such as converting one currency to
another.
exchange control Government restrictions on converting its currency to other currencies.

UK exchange control was generally abolished in 1979.
Exchequer Fund of all money received by the government.

The term dates back to 1100. It is derived from the chequered cloth,
like a chess board, that traditionally covered the table.
excise duties Sales tax charged on items, particularly luxury items. They were first
introduced in 1643. The first duties were imposed on ale, then beer, and
then food and clothing. The scope was progressively extended, leading
to civil unrest in 1647.
In 1683, the scheme was recast. The collection of excise duties was
no longer farmed out by collected by excise men who established a
reputation for ruthlessness. The main duties were imposed on soap,
candles, leather, salt and brewing malt.
In 1723 bonded warehouses were created, and initially used for tea,
coffee and cocoa. Salt was removed from excise in 1730 after popular
protest, though it was subsequently re-excised until 1822.
By the 19th century, many items were excised. This included
licences for solicitors, hawkers and railway operators. Excise was
charged on employment of servants, armorial bearings and any other
obvious sign of status or luxury. Many 19th century excises were short-
lived.
During the 20th century, the scope of excise duties was
progressively rolled back in preference to sales taxes such as purchase
tax and value added tax.
Excise duty is now limited to hydrocarbon oil duty, alcoholic
liquor duty, gaming duty and tobacco duty.
excise duties Taxes charged on certain goods and supplies. Part of their function is to
reduce consumption on products seen as harmful, where excise acts as a
sumptuary tax.
Duties were traditionally applied to many goods from ancient times
into the 19th century. They are now only charged on alcoholic drink,
tobacco products, and betting and gaming. There is a separate vehicle
excise duty.
excise duty Tax charged on certain categories of goods and services. Excise duty is
now charged only on alcoholic liquor, tobacco products,
hydrocarbon oil, betting and gaming, and road vehicles. The rate is
set separately for each category.
Historically, excise duty was one of the main sources of taxation
income. In 1799 there were 3,000 separate duties. Gradually these
duties have been abolished as the revenue has come from other taxes.
excise goods Goods, other than chewing tobacco, which are chargeable with a duty
of excise by or under the Alcoholic Liquor Duties Act 1979; the
Hydrocarbon Oils Duties Act 1979 or the Tobacco Products Act 1979.
Excise Helpline A number that can be called for issues relating to excess duties, such as
to extend a distillation period in manufacturing spirits. The number is
0845 010 9000.
excise label Label indicating that excise duty has been paid.
For forgery, improper use and similar offences, such a label is
treated as if it were a stamp for stamp duty (Stamp Act 1891 s23).
excise licence duty Excise duty charged on those who were allowed to produce excisable
goods. The duty was abolished on 19 March 1986.
excise licence trade With one exception means, “a trade or business for the carrying on of
which an excise licence is required” (Customs and Excise Management
Act 1979 s1(1)). The exception relates to the sale of tobacco which is
regarded as an excise licence trade even though a licence is no longer
required (ibid s1(5)).
excise licence An annual tax charged on those who made liquor, methylated spirits
and matches. The excise licence was abolished on 19 March 1986.
exciseman Person responsible for administering excise duty.
Excise Payment Security System (EPSS)

Procedure that may be used by producers of excised goods (such as
liquor) as an alternative to providing a guarantee to secure payment of
excise duty. This broadly requires a satisfactory compliance record for
excise duty and VAT.
excise tax American term for a tax levied for a particular purpose.
excise warehouse A warehouse authorised by HMRC for the deposit, without payment of
duty, of goods liable to excise duty. There are special requirements for
premises for the storage of oil.
The statutory definition is “a place of security approved by the
Commissioners under subsection (1) (whether or not it is also approved
under subsection (2)) of section 92 below, and, except in that section,
includes a distiller’s warehouse” (Customs and Excise Management Act
1979 s1(1)).
excluded activities Term used in Income Tax Act 2007 s303 in relation to activities for
which it is not possible to claim the special tax provisions for venture
capital trusts.
excluded activities Trading activities which exclude a company from a scheme. Certain
activities exclude the special tax reliefs under Enterprise Investment
Scheme and VCT, for example. The list for VCT is given in Income
Tax Act 2007 s303.
excluded benefit Benefit provided to an employee that is not taxable (Income Tax
excluded property Property whose transfer cannot give rise to a liability under inheritance
tax (Inheritance Tax Act 1984 s3(2)).
The main categories of excluded property are:
• non-UK property of someone who is not UK-domiciled;
• holdings in UK authorised unit trusts or open-ended
investment companies;
• decorations for bravery or gallantry; and
• a reversionary interest in a settlement, unless it was acquired
for money or money’s worth.
excluded property Property that is specifically excluded from the scope of inheritance tax,
by Inheritance Tax Act 1984 s6.
Such property includes:
• property outside the UK held by a non-domiciled person,
• decorations for valour or gallant conduct,
• certain government securities and savings products.
excluded provision Benefits in kind that are exempt from tax and are therefore exempt from
class 1A national insurance unless specifically stated otherwise
The term is used in Social Security Contributions and Benefits Act
1992 s10.
excluded regions Parts of the UK that are excluded from a law or other provision.
In particular the term is used to mean the regions excluded from the
national insurance holiday introduced in 2010. Under National
Insurance Contributions Act 2011 s4(5) the excluded regions “are
Greater London, the South East Region and the Eastern Region”.
excluded remuneration Remuneration paid to a bank employee that is not subject to bank
payroll tax.
excluded services For the purposes of taxing agency workers:

“(a) services as an actor, singer, musician or other entertainer or as a
fashion, photographic or artist’s model, or
(b) services provided wholly —
(i) in the worker’s own home, or
(ii) at other premises which are neither controlled or managed
by the client nor prescribed by the nature of the services” (Income Tax
exclusion State of not being included.

In human resources, it means the state of not being able fully to
participate in society.
exclusion clause Provision in an insurance policy stating when the insurance company
will not pay against a claim.
exclusion requirement Requirement that an offender subject to certain types of order must not
enter a specified place for a specified period (Criminal Justice Act 2003
s205).
exclusions Conditions or circumstances listed in an insurance policy for which the

insurer does not provide benefits.
exclusive agreement Agreement where a person is given a sole right, such as being the only
person allowed to sell a particular product.
exclusive distribution Limiting the distribution of a brand or product to particular retail store
to make the brand or product exclusive.
exclusively One of the conditions that must be met for trade expenditure to be tax-
deductible. The word relates to the purpose of the payment. It appears
with the word wholly which relates to the amount.
exclusivity agreement Agreement between a supplier and a seller whereby the latter receives a
payment from the former for only selling his product. Such
arrangements are common for petrol stations and pubs. In other
businesses, such arrangements may fall foul of competition laws.
For tax purposes, any payment made in connection with such an

agreement is taxed either as income or capital, depending on the nature
of the payment. It is usually taxed as income unless the seller can show
that the sum was to be spent on capital items.
exclusivity tie Payment by a supplier to restrict a retailer’s choice of products. This

has been common in the oil industry.
Leading cases on this are Bolam v Regent Oil Co Ltd [1956]
37TC56 and Strick v Regent Oil Co Ltd [1965] 43TC1. These are
discussed in the Inspectors’ Manual at BIM35555 and BIM35560
respectively.
ex contractu Latin: arising from the contract.
ex coupon Without the coupon. This is usually a description of a security where a

recent interest payment has been made to the previous holder.
ex curia Latin: out of court.
Ex D Exchequer Division. A series of Law Reports published between 1865

and 1875.
ex diuturnitae temporis omnia praesumuntur esse rite et solemnitur acta

Latin: from lapse of time, all things are presumed to have been done
rightly and regularly.
ex div Without dividend. The term is used to denote a share where the next
dividend will be paid to the present owner and not to the purchase. The
opposite is cum div. The price paid usually reflects the lack of the next
dividend.
ex dolo malo non oritur actio

Latin: no right of action can have its origin in fraud.
ex dubito justitiae Latin: of legal right.

The term applies to a remedy given to an applicant as of legal right.
execution of company document

Process by which a company gives effect to a document.
This requires the company either to affix its common seal (if it has
one) or for the document to be signed by two authorised signatories or
by a director in the presence of a witness (Companies Act 2006 s44).
execution only Where a customer buys a financial product without receiving advice on
its suitability.
executive pension plan (EPP)

An individual occupational pension arrangement that is normally used
for directors or senior employees. Such a pension plan is regulated by
the same rules as occupational pension schemes.
executive power Right to act as a director and to make decisions.
executive share option scheme

Scheme, usually for directors and senior managers, whereby they have
the right to buy shares at a future date at a fixed price. The more the
shares increase in value, the more the scheme is worth to them.
executives’ remuneration reports

Report on the remuneration of executives of financial institutions. Such
a report may be made by the Financial Services Authority under
Financial Services Act 2010 s4.
executor Person who administers the estate of someone who has died and left a
will.
executor-dative Man who is appointed by a Scottish court to administer the estate of a

deceased person, usually when there is no will or when no executor is
named in the will.
executor de son tort Person who acts as executor without having the necessary authority.
Such a person has the liability of an executor without any of the rights.
executor-nominate Man who administers a deceased person’s estate in Scotland by being

named in the will.
executorship Discipline of dealing with the estates of those who have died.
executor’s year The period of one year in which an executor traditionally deals with the
estate of the deceased.
executrices Plural of executrix.
executrix Female executor.
executrix-dative Woman who is appointed by a Scottish court to administer the estate of

a deceased person, usually when there is no will or when no executor is
named in the will.
executrix-nominate Woman who administers a deceased person’s estate in Scotland by

being named in the will.
exemplary damages Heavy damages which a court adds as a means of the court expressing
that the defendant has behaved badly towards the claimant.
exempli gratia (eg) Latin: for example.
exempt Not required to follow a law, rule or other provision.

In VAT, a supply where the supplier does not charge VAT but
cannot claim back any VAT paid.
exempt approved scheme An HMRC approved pension scheme, which is established under an
irrevocable trust and hence qualifies for tax advantages relating to
contributions, income and capital gains from investments.
exempt assets Assets which are exempt from capital gains tax when disposed, such as
wasting assets like cars and animals.
exempt beneficiary Term used in Inheritance Tax Act 1984 s29A with regard to a
beneficiary not liable to pay inheritance tax, such as a spouse. The
provision is relevant for abating tax reliefs for payments made from a
beneficiary’s own resources.
exempt benefit “Benefit the direct provision of which is exempted from liability to
income tax by a provision of Part 4 (employment income exemptions)”
(Income Tax (Earnings and Pensions) Act 2003 s96A(1)).
exempt department Certain government departments that were allowed to buy goods free of
purchase tax, provided they indemnified the supplier.
exempt distribution Type of distribution between companies in a group which has a special
tax treatment under Income and Corporation Taxes Act 1988 s213.
exempted large goods vehicle

Vehicle which may be driven by a holder of a driving licence for a car
even though the vehicle weighs more than 3,500 kilograms. Such
vehicles include steam engines, tractors and construction vehicles.
exempt gift Gift that is exempt from inheritance tax. The tax-free value of the gift
may be abated when a payment is made from a beneficary’s own
resources.
Exempt gifs are:
• gifts made more than seven years before death
• gifts to spouses or civil partners
• small gifts of up to £250 to any number of recipients
• other gifts up to £3,000 a year
• gifts in consideration of marriage
• gifts to charity or eligible political parties
• gifts for national purposes
• normal expenditure out of income.
exempt input tax Input tax incurred on goods and services purchased which are wholly
used, or to be used, in making exempt supplies. After the method has
been applied, this value will include the exempt element of residual
input tax identified by the partial exemption method.
exempt investment fund Collective fund that is exempt from certain tax provisions. Such funds
are usually either charities or pension funds.
exemption For VAT, a supply on which no VAT is charged but for which the
trader may not claim input tax.
It should be noted that some EU directives use the term
“exemption” for what the UK calls zero-rating.
exemption clause Clause in a contract which seeks to exempt one party from a liability in
certain events. Such a clause is only effective if:
● it is an express clause of the contract;
● properly construed, it covers the liability in question; and
● there is no legal bar to enforcing such a clause.
A legal bar may arise from specific legislation (eg Sale of Goods Act
1979 or Unfair Contract Terms Act 1977) or under common law, such
as when there has been a complete failure by one party to perform his
obligations.
exemption from registration

The waiver of the requirement to register on request if all, or most, of
the applicant's taxable supplies are zero-rated.
exemption from registration

When a person or business is exempted from a requirement to register
which would otherwise apply. The term is particularly used for VAT
and applies to businesses with a turnover above the registration
threshold but where all the supplies are either exempt or zero-rated.
HMRC will also a business to be exempted if it makes some standard-
rated supplies but the input tax claimable is more than the output tax
chargeable.
exempt lifetime transfer Transfer of property made during the lifetime of a person which does
not form part of their estate on death. Examples include transfers of up
to £3,000 a year, and gifts in consideration of marriage.
exempt lottery Lottery which is exempt from the licensing requirements. The
conditions for such a lottery are set out in Gambling Act 2005 Sch 11
and supporting regulations.
exempt persons Importers who are not registered for VAT or registered taxable persons
who are reimporting goods other than in the course of their business.
exempt schedule Value Added Tax Act 1994 Schedule 9. This lists 13 Groups of supply
which are exempt from VAT:
1 Land 8 Burial and cremation
2 Insurance 9 Trade unions and professional bodies
3 Postal services 10 Sports competitions
4 Betting, gaming etc 11 Works of art etc
5 Finance 12 Charity fund-raising events
6 Education 13 Cultural services
7 Health and welfare
The exact scope of each Group must be carefully considered before
exempting a supply. Many supplies which may come within these
general headings are not exempt.
exempt subsidiary undertaking

A company or other trading body which is at least 90% owned by
another. Transactions between those two bodies need not be disclosed

as a related party disclosure in the accounts (FRS 8 para 12).
exempt supplies Supplies made by a business which are listed in Schedule 9 of the VAT
Act 1994. VAT incurred in making exempt supplies is non-recoverable,
subject to the de minimis test.
exempt supply A supply for which no tax is payable and in respect of which Input tax
cannot be claimed.
exequatur Latin: he may perform (or exercise).

Term of a permission, particularly by a government in which a
diplomat of another country works.
exercise (1) Use a right, such as taking up the shares in an option.

(2) Dummy run of a procedure to see how well it works.
exercise date Date when an option may be taken up.
exercise of option “When the option-holder uses the rights under the option to buy shares
at the option exercise price” (Inspectors’ Manual at BIM 44001).
exercise of significant influence

Expression used in FRS 6 when an investor influences policy decisions
of the company in which he has invested.
exercise price Price at which an option may be taken up.

In relation to capital gains tax on options, the term is defined in
Taxation of Chargeable Gains Act 1992 s144ZA and in subsequent
sections.
Ex G (Drawback) Regs Excise Goods (Drawback) Regulations 1995.
ex gratia Latin: as of favour.

The term is used in such contexts as a payment made without
admitting any legal liability to make it.
ex gratia payment Payment which a person or business is not legally obliged to pay but
does so from a sense of moral obligation. Such payments must be
disclosed in the annual report.
exhibits Collectors' pieces and works of art of an educational, scientific or

cultural character.
ex hypothesi Latin: from the hypothesis, according to what is supposed.
existence, ownership and valuation (EOV)

The three traditional tests for an auditor checking assets on a balance
sheet.
existing award In social security, a means-tested benefit for which a claim has already
established entitlement. Such an award usually enjoys a limited amount
of transitional protection when the rules for the benefit are changed.
existing director In company law, “a person who is a director of the company

immediately before [the accounts] meeting” (Companies Act 2006
s439(6)). All such directors have a duty to ensure that resolutions about
directors’ remuneration are put to shareholders at the accounts meeting.
existing goods Goods for sale currently in the ownership or possession of the seller,
unlike future goods which have yet to be acquired (Sale of Goods Act
1979 s5(1)).
exit arrangement How a person plans to leave a scheme or end an investment

arrangement. An exit arrangement designed to sidestep tax
consequences is one of the hallmarks of a tax planning scheme of
which taxpayers are advised to be wary.
exit charge Any fee payable when someone leaves an arrangement. In particular,
the term applies to:
• VAT paid by the representative member of a VAT group when a
company leaves the group;
• charge made by a trust when selling units in a unit trust;
• inheritance tax charge imposed on a discretionary trust, but not
on an accumulation and maintenance trust.
exit value A method of valuing assets and liabilities based on selling prices, as an
alternative to historical cost.
ex malefico non oritur contractus

Latin: a contract cannot arise out of an illegal act.
ex mero motu Latin: of one’s free will.
ex natura rei Latin: from the nature of the case.
ex nudo pacto non oritur actio

Latin: no action arises from a nude contract.
This simply means that a contract cannot be enforced when there is
no consideration.
ex officio Latin: by virtue of his office.

The term is widely used when someone becomes a member of one
body by nature of being a member of another body or of holding a
particular office.
exor Abbreviation of executor.
exotic meat Term used in VAT notice 701/14 for the less common sources of meat
for human consumption. These include the meat of horses, crocodiles
and kangaroos. If prepared for human consumption, the meat may be
zero-rated even though a supply of the living animal is not.
expand Grow larger, particularly in relation to size of organisations.
expansionary fiscal policy

Government tax policy which is designed to expand the economy.
expansionary monetary policy

Government monetary policy which is designed to expand the
economy.
ex parte Latin: for the party.

The term is used for a legal action brought on behalf of another
party or in the absence of that party.
expat Common colloquialism for an expatriate.
expatriate Person from the UK living overseas permanently.

Such a person may escape a liability to UK income tax if non-
resident for a year under Income Tax Act 2007 s828A or 828B,
provided the various conditions are met.
From June 2010, expatrate employees must complete form
P46(expat) on arrival in the new country. This replaced form P85.
Expatriate Forum Group comprising representatives of larger taxpayers and HMRC that
meets to discuss issues relating to taxation of expatriates.
expectation of life In insurance and pensions, the period of time which a person is
expected to remain living.
expectations-augmented Phillips Curve

Economic theory developed by Milton Friedman to try to explain the
breakdown of the Phillips Curve in the 1970s.
The main change is that he included people’s price expectations. He
said there would be a number of short-run Phillips Curves - one for
each level of price-expectations. However, in the long-run there would
be no trade-off between unemployment and inflation and any attempt to
reduce unemployment to below its natural rate would simply be
inflationary.
expected birth Date a baby is expected to be born. This is usually stated by a doctor or
midwife on a form MAT-B1.
For some statutory maternity pay purposes, this date is used to
determine entitlement, rather than the actual birth.
expected rate of return In pensions, the rate of return expected over the remaining period that a
pension is payable.
expected strength For beer duty, the alcoholic content of beer that continues to ferment
after the duty point (Customs notice 226). Duty is calculated according
to expected strength.
expected value Future value of actions. Such a value is usually calculated using
probabilities and discounted cashflow.
expected week of childbirth (EWC)

Week, starting on a Sunday, in which a child is expected to be born to
an employee. The EWC determines when the maternity pay period
may start and when the qualifying week is. These are needed to
determine entitlement to statutory maternity pay.
Before 1996, EWC denoted expected week of confinement, which
had the same meaning.
expendable endowment Rare form of endowment where the capital may be spent as well as the
interest.
expenditure grant Sum paid by central government to a local authority in respect of

expenditure by the latter (Local Government Act 2003 s31).
expenditure Amount of money spend by a person or business over a defined period.
expense Cost of a business which relates to being in business rather than to the
cost of the products or services supplied.
expense account (1) Allowance provided to a person to cover their incidental expenses,
such as when an employer provides funds for a sales employee.
(2) In USA, the term also means a memorandum account to keep a
record of all employee costs, including salary.
expense allowance An allowance paid to a worker to cover expenses.

Such an arrangement is legal.
Such payment does not count towards the national minimum wage.
In general an expense allowance is taxed as gross earnings unless
covered by a dispensation or similar arrangement. The employee may
be able to claim tax relief for the expenses.
expense claim Details of expenses provided by an employee to his employer for

payment.
expense ratio The ratio of an insurance company’s operating expenses to its

premiums.
expenses Amounts spent on incurring liabilities, particularly those incurred by an

employee doing his job.
expensive accommodation
Accommodation which cost more than £75,000.
If an employee is provided with such accommodation, the employee
may be liable to pay income tax on the additional yearly rent.
experience rating In insurance, process of determining the premium rate for a group risk,
wholly or partially on the basis of that group's claims experience to
date.
experimental brewing Brewing “solely for the purposes of research or experiments in the
production of beer” (Customs notice 226). This requires notification to
Customs, but does not require registration or payment of beer duty.
experimental design Statistical sampling method which seeks to reduce the number of
independent variables to as few as possible, preferably to one, to make
measurement of the dependent variable as relevant as possible.
experimental group Group of people used for experimental design. They are often
compared with a control group.
experimental psychology Branch of behavioural and cognitive psychology which uses

experimental methods to study relation to stimulus and response.
experimental realism In psychology, extent to which participants in an experiment believe it

to be real.
expert Person who has recognised skill and knowledge in an area.

For social security, the term “means a person appearing to the
Secretary of State to have knowledge or experience which would be
relevant in determining the question of fact requiring special expertise”
(Social Security Act 1998 s11(3) and Social Security Contributions
(Transfer of Functions, Etc.) Act 1999 s9(3)).
experto credo Latin: believe one who has experience.
expert system Software which applies an expert’s knowledge in a particular area to

assist in resolving problems.
expert witness Skilled witness called to assist the court in a specialist area. The use of
expert witnesses is governed by the Civil Rules Procedure 1998, Part
35.
expiration Process or date when something expires.
expire Come to a predetermined end, such as when a lease finishes.
expiscate Scots law: find out by skilful means or strict examination.
exploration or exploitation activities

For tax “means activities carried on in connection with the exploration
or exploitation of so much of the seabed and subsoil and their natural
resources as is situated in the United Kingdom or a designated area”
(Income Tax (Earnings and Pensions) Act 2003 s41(2) and Finance Act
1973 s38(2)(a)).
exploration or exploitation asset

For capital gains tax, means “an asset used in connection with
exploration or exploitation activities carried on in the United Kingdom
or a designated area” (Taxation of Chargeable Gains Act 1992 s25(6)).
exploration or exploitation rights

For tax, “means rights to assets to be produced by exploration or
exploitation activities in or to the benefits of such assets” (Finance Act
1973 s38(2)(b)).
explosives Customs may seize any explosives brought into the country.
export Process of sending goods to another country.

Since the Single Market, export means sending goods to a country
outside the European Union. Goods moved to another member state
within the EU are said to be “removed”. The zero-rating of exports and
removals is in Value Added Tax Act 1994 ss30.
For goods to qualify as zero-rated for VAT as exports or removals,
they must leave the UK for a non-UK customer. This includes a
business sending goods to its own overseas branch. Such a supply must
be supported by an invoice.
There must be evidence that the goods have been exported or
removed. The evidence is set out in VAT Regulations SI 1995 No 2518
regs 128-155. Further information is given in VAT notices 703 (export)
and 725 (single market). There have been several cases on the adequacy
of export evidence. The Teleos case established that a supplier should
not be unduly penalised for relying on seemingly legitimate proof of
export that was later proved to be false. The implications of this case
were set out by HMRC in Brief 61/07.
Although both exports and removals are zero-rated, the systems of
zero-rating are different.
For removals to another EU state, the invoice must show the
customer’s VAT number in the member state. This invoice number has
a suffix of two letters denoting the country.
exportation Act of sending goods outside the EU.
export clearance Facilities which allow goods to be exported.

In practice, this only applies to special bilateral arrangements which
allow English authorities to clear being sent through the Channel
Tunnel.
export controls “In relation to any goods, the prohibition or regulation of their
exportation from the United Kingdom or their shipment as stores”
(Export Control Act 2002 s1(2)).
Export Credit Guarantee Department (ECGD)

British government department which provides insurance to businesses
exporting goods against the risk of non-payment.
export department Part of a company which deals with sending goods overseas.
export house Company which specialises in arranging export of goods.
Export Reception List For Customs purposes, a sequentially numbered computer produced list
containing specified details of all export consignments which have been
received and for which details have been recorded on the computer
since the production of the previous list.
export refund A payment made to exporters under Common Agricultural Policy

(CAP) provisions on the export to non-European Union countries of
certain goods originating in the European Union (EU), or in free
circulation, where EU prices are above world prices.
export shop An excise warehouse approved for the supply of excise goods to
entitled passengers without payment of excise duty.
export taxes Customs duty imposed from 1275 to dates in 19th century on wool and
leather exported from London and 13 other ports. It was levied at so
much per sack. It was known as the great custom. Strictly speaking
customs duties can still be imposed on exports, though they are not.
exported tobacco products

Tobacco products which are manufactured in the UK and are exported
to another EU Member State or to a third country, either directly or
indirectly.
exporter For customs purposes, this is considered to be the person on whose

behalf the export declaration is made and who is the owner of the
goods, or has a similar right of disposal over them at the time the
declaration is accepted. Where the ownership, or a similar right of
disposal over the goods, belongs to a person established outside the EU
pursuant to the contract on which the export is based, the exporter is
considered to be the contracting party established in the EU.
A statutory definition is “in relation to goods for exportation or for
use as stores, includes the shipper of the goods and any person
performing in relation to an aircraft functions corresponding with those
of a shipper” (Customs and Excise Management Act 1979 s1(1)).
ex post After the event; the opposite of ex ante.

The term is often used to describe a budget prepared after the
budgeted activity has finished.
ex post facto Latin: by a subsequent act. In other words, retrospectively.
exposure (1) Publicity given to a person or business.

(2) Disclosure of sensitive information.
exposure draft (ED) Draft of an accounting standard.
express money transfer A foreign currency payment to an individual or organisation delivered

electronically to a bank. It takes around 2-5 days, depending on the
currency and destination.
express term Term stated in the contract, as against an implied term.
express trust Trust that is specifically created by the settler, as against constructive
trusts, resulting trusts and implied trusts.
An express trust must have three certainties:
• certainty of words and intention
• certainty of subject matter; and
• certainty of beneficiaries.
express waiver “When the holder of a bill [of exchange] at or after its maturity
absolutely and unconditionally renounces his right against the acceptor”
(Bills of Exchange Act 1882 s62(1)). In such a case, the bill is regarded
as being discharged.
expropriation Compulsory taking of land by public authority.
ex propriis Latin: from one’s own resources.
ex proprio motu Latin: of his own accord.
ex quocunque capite Latin: from whatever source.
ex relatione Latin: from a narrative or information.

The term refers to evidence which is not first-hand, such as from a
report written by another.
ex rights When a share is offered for sale without the rights which attach to the
share.
ex-spouse An individual to whom pension credit rights have been or are to be

allocated following a pension sharing order, agreement or equivalent
provision.
extend Prolong a period, such as allowing further time for something to

happen.
extended credit Allowing a customer a longer time to pay.
extended period
extended warranty Insurance policy sold with goods to extend the guarantee. This is
usually subject to insurance premium tax at the higher rate.
extension (1) Anything which has been extended, such as a warranty period or
credit terms.
(2) Addition to an existing building.
(3) Number of a telephone connected to a central switchboard.
extension lead Electrical cable with a plug at one end and equivalent socket at the
other which may be used to extend the length of an existing cable.
extension period Any additional period allowed for a particular purpose. An example is
Income Tax Act 2007 s318(3) in relation to a VCT-in-liquidation.
extension period For child benefit, a period after a qualifying young person has finished
full-time education or training and has yet to start full-time work (at
least 24 hours a week). Benefit is paid for this period up to 20 weeks.
external account Account held by a British bank for someone living outside the UK.
external audit Audit conducted by an outside firm, as against an internal audit which
is conducted by the organisation’s own staff.
external auditor Person who is not an employee of an organisation whose services are
engaged to audit the accounts.
external benefits Economic term for benefits which accrue to people outside an
organisation by the actions of that organisation.
external border The national frontiers between the EU and non-EU countries.
external costs Economic term for detriments suffered by people outside an

organisation as a consequence of the actions of that organisation.
external debt Money which a business or government has borrowed from outside its
members or citizens.
external funds Another term for external debt.
external growth Growth by buying other businesses, rather than by organic growth.
external hard disk Hard disk of a computer which is designed to be removed from that
computer so it can be used on other computers.
external investigation Investigation by an overseas body into whether someone has obtained
property by criminal activity (Proceeds of Crime Act 2002 s447(3)).
external liabilities Money owed to people outside the organisation.
external lottery manager

Person who runs a lottery for an organisation for which he is not a
member, officer or employee (Gambling Act 2005 s257).
external reporting Reporting financial information to those users with a valid claim to
receive it, but who are not allowed access to the day-to-day records of
the business.
external request Request made by an overseas body under Proceeds of Crime Act 2002.
(ibid s447(1)).
external trade Trade with foreign countries.
external transit One of the transit procedures which Customs may apply to goods
presented on importation.
External transit allows the goods to move freely within the EU
without being subject to any duties or Customs formalities until the
goods reach their final destination.
external users Users of financial statements who have a valid interest but are not
permitted access to the day-to-day records of the company.
extinction of debt When a sum is regarded as no longer owed.

In accounting, this arises when payment is made, the debt is
credited (such as on returned goods), the debt is written off or the debt
is offset against a sum owed to the debtor.
In tax, the term is particularly used for a debt for customs duty for
which there are additional forms of extinction, such as reclassification
of goods, and destruction of goods.
extinguishment Ending of a debt other than by payment.
extortion Payment of extortion is not a deductible expense as it is a criminal

payment.
ExTRA Export/Transit Project.
extract A supplementary license or certificate issued by a competent authority

for part of the quantity authorised by an existing license or certificate.
extraction rates Amount of usable crop which is produced from the weight of material
harvested. For some crops this is more commonly known as the yield.
extraordinary item Most unusual non-trading transaction.
extraordinary rendition Process of sending a suspect for interrogation in another country where
the regime for protecting them is much less.
extraordinary resolution Resolution which requires a vote of at least 75%.
extra-statutory concession (ESC)

A relaxation from the strict interpretation of a tax law.
An ESC is issued by HMRC under their general authority to
manage taxes. HMRC will allow an ESC unless it is being used for tax
avoidance.
extreme unction Anointing with oil of a person believed to be on the point of death.
It is a sacrament in the Roman Catholic church, based on James
5:14 in the Bible.
ex turpi causa non oritur actio

Latin: an action does not arise from a base cause.
ex ungue leonem Latin: judge the lion from its claws.
eye-picking Colloquialism for the practice of early settlers to choose the best pieces
of land first, particularly in Australia.
eye test An employer may be required to provide free eye tests for employees
that routinely use a computer screen.
With effect from 6 April 2006, such a test is not a taxable benefit
(Income Tax (Earnings and Pensions) Act 2003 s320A).
Eyre Travelling judge from 12th to 14th centuries.
EZ Enterprise zone.
EZA Enterprise zone allowance.
E-zine Electronic magazine.
EZPUT Enterprise zone property unit trust.
F
f Factor that may be used to calculate alcoholic strength for beer duty.
The table is contained in Customs notice 226.
F (1) For council tax, the sixth band of property values, for these
property values:
A band F property is subject to council tax at 13/9 of the rate for an
(2) National insurance contribution letter for an employee who is a
member of a contracted-out money purchase scheme. This letter will
become otiose from April 2012.
(3) Federal Reporter, series of US law reports.
(4) Fraser, series of Scottish law reports issued from 1898 to 1906.
faber est quisque fortunae suae

Latin: every man is the fashioner of his own fortunes.
Fabian tactics Delaying tactics and masterly inaction as a means of winning a battle.
The term comes from Quintus Fabius Maximus (?-203 BC). The term
also applied to US president George Washington (1732-1799).
FABs Flavoured alcoholic beverages, more commonly known as alco-pops.
face amount Another term for face value.
face value Value of a bond, security, note, coin or other item as stated on the item.
The term is used when the item may attract another value, as in a
security or a collectable coin.
facile princeps Latin: first principles.
facility In banking, limit on how much may be borrowed, such as on a credit

card or overdraft.
facility fee Charge made by a bank to a customer for providing an overdraft

facility.
facility sustaining Description of an activity which relates to the organisation as a whole

and cannot be readily identified with any particular department or
activity of that organisation.
facta, non verba Latin: deeds, not words.
facto et animo Latin: deed and mind.

In tax, this term is commonly used to describe the necessary
prerequisites to establish a domicile of choice.
[The term is sometimes given as animo et facto.]
factor (1) A consideration in making a decision.

(2) In business, a business who takes on an administrative function of
an organisation, such as collecting its debts or selling its products. This
is regulated by Factors Act 1889.
(3) In maths, a prime number which can be divided into another
number. The factors of 30 are 2, 3 and 5.
factorage Commission paid to a factor.
factoring Process of selling debts at a discount to improve cashflow and save the
cost of debt collecting.
factors of production The factors of production are the resources that are necessary for
production. They are usually classified into 4 different groups:
• land - all natural resources (minerals and other raw materials)
• labour - all human resources
• capital - all man-made aids to production (machinery, equipment
and so on)
• enterprise - entrepreneurial ability
The rate of economic growth that an economy can manage will be
affected by the quantity and the quality of the factors of production it
has.
factory Strictly, a place where items are manufactured, though now the term
applies to any place of manual work, including assembly. It is an
abbreviation of manufactory.
Before 1850, the word meant a textile mill.
A factory is specifically included in the definition of industrial
building.
factory gate price Actual cost of manufacturing goods before profit is added.
factory overhead Production overhead, such as the cost of heating a factory.
factotum Person who does all sorts of work for an employer. The term comes
from the Latin facere totum which means to do everything required.
fact sheet Series of documents produced by HMRC. There are about a dozen, all
prefixed FS. Each one explains an aspect of HMRC’s policy in dealing
with taxpayers.
factum est Latin: it is done.
facultative reinsurance A type of reinsurance in which the reinsurer can accept or reject any
risk presented by an insurance company seeking reinsurance.
Faculty of Advocates Scottish body which appoints advocates, the Scottish equivalent to
barristers.
FAE Final Admitting Exam, of a professional body.
FAFTS Financing-Arrangement-Funded Transfers to Shareholders (UK life

assurance). The term is used in Income and Corporation Taxes Act
1988 s444AE.
FAIFA Fiscal Assurance in the Freight Area.
failed PET A potentially exempt transfer that did not exempt a gift from
inheritance tax, usually because the transferor died within seven years
of making the transfer.
fail to scan Provision in an EPOS system when a barcode fails to scan properly.
The system is overridden by the checkout operator typing in the code.
Such a provision is a condition for being able to use EPOS systems for
determining the store’s VAT liability.
failing to disclose information

In law, there is no general duty to disclose information except in
defined circumstances, such as when required by a court or a tax return.
In contract, there are some uberramei fidei contracts, such as
insurance, where a person must disclose relevant information.
Otherwise there is no duty to disclose in contract.
For fraud, “a person is [guilty of fraud by failing to disclose] if he:
(a) dishonestly fails to disclose to another person information
which he is under a legal duty to disclose, and

(b) intends, by failing to disclose the information:
(i) to make a gain for himself or another, or
(ii) to cause loss to another or to expose another to a risk of
loss” (Fraud Act 2006 s3).
failure to make return A failure to make a tax return is a specific offence under tax law. For
income tax and corporation tax, the offence is contained in Taxes
Management Act 1970 s93.
fair (1) Just, equitable.

(2) An amusement comprising stalls and sideshows. Originally the term
meant a market on the day of a Christian festival.
fair dealing Legal buying and selling of shares.
fair estimate agreement Basis which was used before 1 October 2004 to ensure that the national
minimum wage (NMW) was paid for output work. It is now replaced
by the system of rated output work.
fair fuel stabiliser Policy of adjusting the duty charged on road fuel in inverse ratio to its
price as a means of evening out price fluctuations (June 2010 Red Book
para 1.121 and 2.100).
Fair Labor Standards Act (FLSA)

US law passed by Congress in 1938. It sets basic standards of
employment in USA such as a minimum age and overtime pay. The Act
applies to most private and public sector employment though some
employees are exempt.
fair market value (FMV) Price at which a transaction will be completed if made:
• by a willing buyer and a willing seller
• in an arm’s length transaction
• where each has reasonable knowledge of the relevant facts.
For most accounting and tax purposes, FMV is not used in preference to
historic cost. There are some exceptions for tax avoidance schemes.
fair price Price which is acceptable to both buyer and seller.
fair trade System of selling goods from overseas where arrangements have been
made to ensure that the original producers are fairly remunerated for
their efforts and are not exploited.
fair value (1) “The amount at which an asset or liability could be exchanged in an
armed length’s transaction between informed and willing parties, other
than in a forced or liquidation sale” (FRS 7 para 2).
(2) The theoretical price at which a futures contract should trade to be
equivalent to the purchase price of the underlying instrument.
fair value In relation to taxation of insurance companies, “means the amount

which would be obtained from an independent person purchasing them
or, if the assets are money, its amount” (Income and Corporation Taxes
Act 1988 s431(2)).
fair wear and tear The normal and acceptable small amounts of damage which an item
receives from its proper use. In general, no claim may be made against
someone for fair wear and tear.
fait Latin: deed.
fait accompli French: accomplished act.

Something that has already happened or been decided and where
further discussion serves no purpose.
faithful representation In accounting, one of the five qualities required for accounts to have
reliability. This in turn is one of the four requirements for accounting
Faithful representation broadly requires financial statements to
portray transactions in a way that reflects the commercial effect. This
underpins such principles as substance over form.
fake Indian currency note (FICN)

Illegal currency that was widely used in India soon after independence.
fall American term for autumn.
fallacy In logic and rhetoric, incorrect reasoning in an argument.

The commonest examples are appeals to emotion or taking
advantage of social status or position.
fallacy of accident Coming to a false conclusion by failing to allow for exceptions. There
is also a converse fallacy of accident.
fallback position Tax provision that applies when the usual tax provision cannot be used.
An example relates to paying VAT on acquisitions from another
EU member state. The normal provision is that the UK acquirer pays
the tax. Should that not be possible, there is a fallback position that
allows VAT to be charged in the state of supply.
fallen angels Colloquialism for investments that once performed well but have since
declined in value.
[The term originally meant angels excluded from heaven. It later meant
women who fell from virtue.]
fall in value relief Relief from inheritance tax where assets lose value after being
inherited. Within time limits the reduced value may be substituted for
the inherited value under Inheritance Tax Act 1984 ss179 and 191.
The time limit is four years for land (three years for deaths before
16 March 1990), and one year for quoted securities and other qualifying
investments.
fallopia japonica Latin name for Japanese knotweed for which there is a special landfill
tax provision.
false In fraud, a representation is false if “it is untrue or misleading, and the

person making it knows that it is, or might be, untrue or misleading”
(Fraud Act 2006 s2(2)).
false accounting Criminal offence of deliberately keeping wrong records.

It is a criminal offence under Theft Act 1968 ss17-20. There are
equivalent offences in company law.
false information In relation to an identity document, means “information containing any

inaccuracy or omission that results in a tendency to mislead” (Identity
Documents Act 2010 s9(4)(a)).
false representation This is an element of one of three types of fraud. A person commits this
offence if he “dishonestly makes a false representation to make a gain
for himself or another, or to cause a loss to another or to expose another
to a risk of loss” (Fraud Act 2006 s2(1)).
A representation is false if “it is untrue or misleading, and the
person making it knows that it is, or might be, untrue or misleading”
(ibid s2(2)).
Representation means “any representation as to fact or law,
including a representation as to the state of mind of:
(a) the person making the representation, or
(b) any other person”. (ibid s2(3)).
The representation may be express or implied (ibid s2(4)).
false statement Statement where someone states something as being true when he
knows, or should know, that it is untrue.
It is a criminal offence for a director to make a false statement in the
directors’ report, directors’ remuneration report or summary financial
statement (Companies Act 2006 s463(1)).
Fam Family Division. This is part of the citation of a report of a court case
heard in this division of the High Court.
It is also the citation for a series of law reports for this division from
1972.
family For national insurance and social security purposes, “means —

(a) a couple;
(b) a couple and a member of the same household for whom
one of them is or both of them are responsible and who is a child or a
person of prescribed circumstances;
(c) except in prescribed circumstances, a person who is not a
member of a couple and a member of the same household for whom
that person is responsible and who is a child or person of a prescribed
description” (Social Security Contributions and Benefits Act 1992
s137(1)).
family allowance clawback

Before 6 April 1979, amount of tax allowances which could be reduced
by an amount in respect of the amount of family allowance received.
Family and Medical Leave Act (FMLA)

US law which requires many employers to provide up to 12 weeks of
unpaid leave to US employees within a 12-month period.
family borrowing Borrowing from a relative or friend on non-commercial terms.
family business Business which is largely controlled by more than one member of the
same family.
family company Company where members of one family have significant shareholdings.
family entertainment centre

“Premises (other than an adult gaming centre) wholly or mainly used
for making gaming machines available for use” (Gambling Act 2005
s238).
family entertainment centre gaming machine permit

Permit allowing a Category D gaming machine to be used at a family
entertainment centre (Gambling Act 2005 s247).
family entertainment centre premises licence

Licence issued by a local authority which allows the holder to operate
Category C and Category D machines (Gambling Act 2005 s172(2)).
family foundation In USA, a private foundation created to make charitable contributions

on behalf of a particular family. The board is often limited to family
members.
family income policy A form of term insurance. If the death of the insured occurs during the
term an income will be paid from the date of death to the end of the
term.
family investment company (FIC)

A company (limited or unlimited) that makes investments for a family
or other group of individuals. The shareholders’ agreement reflects the
wishes of its members. Typically each family member is given his or
her own category of share.
It is an alternative to a discretionary trust. It avoids lifetime
inheritance tax when funds are placed in the company, and allows
retained profits to be taxed at corporation tax rates (which are often
lower than income tax).
Its main disadvantage is that the profits attract corporation tax when
earned and capital gains tax when realised by the family member. The
aggregate of these taxes can exceed the income tax otherwise payable.
The FIC can be effective depending on the nature of investments,
family maintenance Usual terms for the arrangements set out in Inheritance Tax Act 1984
s11. Payments of maintenance are excluded from the scope of taxable
dispositions.
Family maintenance broadly comprises payments to maintain a
former spouse or civil partner, payments to maintain or educate a child,
or payments to look after a dependent relative.
Family Procedure Rules Rules introduced for the Family Court from 3 April 2006 under Courts
Act 2003 s75.
family work Work done for another member of the household.

There are two special provisions for family work.
There are some exemptions which allow young people to work in a
family shop or family farm when they would not be allowed so to work
for someone else.
In certain circumstances, family work is outside the scope of the
national minimum wage.
famosus libellus Latin: scandalous libel.
Fannie Mae The popular name for the Federal National Mortgage Association
(FNMA).
This American body was set up by the US government during the
Depression in 1938. It became a stockholder-owned corporation in
1968. Its main purpose was to securitise mortgages and similar loans to
maintain a steady supply of cash for home loans.
Fannie Mae, with Freddie Mac, were in effect renationalised on 7
September 2008. At that time, the two bodies owned or guaranteed
about half the USA’s $12 trillion mortgage market.
fantasy league Competition in which participants nominate an ideal sports team or

similar. If they pay a stake and can win a prize, the competition may be
subject to pool betting duty.
FAQ Frequently Asked Questions.
fare Charge for travelling on a vehicle. The word originally meant the
journey itself.
farm gang Group of people put together by a gangmaster to provide a collective

service of harvesting to a farmer. It is still a common practice, but now
subject to strict controls to prevent exploitation and other abuses.
farrowing crate Metal cage in which sows can give birth. This qualifies as plant and
machinery (at the higher rate) in the pig industry when used in
connection with a slurry system (HMRC Brief 03/2010 issued on 23
February 2010).
farthing Quarter of an old penny, so there were 960 farthings to the pound.
The coin was made in silver from 1279 to 1553, and in copper or
bronze from 1613 to 1956, apart from some farthings made in tin
FAS Flexible Accounting System.
FASB Financial Accounting Standards Board
facsimile copy Another term for a fax.
fast-growing company A company which grows quickly encounters many practical problems,
such as ensuring its infrastructure remains adequate without becoming
excessive. It can also have serious cashflow problems unless it is cash-
positive.
This term is also used in connection with venture capital trusts.
From 16 June 1999, the strict investment criteria is relaxed for such
companies in two respects:
● when shares in one company are exchanged in shares for
another as a preliminary to a stock market flotation; and
● on exercising conversion rights.
FAT Financial activity tax.
FATF blacklist Financial Action Task Force of Non-Cooperative Countries or

Territories (NCCT).
fat finger Colloquial term for a serious typing error in a computer system.
The term was coined in connection with an incident on the Tokyo
Stock Exchange on 8 December 2005. A woman mistakenly sold
610,000 shares in J-Com for one yen, instead of selling one share for
610,000 yen.
The company Mizuho was forced to buy back the shares for 40.7
billion yen, leading to the cancellation of all annual bonuses and the
resignation of the president and managing director. It also led to the
first lawsuit against the Tokyo Stock Exchange.
fat tax Colloquialism for a proposed tax on foods considered unhealthy, such
as burgers and chips. See also FAT.
faute de mieux French: for want of something better.
favourable Description of a departure from a budgeted or forecast figure which is

to the financial advantage of the business.
favourable trade balance Situation where a country exports a greater value of goods and services
than it imports.
favourable variance Variance which is to the advantage of the business.
fax Document which is electronically transmitted by a telephone line using

a fax machine.
The word is an abbreviation of “facsimile”.
fax machine Machine which allows documents to be transmitted down a telephone

line provided both sender and receiver have such a machine.
Fax Service Replacement In tax, a written document which confirms the appointment of an agent
which has been provisionally agreed as a matter of urgency by sending
a fax to HMRC.
FB Foreign body. Common abbreviation for sick notes (HMRC leaflet

E14).
FCA Fellow of the Institute of Chartered Accountants in England and Wales.
FCBA Foreign currency bank account
FCCA Fellow of the Association of Chartered Certified Accountants.
FCIE Fellow of the Association of Charity Independent Examiners.
FCO Foreign and Commonwealth Office - UK Government department.
FCP Fonds Commun de Placement, a Luxembourg fund structure.
FCR (1) Family Court Reports, a series of law reports published from 1987.
(2) Federal Court Reports, a series of US law reports.
FCU File Checking Unit (in police)
FDC Fleur de coin, highest state of a collectable coin.
FDIC Federal Deposit Insurance Corporation.
FE Further education.
feal and divot In Scotland, the right to cut turf or peat.
federal Description of a system of governance where organisations or states are

independent but where some functions are administered centrally.
The USA is a federal government. In the USA, the term means
referring to national government rather than state government.
Federal Deposit Insurance Corporation (FDIC)

American body that acts as guarantor for funds deposited in members’
banks.
Federal Funds Deposits by commercial banks with the Federal Reserve Fund of the
USA.
Federal Home Loan Mortgage Corporation (FHLMC)

American body more commonly known as Freddie Mac.
Federal National Mortgage Association (FNMA)

American body more commonly known as Fannie Mae.
Federal Reserve Board American federal body which controls the money supply, discount rate
and issue of government bonds in the USA.
federal sales tax US tax charged by the federal government on certain sales. It was
introduced in 2010 at the rate of 10% for indoor tanning services.
federated fund drive A centralised campaign in the USA whereby one organisation raises
money for its member agencies. The United Way campaign and the
Community Works are examples.
federated trade union “A trade union which consists wholly or mainly of constituent or
affiliated organisations, or representatives of such organisations”
described as trade unions (Trade Union and Labour Relations
(Consolidation) Act 1992 s118).
federation An organisation to which other organisations can belong. A federation

is typically a mutual interest and support organisation.
fed funds rate Rate charged by banks for lending money deposited with the Federal
Reserve Board to other banks.
Fed Funds Abbreviation of Federal Funds.
fee Charge made for providing a specific service.
feeder fund Fund that invests only in other funds.
feed-in tariff Amount paid for microgeneration of electricity, such as when business
or residential premises sell on surplus electricity produced from solar
panels or wind turbines.
fee-farm Tenure where land is held in fee simple.
feel of the paper One of the Bank of England’s recommended methods for checking
whether a bank note is forged. Bank notes are printed on a special paper
produced by a secret process that gives it a unique feel.
fee-penny Old term for a fine for being late with a payment.
FEES Fees manual produced by the Financial Services Authority.
fee simple Holding land in one’s own name, free from conditions or limitation.
fee-tail Estate limited to a person and his heirs. It was abolished by Law of
Property Act 1925.
fee wall Limit of what work is covered by a contract.

This term is particularly used in the software industry when
additional specification is provided by a customer. It must be agreed

which side of the fee wall such falls, as this determines whether the
customer must make an additional payment.
fee work Work done for which a fee is paid.
feints Impure spirits that arise at the start and end of distillation of spirits.
“Spirits conveyed into a feints receiver” (Customs notice 39).
Normally feints are carried forward from one manufacturing period
to another. If the distiller wishes to dispose of them, the procedure in
Customs notice 39 must be followed.
[Although the word is spelled with an E in Customs’ literature, it may
be spelled as “faints”.]
fellow In a professional or academic body, a person who holds a senior

qualification, above associates, licentiates and affiliates.
female servant tax Excise duty charged between 1785 and 1792. This complemented the
male servant tax introduced in 1777.
feme-covert Married woman, a legal term derived from Old French.
fen One hundredth of a yuan, currency of China.
fence Person who trades in stolen goods. The activity is illegal (Theft Act
1968) but taxable (Partridge v Mallandine [1886] 2TC179). The matter
is discussed in the Inspectors’ Manual at BIM22010.
feodum Latin: fee.
ferae naturae Latin: of savage nature. Legal term to describe animals that are wild
rather than domesticated.
fermentation Biochemical process of turning carbohydrates into alcohol. This is used

to create beer, cider and wine. Such products then attract excise duty
and other taxes.
festina lente Latin: make haste slowly.
feudal taxes Early taxes that were charged from about 200AD to the 11th century,
often arbitrarily.
They were complemented with Saxon levies, Norman dues and
payments to the church. They were largely replaced from the Conquest
of 1066. The king extracted a share of the feudal taxes.
ff Following. This is commonly used for page numbers, so page 47ff

means pages from page 47.
f&f Fixtures and fittings.
FHL Furnished holiday lettings.
FHLMC Federal Home Loan Mortgage Corporation, more commonly known

as Freddie Mac.
FI Country prefix code for Finland.
fiacre French style of cab or hackney carriage, named after the French station
from which they first operated in 1650.
fiancé Man to whom a woman is engaged to be married. The equivalent term

for a woman is fiancée.
fiat Latin: let it be done.
fiat justitia Latin: let justice be done.
fiat justitia, ruat coelum Latin: let justice be done, though the heavens fall.
fiat money Banknotes and coins which have an intrinsic value below their face
value, but which are accepted at face value because of government
support for the currency. Almost all currency is now fiat money.
The difference between the face value and intrinsic value is
seigniorage, which is a form of tax. For example a Bank of England
banknote may cost a few pence to produce but have a face value
expressed in pounds.
FICN Fake Indian currency note.
fictio legis non operatur damnum vel injuriam

Latin: a legal fiction does not work loss or injustice.
fictitious asset Debit balance which arises from a double entry from spending, but
where the debit balance does not represent the value of an asset.
Examples include deferred expenditure, such as development or
advertising costs for a product not yet available.
The term is now little used as there are strict rules which generally
require all spending to be treated as expenses in the profit and loss
account, unless it meets strict conditions which allow the spending to be
capitalised in the balance sheet. As such, the spending becomes an
intangible asset, which is a form of fixed asset.
fiddle Colloquial term for any improper financial adjustment, particularly to a

person’s advantage.
fiddler’s fare Old colloquialism for meat, drink and money.
fiddler’s money Fee paid to a fiddler at a wake, originally it was a silver penny.
Fidei Defensor Latin: Defender of the Faith. This inscription, or an abbreviation of it,
appears on many British coins.
fidelity insurance Insurance against misappropriation of a body’s funds by an officer of

that body.
fide, sed cui vide Latin: trust, but take care in whom.
fiduciary Description of a relationship based on trust.
fiduciary deposits Fund which a bank manages on behalf of its customer.
fiduciary estate Estate or similar interest in land or other assets, as against the beneficial
interest.
fiduciary relationship Relationship based on trust, such as accountant and client. There are
special rules regarding contracts. Trusts are fiduciary relationships.
field (1) General area of activity, particularly one of expertise as in “the field
of medicine”.
(2) Part of the coin between the main design and the inscription or edge.
field allowance Additional pay to officers engaged in a field of battle.
field day Very successful day. The term comes from the military where it meant
a day allocated to field exercises.
field engineer In marketing, sales person who has particular skill in the technical side
of the product and can therefore help make sales to technical buyers. A
field engineer may not have the other skills to sell to other buying
influences, such as in cost-justification and regulation compliance. In
many cases, a field engineer is a part of the sales team, but not the
whole team.
fieri facias Latin: cause to be made.

The term is applied to a writ directing a sheriff to seize goods to pay
a debt.
fieri feci Statement by a sheriff that he has been unable to seize goods as
required by a writ of fieri facias.
fi fa Abbreviation of fieri facias.
FIFO First in, first out.

In accounting, this is the usual method of stock valuation. It
assumes that the oldest item of stock is sold before identical items
purchased later.
Fifth Amendment This usually refers to the fifth amendment to the US constitution which
states that no person “shall be compelled in any criminal case to be a
witness against himself”.
fifty pence coin Coin that was introduced on 14 October 1969 as a replacement for the
ten-shilling note. It has seven curved sides. In 1997 its size was
reduced to 27mm. The larger coin was demonetised on 28 February
1998.
fifty pound note Highest value bank note issued by the Bank of England.
The current note is the Series E note first issued on 20 April 1994
and depiciting Sir John Houblon.
The previous Series D note was issued on 20 March 1981 and
withdrawn on 20 September 1996. It depicted Christopher Wren, the
architect.
Previous “white” £50 notes were withdrawn as legal tender on 31
may 1979.
Current £50 notes have a symbol of a red triangle to assist those
with poor sight.
fighting fund Some of money put aside to contest an issue.

Many promoters of tax avoidance schemes set aside a fighting fund
to pay for any legal action with HMRC.
FII Franked investment income.
FIIT Fellow of the Institute of Indirect Taxation.
filch Steal or purloin. This was originally 16th century slang from a filch,
which was a pole for picking up items from hedges or shop counters.
filial Pertaining to a son or daughter.
filing date Date by which documents must be filed. The term is particularly used
for annual reports and tax returns.
filing obligations In company law, the obligation to file accounts by a stated date. These
obligations are set out in Companies Act 2006 s445.
filing system Way of storing documents so they may be easily retrieved.
filius nullius Latin: son of nobody. In other words, a child whose father is not
known.
filius populi Latin: son of the people.
filler One hundredth of a forint, currency of Hungary.
film “Any record, however made, of a sequence of moving virtual images

that is capable of being used as a means of showing that sequence as a
moving picture” (Films Act 1985 Sch 1 para 1(1)). This definition is
relevant for tax provisions relating to films.
film partnership A trading partnership engaged in the production of films. The tax
provisions are set out in Income Tax Act 2007 s400.
final accounts The accounts produced at the end of the year and which are no longer in
draft form.
Final Admitting Exam (FAE)

The last examination required by the Institute of Chartered Accountants
in England and Wales before admitting a person as a chartered
accountant.
final and conclusive Term used in Income Tax Act 2007 s31 to describe a tax return on
which there are no queries.
final charging order Charging order which is no longer interim.
final closing date Last date for acceptance of a takeover bid. On this date, the bidder must
state how many acceptances he has from shareholders.
final demand Last notice sent to a debtor before commencing legal action.
final designation Notice issued by the Treasury to a suspected terrorist under Terrorist
Asset-Freezing etc Act 2010. It lasts for one year at a time.
final discharge Last payment of a debt.
final dividend Dividend payable on basis of the whole year’s accounts.
final earnings Amount a person is earning at the end of the career and on which is
used for a final salary scheme for pensions.
There are rules for calculating this figure, which may give a figure
different from a person’s final salary figure.
final gravity For beer duty, another name for present gravity.
final instalment of wages The last pay day of an employee.

The term is used in Employment Rights Act 1996 s22 with regards
to retail workers. Such workers may have deductions made from their
pay for a cash shortage or stock deficiency incurred while they were
working. This is limited to 10% of gross earnings except for the last pay
day.
final notice Last notice sent to a debtor before the creditor starts legal action to
recover a sum due.
final order In insolvency, a court order allowing an administration order to be

made.
final salary scheme Occupational pension scheme where the pension is based on the
employee’s “final salary”. It is also known as a defined benefit
scheme.
The amount of pension payable is a fraction of a “final salary”

figure. Such schemes often provide death in service benefit and
surviving partner pensions. The exact terms of the scheme are set out
in the scheme rules.
The fraction depends on length of service, usually calculated as one
sixtieth or eightieth per year of service. So if someone in a sixtieths
scheme retires after 20 years’ service, they will receive a pension of
20/60 of their final salary, which is one third.
From 13 March 1989, tax law allows a rate no higher than one
sixtieth for service of up to five years and these fractions thereafter:
Years service Maximum fraction
6 8/60
7 16/60
8 24/60
9 32/60
10 2/3
Tax law also requires that the scheme must not offer benefits no
greater than:
● a pension of two-thirds final salary;
● a surviving partner pension of no more than two-thirds of the
member’s salary (ie four-ninths of final salary);
● a tax-free lump sum no greater than 1½ times “final salary”:
● death in service benefit of four times salary.
“Final salary” is defined as the better of:
● the average of the last five years’ salary; and
● the average of the best three years out of the last ten.
Salary includes everything which is taxable as employment
income. So it can include commissions, bonuses and overtime as well
as the cash value of benefits such as company cars and private medical
insurance.
final settlement Last payment which clears a debt, whether or not all the payments equal
that debt.
Final Supplementary Declaration (FSD)

Customs document for summary declaration stating how many
supplementary declarations should have been made in the month and
how many have been sent. It must be sent once, at the end of the month.
final tax year Tax year in which a trade permanently ceases (Income Tax Act 2007
s89(1)). There are special provisions for loss relief.
finalisation Status of an entry or submission after which no further amendment can

be made.
Finance Act Annual Act of parliament amending tax law.
Finance Bill Draft law setting out the provisions of the Budget speech. It eventually
becomes a Finance Act.
finance charge Total amount borne by the lessee during the course of a lease above the
cost of the underlying asset.
finance company Company providing money, esp. for hire-purchase transactions.
finance controller An accountant whose task is to manage the company’s monetary

resources.
finance costs “The difference between the net proceeds of an instrument and the total
amount of the payments (or other transfers of economic benefits) that
the issuer may be required to make in respect of the instrument” (FRS 4
para 8).
finance lease Lease which has the nature of funding the acquisition of an asset rather
than an arrangement which simply lends the asset, known as an
operating lease.
The main difference is that assets acquired under a finance lease are
shown as fixed assets on the lessee’s balance sheet.
Under SSAP 21, a finance lease may be depreciated under one of
three methods:
● the actuarial method;
● the rule of 78 (also known as sum of the digits); or
● the straight line method.
For tax purposes, a distinction is made between a short lease and a
long funded lease.
finance market Place where large sums of money are borrowed and lent.
financeiro Portuguese: financial
financial accounting A term usually applied to external reporting by a business where that
reporting is presented in financial terms.
Financial Accounting Standards Board (FASB)

Body which issues accounting standards in the USA.
Financial Action Task Force (FATF)

Body that compiled a list of Non-Cooperative Countries or Territories
which were seen as being havens for money laundering and terrorism
funding.
The first list of 15 states and territories was compiled in June 2000.
The list includes territories that were unable to deal with the issues in
addition to those unwilling to do so. The list was Bahamas, Cayman
Islands, Cook Islands, Dominica, Israel, Lebanon, Liechtenstein,
Marshall Islands, Nauru, Niue, Panama, Philippines, Russia, Saint Kitts
and Nevis, Saint Vincent and the Grenadines.
The list was updated until November 2009 when no countries were
listed.
financial activity tax (FAT)

Tax proposed in 2008 and 2009 on the activities of banks as a means of
controlling irresponsible lending and of recovering government

subsidy.
financial adaptability The ability of the company to respond to unexpected needs or

opportunities.
financial adviser Person who offers personal advice on financial matters, such as
pensions and investments. Such a person must be regulated by the
Financial advisers are of three types:
● S: single tier advisers;
● M: multi-tier advisers; and
● WOM: whole of market advisers.
A single-tier adviser only advises on the financial products of one
company, and is usually an employee of that company.
A multi-tier adviser advises on the products of a few companies.
A whole of market adviser gives advice on all financial products
on the market.
There is also a category D adviser where a person can deal directly
with the company, though this is not really advice at all.
A financial adviser must tell clients what type of adviser he is.
financial aid Assistance given to a person, business or country in the form of cash
rather than in goods or services.
financial asset Financial instrument which is a security.
financial assistance Help in the form of money.

The term has a specific meaning in Companies Act 2006 s677 in
relation to a company providing assistance to buy its own shares. This
is generally prohibited.
Financial Assistance Scheme (FAS)

Government backed scheme set up in 2008 to deal with lost pensions.
Under the scheme, members of lost pension schemes will:
● get 90% of their accrued pension up to a cap of £26,000;
● have their post-1997 entitlements inflation linked;
● be entitled to retirement benefits from the age of 60;
● be able to apply for an earlier pension on grounds of ill
health:
● be entitled to draw a lump sum from the fund if it is able to
pay it.
financial assistance In the context of international aid, includes assistance:

“(a) by way of grant or loan,
(b) in the form of a guarantee, or
(c) by the Secretary of State acquiring securities of a company”
(International Development Act 2002 s6).
financial benefit In relation to frozen terrorist assets, “includes the discharge of a

financial obligation for which the designated person is wholly or partly
responsible” (Terrorist Asset-Freezing etc Act 2010 s13(2)(b)).
financial benefit share The amount that may be paid tax-free to an employee in respect of a
suggestion.
The benefit share is the greater of:
• half the first year’s benefit, and
• 10% of the first five years’ benefit
financial calendar List of significant dates in a business’s financial reporting.
financial correspondent Journalist who specialises in articles on financial topics.
financial derivative Financial instrument whose value depends on another underlying

security. A common example is an option that is a derivative of a
share.
financial futures Contract for the delivery of gilts at a future date.
financial gearing Ratio of loan finance to equity capital and reserves.
financial health check Term sometimes used for a periodic review or audit of an individual or
business’s financial affairs to see if they are still in a healthy state.
What may have been effective tax planning and other general financial
health may no longer be appropriate.
financial health requirement

Requirement under various tax provisions that a business is not in
financial difficulty. This is needed to comply with European law that
generally prohibits any form of state aid (including tax relief) to a firm
in difficulty.
financial information Information which may be reported in money terms.
financial institution Any company or other body which provides financial services to
businesses. Financial institutions include banks, loan companies and
similar.
Companies Act 2006 s778 contains special provisions about transfer
of shares to such an institution. For this purpose the term is restricted to
clearing houses, investment exchanges and equivalent bodies.
In relation to alternative finance arrangements, a definition
appears in Taxation of Chargeable Gains Act 1992 s151I.
financial instrument Document of any kind which shows that money has been lent by one
party to another in expectation or receiving back the funds with a profit
of some kind (FRS 13).
financial intermediary Organisation which takes funds from clients and arranges for them to be
invested.
financial leverage American term for financial gearing.
financial liability Liability under a contract to provide cash or an equivalent asset, or to

exchange financial instruments on terms that are unfavourable (FRS
13).
financial management Management of the financial functions, particularly in relation to the

use of long-term and short-term capital in a business.
financial option Option which is not a traded option, but which relates to currency,
interest rates or share prices generally, or to some similar financial
indicator.
For capital gains tax, an exhaustive definition is given in Taxation
of Chargeable Gains Act 1992 s144(8).
Financial Planning Certificate

A professional qualification for financial advisers obtained by
examination through the Chartered Insurance Institute. Holders are
entitled to be Registered with the Society of Financial Advisers.
financial planning Process of making arrangements for efficient future of funds to cover
foreseeable eventualities, to minimise outgoings and to maximise
income.
financial position State of a person’s or business’s finances. This usually involves looking
at current assets and liabilities, and current income and expenditure.
financial product Insurance, banking, pensions and similar financial services viewed in
the same way as consumer goods.
financial reinsurance arrangement

Term used in determining the tax liability of insurance companies. The
term is explained in Finance Act 1989 ss83YE and 83YF.
financial report Presentation of financial information.

The Statement of Principles for Financial Reporting identifies
three types of financial report:
● special purpose financial reports;
● general purpose financial reports; and
● other financial information.
General purpose financial reports are further distinguished between
general purpose financial statements and other type of general
purpose financial report.
Financial Reporting Exposure Draft (FRED)

Draft of a Financial Reporting Standard.
Financial Reporting Review Panel (FRRP)

UK body which investigates complaints about the accounts of listed
companies with regard to possible discrepancies from the requirements
of company law and accounting standards.
Financial Reporting Standard (FRS)

A UK accounting standard issued by the Accounting Standards Board.
These FRSs have been issued:
1 Cash flow statements
2 Accounting for subsidiary undertakings
3 Reporting financial performance
4 Capital instruments
5 Reporting the substance of transactions
6 Acquisitions and mergers
7 Fair values in acquisition accounting
8 Related party disclosures
9 Associates and joint ventures
10 Goodwill and intangible assets
11 Impairment of fixed assets and goodwill
12 Provisions, contingent liabilities and contingent assets
13 Derivatives and other financial instruments
14 Earnings per share
15 Tangible fixed assets
16 Current tax
17 Retirement benefits
18 Accounting policies
19 Deferred tax
20 Share-based payment
21 Post balance sheet events
22 Earnings per share
23 Changes in foreign exchange rates
24 Financial reporting in hyperinflationary economies
25 Financial instruments: disclosure and presentation
26 Financial instruments: measurement
27 Life assurance
28 Corresponding amounts
29 Financial instruments: disclosures
30 Heritage assets
financial review Examination of the financial position of a person or business.
financial risk Exists where a company has loan finance, especially long-term loan
finance where the company cannot relinquish its commitment. The risk
relates to being unable to meet payments of interest or repayment of
capital as they fall due.
financial services For freezing terrorist assets this term is defined in Terrorist Asset-
Freezing etc Act 2010 s40. It broadly includes insurance, banking and
investment.
Financial Services Act UK law which regulates the provision of financial services to the
public. It creates the Financial Services Authority.
Financial Services Authority (FSA)

The single regulatory authority for the UK financial services industry. It
was formed in 2001.
financial slack Cash buffer that sustains a business while funding is found.
financial stability objective

Objective of the Financial Services Authority under Financial Services
and Markets Act 2000 s2(2) as added by Financial Services Act 2010
s1.
financial statement order Order which requires a military person to provide details of his finances
to a court (Armed Forces Act 2006 s266).
financial statement A report of financial activity, such as statement of financial activities or

summary of assets and liabilities.
financial statements Documents presenting accounting information which are expected to

have a useful purpose.
financial supermarket Company which offers a wide range of financial products.
financial support Term used in Pensions Act 2004 s45 in relation to funding for a service
company for a final salary (or defined benefit) scheme.
financial support direction

Direction issued by the Pensions Regulator under Pensions Act 2004
s43 in respect of a final salary (or defined benefit) occupational pension
scheme which has insufficient financial resources.
Financial Times British daily newspaper on pink paper which concentrates on financial
and commercial news. It was founded on 9 January 1888. The
newspaper co-sponsors may indices of share prices, particularly the
FTSE-100 index. The company also has many other trading divisions
in books, websites and financial services.
financial transaction tax Tax proposed by the European Parliament to discourage excessive risk-
taking in addition to providing revenue. Details were set out in a
European Parliament press release of 10 March 2010.
financial viability Ability of a business to survive on an ongoing basis.
financial year (1) The year for which financial statements are prepared, which may not
be the same as the calendar year. The term accounting period is now
preferred.
(2) For corporation tax, a financial year is a period which runs from 1
April in one year to 31 March in the next (Income and Corporation
Taxes Act 1988 s834(1)).
(3) means, in relation to matters relating to the Consolidated Fund, the

National Loans Fund, or moneys provided by Parliament, or to the
Exchequer or to central taxes or finance, the twelve months ending with
31st March” (Interpretation Act 1978 Sch 1).
financial year (1) For company, the period from the day after the end of the previous
financial year (or start of the first accounting period) to the last day of
the next accounting period or within seven days of it (Companies Act
2006 s390(2)).
(2) For corporation tax, the period from 1 April to following 31 March.
Such years are indicated according to the year they start, so Financial
Year 2010 means 1 April 2010 to 31 March 2011.
fine Penalty imposed for breaking the law. Strictly a fine is only imposed by
a court. Other penalties, such as for most tax or motoring offences, are
civil penalties and do not comprise a criminal conviction. See also
parking fine.
In general, a fine that is a punishment is not tax deductible whereas
a fine that is compensatory is deductible. A leading case is McKnight v
Sheppard [1999] 71TC419. The matter is discussed in the Inspectors’
Manual at BIM42515.
finings Substances that may be added to brewed liquor near the end of the
production process to remove organic matter and thus improve the
drink’s clarity or improve its taste or aroma.
Customs notice 226 explains that the addition of finings does not
affect the calculation of the duty unless (exceptionally) the finings
contain alcohol.
finis finem litibus imponit

Latin: a fine puts an end to legal proceedings.
finishing travelling expenses

“Expenses incurred by the employee in travelling to a place in the
United Kingdom on the termination of the employment” (Income Tax
Finland Member of the European Union, for which purpose the Åland Islands
are excluded.
FINROF regime Regime related to Funds Investing in Non-reporting Offshore Fund.

The regime requires the fund to notify HMRC within three months of
first investing under the regime. Details of the regime are contained in
Authorised Investment Trusts (Tax) Regulations 2006 paras 85A to
85Z11 as inserted by SI 2010 No 294 with effect from 6 March 2010.
FIO Free in and out - the freight rate covers the sea freight only. The costs
of loading and discharging the cargo are not included.
fiqh al-Muamalat Arabic: Islamic rules on [financial] transactions.
firearms Customs may seize any firearms brought into the country. This includes
blank firing and replica guns, self-defence sprays, electric shock
devices and stun guns. Realistic copies may only be imported for an
authorised purpose such as participating in a historical re-enactment.
fire insurance Insurance against an asset being destroyed or damaged by fire.
fire insurance tax Tax charged from 1782 to 1869 at 1s 6d per £100 insured.
fire sale Originally, a sale of fire-damaged goods as a means of reducing the loss
suffered from a fire.
Colloquially, it can mean any quick sale as a desperate attempt to
raise funds. Items in a fire sale are often sold for much less than the
value than would otherwise be sought.
firewood For VAT, firewood may be reduced rated under Value Added Tax Act
are given in VAT notice 701/19. The wood must be specifically held
out for sale as domestic firewood.
firm (1) Business, particularly a partnership, where the statutory definition

is:
“Persons who have entered into partnership with one another are for
the purposes of this Act called collectively a firm, and the name under
which their business is carried on is called the firm-name” (Partnership
Act 1890 s4(1)).
(2) Description of an offer or price which is definite and neither
provisional nor approximate.
firm name Name under which a partnership trades.
first charge The first claim on a property, as evidenced by a legal charge on that
property.
first fruits Most profitable results from labour, from the idea that the first fruit to
be harvested is that which is easiest to pick.
Under ancient Hebrew law, the first fruits were to be offered to
God.
first in, first out (FIFO) Usual method of stock valuation.

The method assumes that the oldest items of stock are sold first.
This means that if a company has 100 widgets which cost it £4 each and
another 100 which cost it £5 each, and it sells 80 widgets. It assumes
that it sold 80 of the £4 ones. If it then sells another 30 widgets, it
assumes that the sale is of the remaining 20 ones which cost £4 and 10
which cost £5.
First Minister (FM) Chief executive of Northern Ireland Executive who has equal power
with the deputy First Minister in a diarchy.
first offender Person with no previous criminal conviction.

Criminal law generally prevents sending such an offender to prison
if the matter can be appropriately punished by other means.
first purchase price Term used in connection with the alternative finance arrangement
known as purchase and resale arrangements (Taxation of Chargeable
Gains Act 1992 s151J).
first quarter First three months of a particular year.
first-tier tribunal Tribunal where a first attempt is made to resolve legal issues. These
bodies are established from 2009 to replace the various employment
tribunals, other tribunals, commissioners’ hearings and similar.
The first-tier tribunals are organised into chambers. All but the
most complex cases will be heard by the relevant chamber of a first-tier
tribunal. Appeals will got to the Upper Tribunal.
first year allowance (FYA)

Capital allowance which is available in the first year that a business
uses a fixed asset.
fiscal Referring to either tax policy or government revenue.
fiscal drag Effect inflation has on average tax rates.

If tax allowances are not increased in line with inflation, and
people's incomes increase with inflation then they will be moved up
into higher tax bands and so their tax bill will go up. However, they are
actually worse off because inflation has cancelled out their pay rise and
their tax bill is higher. The only person that is better off is the
Chancellor as he is getting more tax and hasn't had to increase tax rates.
Chancellors have been known to use this as a subtle means to raise
more tax revenue. To maintain average tax rates, allowances should be
increased by the amount of inflation each year.
fiscal mandate Term used in the June 2010 Budget report. The mandate is “to achieve
cyclically-adjusted current balance by the end of the rolling, five-year
forecast period. At this Budget, the end of the forecast period is 2015-
16” (Budget Red Book para 1.15).
fiscal mark Sign that a tax or duty has been paid, as appears on packets of cigarettes
from 1 April 2001.
fiscal measures Tax changes announced by the government, particularly with a view to
influencing the economy.
fiscal policy Fiscal policy is “the use of government expenditure and taxation to try
to influence the level of economic activity” (HM Treasury glossary).
fiscal territory Those parts of the European Union (EU) in which the EU system of
VAT is applied. It is smaller than the EU customs territory (because it
excludes the Special Territories).
fiscal year The fiscal year is the same as the tax year. It runs from April 6th of one
year to April 5th of the next year. Any budget changes are always
implemented for the next fiscal year. i.e. to start on April 6th.
fish For VAT purposes, fish recognised as food for human consumption are
zero-rated, whereas fish for other purposes, such as tropical fish, are
standard-rated. The criterion is not whether the fish is palatable to
humans (goldfish are) but the purpose of the sale. Further details are
given in VAT notice 701/14 and 701/15.
fishing expedition Exercise that appears to be a cover for searching for mistakes. The
accusation is sometimes made against tax authorities.
fishing interrogatory An interrogatory that does not relate to any matter before a court.
Permission for such an interrogatory will not be granted.
FIT Part of FSA handbook that deals with the test for fit and proper persons
for approval.
fit and proper test A test for those who wish to register under money laundering laws as a
money service business or trust or company service provider. The
test checks a person against various records to see if they have any
convictions, disqualifications or other detriments which indicate they
are unsuitable for registration.
fit for habitation Implied term in all tenancies for low rent.
fitness for purpose Implied condition in all contracts for sale to consumers.
fittings Items in a building which are not attached to it but are sold with it.
Typically these include carpets, curtains and fitted furniture. Items
attached to the building are called fixtures.
five pound note Bank note that is legal tender for five pounds.
Since 1921, such a note may only be issued by the Bank of
England, though some Scottish and Irish bank notes are widely
accepted.
Bank of England £5 notes were first issued in 1793. They became
wholly machine-printed in 1855. Notes produced since 1960 (known as
series C) incorporate a picture of the Queen. Previous notes were
widely known as white fivers.
Since 1971, five pound notes have depicted a famous person:
Series Depicts Issued Demonetised
D Duke of Wellington 11 Nov 1971 29 Nov 1991
E George Stephenson 7 June 1990 21 Nov 2003
E rev Elizabeth Fry 21 May 2002 in use
fiver Common name for a £5 note, or a bank note for five of some other
currencies.
five-year plan National economic plan, particularly those first propounded by the
Russian leader Joseph Stalin in 1928 and copied by other countries.
Most of the plans failed.
fixed asset Buildings, furniture and other assets which are not expected to be
consumed within the next 12 months.
fixed asset restatement reserve

Item in local authority accounts, which shows the change in the value of
our assets from the historic cost to their current valuation.
fixed assets usage Revenue divided by net book value of fixed assets.
fixed budget Budget where amounts of income and expenditure are stated in advance
and are not intended to be affected by circumstances.
fixed capital Finance provided to support the acquisition of fixed assets.

In John Smith and Son v Moore [1921] 12TC266. fixed capital was
defined as “what the owner turns to profit by keeping it in his own
possession”. This is discussed in the Inspectors’ Manual at BIM33015.
fixed charge Charge over a particular fixed asset on terms that allow the asset to be
taken by the lender if a loan is not paid.
fixed cost Cost which is not dependent on quantity of items produced or sold. As
opposed to a direct cost.
Fixed costs include overheads such as rent, rates, office staff,
marketing, inspection, storage etc.
The distinction between fixed costs and direct costs is a matter of
management accounting convenience rather than an accurate
representation of reality, as few costs are either wholly direct or fixed.
The cost of making a metal component can involve a labour cost of
setting up a autolathe which is fixed regardless of how many
components are made.
Conversely fixed costs such as inspection and storage will
eventually assume some of the nature of the direct cost, in that the more
items made, the greater will be the need to inspect and store them.
fixed-date summons Summons in a county court that initiates actions other than for the
payment of money.
fixed deduction Deduction agreed between HMRC and a group of employees which
covers general expenditure borne by the employees which they may
deduct without having to produce supporting evidence. The deduction
is usually in respect of uniforms and tools.
fixed deposit Investment in the form of a deposit which pays a fixed rate of interest.
fixed duty Stamp duty that is charged at a fixed amount, as against an ad valorem
duty which relates to the value of a transaction.
fixed exchange rate Rate of exchange between two currencies which does not fluctuate and
can only change by revaluation or devaluation.
fixed expenses Expenses which do not vary according to the amount of goods or
services produced.
fixed income Situation where income does not change from year to year, as with
annuities where there is no index-linking.
fixed income arbitrage Investment strategy that seeks to exploit inefficiencies in the pricing
policies of fixed income securities and their derivatives.
fixed interest investment Investments which pay interest at a rate which does not change.
fixed interest security Government bond and other forms of security investment where the
interest rate does not change.
fixed interest Where the interest rate does not change whatever happens to the
economy.
fixed interest trust A trust where the beneficiary is entitled to receive all or some of the
income as it arises, such as for a specified period or for his lifetime. At
the end of the period or life, the trust ends, usually with the capital of
the trust passing to someone else.
fixed mortgage Mortgage is one where the rate of interest is fixed and does not vary
with the bank base rate.
Such a mortgage is usually offered:
• for a short term only,
• at a higher rate than the current variable rate, or
• as a short-term marketing ploy.
fixed oil An oil that does not volatalize by heating without decomposition, and
which hardens when left exposed to the air. Linseed oil and walnut oil
are examples.
fixed penalty notice Notice issued under Road Traffic Offenders Act 1988 for a motoring
offence. It is regarded as a civil penalty and not as a criminal offence.
fixed price agreement Agreement where goods or services are supplied at a price which
cannot be changed during the lifetime of the agreement.
fixed price Price which cannot be changed. It is usually time limited.
fixed price contract A contract where the exact price is stated at the outset.
fixed profit car scheme (FPCS)

Arrangement that applied up to 5 April 2002, whereby an employee
could be reimbursed an amount taken from a table for business mileage

in the employee’s car. The table was based on engine size.
From 6 April 2002, this is replaced by the present scheme of
mileage allowances.
fixed rate A guaranteed rate that is normally set just below the standard variable
rate and is guaranteed for a certain period of time. If the standard
variable rate falls below the fixed rate you will still have to pay the
fixed rate. Once the fixed rate period ends you will normally pay the
lender's variable rate. Sometimes there are redemption penalties
associated with this type of deal.
fixed rate loan Loan on which the rate of interest does not change.
Such a loan to an employee is generally not a taxable benefit in
kind, provided similar terms were offered to the employer’s customers
at the time.
Act 2003 s177.
fixed-rate preference shares

In determining eligibility to claim tax relief for a venture capital trust, a
person’s holding or entitlement to acquire such shares is ignored under
Income Tax Act 2007 s313(6)(a).
For this purpose, such shares are defined as “shares which
(a) were issued wholly for new consideration,
(b) do not carry any right either to conversion into shares or
securities of any other description or to the acquisition of any additional
shares or securities, and
(c) do not carry any right to dividends other than dividends which:
(i) are of a fixed amount or at a fixed rate per cent of the
nominal value of the shares, and
(ii) together with any sum paid on redemption, represent no
more than a reasonable commercial return on the consideration for
which the shares were issued”.
fixed scale of charges Rate of charges which do not change.
fixed-sum credit Financial facility, other than a running-account credit, where a debtor
is entitled to borrow money as one amount or in instalments.
fixed term Description of any arrangement that is for a fixed period of time. The
term is commonly used for leases and tenancies.
fixed-term pension Pension whose payments are fixed for a period, typically five years. At
the end of that period, the pension member may choose another type of
pension.
fixed yield Percentage return which does not change
fixer Person who arranges deals on behalf of other people.
fixture Something attached to land or a building which cannot be removed

without damage. Such an item is regarded as part of the land.
A fixture normally requires annexation, which is some form of
physical attachment. Something that rests on its own weight may be
regarded as a fixture if it was intended to be regarded as part of the
land.
fixtures and fittings (f & f)

Objects in a property which are part of the property though they may be
removable. This can include a curtain rail (fixture) and a curtain
(fitting). These items are usually considered together when trading
property.
fixtures Items which are attached to buildings, such as windows and doors.
flag day Day when a charity may raise funds and offer small paper flags or
similar symbols to be displayed on the donor’s clothing.
flag state State where a ship is registered (or “flagged”). International mariners
are generally liable to national insurance and social security according
to the laws of the flag state. Most of the exceptions to this general rule
were removed from 1 May 2010, from when the only exception is
where the mariner is remunerated from a country where he or she also
is resident.
flash man Old slang for a thief.
flash notes Old slang for forged bank notes.
flat (1) State where something neither rises nor falls, such as prices on a
stock market.
(2) Fixed, as in a flat rate of interest or flat rate of pay.
(3) “A separate set of premises (whether or not on the same floor):
(a) which forms part of a building;
(b) which is constructed or adapted for use for the purposes of a
dwelling;
(c) either the whole or a material part of which lies above or below
some other part of the building”
(Commonhold and Leasehold Reform Act 2002 s112(1)).
The creation of flats from commercial premises may attract a
special capital allowance (Capital Allowances Act 2001 ss393A-
393W).
flat management company (FMC)

Company that manages the common parts in blocks of flats. These
include entrances, stairs and corridors. The FMC may hold these
common parts as a freehold, head lease or commonhold.
Where the FMC holds funds on trust, it is required to submit Trust
and Estate tax returns to HMRC. Guidance on sinking funds and service
charge funds is contained in HMRC newsletter 12.10.
flat rate Rate which does not change.
flat rate accrual amount (FRAA)

Proposed amount of State Second Pension (S2P) from a future date,
originally intended to be 6 April 2012 but now deferred. Proposals for
its introduction are given in Social Security Administration Act 1992
s148AA.
Instead of S2P being wholly determined as a percentage of band
earnings, it is intended that it be a mixture of FRAA and a figure
relating to a 10% accrual rate. The figure proposed in 2009 was £1.50
a week, or £78 a year.
flat rate annuity Annuity that does not change value from year to year. Such an annuity
loses value through the effects of inflation.
flat rate introduction year “Such tax year as may be designated as such by order” (Social Security
This relates to the proposals to replace State Second Pension with a
flat rate of benefit unrelated to earnings.
flat tax Tax levied at a single rate regardless of a person’s income.
flat yield Fixed interest rate expressed as a percentage of the sum paid for the
investment.
flavoured alcoholic beverages (FABs)

The formal name for alco-pops.
flavourings For VAT, these are generally zero-rated as food, whether natural or
synthetic (VAT notice 701/14).
flea-bite Colloquialism for a very small amount.
Fleet Book Evidence Old legal colloquialism for no evidence at all. The origin is that books
of the Old Fleet prison were not accepted as evidence of marriage.
Fleming claim Claim for VAT relief outside the three-year cap imposed in 1995.
The name comes from the case M Fleming (t/a Bodycraft) v C & E
Commissioners [2006]. The case concerned a claim for VAT paid on
cars acquired in 1989 and 1990. It was held that the three-year cap was
ineffective under European law as the British government had not
allowed a transitional period.
Flemish account Sum less than expected, from the old Amsterdam pound that was worth
less than the UK pound.
flex-fuel vehicle American term for a vehicle that can be run on two or more types of
fuel, or on any combination of them. The commonest example is petrol
and ethanol.
flexible benefits A program where employees can select from a range of benefits offered
by their employer in order to meet their own specific needs.
flexible budget Budget where some amounts of expenditure are determined by amounts
of income.
flexible drawdown Ability to withdraw funds from a pension fund from 6 April 2011. The
conditions are broadly that the taxpayer is at least 55 years old and has
a secure pension of at least £20,000 a year.
flexible mortgage A feature of some mortgages that gives you freedom to change the
amount and frequency of your mortgage payments.
flexible power of appointment trust

An interest in possession trust where the beneficiaries can be varied.
Such a trust is often used to hold a single premium bond.
flexible spending account (FSA)

US term for a benefit which an employer may provide to employees.
Typically an FSA provides a fixed amount of benefit which the
employee may put towards health costs.
flexible trust Another name for a flexible power of appointment trust.
flexible working A change in an employee’s working conditions to suit the employee.

From 6 April 2003, an employee has the statutory right to request
flexible working to look after a child or dependant relative. An
employer is obliged to have a meeting with the employee and give the
request serious consideration. An employer that fails to do so can be
fined.
There is no obligation on an employer to allow flexible working,
although about 80% of such requests are agreed in practice.
There is a separate right for a person facing retirement to request
flexible working.
flight of capital When money quickly leaves a company, business sector, country or
type of investment because of fears about its future.
flight sheets Separate duplicate list completed by the export shop operator for each
flight, identifying sales to passengers by invoice number and date.
flight to quality Tendency of investors to change investments to safer types when

economic circumstances become difficult.
flip-flop scheme Tax avoidance scheme involving offshore trusts. The essence is to
manipulate the arrangements to avoid a liability for capital gains tax.
The matter was examined in the case Burton [2009] TC00156.
flipping When a person changes a designation for their personal benefit.

The term was so used in May 2009 during the scandal of MPs’
expenses when it was discovered that many members “flipped” their
designation of their main homes and second homes to maximise the

amount they could claim for their second home allowance.
float (1) Quantity of cash used for a purpose such as to fund expenses in
advance or to provide change.
(2) Offering a company’s shares for sale on a stock market.
(3) Allowing a currency to fluctuate freely against other currencies,
rather than be tied to a fixed rate.
floating asset Term sometimes used for a current asset.
floating capital Capital retained to meet current expenditure.
floating charge Security taken by lender which floats over all the assets and crystallises
over particular assets if the security is required.
floating rate loan Loan where the rate varies during the term, such as by being related to
the bank base rate.
floating rate note Form of currency loan, particularly denominated in the euro, which is
not at a fixed exchange rate.
floating rate A variable rate, particularly of a currency against other currencies.
float system System where petty cash is periodically topped up with sufficient funds.
The total amount held is not fixed, as in the imprest system.
flood “Includes any case where land not normally covered by water becomes
covered by water” (Flood and Water Management Act 2010 s1(1)).
Floods from burst water mains or sewers are excluded.
floor The lowest permitted level of something, such as a minimum level of

grant that the government has determined a local authority will receive.
floor broker Stockbroker who is also a member of a brokerage house.
floor loan American term for the amount a lender is willing to provide for a
commercial property which is to be let. The amount of the loan
increases as the floor space increases during construction.
floor price Price which cannot go any lower.
floor trader Independent trader on a stock exchange who trades on his own account.
floor trading Trading on the floor of an exchange, which includes the method of
outcry. Since Big Bang most trading has been done on computers in
offices.
floppy disk Means of storing computer data outside the computer.

Various disks were developed. The early ones were not rigid, hence
the name. Later ones were enclosed in a plastic case. The standard
floppy disk for computers held 1.4 megabytes of data. These disks
started to disappear from use from around 2000 as compact discs,
DVDs and external hard drives became inexpensive and readily
available with a much large capacity.
floppy disk Standard 3.5 inch disc in a plastic cassette used by computers. They
were widely used in the 1990s though now largely replaced by compact
discs, DVDs and USB datasticks. HMRC generally accepts data
submitted on a floppy disk.
floppy drive Drive on a computer for playing floppy disks. This may be built into
the computer or be a separate computer peripheral.
florin (1) Two-shilling coin introduced in 1847 as an early attempt to

introduce decimal currency. The coin was redenominated as 10 new
pence on decimalisation in 1971 until being demonetised in 1993.
(2) Gold coin issued by Aruba or Austria, that may be a gold
investment coin for VAT purposes. They are listed in VAT notice
701/12A.
flotation Process of floating a company, usually by allowing investors to buy its

shares.
The extent to which flotation costs are tax-deductible is discussed in
flow-through funds Contributions (particularly in USA) to a charity or similar foundation

that are used primarily for direct grant making, rather than for
endowing the foundation permanently. Most corporate foundations
depend on these funds each year rather than on income produced from
endowment funds.
FLR (1) Family Law Reports, series of law reports from 1980.
(2) Federal Law Reports, series of Australian law reports from 1956.
fluctuation Day-to-day variation, such as between exchange rates or in the measure

of an index.
fluid ounce Imperial unit of liquid capacity. It is equal to 1/20 of a pint, 1.7339
cubic inches or 28.413 millilitres.
flutter Gamble for a small amount of money.
fly-by-night Colloquialism for someone who defrauds creditors by decamping in the

night.
fly money Term used by police to describe funds they use to catch criminals, such
as by undercover officers buying drugs or stolen goods.
FM First Minister, of Northern Ireland Executive.
FMC Flat management company
FMed 3 Standard medical certificate which a medical practitioner provides to

someone unable to work because of sickness or injury.
FMV Fair market value.
FNMA Federal National Mortgage Association, an American body more

commonly known as Fannie Mae.
FOB Free on board.
f o b contract Contract for export of goods where the seller’s duty is completed by
placing the goods on board a ship.
foddergrains Type of cereal, namely barley, oats, maize, sorghum and millet. These
are also known as coarse grains
FOF Fund of funds
FoI Freedom of Information - obtaining access to information held as

records by government agencies, government ministers, and other
public bodies in accordance with Freedom of Information (FoI)
legislation.
folder For VAT, a folder is generally standard-rated unless it conveys

information or is sold as part of printed matter (VAT notice 701/10).
fold flat crate Plastic crate which can be collapsed for storage.
folio In accounting, a number on a page.

This is used to cross-reference transactions from one part of the
accounting records to another. It is part of the process of creating an
audit trail.
folkland Old term for common land subject to duties being paid to the king.
following trust property Alternative term for tracing trust property.
folly Building erected on a whim with no obvious purpose. Many such follies
are now listed buildings.
By extension, the term has come to mean any foolishness.
fond commun de placement (FCP)

Structure for corporate funds used in Luxembourg. They are co-owned
bodies that must be managed by a fund management company.
font Size and style of a type face.

The standard size is the point where 72-point refers to type one
inch high. So lines of 72-point type are one inch apart. Normal
typefaces for text are 10 or 12 point.
Type faces are generally either serif or sans serif. This means that
they have or do not have respectively little lines or serifs:
A A
Serif face Sans serif face
food For VAT, food is generally zero-rated for VAT under Value Added Tax
Act 1994 Sch 8 Group 1.
The zero-rating applies to food for human consumption, animal
feed, seeds to produce food, and animals which produce food in any
way (eg pigs, cows, bees). Zero-rating does not extend to ice cream and
similar, confectionery, alcoholic drink, manufactured beverages, crisps
and similar snacks, pet foods, catering and hot takeaway food and
drink. Further details are provided in VAT leaflet 701/14.
For income tax and corporation tax, food consumed while away on
business or in entertaining staff is generally tax-deductible for the
business and not taxed as a benefit in kind on the recipient. Other costs
may not be allowable. A leading case on this is Edwards v Warmsley
Henshall [1967] 44TC431 which is discussed in the Inspectors’ Manual
at BIM 37925.
Food provided for customers comprises entertainment and is
usually not tax-deductible.
food additive Something added to food. VAT notice 701/14 states that a food additive
may be zero-rated as food if it:
• has some measurable nutritional content
• is used solely or predominantly, in the particular form in
which it is supplied, in the manufacture of food
• is not one of the excepted items, as set out in the notice.
food containers For VAT, ordinary food packaging is regarded as part of the food and
follows the same VAT treatment. A container that has a significant
value of its own (such as coffee sold in a storage jar) is a mixed supply
where the container is standard-rated. Further details are given in VAT
notice 701/14.
Food for Britain Current name for the Agricultural and Horticultural Co-operation. It is a
mutual trading organisation and is discussed in the Inspectors’ Manual
at BIM24715.
foolscap The once standard paper size of 8 by 13 inches.

During the 1970s, it was generally replaced by A4 size, which is
8.27 by 11.69 inches.
The term comes from the watermark of a fool’s cap that appeared
on the early paper.
foot (1) Imperial measure of length equal to 12 inches, one third of a yard
or 304.8 millimetres. There are 5,280 feet in a mile. The term originally
related to the length of a man’s foot.

(2) American term for sub-total at the bottom of a column of figures.
football ground improvements

A football pools company that pays for such improvements may deduct
that expenditure from trading profits (Finance Act 1990 s126).
This was part of a package of pool betting duty reforms that
included reducing the duty from 42½% to 40% (Finance Act 1990 s4).
football hooliganism This particularly problem is addressed by Sporting Events (Control of

Alcohol etc) Act 1985 and other legislation.
football pitch Unofficial unit of area, even though the size is not fixed under the rules
of Association Football. The average size is 114 yards by 74 yards,
giving an area of 8,414 square yards or 7,036 square metres.
football pools Form of betting where a person tries to predict the outcome of football
matches. It is subject to pool betting duty.
footpath Highway other than a footway where the public have the right of way
on foot only (Highways Act 1980).
foot the bill Pay the bill, or promise to pay it. The term comes from the old custom
of signing the bottom of a bill to indicate a promise to pay.
footway Part of a highway where the public have a right of way on foot and
where other parts have a right of way for vehicles (Highways Act
1980).
Footsie The popular name for the FT-SE 100 Share Index, the UK
stockmarket's main benchmark index, which measures the daily share
price performance of Britain's top 100 public limited companies, ranked
by their size.
for [a tax year] Income Tax (Earnings and Pensions) Act 2003 s16 and s29 defines the
word “for” in the expression “earnings for a tax year” as being any
earnings which arose in the whole or part of the year.
forbearance to sue Giving up the right to sue someone. This can be valid consideration for
a contract, regardless of the merits for which the person may have
intended to sue. A leading case is Horton v Horton [1961].
forced realisation When the going concern accounting principle cannot be applied
because it is believed that the business faces insolvency.
The fixed assets are valued on the basis of what can be expected
from a quick sale, or fire sale. This is usually much less than the
written down value of such assets in a going concern.
forced sale Sale which takes place because circumstances have forced it, such as to
raise funds in a hurry or because a court orders a sale.
force majeure French: irresistible compulsion or coercion.

The term is often used in commercial contracts to describe events
outside the control of either party. The contract may include a provision
relieving a party from the consequences of such an event.
forcible entry Common law criminal offence of using force to enter occupied
premises other than as permitted.
forecast Estimate of future income and expenditure.

Note that this term differs from a budget which is an executive
statement.
forecast dividend Amount of dividend which a company expects to pay.
foreclosure Selling a property because the owner cannot afford to pay a secured
loan. A common example is when a mortgage is not being repaid.
foreign agreement Contract or other agreement that is regulated by a non-UK law.
foreign bill Bill of exchange other than an inland bill. There is a different
procedure if the bill is dishonoured.
foreign branch Branch of a company in another country (SSAP 20).
foreign business In the context of life insurance, means “overseas life assurance business
or life reinsurance business to the extent that it consists of the
reinsurance of overseas life assurance business” (Income and
Corporation Taxes Act 1988 s431(2)).
foreign business assets “In relation to an insurance company, means assets, other than linked
assets, which either —
(a) are shown in the records of the company as being primarily
attributable to liabilities of the company’s foreign business, or
(b) are attributable, under the law of a country or territory outside
the United Kingdom, to a permanent establishment of the company in
that country or territory through which it carries on foreign business”.
foreign company Company incorporated outside the UK but having a place of business in
the UK.
foreign currency Currency of another country.

No foreign currency is legal tender in the UK, but there is no law
preventing contracting parties agreeing to accept any currency they
wish.
foreign currency account Bank account in a currency other than that normally used by the
customer.
For inheritance tax, such accounts are usually excluded from the
personal estate by Inheritance Tax Act 1984 s157.
For income tax and corporation tax, the implications of such an
account are discussed in the Inspectors’ Manual at BIM39528.
foreign currency bank account (FCBA)

Bank account in currency other than UK currency. There are special
capital gains tax provisions when a non-domiciled individual makes a
remittance to the UK into such an account.
foreign currency assets Term used in taxation of insurance companies. A full definition is
contained in Income and Corporation Taxes Act 1988 s431(2).
foreign currency reserves Amount of money which one government owns in the currency of
another government.
foreign dividend “Any annual payment, interest or dividend payable out of, or in respect
of the stocks, funds, shares or securities of:
(a) a body not resident in the United Kingdom, or
(b) a government or public or local authority in a country outside
the United Kingdom.” (Taxes Management Act 1970 s18(3G)).
foreign domiciliary Type of excepted estate for inheritance tax.

If the deceased died after 5 April 2004 and never had a UK
domicile or deemed domicile, the estate may be treated as an excepted
estate provided the UK estate comprises only cash or quoted shares up
to £100,000 in value.
foreign draft Bankers draft in a foreign currency.

Foreign drafts take about five days to arrive depending on the
destination.
foreign earnings Tax term for income which arises from overseas activities.
foreign employer For national insurance, a definition is given in Social Security

(Categorisation of Earners) Regulations SI 1978 No 1689 reg 1(2).
foreign enlistment Criminal offence of enlisting oneself or someone else into the armed
forces of a country with whom the Crown is at war (Foreign Enlistment
Act 1870).
foreign enterprise Subsidiary based on a different country (SSAP 20).
foreign entity A business of any form based in another country.
foreign exchange Business of exchanging one currency for another. If the money is
physically changed to another currency, it is said to be converted. If an
amount which remains in one currency is simply stated as a value of
another currency without being changed, the amount is said to be
translated.
The tax implications are discussed in the Inspectors’ Manual from
BIM39500.
foreign exchange broker Person who deals in foreign currencies.
foreign exchange dealing Trading in foreign currencies.
foreign exchange market Place where foreign currencies are bought and sold.
foreign exchange reserves Another name for foreign currency reserves, the amount a
government hold in a currency other than its own.
foreign exchange transfer Sending money from one country to another.
foreign gambling Either non-remote gambling in a non-EEA state or other gambling

which is not regulated by an EEA state (Gambling Act 2005 s331(2)). It
is an offence to advertise foreign gambling other than a lottery.
foreign income Income which comes from outside the UK.
foreign investment Investment in a business or financial product from outside the UK.
foreign judgment A judgment of a non-UK court. There are special rules in determining
whether it is enforceable by UK authorities.
foreign law Any legal system other than English law but which is recognised in that
territory. Scots law is regarded as foreign law in English courts.
An English court may require evidence as to what the foreign law
is. English courts may refuse to uphold foreign law that is against
English public policy, penal or revenue laws.
foreign money order Money order payable in a foreign currency, usually to someone in a
foreign country.
foreign rights Legal entitlement relating to a foreign country, such as the right to sell a
product there.
foreign service allowance Payment to government employees to meet additional costs of living
outside the UK. It is exempt from tax under Income Tax (Earnings and
foreign social security benefit

“Means any benefit, allowance or other payment which is paid under
the law of a country outside the United Kingdom and is in the nature of
social security” (State Pension Credit Act 2002 s17(1)).
foreign trade Trade with other countries, as against domestic trade in one’s own
country.
foreign travel order Order restricting a person’s right to travel overseas when they have
been convicted of a sexual offence (Sexual Offences Act 2003 s114).
foreign war disablement pension

“Means any retired pay, pension, allowance or similar payment granted
by a country outside the United Kingdom —

(a) in respect of disablement arising from forces’ service or war
injury; or
(b) corresponding in nature to any retired pay or pension to which
section 641 of the Income Tax (Earnings and Pensions) Act 2003
applies”
(State Pension Credit Act 2002 s17(1)).
foreign war widow’s or widower’s pension

“Means any pension, allowance or similar payment granted to a widow
or widower by the government of a country outside the United
Kingdom —
(a) in respect of a death due to forces’ service or war injury; or
(b) corresponding in nature to a pension or allowance for a widow
or widower under any scheme mentioned in section 641(1)(e) or (f) of
the Income Tax (Earnings and Pensions) Act 2003”
(State Pension Credit Act 2002 s17(1)).
forensic Description of something relating to the courts or legal system.
forensic accounting Scrutinising financial activities to determine whether anything illegal

has happened, and taking steps to prevent such eventualities.
forensic auditing Another term for forensic accounting, though a distinction is

sometimes made that forensic auditing is undertaken by someone
outside the organisation.
forensic partner Partner in a firm who deals with litigation.
forensic science Scientific analysis of material in connection with the law, particularly
the analysis of material to determine whether it is connected with a
crime.
foreseeable loss Loss which is expected to be incurred, particularly on a long-term

contract.
foresight In law, awareness of consequences at the time of committing an action.

This is an element of some criminal offences.
forex Foreign exchange.
forex matching Matching of foreign exchange such as in Midland Marine. The tax
implications are discussed in the Inspectors’ Manual at BIM39522.
forfaiter Person who discounts bills of exchange in forfaiting.
forfaiting Process of providing finance for an exporter.

The agent or forfaiter accepts a bill of exchange from an overseas
customer and pays the bill at a discount to the exporter before collecting
the full amount from the customer.
forfeit Loss of property without compensation, such as when illegal goods are
seized by Customs officer or when a final call is not paid on shares.
forfeitable shares In relation to employee schemes, “shares given to employees subject to

a risk that they may have to be forfeited if specified conditions are not
met during a forfeiture period” (BIM 44001).
forfeit clause Provision in a contract where something can be forfeited if a specified

breach occurs. Such a clause often refers to a deposit.
forfeiture Losing property without compensation.
forfeiture of seniority Punishment in armed forces of not allowing a person to be promoted to

a higher rank.
forfeiture period Period in which forfeiture may happen.

The term is particularly relevant for forfeitable shares in an
employee share scheme.
forged die Die or similar item used to make false stamps to avoid stamp duty.
Under Stamp Duty Act 1891 s16, an order may be made to search for
such dies.
forgery Any document or item which is not what it seems and is intended to
deceive. The nature of forgery is the falseness of the document or item,
so a hoax £9 note is not a forgery.
Forgery can be a criminal offence.
forinsecus Latin: outside
forint Currency of Hungary.
fork out Pay for. The term comes from the old slang use of “fork” meaning a
finger, so forking out meant opening the hand.
form (1) Structure or order, as in “form of words” or “in due form”.

(2) In gambling, the history of a horse or other subject matter of a bet.
(3) In law, colloquialism for a criminal record.
form letter Standard letter which can be sent out widely with small adaptations to
the circumstances, such as a letter chasing payment or a letter from an
auditor confirming account balances.
formal Description of an arrangement or agreement which is designed to

accord with laid down rules or procedures. A formal agreement is
usually expressed in writing.
formal contract Contract made under seal, as against a simple contract.
formal documents Documents which formally set out an agreement, policy, offer or
similar, particularly in connection with a takeover bid.
formality Step required by a procedure, particularly one which relates to the

documentation of agreement rather than to its creation.
forma pauperis Latin: in the character of a pauper.

The term referred to someone unable to bring a lawsuit because he
could not afford the legal fees.
format Layout of data or information.

In accounting, it is a list of items which may appear in a financial
statement, setting out the order in which they are to appear.
In computing, it is the arrangement of tracks on a disk or similar
storage medium to make them ready to receive data.
formation Act of creating a business or organisation.
former approved superannuation fund

Any fund which immediately before 6 April 1980 was an approved
superannuation fund for the purposes of section 208 Income and
Corporation Taxes Act 1970, that has not been approved for the
purposes of Chapter 1 Part 14 Income and Corporation Taxes Act 1988
since 5 April 1980, and has not received any contributions since 5 April
1980.
former civil partner Person with whom someone was in a civil partnership which has
subsequently been dissolved or annulled. Such a person may make an
application to the court in relation to property and financial matters
under Civil Partnership Act 2004 s68.
former name Name by which a person was previously known.

For company directors, the register of directors must give include
any former name by which a director was known for business purposes
unless the name was changed before a person was 16 or has not been
used for at least 20 years (Companies Act 2006 s163). Former name
includes the maiden name of a married woman who has adopted her
husband’s surname.
former officer, tribunal or body

Term used in Social Security Act 1998 s27(7) in relation to past
decisions about social security.
for the avoidance of doubt

Term used in Acts of Parliament to confirm or clarify a legal position
which is regarded as already the law though not clearly stated as such
anywhere.
fortiter in re Latin: firmness in action, being decisive.
forty-niners Miners who took part in the 1849 California gold rush.
fortuna Latin: treasure trove.
forum rei Latin: forum of the thing. Court of the country where a dispute is heard.
forum shopping Practice of choosing a country whose laws are most likely to produce
the desired result in litigation.
forward Relating to the future, as in a forward contract.
forward contract Agreement to do something in the future, particularly to buy foreign

currency.
forward cover Arrangements to protect against the risk of a forward contract.
forward currency contract

Agreement to buy or sell currency at a predetermined price on a
specified future date. This is the commonest form of hedging the risk
from foreign exchange.
BIM39523.
forward delivery Delivery for an agreed future date, particularly under a contract.
forward exchange contract

An agreement to buy foreign currency at a fixed future date and at an
agreed price.
forward margin Difference between a current price and a future price.
forward market Market for purchasing goods in the future, particularly in relating to
commodities, oil and foreign currency.
forward rate agreement (FRA)

Investment arrangement that is linked to future interest rates.
forward sales Sales for delivery at a future date, particularly of shares, commodities
and oil.
forward trading Trading for delivery at a future date.
forward work programme

Any statement of priorities for the coming period, particularly from a
public body.
The National Consumer Council is obliged to publish such a
programme under Consumers, Estate Agents and Redress Act 2007 s5.
forwarding address Address to which a person’s mail may be redirected, such as after a
change of address.
forwarding agent A person or company who is a specialist in customs procedures and the
international carriage of goods, and acts on behalf of importers and
exporters.
FOS Financial Ombudsman Service.
fossil fuels Oil and coal.
foster Person who looks after a child without requiring any rights of a parent
or guardian.
foster parent Person who looks after a child or children without acquiring any legal
rights of guardianship.
A foster parent may have class 3 contributions credited from 6 April
2010 under Social Security Contributions and Benefits Act 1992 s23A.
FOTRA Free of tax to residents abroad.

This is category of gilts which is exempt from UK tax provided they
are beneficially held by a person whose residence is outside the UK.
fouage Unpopular hearth tax imposed by England in France in 14th century.
foul bill of lading Bill of lading which states that the goods arrived in a bad condition.
foundation In the USA, a private non-profit organisation with funds and a program
managed by its own trustees and directors, established to further social,
educational, religious or other charitable activities by making grants.
A private foundation receives its funds from, and is subject to
control of, an individual family, corporation or other group of limited
number. In contrast, a community foundation receives its funds from
multiple public sources and is classified by the IRS as a public charity.
founder Person who establishes an organisation.
founders’ shares Ordinary shares subject to special conditions.

These conditions may be either beneficial or adverse to the founder,
though the former are usually designated as A shares. More commonly,
founders’ shares are ordinary shares which rank after other ordinary
shares and are therefore the last valuable.
four-ale Old slang for a very cheap beer, originally sold at four pence per quart.
four-day order Supplemental order of a court where a previous court has required an
act to be performed but not specified the time. The time in the
supplemental order is not necessarily four days.
Fourth Directive This expression usually refers to the European directive on company
law that requires all company accounts to be true and fair. This
directive was introduced into English law by Companies Act 1981 and
has subsequently been consolidated, although the concept of true and
fair was introduced into English company law in 1947.
fourth quarter The last three months of a particular year. In a calendar year, it is the
period from 1 October to 31 December.
Fourth Republic Government of France between 1946 and 1958.
fox As a verb, an old colloquialism meaning to cheat.
FPA Arithmos Forologikou Mitroou, Greek for “value added tax”.
FPC Financial Planning Certificate.
FPCS Fixed profit car scheme.
FPO Fast Parcel Operator.
FR (1) Country prefix code for France.

(2) Fully reportable, under European Savings Directive.
FRA Forward rate agreement.
FRAA Flat rate accrual amount of State Second Pension.
fraction (1) Number, usually less than 1, expressed as one number divided by
another, as against a decimal. Thus ⅝ and ⅔ are fractions.
(2) Colloquially, a small amount, as in “we received only a fraction of
the replies we expected”. This meaning is deprecated as imprecise:
99/100 is a fraction.
fractional certificate A certificate for part of a share. Such a certificate cannot normally be
issued in the UK.
fractionem diei non recipit lex

Latin: the law does not recognise a fraction of a day.
franc Currency of France before it adopted the euro in 2002. It is still the
currency in other countries, such as Switzerland.
France Member state of European Union, for which purpose Monaco is

included, but these territories are excluded: Martinique, French Guiana,
Guadeloupe, Reunion, and St Pierre and Miquelon.
franchise Arrangement whereby an established business grants rights to another

business.
A common form of franchise allows an established business
(franchisor) to allow another much smaller business (franchisee) the
right to trade in the franchisor’s name. The franchisor may provide
training, products, marketing and other assistance. The franchisee may
require an initial fee to set up the franchise and an annual fee thereafter.
The annual fee is often a percentage of sales.
For the purpose of tax, the annual fee is regarded as a revenue

expense. The amount of the initial fee which relates to such items as
stock is also regarded as a revenue expense. The amount which
represents payment for the right to become a franchise is a capital
expense.
franchisee Person who operates a franchised operation
franchisor Person who runs a business which allows others to use the name, and
provides certain other services to franchisees.
francus bancus Latin: free bench, an old legal right.
frank Stamp or endorse, as in postage on an envelope.
franked income Income on which tax has been paid, such as for a dividend.
franked investment income (FII)

Dividends that a company receives from other UK companies
(excluding subsidiaries), plus (from 1 July 2009) most dividends from
overseas companies.
frankpledge System of collective tithing in Anglo-Saxon times.
Franks Committee Body which sat in the 1950s under Sir Oliver Franks to look into the
operation of tribunals.
fraud Crime of obtaining money by deception.

From 15 January 2007, this is a statutory offence under Fraud Act
2006. Section 2(2) identifies three types of fraud:
● fraud by false representation;
● fraud by failing to disclose information; and
● fraud by abuse of position.
The Act also creates the offences of possession of articles for use in
frauds (ibid s6) and making or supplying articles for use in frauds
(ibid s7).
The Act also creates the offence of participating in fraudulent
business carried on by sole trader (ibid s9).
The Act increases the penalty for participating in a fraud carried on
by a company from seven to ten years imprisonment (ibid s10). The
latter offence is contained in Companies Act 1985 Sch 24.
The Act creates an offence of obtaining services dishonestly (ibid
s11).
Fraud Compensation Fund

Fund established under Pensions Act 2004 s188 to compensate victims
of pension fraud.
fraud compensation levy Levy which may be imposed on occupational pension schemes under
Pensions Act 2004 s189 to fund the Fraud Compensation Fund.
fraud compensation payments

Payment which may be made from Pension Protection Fund when
fraud or similar offence has been committed (Pensions Act 2004 s182).
fraud on a power Old offence of using a power to one’s own advantage. Under modern
fraud law, this is now abuse of power.
fraud on the minority Improper action of majority of shareholders to the disadvantage of

minority holders.
fraudulent Designed to cheat people of money.
fraudulent conveyance Transfer of land without consideration with a view to defrauding a

subsequent purchaser. Under Law of Property Act 1925, an innocent
purchaser may have the purchase set aside,
fraudulent misrepresentation
Misrepresentation which a person makes knowingly, or without
believing it to be true, or who is reckless or careless as to whether the
representation is true (Derry v Peek [1889]).
Fraudulent misrepresentation allows the other party to void the
contract and to claim damages.
Such misrepresentation is also actionable as the tort of deceit, and
may also be the crime of fraud.
fraudulent misrepresentation
Offence of deliberately making a false statement as a means of
dishonestly obtaining money from a customer.
fraudulent trading Criminal offence when a business is set up for fraud (Insolvency Act
1986 s213).
fraus est celare fraudem Latin: it is a fraud to conceal a fraud.
FRED Financial Reporting Exposure Draft.
Freddie Mac The popular name for the Federal Home Loan Mortgage
Corporation (FHLMC).
The body was set up in 1970 by the US federal government to
expand the secondary market for mortgages in the USA. On 7
September 2008, the body, with Fannie Mae, were in effect
nationalised after they got into serious difficulties.
free (1) At a price of zero; when something is given away.

(2) With no restrictions, as in “free trade” or “tax-free”.
(3) Not imprisoned.
free assets amount Term used in taxation of insurance companies. It means “the excess of
the value of the company’s long-term business” over its liabilities of
that business plus relevant money debts and shareholders’ excess assets
free association In psychology, a technique which encourages a person to speak of

whatever comes into his head regardless of whether it makes sense or
not. This is intended to analyse unconscious thoughts.
free banking Terms between a bank and its customer whereby no charge is made for
operating the account or for normal transactions. In practice, such “free
banking” is funded by heavy charges for unauthorised overdrafts,
dishonoured cheques and the like.
free bench Legal term for the old right of a widow to an interest in a copyhold
estate. It was abolished in 1922. The Latin is francus bancus.
freeboard Vertical distance amidships from the upper edge of the deck line to the
upper edge of the load line mark.
freebooter Pirate or similar adventurer who plunders others’ goods.
free churches Churches of non-conformist traditions that are free of state control, such
as Methodist and Baptist churches.
free circulation Goods are in Free Circulation if they are wholly produced in the
European Union (EU), unless they are Common Agricultural Policy
(CAP) goods on which an Export Refund has been claimed. Goods
imported from outside the EU are in Free Circulation if all import
formalities have been completed and all Customs charges have been
paid and not refunded, wholly or in part.
free competition When businesses are allowed to compete without interference from the
government.
free coup Place in Scotland where rubbish may be dumped free of charge.
free cover level The maximum amount of benefit for which an insurance company is
prepared to insure a member of a group insurance scheme without the
member needing to provide evidence of good health.
free currency Currency which may be bought and sold without restriction or
interference from the government which issues it.
free enterprise System of business which is without government interference.
freedom of encumbrance Freedom of property from rights of anyone other than the owner.
freedom of testation Right of a person to write he or she wishes in a will.
freehold Ownership of land and all that is on it, under it and over it.
free house Pub that is not tied to a brewery and may sell any beer it wishes.
free issue Issue of shares to existing shareholders in ratio to their existing

holdings.
freelance Person who acts independently in providing services. Such a person is

usually taxed as being self-employed.
free movement Movement of goods, people, capital and services without undue
restriction.
free of tax to residents abroad (FOTRA)

Range of gilts which are exempt from UK inheritance tax if beneficially
held by a person whose ordinary residence is outside the UK.
free on board (FOB) Description of a price which includes the cost of placing the goods on
board a ship.
The term applies to a contract of sale where the seller pays the
shipping costs. The goods are regarded as having been delivered to the
buyer once they are on board. The buyer then bears the risk for such
perils as being lost at sea.
free pay Term once used for the amount of pay on which an employee paid no
tax as indicated by their tax code. The term is now replaced by pay
adjustment following the introduction of K codes where the amount
otherwise known as free pay is added to gross pay.
free reserves Part of the reserves of an organisation which are not allocated or
required for any particular purpose, and which the organisation may
therefore use as it wishes. The term particularly applies to the amount a
bank may have above those required by its regulatory body.
free spending When expenditure is not governed by a budget, which is known as

budgetary control.
Free Standing Additional Voluntary Contributions (FSAVC)

A scheme whereby an individual can make payment into an
independent arrangement to supplement an occupational pension
scheme as longs as the anticipated benefits from the two schemes
together are less than the maximum permitted under the rules laid down
by the Inland Revenue.
free trade System whereby goods may be bought and sold without government
interference. The term particularly applies to trade between different
countries.
free trade area Group of countries which have agreed that goods may be sold between
them without government interference.
free trade zone Group of countries which have agreed that goods may be sold between
them without the imposition of any Customs duties or import duties.
free trader Person who believes in free trade.
free trial Period during which a customer is allowed to use goods or services
with a view to possibly buying them.
freeview box Box which connects to a television set allowing some digital channels
to be received without any further payment.
freeware Software that is made available free of charge, often by hobby

programmers or those who wish to establish a reputation. Much
freeware comprises games and novelties, but there are some useful
business programs available. Freeware is usually downloaded from
specialist websites.
free warehouse Warehouse in a free zone where goods may be held without payment of
customs duty or VAT.
freewill offering Voluntary gift to a church, charity or similar body.
freeze Restriction on increasing an amount, such as when wages, prices,

dividends or pension fund are not allowed to increase.
freeze bank American term for a refrigerated stock of perishable goods, particularly
human organs. The quality of the refrigeration affects the value of the
goods.
freezing an account Court order preventing a person drawing money from a bank account or
similar.
freezing order (1) Order which the Pension Regulator may serve on a final salary (or
defined benefit) occupational pension scheme under Pensions Act 2004
s23. The order has the effect of preventing any benefits accruing and
prevents any winding up.
An order may have additional provisions about not permitting new
members or not allowing contributions or payments to be made. The
order is made while consideration is given as to whether to wind up the
scheme.
(2) Order a court may serve on a person preventing them from
transferring assets abroad.
Such an order was previously known as a Mareva injunction.
free zone A designated and approved area where imported goods may be stored
without payment of VAT or import duty. It is created under Customs
and Excise Management Act 1979 s100A.
free zone goods Goods within the designated free zone area which have met the
necessary requirements to gain free zone status.
free zone manager The company authorised in the designation order as the responsible
authority for controlling the free zone.
freight Cost of transporting goods. The word sometimes refers to the goods
being transported.
freight cost Amount paid to transport goods.
freight forward Deal whereby the customer pays for his goods to be delivered.
freight forwarder An intermediary who arranges for the carriage of goods and/or
associated services on behalf of a shipper, importer or exporter.
Freight Transport Association (FTA)

Body which represents the transport interests of companies moving
goods by road, rail, sea and air.
freightage Cost of transporting goods.
French leave Old term for absence from work without permission.
[The French returned the compliment with their equivalent expression
of s’en aller à anglaise.]
French war taxes Taxes levied from 1522 by a specially recalled Parliament (which had
not sat since 1515) to fund the war with France.
frequent absences For statutory sick pay, frequent short absences for sickness. An
employer may seek advice from Medical Services as explained in
HMRC booklet E14. While the matter is being investigated, statutory
sick pay must continue to be paid to an eligible employee.
freshwater fish For VAT purposes, fish for eating are zero-rated but ornamental and
coarse fish are standard-rated. VAT notice 701/15 zero-rates eels,
salmon, trout and “other fish recognised as food for human
consumption”. It standard-rates bream, perch, pike, carp and tench.
friendly alien An alien who is not an enemy alien. The term basically means a citizen
of any non-UK country with which Britain is not at war.
friendly society Body which is similar to a mutual insurance company. A Friendly

Society, registered under the terms of the Friendly Societies Act 1974
or 1992 (or predecessor legislation), is owned and operated for the
benefit of its members. There are limits on the amounts which can be
invested by members but tax privileges are available to policies within
those limits. Some Friendly Societies now operate with separate
sections for 'tax-exempt' and 'ordinary' business.
Their tax provisions are set out in Income and Corporation Taxes
Act 1988 ss459-466.
friendly suit Legal action between two people who are not in dispute but need the
guidance of the court.
friend of the court Legal term for someone not connected with a case but who points out
some matter that the court may otherwise overlook.
friends group Body set up to help another body (such as a church or school) but
which is legally independent of that other body. Its funds are therefore
not aggregated with the other body.
fringe benefit Something provided by an employer to an employee as a benefit

additional to salary. Most such benefits are taxable as a benefit in kind.
frippery Worthless item. A fripper was originally a seller of old clothes.
FRN Floating rate note.
from In accounting, this common preposition includes the first number or

date, so “from 1 July 2010” includes 1 July 2010, whereas “after 1 July
2010” means from 2 July 2010.
In law, this usage is less precise. In the case Cartwright v Cormack
[1963], the first day was held to be excluded. To avoid ambiguity,
many statutes and legal documents have precise phrases such as “on or
after 1 July 2010”.
frontager Person who owns land that abuts a highway, river or shore.
front bench Spokesman for a political party, so-called because he sits on a front
bench in Parliament.
front end Description of the beginning of a period, particularly of insurance or

investment.
front end loaded Description of an insurance or investment scheme where most of the
charges are made in the early period.
front (1) Start, such as of a contract period, and used in expressions such as
“payment up front”.
(2) Side of a building which contains the main entrance or is visible
from the street.
(3) False persona assumed by a person to conceal their real nature.
front-ended Description of a tax relief that is given straight away, as against a back-
ended relief which is given later, such as on the disposal of an asset.
frontier Any place where goods are still to be notified formally to HM Customs
and Excise by placing them under a nominated customs procedure.
frozen Description of an amount which is not allowed to increase or decrease.
frozen account Account whose amount is not allowed to increase or decrease.

In relation to terrorist assets, this means “an account with a relevant
institution which is held or controlled (directly or indirectly) by a
designated person” (Terrorist Asset-Freezing etc Act 2010 s16(5)).
frozen assets Assets which cannot be sold, usually because there is a legal process in
hand whereby someone is making a claim against them.
frozen credits Credits in an account which cannot be moved.
frozen food For VAT, food that is sold frozen but must be thawed before eating is
zero-rated as food. Food that is sold to be eaten while frozen (such as
ice cream) is generally standard-rated. The exact scope is set out in
VAT notice 701/14.
frozen pension Pension fund where the amount does not increase and whose value in
real terms therefore reduces each year by inflation.
Before 1 July 1988, an early leaver in an occupational pension
scheme had a frozen pension whose value when he eventually retired
could be much less than when the scheme was frozen. Since 1 July
1988 the benefits of such a deferred member must be uplifted each
year by the lower of inflation and 5%. It is still possible to encounter
frozen pensions overseas.
FRRP Financial Reporting Review Panel
FRS Financial Reporting Standard.
fructus industriales Latin: fruits of industry. Crops which are the result of human effort,
such as cereals and potatoes. The tax implication is discussed in the
fructus naturales Latin: fruits of nature. A description of crops which grow naturally such
as grass and timber. The tax implication is discussed in the Inspectors’
Manual at BIM35410.
fruit machine Gambling machine where a lever is pulled to set wheels spinning. If
they stop with the same picture of fruit appearing across the wheels, the
player wins a multiple of his stake. Some other symbols were used,
including a bell on machines made by the Bell Fruit company. The
early machines not only used fruit pictures but dispensed small pieces
of fruit as prizes.
frusta legis auxilium quaerit qui in leges committit

Latin: he who offends against the law vainly seeks the help of the law.
frustration In law, the situation where a contract cannot be completed because of

an eventuality outside the control of either party. This is a principle of
common law and Law Reform (Frustration of Contracts) Act 1943.
Frustration has the effect of voiding a contract, putting the parties
back in the position as if they had not contracted at all. This usually
means that any money paid by one party to the other must be repaid.
F&S Fox and Smith’s law reports.
FSA Financial Services Authority.
FSAVC Free-standing additional voluntary contribution.
FSAVCS A registered pension scheme that was originally approved by the Board
before 6 April 2006 as a retirement benefits scheme by virtue of section
591(2)(h) Income and Corporation Taxes Act 1988, established by a
pension provider or the trustees of an approved centralised scheme for
non-associated employers to which the employer does not contribute
and which provides benefits additional to those provided by a scheme to
which the employer does contribute.
FSC Financial Securities Centre.
FSCS Financial Services Compensation Scheme.
FSD Final Supplementary Declaration.
FSR Fleet Street Reports, series of law reports from 1963.
F Supp Federal Reporter Supplement, series of US law reports.
FT Financial Times
FTA Freight Transport Association
fte Full time equivalent.
FTE Full time employment.
FTII Fellow of the Chartered Institute of Taxation.
FTLR Financial Times Law Reports, published from 1986 to 1988.
FTP File Transfer Protocol, in computing.
FTRS Full Time Reserve Service (in armed forces).
FTSE An index compiled by the Financial Times that is made up of all the
companies listed on the UK Stock exchange (over 800).
The purpose of the index is to provide a benchmark of the
performance of the stock market as a whole. This benchmark is often
used to measure the effectiveness of a fund manager.
An annuity which is payable for a fixed period regardless of whether
the annuitant survives, and thereafter only while the annuitant is alive.
Annuities guaranteed for 5 years are very commonly used in
conjunction with pension arrangements.
FTSE-100 Index of the stock market prepared by the Financial Times based on the
value of shares for the 100 leading UK companies.
FTWA Full-time working abroad.
FUD Fear, uncertainty and doubt. Three negative factors in marketing.
fuel benefit Another term for car fuel benefit, when an employee is provided with
petrol or other road fuel for private use.
fuel duty stabiliser Mechanism to reduce the duty on road fuel when the price of raw
material rises, and vice versa. This would reduce the fluctuations in
petrol and diesel prices. It was proposed in 2010.
fuel oil Heavy oil which contains in solution an amount of asphaltenes of not
less than 0.5%, or which contains less than 0.5% but not less than 0.1%
of asphaltenes and has a closed flash point not exceeding 150°C
(Hydrocarbon Oil Regulation 2).
fuel poverty Inability of a person to afford to buy sufficient fuel for a reasonable life.
The government may make schemes to address fuel poverty under
Energy Act 2010 s9. Other provisions include the winter fuel
allowance and cold weather payments.
fuel substitute Anything used in place of a hydrocarbon oil as a motor fuel. A fuel
substitute bears the same rate of excise duty as the fuel it replaces.
fugam fecit Latin: he has made flight.
Fugger Family of wealthy German merchant bankers of 16th and 17th centuries.
The term has come to mean a wealthy person.
fugitive offender Person who has committed an offence in another country, particularly a
Commonwealth country or British dependency.
full age Age at which a person is legally regarded as an adult.

From 1 January 1970, this has been at the age of 18 (Family Law
Reform Act 1969 s1). Previously, the age was 21.
full birth certificate Certificate providing full details of a person’s birth, as against a short
birth certificate which provides just a summary.
full cover In insurance, description of a policy which covers all risks.
full gender recognition certificate

Certificate which conclusively re-registers a person under an acquired
gender (Gender Recognition Act 2004 s25). There are interim and full
certificates.
full house (1) In theatres and similar establishments, when all tickets have been
sold for an event and revenue is therefore maximised.
(2) In gambling, a five card hand consisting of trips and a pair.
full indexation Where a figure increases in line with an index regardless of how large
that increase is. This applies particularly to index-linked pensions and
some forms of savings, such as National Savings.
Where a figure increases by an index but only to a predetermined
limit, this is known as limited price indexation (LPI). An example is
LPI providing RPI-indexation to a limit of 5%. If the RPI increases by
3%, the pensioner receives 3% indexation. If the RPI increases by 6%,
the pension receives only 5% indexation.
full licence Licence which is not provisional, particularly for driving a motor
vehicle.
full price Price with no discounts offered.
full production costs All the costs of producing an item, including all fixed and variable
costs.
full rate Full charge for a service with no discount.
full repairing lease Lease of property on terms whereby the tenant must pay all costs for
keeping the property in good repair.
full scale Of the full size, as against a small scale or trial project.
full service banking Banking which offers a comprehensive range of other financial
services.
full time Description of employment which relates to the complete range of

working hours, usually at least 30 hours a week.
full time education For social security, a condition that may have to be met to claim a
particular benefit. The conditions are usually that person is under the
age of 19 and attends a course of education for at least 21 hours a week.
full-time employee For the purposes of loans for employee-controlled companies, the term
means “an individual the greater part of whose time is spent working as
an employee or director of the company or of a 51% subsidiary of the
company” (Income Tax Act 2007 s396(5)).
full time equivalent (fte) Method of counting the size of the workforce, particularly when it
includes part-timers.
Each part-timer is counted as a fraction of a full time worker, so
someone who works three days out of five counts as 0.6. These
fractions may be added to give the fte figure for a department or
organisation.
full-employment equilibrium
Economic term for the level of national income at which everyone who
wants to work can do so.
Classical economists argue that the economy automatically tends to

this equilibrium. Keynesians argue that it is the role of government
policy to produce this equilibrium
full-service factoring Debt factoring where the factor takes over the whole administration of
the sales ledger.
full-time minister In relation to accommodation expenses, means “a person in full-time

employment as a minister of a religious denomination” (Income Tax
full-time work Term used in connection with eligibility for certain social security
benefits. For employment support allowance, the term means working
for at least 24 hours a week.
full-time working director

For the purpose of calculating the tax on benefits in kind, “a director
who is required to devote substantially the whole of his time to the
service of the company in a managerial or technical capacity” (Income
Tax (Earnings and Pensions) Act 2003 s6y7(3)).
fully diluted earnings per share

Earnings per share calculated on the basis that all options to buy
shares have been fully exercised.
fully paid Description of shares on which the amount of share capital has been
paid in full to the company.
fully paid up capital Shares where all the funds to buy them have been paid.
fully reportable Description of savings income that must be reported in full by the
paying agent.
fumage Another name for chimney money.
function (1) Purpose or duties of a person, department or organisation, as in

functions of HMRC.
(2) Occasion whose main purpose is to allow people to meet socially.
(3) Option assigned to a function key in computer software.
functional budget Budget relating to a specific function in an organisation, such as

marketing or personnel.
functional currency Currency of the primary economic environment in which the entity
operates (FRS 13).
functional fixed asset Item of tangible property which is intended to further the purposes of
the organisation. The term is particularly used for charities.
functions In relation to HMRC, Finance Act 1989 s182 apportions these between:
• tax functions
• tax credit functions

• child trust fund functions
• social security functions.
This category applies in relation to the disclosure of information to
HMRC and the penalties for non-disclosure.
HMRC has other functions (eg national minimum wage, rateable
values and Customs controls) that are covered by separate legislation.
functus officio Latin: having discharged his duty.

This is a legal principle that once sentence has been passed, the
judge cannot change his mind and alter the sentence or verdict, or hear
new evidence.
fund (1) Amount of money available to an organisation and categorised

according to how it may be spent.
(2) General term for any investment vehicle which pools together the
money of many small individual investors and invests it in certain
markets and securities according to a defined set of investment aims
and objectives. Covers such investments as unit trusts, investment trusts
and pension plans.
fund accounting Preparation of accounts for an organisation which has the nature of a
fund.
fundamental analysis In investment, research for decision making based on the accounts of
the companies under consideration.
fundamental assumption Basic assumptions for producing accounts.
fundamental breach Breach of contract that is so serious.....
fundamental issues In accounting, matters which relate to an organisation’s assets or

liabilities.
fundamental research In investment, examination of the basic factors which affect a market.
fundamentals The underlying economic factors affecting a particular market, country

or sector and will include such aspects as industrial output, wages and
raw materials costs, currency strength or weaknesses, trade balance and
so on.
funded company Company which is funded by another (Income and Corporation Taxes
Act 1988 s209(11)).
funded scheme In pensions, a scheme where sufficient money is held in a fund to meet
its obligations (SSAP 24).
funding bond A bond, stock, share or similar security or other certificate of

indebtedness. Businesses which pay interest on loans may using a
funding bond rather than pay cash.
The use of a funding bond has tax consequences. The main one is
that the bond is treated as a payment of interest in cash to the value of

the bond when issued. This usually means that 20% tax must be
deducted.
funding bond General term for a share, security, bond or other form of certificate of
indebtedness. It is sometimes used instead of cash to pay a dividend.
The tax provisions for a funding bond are found in Income Tax
(Trading and Other Income) Act 2005 s380 as amended. This basically
requires the bond to be treated as a cash payment with the usual tax
deducted at source.
funding lease In tax law, the term that Finance Act 2006 gives to what is usually a
finance lease.
Under the tax provision, the lessee and not the lessor is entitled to
the capital allowance provided the lease is:
● a finance lease under GAAP in the accounts of the lessor;
● one where the present value of the minimum lease period is
equal to or greater than 80% of the fair value of the leased plant; or
● one where the term of the lease is more than 65% of the
remaining useful economic life of the leased asset.
A funding lease is then classified as either a short lease or a long
funding lease, where the former usually has less than five years to run.
funding level In pensions, amount held by the fund as a ratio to the acturial value of
the fund’s requirements to meet its obligations.
funding plan In pensions, the timing of payments to meet the future cost of pension
benefits.
fund management Business of dealing with money provided by clients.
fund manager Person employed to invest money on a collective basis, such as for a
unit trust.
Fund Managers Association (FMA)

Body which represented investment fund managers. In February 2002,
it merged with the Association of Unit Trusts and Investment Funds to
form the Investment Managers Association.
fundo Portuguese: fund
fund of funds (FOF) A collective fund, such as a unit trust, which invests in other funds.
They have the advantage of very wide risk-spreading but can have the
disadvantage of two sets of charges.
fund raising Any activity primarily conducted to generate income such as for a
charity or voluntary body.
A business that does this commercially is regulated by Charities Act
1992 ss59-64.
funds Imprecise term that means the liquid resources available to a person or
business either generally or in a specific context.
For terrorist assets, the term is defined to mean “financial assets and
benefits of every kind, including (but not limited to) —
(a) cash, cheques, claims on money, drafts, money orders and
other payment instructions;
(b) deposits with relevant institutions or other persons,
balances on accounts, debts and debt obligations;
(c) publicly and privately traded securities and debt
instruments, including stocks and shares, certificates representing
securities, bonds, notes, warrants, debentures and derivative products;
(d) interest, dividends and other income on or value accruing
from or generated by assets;
(e) credit, rights of set-off, guarantees, performance bonds and
other financial commitments;
(f) letters of credit, bills of lading and bills of sale;
(g) documents providing evidence of an interest in funds or
financial resources;
(h) any other instrument of export financing”
(Terrorist Asset-Freezing etc Act 2010 s39(1)).
funds in court Money held by a court for the benefit of someone, usually while
beneficial ownership is being litigated.
For capital gains tax purposes, the court is regarded as a nominee
funds statement American term for an analysis of changes in working capital that all
public corporations must report.
funeral expenses Reasonable funeral expenses are allowable as a deduction from a

person’s estate for inheritance tax purposes under Inheritance Tax Act
1984 s172. Reasonable expenses include the cost of a tombstone
(statement of practice SP 7/87) and mourning costs for the family
(extra-statutory concession F1).
funeral expenses grant Social Fund payment to a person on means-tested benefits who
becomes responsible for arranging a funeral.
fungibility Ability of one thing to be exchanged for another.
fungible assets In accounting, “assets that are substantially indistinguishable one from
another, in that there is no basis on which to distinguish between them
in economic terms” (FRS 18 para 10). The FRS continues with further
explanation.
Fungible assets may be a quantity of indistinguishable assets, such
as a stock of washers, or may be a quantity of gas or liquid.
furcam et flagellum Lowest form of tenure in the middle ages. The term is Latin for gallows
and whip, indicating their total dependence on their master.
furlong Imperial unit of length common in horse racing. It is equal to 220

yards, 660 feet or 201.168 metres. There are 8 furlongs in a mile.
furnished holiday lettings (FHL)

Activity that has elements of both trade and investment, and therefore
has its own tax provisions.
If provided by a company, it is generally taxed as a trade under
If provided by an individual, it has some of the benefits of a trade in
terms of loss relief.
furnished letting Property which may be rented with furniture provided.
Furniss v Dawson Landmark tax case from House of Lords in 1984.

The case established that where a pre-ordained series of transactions
includes steps which have no commercial purpose other than avoiding
tax, those steps may be ignored for tax purposes. This considerably
reduced the scope of tax avoidance and ended many schemes.
The test case concerned two family companies who wished to sell
their shares to an unconnected company. They effected this by first
selling their shares to a Manx company which sold them to the
company, taking advantage of the law as it then was.
further advance Additional loan to an existing loan or mortgage.
further assurance In contracts for property, a covenant to make to the purchaser any
additional assurance that may be necessary to complete the title.
further charge Another name for a further advance.
fusel oil Nauseous oil produced in distillation of spirits. A distiller must

measure the quantity and strength of fusel oil before disposing of it.
Alcoholic liquor duty is not charged on fusel oil with a strength below
8.7% abv. HMRC must be notified if the distiller wishes to keep fusel
oil, such as to use as fuel.
future delivery Contractual term where delivery of goods is to happen at a future date.
future economic benefits In accounting, term used to define an asset. An asset must be capable of
generating future economic benefits, not necessarily on its own.
An asset may be so recognised if the benefit is uncertain, but not if
it is remote. Something acquired as an asset is accounted as such, even
if it can become a liability, as in a forward contract.
future estates Estates which have yet to come into existence. Such estates may be
created by trusts, wills, contracts or by other means. Since 1925, such
an estate is an equitable interest.
future goods Goods for sale which are not yet in the ownership or possession of the
seller, unlike existing goods. (Sale of Goods Act 1979 s5(1)).
future plans Tautology which simply means “plans”. You cannot plan for the past.
future shock Term once used to denote the stress and disorientation felt by salesman
faced with constant changes in the market.
future value (FV) Value to which a sum of money will increase over time.
futures Obligation to buy or sell a specific amount of a commodity, currency

or financial instrument at a particular price on a stipulated future date.
The price is established between buyer and seller on the floor of an
exchange, such as the London International Financial Futures Exchange
(LIFFE). Futures contracts may themselves be traded.
futures contract Contract for the purchase of commodities at a future date.
futures exchange Market, such as LIFFE, where futures contracts may be traded.
fuzzy logic Computer application which seeks to interpret data in a human way. It
is similar to artificial intelligence.
Photographing an object is an ordinary computer application.
Identifying the objects is fuzzy logic.
Taking a film of a crowd is an ordinary computer application.
Detecting movements and gestures which could indicate trouble is
fuzzy logic.
FV Future value.
FVA Fair value of the assets (as used in Income and Corporation Taxes Act
1988 s444ABB).
FWO Freewill offering, in churches.
FY Financial year.
FYA First year allowance
FYROM Former Yugoslav Republic of Macedonia - Macedonia's identity

remains contentious and it is still referred to formally as the Former
Yugoslav Republic of Macedonia (FYROM). International recognition
of FYROM's split from Yugoslavia in 1991 was held up over Greek
fears that the country's name implied territorial ambitions toward the
northern Greek region of Macedonia. The country gained UN
membership in 1993 under the name Former Yugoslav Republic of
Macedonia.
G
G For council tax, the second highest band of property values (except for
Wales). The band applies to these property values:

A band G property pays council tax at a rate of 1⅔ the rate of an
G7 The seven countries with the largest economies. They meet

occasionally to discuss economic matters.
Members are Canada, France, Germany, Italy, Japan, UK and USA.
This became G8 in 2006 when Russia was added.
G8 The G7 countries to which Russia was added in 2006.
G20 The twenty countries with the largest economies. They held a summit
meeting in 2007 and an important meeting in 2009.
GAAP Generally accepted accounting principles.
GAAR General anti-avoidance rule.
gabelle French tax on salt between 1286 and 1790.
GAD Government Actuary Department.
GAD tables The Government Actuary's Department Tables on a single life basis.
gager de deliverance Give surety for the delivery of goods.
gain (1) In accounting, means all profits, surpluses and other gains.
Statement of Principles defines gains as “increases in ownership
interest not resulting from contributions from owners” (para 4.39).
(2) In tax, the term gain is usually distinguished from profit to mean a
capital gain.
(3) For fraud, the term means a gain in money or other property,
whether that gain is temporary or permanent.
Property means any property, real or personal, including things in
actions and other intangible property (Fraud Act s5(2). A gain includes
keeping what one has in addition to getting what one does not have
(ibid s5(3)).
gains referable to gross roll-up business

In relation to the taxation of insurance companies, “gains which:
(a) accrue to an insurance company on the disposal by it of assets of
its long-term insurance fund, and
(b) are referable.... to gross roll-up business.
(Income and Corporation Taxes Act 1988 s436B(2)).
Gaitskell, Hugh English Labour politician (1906-1963) who was Chancellor of the
Exchequer from 19 October 1950 to 26 October 1951 in the
government of Clement Attlee. The Korean war added to the financial
strains from the second world war which led him to introduce
prescription charges that have remained ever since.
From 1955 to 1963, he was Leader of the Opposition.
gallon Imperial unit of liquid capacity equal to 8 pints, 277.42 cubic inches or
4.546 litres. The measure was the basis of alcoholic liquor duty before
1980.
galloping inflation Colloquial term for inflation which seems to be out of control.
gambling Any form of wager. The elements are that a person places money on the
basis that if an unknown future event happens, that sum and further
money will be repaid.
Gambling is not a trade (Graham v Green ]1925] 9TC309).
However being a bookmaker can be a trade (Partridge v Mallandaine
[1886] 18QBD276).
This definition also applies to insurance, the difference is that
insurance is intended to compensate for a loss already suffered, whereas
gambling is for gratuitous gain. This can be an issue in investing, where
such financial instruments as options and futures can be used for either
gambling or insurance.
Traditionally, gambling has been seen as immoral. The commonest
reason is that it is addictive and can easily lead to ruin. For this reason,
the UK has a policy of imposing severe restrictions on gambling,
without banning it.
The two common forms of gambling are gaming and betting. The
former is gambling on a chance event, such as the throw of a dice. The
latter is gambling on a future event, such as the result of a horse race.
gambling Means gambling, betting and participating in a lottery (Gambling Act

2005 s3).
gambling Staking a sum of money on an uncertain outcome on the basis that a

larger sum may be won or the stake is lost.
Gambling Commission Body corporate established under Gambling Act 2005 s20 as a
successor to the Gaming Board for Great Britain.
gambling policy In marine insurance, a policy where the supposed beneficiary has no
insurable interest. Such a policy is void, and attempting to effect such a
policy is an offence under Marine Insurance (Gambling Policies) Act
1909 s1.
gambling software operating licence

Licence issued by Gambling Commission to someone who
manufactures, supplies, installs or adapts gambling software
(Gambling Act 2005 s65(2)(i)).
gambling software Computer software “for use in connection with remote gambling” but
which is not solely for use in a gaming machine. A licence is needed to
produce such software under Gambling Act 2005 s41.
game of chance For the purposes of gambling, a game of chance is one which either
requires no skill from the participants (as in a lottery), or which
requires some skill, judgment or knowledge on their part, but “the
requirement cannot reasonably be expected to prevent a significant
proportion of persons who participate in the arrangement of which the
process forms part from receiving a prize” (Gambling Act 2005 s15(5)).
gaming Game of chance played for winnings, such as bingo and whist drives.
To be gaming, every participant must have a chance of both winning
and losing.
Above a certain limit, a licence is needed.
Gaming Board for Great Britain

Body set up to oversee gaming activities. It is replaced by the
Gambling Commission under Gambling Act 2005 s20.
gaming duty A duty payable on the gross gaming yield for premises where gaming
takes place. It applies only to certain specified games, or to games
essentially similar to them.
gaming machine “A machine which is designed or adapted for use by individuals to

gamble (whether or not it can also be used for other purposes)”
(Gambling Act 2005 s235(1)).
S235(2) excludes from the scope ordinary computers, telephones
and other communication equipment, machines for placing bets, lottery
ticket dispensers, bingo machines and machines for games of chance.
For VAT purposes, it is defined as a machine where these
conditions are satisfied:
“(a) it is constructed or adapted for playing a game of chance by means
of it; and
(b) a player pays to play the machine (except where he has the
opportunity to play payment-free as a result of having previously
played successfully), either by inserting a coin or token into the
machine or in some other way; and
(c) the element of chance in the game is provided by means of the
machine” (Value Added Tax Act 1994 Sch 9 Group 4 Note 3).
The term includes AWP machines, crane grabs and pinball
machines.
gangmaster “A person (A) acts as a gangmaster if he supplies a worker to do work

to which Act applies for another person (B)” (Gangmasters (Licensing)
Act 2004 s4(2)). This law was passed in the wake of a tragedy.....
Gangmasters have commonly been used for harvesting. A farmer
would make a single deal with a gangmaster who would provide the
labour. In 1867, the law was changed outlawing using children under 8,
and requiring a gang-mistress if older girls were used.
Gangmasters Licensing Authority

Body corporate established under Gangmasters (Licensing) Act 2004
s1.
gaol Prison. In USA, it is spelled jail. The words have the same
pronunciations.
gaol delivery Right of a judge to have prisoners awaiting trial released from gaol to
him to hear their case. This right is now contained in Courts Act 1971.
gap analysis In marketing, an examination of the market to identify any need not
otherwise being satisfied.
gap financing Additional loan to cover a need for which finance is not otherwise
available.
gap financing American term for a temporary loan to cover any shortfall in funding
between the maximum permanent loan and the floor loan.
A floor loan provides funds according to the amount of floor space
that has been built during construction.
gap year Period of about one year when a person who has completed a course of
education delays the start of work or further education, for such a
purpose as travelling or gaining experience in a different environment.
gap year travel insurance Another name for backpacker insurance.
garage For council tax, a garage is not a chargeable dwelling unless it belongs
to a property for domestic occupation or has a floor area of up to 25
square metre and is used primarily to house a car.
gas One of the states of matter, of which the other two are solid and liquid.
In particular, the term is used for flammable gas used for heating and
power.
For VAT, the supply of gas for fuel is a supply of goods. When
supplied for domestic or charity use it may be reduced-rated under
Value Added Tax Act 1994 Sch 7A Group 1. Further details are
provided in VAT notice 701/19.
Gases that are not used for fuel (such as nitrogen and chlorine) are
generally not zero-rated, even if combustible (such as hydrogen), except
that oxygen and anaesthetic gases may be zero-rated or exempt as a
health supply, as explained in VAT notice 701/31.
Gas as road fuel is always standard-rated.
gas oil “Means heavy oil of which not more than 50 per cent by volume distils
at a temperature not exceeding 240°C and of which more than 50 per
cent by volume distils at a temperature not exceeding 340°C”
(Hydrocarbon Oil Duties Act 1979 s1(5)).
GAS Government Accounting Service
gateway General term for any form of entrance. For tax, the term is commonly
used for the access to government files relating to an individual,
particularly for tax returns and tax credits. The individual is allocated a
12-digit user ID number.
Gateway Agent Identifier A form of user ID issued by HMRC to tax agents which allows the
agent to file returns on behalf of clients.
gatekeeper Person in an organisation who controls the flow of information to and

from management.
gateway test Term used in relation to worldwide debt cap. The gateway test
compares UK net debt with worldwide gross debt.
GATT General Agreement on Tariffs and Trade - the agreement was designed
to provide an international forum that encouraged free trade between
member states by regulating and reducing tariffs on traded goods and
by providing a common mechanism for resolving trade disputes.
General Agreement on Tariffs and Trade (GATT) membership now
includes more than 110 countries.
gauging For spirits production, “the process by which a vessel is calibrated”

gavel Payment to a superior, as rent, tribute or similar.

[The word also means a small hammer as used by an auctioneer.]
gavelkind Traditional form of property inheritance in Kent which basically

devolved a man’s properly to all his sons equally. It was abolished by
Law of Property Act 1922 and Administration of Estates Act 1925.
GAYE Give As You Earn.
gazette Official publication which prints statutory notices and other formal
statements. With a capital G, the word means The London Gazette
which publishes royal proclamations, orders in council and other formal
legal statements. The Gazette may be used as evidence for many
purposes.
gazumping Practice of offering a higher price to persuade a seller to sell an item to

you rather than to an existing potential purchaser. The practice relates
almost exclusively to houses.
GCCR Goode Consumer Credit Reports, a series of law reports first published
in 1882.
GCR Group capital resources.
GCRR Group capital resources requirement.
geared growth In tax, an avoidance method developed to breach the limits that
otherwise apply to company share option plans. The method was
made ineffective by Finance Act 2010 s39 from 24 March 2010.
gearing Relationship between two figures whereby a small increase in one

figure can lead to a large increase in another.
The term is particularly used in business to mean the ratio between
debt capital to equity capital. A company which is highly geared has a
relatively greater ratio of debt capital. This magnifies the benefit or
detriment to shareholders of a particularly good or bad profit.
gearing ratio The gearing ratio shows the proportion of the total capital of the firm
that is loan capital. It therefore measures the extent to which the
company has borrowed. The higher the gearing ratio, the greater the
proportion of their capital the firm has borrowed and the higher the
interest payments the firm faces will be.
gelatine For VAT, gelatine is zero-rated when supplied for use in food but
standard-rated for purposes such as photography (VAT notice 701/14).
geld (1) A tax, tribute or penalty paid in money.

(2) Dutch: money
gelds Taxes charged in 11th century by William I in addition to the Danegeld.
gem A stone which is regarded as having great beauty and is therefore

widely used in jewellery. Many gems also have industrial uses, because
of their hardness or electrical properties.
Gems are typically crystals. Diamonds are crystals of pure carbon,
while rubies are crystals of aluminium oxide. By far the most valuable
gems are diamonds which are valued separately from all others.
Most gems are naturally occurring minerals, but the term is
sometimes extended to pearls made by oysters and to amber which is
fossilised resin.
Traditionally gems were classified as precious and semi-precious
with the former comprising diamonds, rubies, sapphires, emeralds,
opals and (sometimes) pearls. This classification is now not widely used
as it is too vague.
GEN Part of the Financial Services Authority handbook that contains general
provisions.
gender Whether something is male or female.

Strictly speaking the correct term for people is sex, as “gender” is
restricted to words. However the term “gender” is increasingly being
used for people, presumably because of coyness in talking about sex.
Gender Directive EU directive which requires member states to give equal treatment to
men and women in accessing publicly available goods and services.
gender reassignment Legal and (usually) surgical or hormonal procedure by which a person
comes to be regarded as being of the opposite sex to that in which they
were born. The legal process ends with a gender recognition
certificate.
This change is effective for all purposes including tax, such as
cessation of liability to class 1 national insurance. It is an offence for an
employer to discriminate against someone who has had this procedure
(Sex Discrimination Act 1975 s2A).
For national insurance purposes, the change is only effective from
the issue of the certificate (M v HMRC. TC00638 [2010]).
gender recognition certificate

Certificate which states that a person is legally regarded as having
changed their sex following gender reassignment.
general agent Person who has been given authority to act as agent for another person
on all matters of a particular type.
general annuity contract In relation to taxation of annuity business, “means an annuity contract
so far as referable to general annuity business” (Finance Act 1991 Sch 7
para 16(7)).
general anti-avoidance rule (GAAR)

Tax provision that would generally disallow tax avoidance schemes
without the need for separate legislation for each scheme. A GAAR has
frequently been proposed but not yet introduced, with some exceptions
during wartime.
General Commissioners Lay people, similar in status to magistrates, who heard tax appeals.
They are independent from the tax authorities.
With the Special Commissioners, they comprised the Appeal
Commissioners. They are both replaced by tax tribunals from April
2009.
general earnings Tax term for all employment income except some items which are
counted as employment income. The definition is given in Income Tax
generale tantum valet in generalibus quantum singulare in singulis

Latin: when words are general, they are to be taken in a general sense,
just as words relating to a particular thing are to be taken as referring
only to that thing.
general expenses Routine expenses incurred on a day-to-day basis for normal activities.
general fund (1) Unit trust whose investments are not restricted to a particular area.
(2) For non-profit organisations, a fund which may be used for any
purpose, as against a restricted fund.
generalia specialibus non derogant

Latin: general things do not derogate from special things.
generalibus specialia derogant

Latin: special things derogate from general things.
general insurance Insurance which covers most types of risk, such as for theft, loss and
damage. It does not include life insurance.
General Insurance Standards Council (GISC)

Independent non-statutory organisation established on 3 July 2000 “to
regulate the sales, advice and service standards of its members. The
main purpose is to make sure that general insurance customers are
treated fairly” (GISC website).
general insurer Term used in Finance Act 2007 Sch 11 para 3 in relation to technical
provisions relating to the taxation of insurance business.
Generalised System of Preferences (GSP)

Part of the Customs system for calculating customs duties. A full list of
participating countries is found in the Tariff.
general ledger Ledger which records a organisation’s income and expenditure which is
not recorded in any other ledger.
The term sometimes is used to mean the nominal ledger.
general legacy Legacy of identifiable but not specified property.
general lien Legal right to hold someone else’s goods until they have paid a debt.
For example, a repairer may hold goods until the repair bill is paid.
generally accepted accounting principles (GAAP)

Collective term for all relevant accounting standards.
All accounts used for tax computations must comply with GAAP
(Income Tax (Trading and Other Income) Act 2005 s25).
general manager Person in charge of the overall administration of an organisation.
General Medical Council (GMC)

Statutory body which deals with discipline of medical practitioners. It is
not a court, but must follow the principles of natural justice.
general office Main administrative centre of an organisation.
general partner Partner whose liabilities to the partnership are not limited.
general partnership Partnership where all partners have unlimited liability.
general power “A power or authority enabling the person by whom it is exercisable to

appoint or dispose of property as he thinks fit” (Inheritance Tax Act
1984 s5(2)).
General Protocol “The General Protocol relating to the collaboration of the insurance
supervisory authorities of the Member States of the European Union"
issued by the Committee of European Insurance and Occupational

Pensions Supervisors.” (FSA handbook)
General Prudential Sourcebook

“The General Prudential Sourcebook made by the Financial Services
Authority under the Financial Services and Markets Act 2000.”
general purpose financial report

One of three types of financial report identified by Statement of
Principles for Financial Reporting.
A general purpose financial report is prepared by the entity for
general use and not for a specific purpose.
There are two types of report:
● general purpose financial statements; and
● other types of general purpose financial report.
general purpose financial statement

One of two types of general purpose financial report identified by
Statement of Principles for Financial Reporting.
A general purpose financial statement is prepared by the entity for
general use. It includes the annual accounts, interim statements and the
suchlike.
Most statements produced by an entity are general purpose financial
statements.
general purpose financial statements

Documents containing accounting information which would be
expected to be of interest to a wide range of user groups. For a limited
liability company there would be: a balance sheet, a profit and loss
account, a statement of recognised gains and losses and a cash flow
statement.
general representative “A person resident in the United Kingdom who is authorised to act
generally, and to accept service of any document, on behalf of the firm”
(FSA handbook).
general reserve Money set aside to be used in the future to meet unforeseen
eventualities of any kind. Money side aside for a particular purpose is
called a special reserve.
general secretary For a trade union, this includes someone who holds an office which is
similar (Trade Union and Labour Relations (Consolidation) Act 1992
s119).
general ship Ship which carries goods generally, as against a chartered ship which
carries goods for only particular persons.
general undertaking Undertaking signed by directors of a company which is applying for

listing on the Stock Exchange. The directors undertake to comply with
the Exchange’s listing requirements.
general warrant Warrant for the arrest of people who are not named.
general words Old term for words of description added to the parcel clause in a
conveyance to transfer all the rights of property of the grantor. Such a
clause was made unnecessary by Conveyancing Act 1881.
generation skipping Practice of avoiding inheritance tax by passing property directly to

grandchildren.
Geneva Convention International agreement first made in Geneva, Switzerland in 1864 to

impose humanitarian obligations on countries which capture enemy
soldiers. The Convention was superseded in 1906. It has effect in UK
law under Geneva Conventions Act 1957.
The Red Cross operates under these Convention.
GENPRU General Prudential Sourcebook.
gensaki Japanese bond market where there are agreements for the sellers to
repurchase the bonds at less than 12 months’ notice.
genuine occupational qualification (GOQ)

Characteristic which is needed for a particular job and therefore
disapplies provisions of the sex discrimination law.
Under Sex Discrimination Act 1975 s7, the GOQs are:
● physical strength or stamina;
● dramatic performance or similar entertainment;
● for decency and privacy;
● working in a private home;
● working in premises which do not have adequate facilities
for both sexes;
● working in a single sex establishment;
● working in a country whose customs or laws do not allow a
woman;
● where a job requires a married couple.
Under Race Relations Act 1976 s5, the GOQs are:
● dramatic performance or similar entertainment;
● modelling;
● serving food in an ethnic restaurant;
● providing assistance to a particular racial group.
Many of these provisions are subject to conditions.
genuine occupational requirement

In equality law, an exception to the genuine rule against discrimination
when this is required by the occupation. Examples include a woman to
model women’s clothes, or a black actor to play a black man.
genuine triable issue Real dispute which must be resolved before a bankruptcy may proceed.
geographical designation Indication of place from which goods come. Customs may seize goods
that have a false indication, as explained in Customs notice 34.
geographical immobility Situation where resources do not freely move from one location to
another.
It is a particular problem in the labour market as people are
reluctant to relocate.
geographical segment Geographical area where an entity operates and for which it can
produce segmental reporting (SSAP 25).
geographic segmentation Dividing a market into certain geographic regions eg towns, cities,
countries or neighbourhoods.
geographic spread Investment policy in relation to the countries whose products are held.
George, Henry American political economist (1839-1897) who pioneered the land
value tax and developed the doctrine of Georgism. An attempt to
introduce a form of his land value tax was made in the People’s Budget
of 1909.
Georgism Doctrine espoused by Henry George (USA, 1839-1897) that a man

may own what he creates but everything in nature (such as land,
minerals, water and vegetation) should be commonly owned. He
advanced tax principles to achieve such ends.
Germany Member of the European Union, for which purpose the island of
Heligoland and Büsingen are excluded. Since 1990, Germany includes
the territory previously known as East Germany.
gestation Period of pregnancy between conception and childbirth. For the

purposes of the law on perpetuities this is reckoned as nine months of
30 days.
ghost Something which appears not to exist.

In tax, the term is used for a person not known to the tax authorities.
Gibraltar Order Common name for Financial Services and Markets Act 2000 (Gibraltar)
Order SI 2001 No 3084.
Gibraltar pound Currency of Gibraltar.
GICR General insurance capital requirement.
gift Something which is given to someone without charge, a gratuitous

transfer of property.
For a gift legally to transfer property there must be intention by the
donor to yield his title, and action sufficient to indicate transfer.
For trading profits, a gift is an allowable expense provided that it:
• contains a conspicuous advertisement;
• does not comprise food, alcoholic drink or tobacco; and
• costs no more than £50 (from 1 April 2001. Previous limits

were £10 from 6 April 1985; £2 from 6 April 1971; and £1 from 6 April
1965).
For capital gains tax, a gift is a disposal.
For inheritance tax, a gift may be a potentially exempt transfer,
usually where the donor lives for seven years after making the gift.
For a conditionally exempt transfer, a gift is defined “in relation
to any transfer of value, means the benefit of any disposition or rule of
law by which, on the making of the transfer, any property becomes (or
would but for any abatement become) the property of any person or
applicable for any purpose” (Inheritance Tax Act 1984 s42(1)).
For VAT, gifts are supplies. They may be taxable if their value is
above a de minimis figure.
For income tax, a gift can be a taxable benefit to an employee if in
truth it arises from the employment even where the employee has no
contractual or other legal right to the gift.
Some gifts were subject to stamp duty until 1985.
Gift Aid Scheme which allows tax to be reclaimed on donations.
Gift Aid Tax provisions are contained in Income Tax Act 2007 ss413-430.
gift aid declaration A declaration that complies with HMRC requirements under the Gift
Aid scheme (Income Tax Act 2007 s428(1)).
gift aid supplement Addition to tax refunds to compensate for the reduction in tax rate in
2008. The reduction of the basic rate of income tax from 25% to 20%
reduced the rate of tax recoverable by charities under Gift Aid from
28.2% to 25%. To provide a measure of transitional relief, for two
years, the government will allow charities to reclaim at 28.2% and will
fund the difference itself.
gift and loan trust Discretionary trust where a small sum is settled but a large sum is
lent. The net value of the trust is therefore a small amount. It can be
used to shelter significant capital growth.
gift book Book intended to be given as a present.
gift coupon Card or similar token which can be used to buy goods to a stated value,
often from a stated store or group of stores.
gift in consideration of marriage

Such gifts may attract an exemption from inheritance tax as explained
under marriage.
gift inter vivos Gift given during the lifetime of the donor.
gift saving Term used to describe certain provisions of Perpetuities and

Accumulations Act 1964 that had the effect of allowing gifts in a will to
be effective where they would previously have failed. One of these
provisions is class-closing.
gifts of business assets The capital gains tax implications are set out in Taxation of Chargeable
Gains Act 1992 from s165.
gift token Voucher which may be exchanged for goods in a shop or range of
shops.
Under PAYE, if the token can be exchanged for cash or for
something which is readily exchangeable for cash, provision by an
employer is treated as payment in cash and is subject to income tax
under PAYE and class 1 national insurance. If the token can only be
exchanged for goods, the employee may be liable to pay income tax on
its cost (unless covered by a PAYE settlement agreement or under the
Taxes Award Scheme), and the employer is liable to pay class 1B
national insurance.
giga- Prefix which means one billion, or multiplied by a factor of 109.
gild (1) Voluntary association formed in England in the Middle Ages for
religious, benevolent, economic and social purposes. Many of these
gilds still exist.
(2) Cover or overlay with gold leaf or with any equivalent substance.
gill Imperial unit of liquid capacity, equal to one quarter of a pint, 34.677
cubic inches or 568.26 millilitres. Until 1971, certain alcoholic drinks
were dispensed as submultiples of a gill.
Gillespie ruling Decision of the European Court of Justice in a 2004 case. It held that a
woman receiving statutory maternity pay is entitled to have that pay
recalculated if she receives a pay rise during her maternity pay period.
The Gillespie ruling applies from 6 April 2005.
gilt An abbreviation for gilt-edged securities. These are bonds, loans etc
issued by the UK government or UK local authorities and are generally
considered to be one of the safer forms of investment. Although the
interest rate on the underlying value and the price at maturity are
guaranteed, the price will vary during the lifetime of a gilt; so there is
some element of risk.
gilt-edged securities Gilt-edged securities are a form of long-term government borrowing.

They are a promise to repay in the future and usually have a fixed term
(for example 5 years). They pay a fixed level of interest which is
determined when they are issued. Their value will vary inversely with
changes in the level of interest rates. If interest rates rise, then the fixed
interest gilt will appear less attractive to investors and their value will
fall. However, they are always redeemed at the end for their face value
(original value).
ginger For VAT, the zero-rating for food applies to “ginger preserved in syrup,
drained ginger or dusted ginger... as long as it is not held out for sale as
confectionery”. Standard-rating applies to “crystallised, sugared or
chocolate covered ginger” (VAT notice 701/14).
Ginnie Mae (GNMA) Common name for Government National Mortgage Association. This is
a US-government owned body that raises funds and is traded on the US
stock markets. It is regarded as a risk-free investment.
giro Bank giro.
GISC General Insurance Standards Council.
GISC facility The dispute resolution facility established by the General Insurance
Standards Council.
GIV Gift inter-vivos. A gift made during a person's lifetime as opposed to a

legacy, which passes on death.
Give As You Earn Another name for payroll giving.
Gladstone, William English Liberal politician (1809-1898) who was Chancellor of the
Exchequer for four periods between 1852 and 1882. He was prime
minister for four periods between 1868 and 1894, twice serving himself
as Chancellor.
glass ceiling Invisible barrier that can restrict a person’s progression in an

organisation. The term is often applied in relation to women and
minority groups.
glasses Glasses provided by an employer for someone who works with a

computer screen may be exempt as a benefit under Income Tax
(Earnings and Pensions) Act 2003 s320A.
glebe Land traditionally owned by the church to provide an income to support

the rector or vicar.
global account Aggregate accounts that must be produced by the Council of Lloyd’s.
global accounting Method of accounting for many small items rather than single items.
Such methods are particularly used by retailers who sell large quantities
of low value items.
There is a special VAT procedure when people sell large quantities
of second-hand goods, such as stamp dealers and coin dealers. They
may use the margin scheme for second-hand goods but calculate the
margin on the difference between stock and purchases between
accounting periods.
global credit shock Term used in Budget Report 2009 to describe events in mid-2007.
global macro Investment strategy based on movements in the world economy.
globe For VAT purposes, a globe is not regarded as a map and therefore is
zero-rated under Value Added Tax Act 1994 Sch 8 Group 3, according
to VAT notice 701/10.
Gloucester Railway Carriage

Leading tax case on whether one trade or two is being carried out. The
full name is Gloucester Railway Carriage and Waggon Company Ltd v
CIR [1925] 12TC720.
The company unsuccessfully claimed that hiring railway wagons
was a separate trading from making them. The case is discussed in the
glove-money Old term for a gratuity given to an officer of a court or other servant.
glove tax Excise duty charged between 1785 and 1794 on gloves and mittens in a
similar manner to hat tax. It was considered futile and so repealed
earlier.
GM Gross margin
GMP Guaranteed Minimum Pension.
GMPs Stands for guaranteed minimum pensions and has the same meaning as
in the Pension Schemes Act 1993.
GMW Guaranteed minimum wage.
GNMA Government National Mortgage Association, a US government-owned

body commonly called Ginnie Mae.
GNP Gross national product.
godless florin Nickname for two-shilling coin minted in 1849. The name comes from
the omission of “Dei Gratia” (by the grace of God) in the legend.
going concern The accounting basis which assumes that the entity will continue in
being for the foreseeable future. The opposite is forced realisation.
Users of accounts may assume that accounts have been prepared on
this basis unless the accounts specifically state otherwise.
The position is stated in FRS 18 para 21 thus:
“An entity should prepare its financial statements on a going concern
basis, unless
(a) the entity is being liquidated or has ceased trading, or
(b) the directors have no realistic alternative but to liquidate the
entity or to cease trading,
in which circumstances the entity may, if appropriate, prepare its
financial statements on a basis other than that of going concern”.
Para 23 adds, “when preparing financial statements, directors
should assess whether there are significant doubts about an entity’s
ability to continue as a going concern”.
Auditors are expected to consider this matter. They may express
comments about going concern while not requiring the accounts to be
prepared on an alternative basis. Examples include where there is an
outstanding court case that could bankrupt the company, or where

continuance on business is uncertain.
going concern basis The assumption that the business will continue operating into the
foreseeable future.
going concern value Value of assets or a business on the assumption that it will continue
trading for the foreseeable future.
going private When a public company becomes a private company.

It is the opposite of the much more common going public. Many
companies, such as Virgin, have gone private.
going public (1) When a private company becomes a public company.

(2) When information which has been regarded as private or
confidential is made generally known.
gold Naturally occurring element which has been regarded as a precious

metal from earliest times. It has been widely used as a means of
exchange and store of value. It is still used in coins and for bullion. It
was the basis for the gold standard.
As a chemical element, it has the atomic symbol Au and atomic
number 79. It has a yellow lustre. It is naturally a soft metal and is
usually mixed with at least one twelfth of a base metal (often copper or
nickel) to give it sufficient strength for jewellery and coinage.
The ISO currency code for gold bullion is XAU.
Gold is refined by different processes such as smelting and
inquartation. Its purity is measured in carats where pure gold is 24-
carat. The commonest measure is 22-carat which was used for British
coinage from 1526 to 1930 (known as crown gold) and is widely used
for jewellery.
Gold is also the symbol for 50, so a golden anniversary is a 50th
anniversary.
gold For VAT, a supply of gold between a central bank to another central
bank is zero-rated under Value Added Tax Act 1994 Sch 8 Group 10, as
is a supply from the London Gold Market to a central bank.
Before 1 April 1980, this Group zero-rated all supplies of gold ingot
and gold coins. Gold coins held for investment are exempt from VAT.
goldbricker Colloquialism for an employee who presents himself as more valuable

than he really is.
gold bullion Gold in ingots or similar form of predetermined weight and provenance.
gold coin Coin made from gold, and now used solely as a store of value.
Gold has been a medium of exchange from earliest times. In Britain
gold coins ceased to be used for general circulation during the first
world war (1914-18) when replaced by banknotes. Gold coins are still
produced for bullion purposes. Eight gold coins remain legal tender: the
sovereign, half sovereign and gold £2 and £5 coins, plus the four
Britannia coins.
For VAT, a gold coin is exempt as an investment gold coin if its
purity is at least 900 parts per 1000 and it is one of a long list of bullion
coins produced on EU list C291/23. British coins on this list include
sovereigns and half sovereigns, Britannia coins, gold £2 and £5 coins
and specially minted gold 50p pieces. Before 1 April 1982, gold coins
were exempt simply if they were legal tender in the country of issue.
Details are provided in VAT notice 701/12A.
Gold coins more than 100 years old may benefit from a VAT
scheme for antiques.
gold-digging Practice of looking for someone wealthy to sue, particularly the practice
of investors suing auditors of a company which becomes insolvent.
golden goose Business jargon for a company’s most valuable asset or product.
golden handcuffs Monetary incentive to make it too expensive for staff to leave.
golden handshake Large amount paid to a director or other senior employee at the end of
their employment or service contract. Such payments may be tax-free.
golden hello Payment to an individual to persuade a person to become an employee.

The inspectors’ manual at EIM00700 states that this is taxable as
employment income under Income Tax (Earnings and Pensions) Act
2003 s62. Cases on this include Glantre Engineering Ltd v Goodhand
[1982] 56TC165 concerning an accountant, and Shilton v Wilmshurst
[1991] 64TC78 concerning a footballer.
At EIM00710, this position is qualified when the golden hello is a
payment to give up a right, which is not taxable as employment income.
In Jarrold v Boustead [1964] 41TC70, a signing-on fee paid by a
Rugby League club to a Rugby Union player was held to be
compensation for losing amateur status. (It should be noted that the
rules of Rugby have since changed.)
HMRC state that golden hellos are also subject to class 1 national
insurance, though some commentators question the correctness of this
interpretation.
golden parachute Generous compensation package to laid off staff.
golden rule (1) One of the methods for interpreting an Act of Parliament. (The other
main methods are the mischief rule and literal rule.)
The golden rule means that words are given their ordinary meaning
unless this leads to absurdity. The rule was summarised in the case
River Wear Commissioners v Adamson [1877]. An example of an
unsuccessful attempt at an absurd interpretation in a tax case was
Hallamshire Estates Ltd v Walford. SpC 412 [2004].
(2) Principle announced by Gordon Brown MP when he became
Chancellor of the Exchequer in the 1997 that income and expenditure
must balance over the economic cycle. This was originally defined as
the period from 1999 (when the new Labour government was no longer
following the plans of the previous Conservative government) to
2006/07.
The golden rule has been amended four times. The cycle was
backdated to 1997; spending on roads was excluded; government
subsidy to railways was excluded; and the end of the cycle was put back
to 2008/09.
golden share Share held by the government in certain privatised companies. The
golden share contains special powers such as the right to veto a foreign
takeover bid.
gold fixing System where the price of gold is fixed twice a day in US dollars in the
Gold Exchanges of London, Paris and Zurich.
gold grain Pebble-like pieces of gold, about 3mm in diameter and supplied in
various purities. It is used to make jewellery. From 29 November 1995,
this is included within the scope of gold for VAT purposes.
gold-plating Practice of the British government to add provisions to EU directives,

most of which are written in very general and unspecific terms.
gold point Amount by which a currency linked to a gold standard may vary in
price.
gold reserves A country’s store of gold held to pay international debts.
gold standard International monetary system where the value of currency and other
assets is based on the value of gold.
The UK left the gold standard in 1931.
golf club Whether one is a mutual trade is discussed in the Inspectors’ Manual at
BIM24350.
GOMC Gas Oil Marker Concentrate - a composite marking solution containing

the prescribed gas oil markers quinizarin and Solvent Red 24. GOMC is
used to mark fuel on which duty has been paid at a reduced rate and
which is not, therefore, to be used as fuel for road vehicles.
Gomez case The European Court of Justice decision in Maria Paz Merino Gómez v
Continental Industrias del Caucho SA [2004].
This established that a woman is entitled to take her annual leave
after any period of maternity leave.
good faith For the purposes of bills of exchange, cheques and promissory notes, “a
thing is deemed to be done in good faith, within the meaning of this
Act, where it is in fact done honestly, whether it is done negligently or
not” (Bills of Exchange Act 1882 s90).
good faith When acting from honest motives. It can be relevant in particular
circumstances, particularly:
For the purposes of a holder in due course of a bill of exchange, if
it appears that there was any fraud, duress, force, fear or illegality, there
is not good faith unless the holder proves otherwise (Bills of Exchange
Act 1882 s30(2)).
In employment, good faith means that someone acts from a proper
motive even if the decision subsequently proves to be unwise. This
concept is relevant in such areas as trustee insurance and
whistleblowing.
goods Items for sale which have a tangible form, as against a supply of
services.
In law, goods are all chattels personal other than money, legal
actions and items attached to the ground (such as growing crops).
Various statutes also offer limited definitions:
● “Shall include wares and merchandise” (Factors Act 1889
s1(3)).
•“includes stores and baggage” (Customs and Excise
goods and chattels Moveable personal possessions.

[The term is an example of lawyer’s design to use two terms when one
will suffice, as all chattels are legally goods.]
Goods and Services Tax Canadian tax on goods and services, which operates in a manner similar
to VAT.
Goods In Free Circulation

Goods of wholly Customs Union origin (including component parts), or
goods imported into the Union on which all the import formalities have
been completed, and all the duty due has been paid and not repaid in
whole or part.
goods in transit Goods that are in the process of being supplied from a supplier to a
customer. This is a specific category of insurance risk.
goods received Goods which have been received by an organisation during an

accounting period.
goods received note Internal document which may be produced within an organisation, such
as from a goods yard to the purchasing department as part of the
process for authorising payment of an invoice.
goods vehicle “Vehicle of a construction primarily suited for the conveyance of goods
or burden of any description” (Income Tax (Earnings and Pensions) Act
2003 s115(2) and s235(6)).
goodwill Value of a business above the value of its net assets. It is usually
expressed as a multiple of annual profits.
Goodwill includes internally generated goodwill, but this must
accord with accounting standards. Goodwill is not recognised for tax
purposes just because it appears in the accounts (Greenbank Holidays
Ltd v HMRC [2011] UKUT B11).
Goodwill on acquisition is the difference between the fair value of
the amount paid for an investment in a subsidiary and the fair value of
the net assets acquired.
For tax purposes, a leading authority in goodwill was given in the
case IRC v Muller & Co Margarine Ltd [1901]: “it is a thing very easy
to describe, very difficult to define. It is the benefit and advantage of a
good name, reputation and connection of a business. It is the attractive
force which brings in custom. It is the one thing which distinguishes an
old-established business from a new business at its first stage”.
goose For VAT, geese for food are zero-rated, but ornamental geese are
standard-rated. VAT notice 701/15 states that the former includes
Brecon Buff, Chinese Commercial, Embdem, Roman, Toulouse and
derivatives and crossbreeds of these.
Goschen, George English Liberal politician (1831-1907) who was Chancellor of the
Exchequer from 14 January 1887 to 11 August 1892.
Goulburn, Henry English Conservative politician (1784-1856) who was Chancellor of the
Exchequer for two periods between 1828 and 1846.
gourde Currency of Haiti.
Gourley The legal principle that a court award for compensation should reflect
the tax which would have been payable. For example compensation for
loss of earnings should reflect the tax which would have been payable
on those earnings.
This principle was established in the case British Transport
Commission v Gourley [1955].
governing body For financial services, “the board of directors, committee of

management or other governing body of a firm, or recognised body,
including, in relation to a sole trader, the sole trader” (FSA handbook).
government Collective term for the people and bodies which run the country,
including ministers and Parliament.
Government Accounting Service (GAS)

Part of HM Treasury whose function is to ensure that the government
operates best accounting practice.
Government Actuary Department
government backed Description of any activity, service, product or other thing which the
government supports in any way.
government bonds Gilts and other bonds and securities issued by the government to those
prepared to lend it money. Such bonds are treated by their holders as
investments.
Government capital expenditure

Government spending on assets that last for many years. This may
include investment in hospitals, schools, equipment and roads.
government contract Contract to supply goods or services to a government department or

body.
government contractor Business which supplies goods or services to a government department

or body.
government controlled Description of anything under the control of a government body.
Government current expenditure

Government spending on recurring items. This includes salaries and
wages that keep recurring, spending on consumables and everyday
items that get used up as the good or service is provided.
government economic indicators

Statistics which show how well the country is performing.
Government Gateway An Internet portal operated by the UK Government that provides UK

citizens and businesses with a convenient way to link up their usage of
various online services provided by a range of Government
departments.
government grants (1) Money provided by government to a business. Such state aid is
generally prohibited or restricted under EU law.
Historically various forms of grants were made, of which regional
development grants were particularly important.
(2) Payment by the Government towards the cost of local-authority
services. These are either for particular purposes or services (specific
grants) or to fund local services generally (revenue support grant).
government grants deferred account

The amount of money given to a local authority by government to
spend on assets that have a lasting value, for example, land and
buildings. This amount is reduced each year as the value of the asset
reduces due to wear and tear.
government investment Funds provided by the government to assist a business. Corporation Tax
Act 2010 s92 contains provisions regarding the tax treatment when such
investment is written off.
government loan Money lent by the government.
government regulated Description of activity regulated by the government beyond the general
law.
government sponsored Description of activity sponsored by the government.
government stock Another term for government bonds.
government support Financial, practical or moral assistance provided by the government for
a project or campaign which is run outside the government.
governor (1) Person in charge of an important body, such as Bank of England or

a British colony.
(2) In USA, member of the Federal Reserve Board.
(3) In USA, person who is the head of an individual state. The adjective
for this definition is gubernatorial.
Governor-General includes any person who for the time being has the powers of the
Governor-General, and Governor , in relation to any British
possession, includes the officer for the time being administering the
government of that possession.” (Interpretation Act 1978 Sch 1).
GPP Group Personal Pension.
grace (1) Favour shown, such as allowing an extended time period.

(2) State of mind which promotes kindness.
grace period The specified period after a premium payment is due, in which the
policyholder may make such payment, and during which the protection
of the policy continues.
gradual Slow and steady.
graduate Person who has passed the exams of a university or professional body.
graduated income tax Income tax where the rates increase on successive slices of income.
graduated pension Government-backed additional pension scheme which operated for

employees between April 1961 and April 1975.
The employees bought units at the rate of one for every £7.50
earned by a man or £9 earned by a woman. The maximum number of
units that could be bought was 86 for a man or 48 for a woman. Each
unit buys a small amount of additional pension added to the state
retirement pension.
graduated taxation Tax system where the rate of tax increases in line with income or
(rarely) spending.
graduation of charge System of relief from estate duty granted in respect of gifts and
business assets. Relief was granted by Finance Act 1960 ss64 and 65
respectively. These provisions were repealed by Finance Act 1975.
grain Imperial unit of weight equal to 64.79891 milligrams. There are 7000
grains to the pound, or 437.5 to the ounce.
grain alcohol Ethanol produced by fermentation of grain, as in producing liquor.
graining Crenellations around the edge of a coin.
grand total Final total from adding sub-totals.
granny annex Part of a building built or adapted as separate living accommodation for
a dependant relative (not necessarily a grandmother).
For council tax, this is a separate self-contained unit if a person
can live independently in it. It is not necessary for the annex to have
independent access from outside (James v Williams [1973]).
granny bond A bond issued by the UK government with enhanced interest or tax
privileges but restricted in availability to persons of pensionable age.
grant Donation made to a body, usually as a single payment for a specific

object.
grant ad colligenda bona Grant of representation that is limited to a particular purpose. It

allows the administrator to whom it is granted to deal with an aspect of
a deceased’s estate, such as selling perishable goods.
grant caeterorum Grant of representation that follows an initial grant regarding limited
property. The grant caeterorum gives the administrator power over the
remaining assets.
grant clause Clause in a contract that grants a right, particularly an exclusivity right
for a geographical area in a franchise agreement.
grantee Individual or organization that receives a grant. Also called a donee.
grant funding Provision of funds to a charity, such as from a local authority.

Ordinarily, this is outside the scope of VAT (VAT notice 701/1). It may
come within the scope of VAT, if it takes the form of third party
funding.
grant of confirmation Proof of legal authority required by the person entrusted with dealing
with the deceased’s estate in Scotland.
grant of double probate “A grant of representation where one executor does not wish to prove
the will and the right to join others later is reserved. When the non-
proving executor wishes to take up office later, a grant of double
probate is made. Application for this is made on the form Cap A5C
which is available from the Probate and IHT Helpline on 0845
3020900” (HMRC inheritance tax glossary).
grant of letters of administration

Proof of legal authority required by a person dealing with the estate of a
deceased person, when there is no will or where the will is invalid.
grant of letters of administration with will annexed

Proof of legal authority required by a person dealing with the estate of a
deceased person when there is either a will with no executor named, or
where the executors are unable or unwilling to apply for the grant.
grant of option Giving the option-holder a right to acquire shares in the future.
Options must be granted under seal or deed or for consideration
(usually a nominal amount such as £1” (Inspectors’ Manual at BIM
44001).
grant of representation Proof of legal authority required by a person dealing with the estate of a
deceased person.
grantor Individual or organization that makes a grant. Also called a donor.
grant pendent lite An interim grant of representation which is effective for a limited
sum, such as while a will is being contested.
grants Term used for some ancient taxes such as the two parliamentary grants
of taxation in 1487 of tenths and fifteenths for the Battle of Stokes, at
the end of the War of the Roses.
grasskeep Alternative name for a grazing licence.
gratis dictum Latin: mere assertion.
gratuitous intent Intention for a transfer to be a gift or bounty, even if some charge is
made for it.
Gratuitous intent is a requirement for a disposition to come within
the scope of inheritance tax. If there is no such intent, such as in an
arm’s length sale, the transaction cannot come within the scope of the
tax.
gratuity Money given to someone in appreciation for their services but which is
not legally required, such as a tip.
Such payments are usually subject to income tax in the hands of the
recipient. Whether they are also subject to class 1 national insurance
depends on how it was provided. If paid other by the employer, such as
when a customer leaves cash on a table for the waiter, there is no class
1 national insurance payable. The waiter is obliged to declare the
gratuity to HMRC, but the employer is not obliged to deduct PAYE.
A gratuitous gift can come within the scope of inheritance tax.
gravity In relation to beer duty, “means the ratio of the weight of a volume of
the liquid to the weight of an equal volume of distilled water, the
volume of each liquid being computed as at 20ºC” (Alcoholic Liquor
Duties Act 1979 s3(1)(a)).
grazing licence Licence granted for a period of less than 12 months which allows the
licensee to graze animals or take grass from land for a season.
The existing of such a licence does not affect the ownership of the
land, so agricultural relief at the higher rate may still be claimed for
such land.
grazing rights For VAT, such rights are usually zero-rated unless part of a wider
supply. The exact scope is explained in VAT notice 701/15.
Great Britain Britain (England and Wales) plus Scotland (Union with Scotland Act
1706).
The United Kingdom comprises Great Britain plus Northern
Ireland.
great custom Another name once used for export taxes.
great depression Term used for a period of years in which the economy performed so
badly that there was extreme poverty for a large part of the population.
In particular, the term refers to the period from 1875 to 1882 in
Britain when the crops repeatedly failed because of bad weather.
(Sometimes it used for the Great Slump between 1929 and 1931.)
It also refers to the USA in the 1930s.
greater fool theory Business jargon for the notion that there is always someone willing to
pay a higher price.
great gross The number 1728 as a quantity. This is 144 (gross) multiplied by 12. It
was used for match duty.
Great Teacakes Case Name given to the protracted legislation between Marks and Spencer
plc and Customs and Excise (as it was) which started in 1994 about
VAT on teacakes.
The company sold teacakes were basically chocolate-covered
marshmallow on a biscuit base. The company standard-rated them as
biscuits but in 1994 the court held that they were zero-rated cakes.
The company attempted to claim back all the VAT it had added to
the price since the tax was introduced in 1973. This was restricted by
the three-year cap, which the company challenged, eventually winning
a limited concession from the European Court of Justice.
Customs then refused to repay more than 10% of the £3.5 million
being claimed on the grounds of unjust enrichment in that the
company could not repay the VAT to its customers.
Green Budget Report from the government on what it intends to include in the next
Budget.
green card (1) Special insurance card issued in the UK which allows a car to be
driven in most other countries.
(2) Identity card and work permit issued by the American authorities to
someone going to work there.
green channel Customs term for the exit at a port or airport to be used by a traveller
from outside the European Union, who is carrying no banned or
restricted goods, and no goods in excess of the personal allowance.
green currency Form of theoretical currency once used in the European Union for
making agricultural payments. Each country had its own currency fixed
to this currency, known as green pounds, green francs etc.
green form Form for giving free or subsidised Legal Aid.
green gold Colloquialism for the value which can be obtained by extracting
reuseable materials from waste.
Green Paper Report from the government on intended legislation. Options which are
merely being considered are published in a White Paper.
green pound Form of theoretical currency once used in the European Union for
making agricultural payments in the UK.
green report Part of a company’s report which deals with environmental matters.
greenback Colloquialism for the US dollar, so called because of its prime colour.
Greenbury Report Report published in 1995 as a follow-up to the Cadbury Report. It

dealt with director remuneration.
Green Deal Policy announced in the June 2010 Budget to promote energy
efficiency in the home. (Red Book para 1.79)
greenhouse gas “Any one of the following:

(a) carbon dioxide;
(b) methane;
(c) nitrous oxide;
(d) hydrofluorocarbons;
(e) perfluorocarbons;
(f) sulphur hexafluoride.”
(Climate Change and Sustainable Energy Act 2006 s26(1)).
Basically the same definition is also given in Finance Act 2007
s16(6).
Green Investment Bank Body announced in the June 2010 to promote investment in the low-
carbon economy (Red Book para 1.78).
greenmail Practice of buying many shares in a company, threatening to take it

over, and as a consequence being able to sell the shares back at a profit.
grey market For shares, unofficial market, particularly in new shares which are
traded before the official market opens.
For goods, products that infringe trade marks and copyright. (This
term is used in Customs notice 34).
grey-sourcing Finding staff from retired or elderly people.
groat Silver coin worth 4p (four old pence before decimalisation in 1971).
The coins are still made for Maundy money.
grogging Extracting spirits from the wood of casks. It is illegal under Alcoholic
Liquor Duties Act 1979 s34.
gross (1) A figure which includes an element excluded in the net equivalent.
For example, gross profit is turnover minus cost of sales. Net profit
requires the further subtraction of overheads.
(2) 144, particularly as a quantity of items for sale.
gross assets requirement Requirement that the tax relief under Enterprise Investment Scheme
depends on the company having gross assets no greater than £7 million
before investment and £8 million after investment (Income Tax Act
2007 s142 and s186).
The similar provision for VCT relief (Income Tax Act 2007 s297).
gross attributable tax Aggregate of sums of tax paid by controlled foreign companies in the
territories where they operate. A full and more detailed definition is
given in Income and Corporation Taxes Act 1988 Sch 26 para 4.
gross division approach Method of apportioning an estate where the residue of the estate is
shared between exempt and non-exempt beneficiaries (such as a
charity) so that they each receive the same gross figure before
deducting inheritance tax. This may avoid the need for double grossing
up. The matter was considered in the case re Ratcliffe [1999] STC 262.
Gross Domestic Product (GDP)

“A measure of economic activity. It is the sum of all goods and services
produced by a country over a given time period (usually a year). A rise
in GDP shows the economy is growing, whilst falling GDP means the
economy is contracting. GDP can be measured in three ways:
• Income (the value of the income generated mostly in terms of
profits and wages);
• Output (the value of the goods and services produced); and
• Expenditure (the value of the goods and services purchased).”
(HM Treasury glossary).
gross earnings Total earnings before tax, national insurance and other deductions.
gross equity method In accounting, method where the investor’s share of assets, liabilities,
profits, gains and losses are shown on the face of the balance sheet and
profit and loss account (FRS 9).
gross estate Total value of a person’s property and other assets before deductions
for liabilities such as debts and taxes.
gross floorspace Total external floorspace, particularly of shops and other retail units,
excluding exterior walls.
gross gaming yield The gaming yield consists of two parts. For games where the house is
the banker, the yield is the total value of stakes minus the value of
players' winnings. For games where the bank is shared among the
players, the yield is the total of participation charges ('table money'),
exclusive of VAT. The gross gaming yield is the sum of these two
amounts.
gross income Salary, wages or similar before deduction of tax and national insurance.
gross interest Interest earned before tax is deducted.
gross investment in a lease

Total of lease payments plus residual value accruing to the lessor at a
stated point in time (SSAP 21).
gross margin Sales minus cost of sales before deducting administration and selling
expenses (another name for gross profit). Usually applied when
discussing a particular line of activity.
gross margin ratio Gross profit as a percentage of sales.
gross misconduct Misconduct by an employee which is considered sufficiently serious to

justify summary dismissal.
Examples which may comprise gross misconduct include fighting,
drunkenness, sleeping on duty, repeated disobedience, theft, vandalism,
violent behaviour, possessing illicit drugs and harassment. It should be
noted that the determining factor is not the seriousness of the offence,
but its consequence for any continuing relationship.
ACAS defines gross misconduct as “generally seen as misconduct
serious enough to destroy the employment contract between the
employer and employee and make any further working relationship and
trust impossible”.
Gross National Product (GNP)

Annual value of goods and services produced in a country.
gross pay Amount an employee earns before any deductions are made.
gross premium The actual premium paid by a policy holder before any tax relief or
discount is taken into account.
gross profit Sales minus cost of sales before deducting administration and selling
expenses (see also gross margin).
gross profit Turnover minus cost of sales, but before expenses have been
deducted.
gross receipts Total amount of money received before expenses are deducted.
gross receipts tax Tax that was levied in European countries before they adopted value
added tax. Such a tax was never levied in the UK.
The tax was levied on all sales income, so goods that had passed
from manufacturers and suppliers would be taxed more than once. VAT
avoids this problem by refunding the purchaser’s tax.
gross roll-up business “Business of the following kinds:

(a) pension business;
(b) child trust fund business;
(c) individual savings account business;
(d) life reinsurance business; and
(e) overseas life assurance business”
(Income and Corporation Taxes Act 1988 s431EA).
gross salary Salary before income tax, national insurance and other deductions.
gross sales Income from sales before deductions for such matters as discounts,
commissions and returned goods.
gross spending The overall cost of providing a local authority’s services before
allowing for government grants or other income.
gross tonnage Official weight of a ship as defined under Merchant Shipping Acts.
For VAT purposes, this may be calculated by a special formula given
in VAT Notice 744C where there is not otherwise known. A ship is
generally zero-rated if its gross tonnage exceeds 15 tonnes.
gross transfer to non-technical account

Term used in Income and Corporation Taxes Act 1988 s444AJ(3) in
relation to the taxation consequences when there has been a transfer of
an annuity business.
gross turnover Income from trading activity before most deductions. The figure taken
usually includes any VAT and other duties charged on sales, but
excludes trade discounts given to customers. In short, it is simply a total
of all invoices issued during the accounting period.
gross up Increase a number, so that when a percentage is extracted the original

number is arrived.
The formula is:
G= 100N .
100 – N
where N is the net percentage, and G is the gross percentage.
This means that the Gross equivalent for the net of 20% is 25%.
This means that if you increase a number by 25%, you get back to the
original number by subtracting 20%.
Grossing up is needed in tax for determining the assessable value of
an employee benefit when the employer agrees to pay the tax. It may
also be used in determining prices to allow for discounts.
gross yield Profit from investments before tax is deducted.
ground landlord Person who owns the freehold of a leased property.
ground rent Sum paid by a leaseholder to the owner of the freehold. This is usually
a small figure.
groundwater “All water which is below the surface of the ground and in direct
contact with the ground or subsoil” (Flood and Water Management Act
2010 s6(4).
group Economic entity formed by parent and one or more subsidiaries.

Official definitions include:
●“Parent undertaking and its subsidiary undertakings”
●“A parent undertaking and its subsidiary undertakings” (FRS
2 para 9).
Company law and accounting standards require a group to produce
a single set of accounts as if the group were a single company. This is
known as consolidated accounts.
In taxation, a loss made by one company in a group may be offset
against the profits of another under group relief.
group accounts Accounts of a holding company and its subsidiaries which have been
prepared as if they were one company.
groupage For Customs purposes, a procedure whereby a number of small

consignments are loaded together to form a single, larger consignment.
This must be carried out as part of a contract to transport the goods.
For VAT, care must be taken to ensure that the groupage
arrangement provides enough documentary evidence when goods are
zero-rated on being supplied to a customer in another EU member state.
group annuity contract In relation to taxation of annuity business, “means a contract between
an insurance company and some other person under which the company
undertakes to become liable to pay annuities to or in respect of such
persons as may subsequently be specified or otherwise ascertained
under or in accordance with the contract (whether or not annuities under
the contract are also payable to or in respect of persons who are
specified or ascertained at the time the contract is made” (Finance Act
1991 Sch 7 para 16(7)).
group balance sheet Balance sheet of a holding company and its subsidiaries which has been
group contract A contract of insurance made with an employer or other entity not
formed for the purpose of obtaining insurance that covers a group of
persons identified by reference to their relationship to that entity.
Several different types of insurance may be arranged on this basis,
including life, critical illness, income protection, private medical, etc.
group critical illness scheme

A scheme that will pay a cash lump sum to members diagnosed as
suffering from one of a range of specified illnesses and conditions.
group health insurance Health insurance written on a number of people under a single master
policy, issued to their employer or to an association with which they are
affiliated.
group incentive Incentive provided by an employer to a group of workers, to encourage

them to meet an objective.
group income protection Group Income Protection Insurance (also known as Permanent Health
Insurance, or PHI) gives sick and injured employees a replacement
income, and provides the means for the employer to retain staff even
when they are not contributing to the business. The benefit (typically)
becomes payable when the company's sickness scheme ends and
continues as long as the employee's absence lasts, right up to normal
retirement age.
group life insurance Group Life is designed to pay a benefit, in either lump sum form or as a
dependants' pension, on the death of the member.
group litigation order (GLO)

“An order of a court providing for the case management of actions
which give rise to common or related issues of fact or law” (Finance
Act 2007 s107(6)).
group permanent health insurance

An alternative name for Group Income Protection.
group personal pension (GPP)

An arrangement between a provider and an employer to offer personal
pensions to employees. Charges may be lower because of the numbers
involved, and the employer may also agree to contribute. A GPP is not
an occupational pension scheme.
group profit and loss account

Profit and loss account for a holding company and its subsidiaries
which has been prepared as if they were one company.
group reconstruction “Any of the following arrangements:

(a) the transfer of a shareholding in a subsidiary undertaking from
one group company to another;
(b) the addition of a new parent company to a group;
(c) the transfer of shares in one or more subsidiary undertakings of a
group to a new company that is not a group company but whose
shareholders are the same as the group’s parents;
(d) the combination into a group of two or more companies that
before the combination had the same shareholders” (FRS 6 para 2).
group registration When a group of companies registers as if it were one company. This
applies to VAT. One company in the group must be designated as the
representative member.
group registration When two or more corporate bodies account for tax as a single taxable
person. All members of a VAT group are jointly and severally liable for
any tax due to HMRC from the representative member of the group.
group relief When a loss suffered by one company may be offset against the profit
of another company in the same group. For these purposes, there must
be a 75% relationship. The relief is given by Corporation Tax Act 2010
Part 5.
group results The results of a holding company and its subsidiaries which have been
group scheme In relation to employee share schemes, “ an employee share scheme set
up by the parent company of a group under which share-related benefits
are provided to employees of nominated companies in the group”
group service company Company in a group that provides a service to other companies, such as
payroll.
A reasonable charge from such a company is a tax-allowable
expense, are discussed in the Inspectors’ Manual at BIM38230. If
unreasonable, it may raise issues of transfer pricing.
group subsidiary In VAT, a member of a group registration who is not the

representative member.
growth Expansion, particularly of a business.

Business growth is usually of two kinds: acquisitive growth, where
new businesses are acquired, and organic growth where the existing
business grows through increased activity.
Growth Capital Fund Government-supported fund to provide growth capital of between £2

million and £10 million for small and medium-sized enterprises that
cannot otherwise obtain funding.
growth oriented Description of a portfolio where growth is the prime consideration.
growth stocks In investment, shares or similar security in companies that are expected
to grow in value more than their industry or national average.
GSP Generalised System of Preferences
GST Goods and Services Tax.
GU Gastric ulcer. Common abbreviation for sick notes (HMRC leaflet

E14).
guarantee (1) Period during which faulty goods may be returned.

(2) Legal undertaking to pay someone else’s debt if they fail to pay it.
(3) Obligation to pay a sum to compensate a loss, such as by members
of a company limited by guarantee, or as financial security required
for some warehouse premises and all movements of duty suspended
excise goods from an excise warehouse.
guarantee credit One of two elements of the state pension credit. The other is the
savings credit (State Pension Credit Act 2002 s2).
This element ensures that a pensioner’s income is made up to an
appropriate minimum guarantee.
guarantee credit Part of the pension credit related to income.
guarantee payment Payment made to an employee who would normally be engaged for
work one day but where the employer has no work (Employment Rights
Act 1996 s28). The amount is revised each year from 1 February.
guarantee period The period for which an insurer will guarantee a quoted rate prior to it
being accepted.
The period for which a guaranteed annuity will continue regardless
of the survival of the annuitant
guaranteed annuity rate (GAR)

The minimum rate which a pension provider will pay for a pension.
guaranteed growth bonds

Fixed term investments, typically between 3 and 5 years, where you
invest a lump sum and are guaranteed either a minimum return or that
you won't lose capital.
guaranteed income bond A single premium insurance contract providing payments at regular
intervals for a fixed period at the end of which the premium is returned.
guaranteed minimum pension (GMP)

The minimum pension which an occupational pension scheme must
provide as one of the conditions of contracting out in respect of pre
April 1997 service.
guaranteed return One of the hallmarks of a tax planning scheme of which taxpayers are
advised to be wary, if the taxpayer appears to be involved in no risk.
guaranteed wage Wage which the employer promises will not fall below a stated figure.
Guaranteeing Association
Organisation that is approved by HMRC to issue Transports
Internationaux Routiers (TIR) Carnets.
guarantor Someone who undertakes to pay someone else’s debt if they fail to pay
it.
guarantor The person who undertakes to pay to HM Customs and Excise a sum of
money up to the level of a guarantee, for example a bank or a building
society.
guardian ad litem Person appointed to represent minors in legal action.
guardian’s allowance Addition to child benefit when the child is an orphan.

It is paid under Social Security Contributions and Benefits Act 1992
s77.
GUI Graphical user interface. A graphics-based means of communicating

with a program, especially an operating system or window manager.
guilder Currency of Aruba
guillotine Old piece of office equipment which has a wooden base against which a
sharp lever slices of edges of paper. It is now largely replaced by the
trimmer.
guinea Gold coin first minted in 1663 with a value of 20 shillings, the same as
a sovereign. The name comes from the African country which provided
the gold.
Its value increased to 30 shillings in 1694, fell to 21s 6d between
1698 and 1717, before settling at 21 shillings from 1717. The coin was
last minted in 1813, but the guinea remained as a measure of currency
until decimal currency in 1971, from when it quickly fell from use.
gulden For VAT, gold investment coin issued by Austria and listed in VAT
notice 701/12A.
gutta cavat lapidem Latin: the drop wears away the stone. (Quote from Ovid)
GVS General Valuation Statement.

In Customs, this is a form used as a 'season ticket' in place of
individual valuation declarations.
H
H (1) Suffix used in tax codes up to 2002/03. Until 2000/01, it meant that
the taxpayer was entitled to the higher personal allowance (hence the
letter) or (from 1990/91) the single personal allowance plus the married
couple's allowance. In 2001/02, it denoted that the taxpayer was entitled
to the married couple's allowance and paid tax at the basic rate only. In
2002/03, it indicated that the taxpayer was entitled to the whole of the
children’s tax credit.
(2) Before PAYE was introduced in 1943, tax forms were designated H,
with H1 as the main tax return and H13 as the assessment.
(3) For council tax, the highest band of property values (except in
Wales). It applies to properties of these values:
• in England, above £320,000 in 1993
above £240,000 before;

• in Scotland, above £212,000 in 1993.
A band H property is subject to council tax at twice the rate for an
habeas corpus Latin: have the body.

A writ which requires a person who hold someone in custody to
produce them.
habere facias possessionem

Latin: that you cause to have possession.
habere facias seisinam Latin: that you cause to have seisin.
habere facias visum Latin: that you cause to have the view.
hacker The current popular meaning of the term is to describe those who break
into computer systems or networks, destroy data, steal copyrighted
software, and perform other destructive or illegal acts.
haeres legitimus est quem nuptiae demonstrant

Latin: the lawful heir is he whom wedlock shows to be.
hair powder tax Excise duty charged from 1795 to 1850.
haléru One hundredth of a koruna, currency of Hungary.
half crown Old coin worth 2 shillings and 6 pence. It was introduced as a gold coin
in 1526. It became a silver coin in 1551. It was demonetised on 31
December 1969, before decimalisation.
halfpenny Coin worth half a penny.

Before 1100, they were made by cutting silver pennies in half.
Separate coins were minted from 1135, though they did not enter
general use until 1272. A copper coin was minted from 1672. The last
mintage for circulation was in 1967. The coin was demonetised on 1
August 1969. There were 480 halfpennies to the pound.
In 1971, a decimal halfpenny was issued with a value equal to 2.4
times the old halfpenny. This was demonetised in 1984.
half rate Term sometimes used for the inheritance tax rate payable on lifetime
transfers at half the death rate, ie 20% rather than 40%.
half year Either the first or last six months of a particular year. Listed companies
must publish audited accounts every half year.
hallmark In tax, one of a list of factors that may indicate the presence of a tax
avoidance scheme.
The full list of hallmarks is:
• it sounds too good to be true
• artificial or contrived arrangements are involved
• it seems very complex for what you want to do

• there are guaranteed returns for apparently no risk
• there are secrecy or confidentiality agreements
• upfront fees are payable or the arrangement is on a no win/no
fee basis
• the scheme is said to be verified by a top lawyer or
accountant but no details of their opinion are provided
• the scheme is said to be approved by HMRC (it does not
follow that this is true)
• taxation of income is delayed or tax deductions accelerated
• tax benefits are disproportionate to the commercial activity
• offshore companies or trusts are involved for no sound
commercial reason
• a tax haven or banking secrecy country is involved without
any sound commercial reason
• tax exempt entities, such as pension funds, are involved
inappropriately
• it contains exit arrangements designed to sidestep tax
consequences
• it involves money going in a circle back to where it started
• low risk loans to be paid off by future earnings are involved
• the scheme promoter lends the funding needed.
hall of residence Place in a university or similar establishment where students or others

live. This is treated as residential property for most financial, tax and
rating purposes.
For the purposes of claiming a capital allowance for plant and
machinery in a hall of residence, HMRC Brief 66/2008 explains that no
such claim may be made for plant in residential parts of halls, but may
be claimed for communal parts, such as stairs and corridors, and parts
to which residents do not have access, such as the roof and attic.
Hallstrom’s Australian tax case on whether expenditure was capital or revenue. The
case related to opposing an extension of another company’s patent. The
full name of the case is Hallstrom’s Proprietary Ltd v The Federal
Commissioner of Taxation 72CLR634. The case is discussed in the
halo effect Personnel term for the bad practice of an applicant who does not have
the faults of a previous person, but without making an objective
consideration of the application.
Hampel Report Report published in 1998 on corporate governance, following the

Cadbury Report and Greenbury Report. Hampel proposed no
significant change to corporate governance.
Hampton Implementation Review

Reviews carried out between 2006 and 2008 by Sir Philip Hampton and
Professor Richard Macrory into business regulation.
Its main recommendation is that inspection visits should be targeted
according to the perceived need to do so. This is a move from the one
size fits all approach to business regulation. This approach resulted in

some businesses receiving unnecessary visits while other businesses did
not receive necessary visits. The government accepted this
recommendation.
handling Charge made for handling goods in relation to packing, invoicing and
otherwise preparing them for delivery.
hang fire Colloquialism which means to delay something, hopefully for a short
time. The term is analogy to a gun which is slow in firing.
handset Telephone or other instrument which is used by a person’s hands while

performing another task, such as speaking.
hang up one’s axe Old expression, meaning to retire from business.
Hansard Written record of proceedings in Parliament.

The leading tax case Pepper v Hart [1992] held that the courts may
look to Hansard when interpreting an Act of Parliament.
haraam Forbidden under Islamic finance, particularly the payment of interest.
haram Alternative spelling of haraam.
Harcourt, William English Liberal politician (1827-1904) who was Chancellor of the
Exchequer from 18 August 1892 to 21 June 1895, and from 6 February
1886 to 20 July 1886.
hard currency Stable currency which is widely recognised, such as pound, euro or US
dollar. Where a local currency is weak, traders often revert to a hard
currency.
hard disk The main storage disk in a computer. It is sealed within the body of the
central processing unit.
hard disk player Piece of recording equipment, where the recording is to a hard disk as
in a computer.
hard landing Change in economic policy which has serious consequences for some
people, such as when anti-inflationary policies lead to high
unemployment. The switch to monetarism in 1979 was such an
example.
hard market Market which is strong and considered unlikely to fall.
hardening Description of a market where volatility is reducing and values slowly

increasing.
hardship application For tax hearings, an application to a tribunal that a person would suffer
undue hardship in meeting the requirement to pay a disputed sum as a
condition of starting proceedings on the substantive issue.
For example, an appeal against disputed VAT usually requires the
sum to be paid first, to prevent appeals being used merely to postpone

payment. If the taxpayer cannot afford to pay the sum, a hardship
application may be brought first to dispense with the requirement to
make payment.
The rules for this are set out in The Tribunal Procedure (First-tier
Tribunal) (Tax Chamber) Rules SI 2009 No 273 rule 22.
hardship payment order Court order allowing a payment from an account which has been frozen
by the court.
hardware Tangible computer equipment, as against the software which comprises

the programs, operating systems, data and suchlike.
Hare Hare’s Reports, law reports from 1841 to 1853.
Harmonised System Explanatory Notes (HSEN)

Guidance produced by HMRC on the interpretation of the Harmonised
System classifications. These explain the detailed application of each
code.
harmonisation Process of bringing two or more things together, such as harmonising

tax regulations by making them similar.
Harmonised System (HS)

An international system of classifying and describing goods for tax and
economic purposes.
HS is managed by the World Customs Organisation (WCO). In
the European Union (EU), it is embodied in the Customs Tariff.
Harmonised System Committee (HSC)

The committee of the World Customs Organisation (WCO)
responsible for managing the Harmonised System (HS).
Hastings-Bass Tax case relating to when mistakes by trustees can be reversed. The full
citation is re Hastings Bass deceased [1974] STC 211. The case was
brought by Inland Revenue in who argued that an advancement of
capital was ineffective.
Hastings-Bass was first used by a taxpayer in Mettoy Pension
Trustees Ltd v Evans [1990] to provide relief when trustees fail to take
into account all consequences of their decisions.
The first non-pension case was Green v Cobham [2002]. This
started a series of cases where trustees’ decisions were declared void
when they led to unexpected tax consequences.
The rule was restrained by the Court of Appeal decisions in Futter v
Futter and Pitt v Holt.
hat tax Tax charged between 1784 and 1811 in the form of an annual licence
payable by hat-sellers.
haulage contractor Company whose business is transporting goods.
HAWB House Air Waybill.
HB Housing benefit.
HBOS Company formed in 2001 by the merger of the Halifax, a building

society that had become a bank, and Bank of Scotland.
HC High Court.
HCO Hydrocarbon Oils
headings For Customs duty purposes, the first 4 digits of the commodity code.
headlease Lease from a freeholder to a lessee who may then grant sub-leases.
headline rates Rates of tax that are apparently charged, but where the effective rate is
different.
An example is in relation to taxation of dividends where the
headline rate for a higher rate taxpayer is 32.5% but the effective rate is
25%.
head office Main office of a business which operates from more than one premises.
headquarters Office from which an organisation is directed.
heads of agreement Draft agreement where at least the parties have decided what topics
should be covered in the agreement, even if some of the details have yet
to be agreed.
HEAG Hidden Economy Advisory Group.
Healey, Denis Labour politician (1917- ) who was Chancellor of the Exchequer from 5
March 1974 to 4 May 1979 under the governments of Harold Wilson
and Jim Callaghan. He raised taxes to redistribute wealth, including
income tax basic rate at its record high of 35%. He negotiated a loan
from the IMF in 1976 which led to austerity measures.
health and employment insurance

Premiums paid by an employer may be exempt from tax under Income
Tax (Earnings and Pensions) Act 2003 s325A.
Health in Pregnancy Grant

A grant payable from 6 April 2009 to a woman who is at least 25 weeks
pregnant and who has received advice relating to the pregnancy from a
suitable health professional. The law is Social Security Contributions
and Benefits Act 1992 s140A.
These grants cease to be available for women whose 25th week of
pregnancy is after 31 December 2010, under provisions of Savings
Accounts and Health in Pregnancy Grant Act 2010 s3.
health insurance Insurance against financial losses resulting from sickness or accidental
bodily injury. Included under this definition are accident insurance,
disability insurance and accidental death and dismemberment
insurance. Private Medical Insurance (to provide for the cost of private
- ie not within the National Health Service - medical treatment also
comes under this general heading).
health-screening “Means an assessment to identify employees who might be at particular

risk of ill-health” (Income Tax (Earnings and Pensions) Act 2003
s320B(3)).
Such screening may be exempt from tax.
hearing For tax appeals, means “an oral hearing and includes a hearing
conducted in whole or in part by video link, telephone or other means
of instantaneous two-way electronic communication” (The Tribunal
Procedure (First-tier Tribunal) (Tax Chamber) Rules SI 2009 No 273
rule 1(3)).
hearth money Another name for chimney money, a tax from 1663 to 1689.
hearth tax Tax imposed by Charles II between 1662 and 1688 to fund the restored
monarchy.
heat For VAT, a supply of heat is treated as a supply of goods (Value Added
Tax Act 1994 Sch 4 para 3). As such, supplies for residential use are
generally reduced-rated under ibid Sch 7A Group 1, but standard-rated
for other supplies. Details are given in VAT notice 701/19.
Heathcoat-Amory, Derick English Conservative politician (1899-1981) who was Chancellor of the
Exchequer from 6 January 1958 to 27 July 1960 in the government of
Harold Macmillan.
heating For capital allowance purposes, is treated as an integral feature, which

Heaton v Bell Tax case from 1969 that established the taxable value of a benefit in
kind provided to an employee. In that case, the employee was provided
with a car which he could surrender and receive increased pay. It was
held that the increase he could receive was the taxable value of the car.
This has now been superseded by what is now Income Tax (Earnings
and Pensions) Act 2003 ss120-148, but the case can still be relevant for
valuing other benefits in kind.
Heavily Indebted Poor Countries Programme (HICP programme)

Programme launched in 1998 to deal with the problems of countries
with unrepayable debt. The programme works by requiring these
countries to introduce proper economies, which usually requires
privatisation of state industries and control on public spending.
heavy crude oil Naturally occurring oil before processing which contains a low
concentration (down to 50%) of the more valuable hydrocarbons.
heavy goods vehicle (HGV)

Vehicle which weighs more than 7.5 tonnes. The proper name is now
large goods vehicle (LGV), though the old name and abbreviation
remain in popular use.
For the purposes of employees’ taxable benefits, an HGV “means a
mechanically propelled road vehicle which —
(a) is of a construction primarily suited for the conveyance of
goods or burden of any kind, and
(b) is designed or adapted to have a maximum weight
exceeding 3,500 kilograms when in normal use and travelling on a road
laden” (Income Tax (Earnings and Pensions) Act 2003 s238(4)).
An employee is not taxed on the “modest” use of such a vehicle.
heavy industry Industry which deals with large quantities of materials (such as coal
mining) or makes heavy items.
heavy oil Hydrocarbon oil which is not light oil. Examples include diesel,
kerosene and aviation fuel.
They are subject to hydrocarbon oil duty, except that fuel oil and
gas oil (which are not intended for vehicles) are heavily rebated. From 1
August 2002, such dutiable oils must be marked with a yellow dye.
heavy oil “Means hydrocarbon oil other than light oil” (Hydrocarbon Oil Duties
Act 1979 s1(4)).
hectare Unit of land measurement equal to 10,000 square metres. One hectare is
about 2.471 acres. The capital gains tax exemption for principal
private residence allows a garden of up to half a hectare or larger if
consistent with the size of the property.
hedge (1) In finance, an arrangement whereby a person makes a financial

arrangement to counter any adverse effect from an existing
arrangement. It is similar to insurance in seeking to negate an extant
risk. An example is where an investor in shares buys a call option on
the stock market collapsing. If it does collapse, the payment from the
option will compensate for some of the loss.
(2) In land, two or more trees planted to form a boundary.
hedge fund Fund typically run by partnerships which specialise in high-risk high-
profit investments. The name comes from the fact that such funds
typically seek to hedge the risks in their investments.
The term is sometimes used for funds that take high risks which
they do not hedge. Such investments typically include short selling and
derivatives.
Hedge funds are only available for a limited range of investors. This
exempts them from many controls that would otherwise apply.
The net asset value of a hedge fund can be billions of pounds (or
dollars). Because such funds are often highly geared, their gross assets
can be much higher. Hedge funds are believed to have been controlling
$2.5 trillion at their peak in summer 2008.
The first hedge fund is believed to have been formed in 1949.
hedge pricing Another name for anticipatory pricing.
hedging A strategy used to offset investment risk as a hedge. Usually makes use
of futures or options.
hedging arrangements Tax provisions in Income and Corporation Taxes Act 1988 s209B.
Hedley Byrne v Heller Name of court case of 1963 which established that a person could be
liable to a third party for negligence. In the case, that liability was
avoided by a suitable disclaimer. This case has been seen as
establishing the principle that a negligent auditor could be liable to a
third party investor. The House of Lords gave details guidance on this
matter in this case.
HEI Higher education institution.
Heid Männystèr an Heid Männystèr depute

Ulster Scots: First Minister and deputy First Minister, of Northern
Ireland Executive.
heir Person who is due to inherit
heir apparent Person who will succeed to another’s property or title, provided only
that he lives beyond the other’s death. The status as heir cannot be
displaced by any event, unlike an heir presumptive.
heir-at-law Person who succeeds to the property or title of another on their death.
This was regulated by custom until Inheritance Act 1833. All historic
forms of inheritance are generally abolished by Administration of
Estates Act 1925 s45.
heiress Female heir.
heirloom Asset which is regarded as belonging to succeeding generations of a

family rather than to its current owner. A family must make provisions
to secure heirlooms in an insolvency.
held out for sale How a product is offered to customers.

This can be a factor in determining whether the product is zero-
rated. For example gelatine held out for sale as a food product is zero-
rated, but when held out for sale for photography is standard-rated.
helpbook Term used by HMRC for guidance sent to employers about the PAYE
system.
helpsheet Document produced free by HMRC to assist taxpayers in calculating a

figure or determining a liability. Their use is optional.
Henry VII taxes Taxes demanded by Henry VIII for the period from around 1500 to the
end of his reign in 1509.
herd basis Election that may be made by a farmer for tax purposes.
The normal tax treatment for farm animals is to treat them as
trading stock. Under the herd basis, the value of the animals is ignored
in calculating trading profit. The cost of acquiring animals is not
allowed, and the sale of animals are not taxable.
herding In investment, strategy of persuading other investors to follow your

policy.
hereditament Property including land and buildings.

The term means “a property which is or may become liable to a
rate, being a unit of such property which is, or would fall to be, shown
as a separate rate item in the valuation list” (General Rates Act 1967
s115(1)). This definition can still be relevant in determining what is a
chargeable dwelling for council tax.
Heregeld The equivalent of Danegeld levied between 1016 and 1051.
heritage asset Fixed asset which cannot be disposed of without special permission and
which is excluded from the accounts.
HGV Heavy goods vehicle.
hic Latin: this, here.
Hicks-Beach, Michael English Conservative politician (1837-1916) who was Chancellor of the
Exchequer from 24 June 1885 to 28 January 1886, and from 29 June
1895 to 11 August 1902.
HICP Harmonised index of consumer prices; the full name for CPI, a measure
of inflation now used in all European Union countries.
hidden agenda Management style where the real purpose of a proposal is hidden from
the meeting but achieved by proposing ideas which sound reasonable.
The real purpose is often personal advancement.
hidden asset Asset which is valued at much less in the company’s accounts than its
real value. Common examples include land and property, and research
and development.
hidden economy Legal activities which are illegally concealed from the tax authorities.
Hidden Economy Advisory Group (HEAG)

Body formed in 2010 by HMRC to look at methods of countering the
hidden economy.
HIERC Higher income excess relief charge

high conviction stock picking

Fund management strategy that allows the fund manager freedom to use
his discretion in selecting securities rather than follow a policy.
High Court means̶

(a) in relation to England and Wales, Her Majesty s High Court of
Justice in England;
(b) in relation to Northern Ireland, Her Majesty s High Court of
Justice in Northern Ireland” (Interpretation Act 1978 Sch 1).
higher family element Element of child tax credit payable in respect of a child up to one year
old. It is abolished from 6 April 2011.
higher income excess relief charge (HIERC)

Complex tax provisions set out in Finance Act 2010 s23 and Sch 2 to
restrict tax relief on pensions for taxpayers with annual earnings over
£130,000. The charge was repealed before its introduction.
higher personal allowance

Allowance against income tax which could be claimed by a man who
was married on the first day of the tax year. A single woman looking
after a child could claim the lower personal allowance and additional
personal allowance which equalled the higher personal allowance.
Those who were entitled to these allowances had a tax code ending
with the letter H.
The allowance was abolished from 6 April 1990 and replaced by a
personal allowance plus the married couple's allowance (MCA).
MCA was itself phased out between 1994 and 2000.
higher rate For income tax, this is a rate which applies to income above the upper
threshold for the basic rate. Since 6 April 1988 there has been just one
higher rate of 40%.
higher-rate contribution Rate of class 2 national insurance above the normal rate that may be
imposed under Social Security Contributions and Benefits Act 1992
s11(3).
This applies to an employee who is regarded as self-employed.
Such rates have been introduced for share fishermen and volunteer
workers.
higher rate taxpayer Someone who pays income tax at rates of 40% or above.
high gearing Funding of a company which has a large amount of debt finance
relative to equity finance. This has the effect of increasing the return to
shareholders when profits are low and reducing them when profits are
low.
high grade bond Bond which has a high rating.
high net worth individual Person who has significant personal wealth. Such people have
particular accounting and tax requirements, which are usually addressed
either by specialist firms.
high risk CAP goods Goods subject to special Common Agricultural Policy (CAP) controls
that are considered to be of high revenue risk. Such goods must only be
moved in sealed containers/vehicles under bond.
high-risk reservoir Term defined in Reservoirs Act 1975 s2C, as inserted by Flood and
Water Management Act 2010 Sch 4.
high risk tax avoidance scheme

List published by HMRC from 2011 of the most artificial tax avoidance
schemes being marketed. The list indicates why HMRC thinks the
scheme is ineffective.
Under proposals, a user of the scheme would be required to pay an
additional charge at a rate designed to cancel the cashflow benefit of
using the scheme. A user of the scheme could protect himself or herself
from tax penalties and interest by paying the avoided tax in advance.
high value dealer (HVD) Person who deal with large amounts of money in the form of cash (ie
banknotes and coins) in the course of business and who is not otherwise
regulated. A car dealer or amusement arcade could be an HVD.
The large amount is €15,000. In practice this is translated as £9,000,
though this is below the usual value of this euro amount. A trader is not
an HVD if he receives payments of large amounts by other means (such
as cheque or card) and refuses to accept cash above the limit.
From 1 April 2004, HVDs must register as such with HMRC under
laws on money laundering. The registration requirements were
tightened on 15 December 2007.
A definition of HVD is given in Proceeds of Crime Act 2002 Sch 9
para 1(1)(q) and 2(2).
high yield Dividend which is large, particularly one which is larger than is normal
for such a company.
hindsight Knowledge of what happened after the event.

In accounting this can lead to an adjustment known as a post-
balance sheet event.
For tax purposes, the extent to which such an event affects taxable
profits is discussed in the Inspectors’ Manual at BIM38560. This notes
that “when figures are amended taking advantage of hindsight then the
use of hindsight should be unfettered”. A leading case is Simpson v
James [1968] 44TC599.
HIP Home information pack.
HIPC programme Heavily Indebted Poor Countries Programme.

This is a programme launched in 1998 to deal with the problems of
countries with unrepayable debt. The programme works by requiring
these countries to introduce proper economies, which usually requires
privatisation of state industries and control on public spending.
hire Commercial transaction where a customer pays money for a time-

related use of an asset.
hire car Car hired for use for a short period.
hire purchase (HP) A method of buying goods in which the purchaser takes possession of
them as soon as he has paid an initial instalment of the price (a deposit)
and obtains ownership of the goods when he has paid all the agreed
number of subsequent instalments. A hire-purchase agreement differs
from a credit-sale agreement and sale by instalments (or a deferred
payment agreement) because in these transactions ownership passes
when the contract is signed. It also differs from a contract of hire,
because in this case ownership never passes. Hire-purchase agreements
were formerly controlled by government regulations stipulating the
minimum deposit and the length of the repayment period. These
controls were removed in 1982.
Hire-purchase agreements were also formerly controlled by the Hire
Purchase Act (1965), but most are now regulated by the Consumer
Credit Act (1974). In this Act a hire-purchase agreement is regarded as
one in which goods are bailed in return for periodical payments by the
bailee; ownership passes to the bailee if he complies with the terms of
the agreement and exercises his option to purchase. A hire-purchase
agreement often involves a finance company as a third party. The seller
of the goods sells them outright to the finance company, which enters
into a hire-purchase agreement with the hirer.
historical cost convention (HCC)

Accounting convention that assets, liabilities and other items in the
financial statements are shown at the original amount of currency. No
allowance is made for inflation.
historic and inalienable assets

Term used before March 2005 for heritage assets.
historic buildings A donation to a maintenance fund for such buildings does not attract
inheritance tax (Inheritance Tax Act 1984 s27).
historic resources Funds of a church, charity or public body which are derived from past
giving.
historical cost Method of valuing assets and liabilities based on their original cost
without adjustment for inflation or subsequent changing prices.
historical cost accounting

System of financial accounting which treats all figures at the amounts at
which they were incurred and does not adjust them for inflation.
historical cost concept Another term for historical cost convention.
historical cost convention

Widely used accounting basis which ignores the fact that money has
lost value during the accounting period.
historical cost depreciation

Depreciation which is calculated on the original acquisition of the asset,
unadjusted for inflation.
historical figures Figures from previous sets of accounts.
historical pricing Pricing method which sets prices on the basis of previous prices.
historical summary Table of key financial indicators over a period, usually of five or ten
years.
historical trading range Difference between the highest and lowest prices for a share during a
period.
historic house House of interest because of its age. There are special VAT provisions
for the sale of items from such houses. These are set out in VAT notice
701/12.
hit squad Nickname for the Strategic Response Unit, part of the Large Business
Service at HMRC. Its brief is to assess the potential opportunity for tax
avoidance in any new tax scheme.
hive off Split off part of a company as a new business.
HL House of Lords.
HLCase House of Lords Cases, series of law reports from 1862 to 1865.
HLR Housing Law Reports.
HM Her Majesty, or His Majesty.
H&M Hemming and Miller’s Reports, law reports from 1862 to 1865.
HMIT HM Inspector of Taxes.
HMO House in multiple occupation.
HMRC HM Revenue and Customs. Her Majesty’s Revenue and Customs.
HM Revenue and Customs (HMRC)

The UK tax authority formed on 18 April 2005 from the merger of
Inland Revenue and Customs and Excise by Commissioners for
Revenue and Customs Act 2005. Since then, attempts have been to
harmonise rules, time limits and procedures of the two previous bodies.
Around the same time, the authority for prosecutions was taken
from the bodies and given to the Revenue and Customs Prosecution
Office (RCPO). Responsibility for border controls, such as to prevent

illegal immigration, passed to a new Border Agency under Home Office
control.
HMRC is responsible for the administration and collection of all
UK taxes except vehicle excise duty and local taxes.
It is also responsible for valuing property (such as for inheritance
tax and council tax), tax credits, national minimum wage, Customs
control such as prevention of smuggling, and collection of some
statistics.
HMRC is administered by a board under a chairman. The board has
an executive committee and non-executive directors.
HM Revenue and Customs Brief

Series of short statements produced each year from 2007 explaining
HMRC’s understanding on a topical point of law.
HM Treasury United Kingdom government department responsible for managing the

public finances. Its origins date back to 1126 when it merged from the
Royal Household under Henry I.
Since the 17th century, the Treasury is run by a commission,
comprising Lords of the Treasury. The first Lord became recognised
as the country’s leader, now known as the prime minister and first
Lord of the Treasury. Since 1827, the Chancellor of the Exchequer
has been the second Lord of the Treasury.
HM Revenue and Customs is one of the agencies of HM Treasury.
Other agencies are Asset Protection Agency, National Savings and
Investments, Royal Mint and UK Debt Management Office.
HMWR Holding, Movement, Warehousing. A Customs term.
hoard Store goods or cash, typically for a long time as a precaution against
future need.
hobby Activity pursued for pleasure rather than profit. In general the cost or
loss of such activities is not allowable for tax, as explained in the
hobby farming Agricultural activity which is not pursued commercially. For the first
five years, losses from this activity may not be offset against other
profits (Income Tax Act 2007 ss67-68).
HOC Home Office Circular
HODA Hydrocarbon Oil Duties Act 1979.
hogshead Barrel used to contain liquor. Its size varies from 46 to 65 gallons
depending on the drink.
hold (1) In investment, policy of neither buying or selling a share or other

security.
(2) In transport, part of a large vehicle in which luggage is stored.
hold back Wait and refrain from taking some action.
holder Person who owns a financial instrument.
holder in due course A holder who has taken a bill of exchange which appears to be
complete and regular before it was overdue and without any knowledge
of its having been dishonoured, and who took it in good faith and for
value and without any knowledge of any defect in the title (Bills of
hold harmless letter Letter indemnifying an auditor or other professional adviser from any
legal action in connection with information provided by the auditor or
adviser. The expression is a contraction of “hold me harmless”.
The auditor will usually draft the letter and required it to be signed
before releasing the information.
In tax, HMRC has not indicated whether it will accept such a letter
as part of an Independent Business Review when a taxpayer seeks a
Time to Pay arrangement for a sum greater than £1 million.
holding Amount of an investment, as in holding of shares.
holding company In the contest of employee-controlled companies means “a company

whose business (ignoring any trade carried on by it) consists wholly or
mainly of the holding of shares or securities of one or more companies
which are its 75% subsidiaries” (Income Tax Act 2007 s397(6)).
For corporation tax and distributions, the term is defined more
narrowly to mean a company which has a 90% or greater holding in
trading companies (Corporation Tax Act 2010 s185(2)).
holding cost Cost of keeping items in stock. Such costs include storage, insurance,
wastage, theft, accidental damage etc.
holding out When a person acts as if he holds a position.

In some cases, such conduct can make a person liable as if he did
hold the position. For example Partnership Act 1890 s14 imposes a
liability on someone who holds himself out as a partner.
holding trustees Trustees who hold a building and other assets for benefit of members,
usually distinguished from managing trustees.
hold-mail Address of someone else who agrees to hold mail on behalf of another
person. Such addresses are often of banks, solicitors or accountants. For
savings accounts opened from 6 April 2001, HMRC will not accept a
hold-mail address from paying agents of savings funds when making
their payment returns.
hold-over gain Capital gain made when hold-over relief has been claimed.
Its calculation is explained in Taxation of Chargeable Gains Act
1992 s154.
hold-over relief Relief from capital gains tax that may be claimed in respect of a gift.
The effect is defer the disposal until the recipient disposes of the asset.
This relief may be claimed for various classes of depreciating
assets as listed in Taxation of Chargeable Gains Act 1992 s155.
holiday When an employee is allowed to be absent for rest. The law requires at
least four weeks’ paid holiday.
For Customs purpose, holiday “in relation to any part of the United
Kingdom, means any day that is a bank holiday in that part of the
United Kingdom under the Banking and Financial Dealings Act 1971,
Christmas Day, Good Friday, and the day appointed for the purposes of
customs and excise for the celebration of Her Majesty’s birthday”
holiday accommodation For income tax purposes, holiday accommodation may be taxed as
trading income which is usually preferable to having it taxed as
property income. This allows capital allowances and more expenses to
be offset against taxable income. For this purpose, the term often used
is furnished holiday lettings.
The main conditions for income tax are that:
● the property is let with a view to making a profit;
● the room is furnished and the occupant may use the
furniture;
● the accommodation must be available for hire for at least
140 days in any year;
● the accommodation must be actually let for at least 70 days
in any year; and
● there must be at least seven months in the year when no-one
occupies any premises for a continuous period of more than 31 days.
There are proposals for increasing the time periods by 50%.
holiday club Organisation which provides care and entertainment for children during
school holidays.
holiday entitlement Amount of holiday an employee is allowed to take.
holiday with pay There is still an unrepealed Holidays with Pay Act 1938 s4, allowing
the Secretary of State to assist employers and employees to set up a
holiday with pay scheme.
Holocaust Term for the breaches of human rights committed by the Nazi
government of Germany between 1933 and 1945, particularly against
Jews, though also against gypsies, freemasons, homosexuals and the
disabled.
Many compensation payments to victims or their heirs are tax-free,
as explained at Nazi compensation.
holographic feature Security device provided on banknotes, driving licences and other
important documents. They appear three dimensional and change
appearance according to the angle at which they are viewed. Such
devices are difficult to forge.
holzgas A form of wood gas.
home address Another name for residential address, for which there are special
provisions under Companies Act 2006 s165.
home banking System of banking where instructions are given over the Internet from a
computer in the home.
home income plan Home income plans allow elderly homeowners to use the equity tied up
in their home to purchase an income and thus increase their standard of
living. Homeowners can release this capital without having to sell their
home.
With a reversion plan, the home is sold to an insurance company
that then pays a regular income to the owner. On the death of the
owner, the house becomes the property of the insurance company.
home information pack (HIP)

Pack of documents which a seller of a dwelling must prepare under
Housing Act 2004 s148.
home loan Loan made to allow a person to acquire a home.

In company law, such a loan made by a company to one of its
directors requires the approval of its members unless the loan is made
on the same terms as the company offers to all its employees
home office In tax, payment for maintaining office facilities in a home.

Such expenditure is allowable for both employed and self-employed
taxpayers. HMRC accepts £3 a week without the need for supporting
evidence. Higher figures can be accepted if supported by evidence. It is
acceptable to pro-rate general household overheads, such as claiming
one seventh of council tax and electricity bill when one room is set
aside in a seven-room house.
Use of a home office means that a portion of the house ceases to
qualify for private residence relief for capital gains tax. In many cases,
this will not matter as the amount of capital gain is less than the
available allowances, but this should always be considered, particularly
if the house is expensive and the home office claims are large.
home service insurance
home trade Trade in the country where the business is based.
home use For Customs purposes, the United Kingdom home market.
home use removal (or delivery)

Removal from registered premises or an excise warehouse for duty paid
consumption in the UK.
homelessness strategy Review and strategy which a local housing authority must conduct from
time to time in regard to homelessness (Homelessness Act 2002 s1).
homeworker Person who works from home as an employee.

Such a person may be exempt from tax on any payment made by
the employer for additional expenses (Income Tax (Earnings and
Pensions) Act 2003 s316A).
hominis est errare Latin: it belongs to man to err.
Hon honorary
Hon Sec Honorary Secretary
Hong Kong Territory in China. It was a British dependent territory until 30 June
1997 when sovereignty returned to China.
Hong Kong dollar Currency of Hong Kong, comprising 100 cents.
honorarium Sum paid to a person when a salary, wage or other fee has not been
agreed.
honorary (Hon) Description of a position which is unpaid, such as a secretary of a club.
honour In finance, paying a cheque or similar instrument as required.
honour clause Clause in an agreement which expressly states that it is not a contract.
Such an agreement cannot be enforced (Appleson v Littlewood [1939]).
honour supra protest Process described thus: “Where a bill of exchange has been protested
for dishonour by non-acceptance, or protested for better security, and is
not overdue, any person, not being a party already liable thereon may,
with the consent of the holder, intervene and accept the bill supra
protest, for the honour of any party liable thereon, or for the honour of
the person for whose account the bill is drawn” (Bills of Exchange Act
1882 s65(1)).
hope value Additional value of land reflecting the probability that it may one day
be given planning permission for a more valuable use, and thus create
development value. An example is buying a piece of land in the Green
Belt in the hope that, perhaps in 30 years’ time, the land will be
removed from the Green Belt and allowed for development.
HOR Hydrocarbon Oil Regulations 1973.
horizontal integration Process of expansion by acquiring businesses in the same area as

yourself.
Horne, Robert Scottish politician (1871-1940) who was Chancellor of the Exchequer
from 1 April 1921 to 19 October 1922 in the last days of the coalition
government led by David Lloyd George.
horse For income tax, an employee who had to provide horse for his work
was allowed to claim relief....
For VAT, horses are standard-rated. However horse meat that is
prepared for human consumption is zero-rated (VAT notice 701/14).
horse-race course “Premises which are designed, used or adapted for use for horse-racing”
(Gambling Act 2005 s353).
Horserace Totalisator Board (the Tote)

Dissolved by Horserace Betting and Olympic Lottery Act 2004 s1.
hospitality Provision of basic human necessities, particularly light refreshments

such as tea, coffee, biscuits and sandwiches.
Although there is an element of human sustenance, this is not
usually considered sufficient to disallow expenditure as being not
exclusively for a trade. The matter is discussed in the Inspectors’
Manual at BIM37400.
HMRC has confirmed that normal hospitality to its officers during a
visit will not be regarded as bribery.
Host City Contract Contract in connection with the London Olympics of 2012. It was
signed in Singapore on 6 July 2005 by the International Olympic
Committee, the Mayor of London and the British Olympic Association.
host Any end-user computer system that connects to a network.
hostage customer Bank customer who cannot clear an overdraft and is therefore at the
mercy of the bank when it imposes interest and charges
hostile bid Offer buy one company to take over another company where the latter
company resists such takeover. It is also known as a contested
takeover.
hostile witness Witness giving evidence against the person on whose behalf he is being
questioned. The term adverse witness is also used.
hotchpot An accumulation of benefits. The word originally meant a pudding

from many ingredients.
In finance, the term refers to a trust (usually by parents for their
children) whereby if any child takes funds early, those funds are to be
added back in any subsequent distribution. In other words, all children
receive the same amount, though some may receive it earlier.
hot desking Practice whereby every worker is not allocated their own desk but may
use an available desk when in the office. Such a practice is usually only
acceptable for those who are not office-based, such as sales
representatives.
hot food For VAT, food that is sold while hot with the intention of being eaten
while hot (such as burgers and chips) is standard-rated. Food that is hot
solely because it has not yet cooled down (such as fresh bread) is
generally zero-rated. Food that is sold cold to be heated up by the
customer (such as fresh meat) is generally zero-rated. Further details are
given in VAT notices 701/14 (food) and 709/1 (catering).
hotel
hotels and comparable establishments

Activity which excludes a company from the scope of EIS relief. It is
defined for this purpose in Income Tax Act 2007 s197.
hotels and comparable establishments

This term is used in Income Tax Act 2007 s308 to exclude such
businesses from the scope of venture capital trust tax relief.
Sub-section (2) explains that a comparable establishment is “a guest
house, hostel or other establishment the main purpose of which is the
provision of facilities for overnight accommodation (with or without
catering services)”.
hot IPO Colloquialism for an initial public offering (IPO) where the demand is
greater than the supply.
hot springs For VAT, water taken from such a spring and not further heated or
treated is zero-rated as water under Value Added Tax Act 1994 Sch 8
Group 2 when supplied for non-industrial use. Details are given in VAT
notice 701/16.
hot stock Colloquialism for a share or equivalent security whose prices rise high
because of demand.
hot take-away food and drink

Food and drink which is sold to be taken away and eaten while it is still
hot. Since 1 May 1985, such food and drink is standard-rated for VAT
whereas other takeaway food and drink is usually zero-rated.
The main points include:
● “hot” means above room temperature;
● the item must be hot when supplied and not taken away for
the customer to heat up;
● food is not hot if it simply has not cooled down from a
cooking process, such as fresh-baked bread;
● food is hot if it is supplied warm to create a pleasant smell,
such as hot sausage rolls;
● hot food includes any related cold food supplied with it, such
as a bun for a burger.
hot water For VAT, this is usually regarded as standard-rated supply of heat
rather than a zero-rated supply of water. Further details are given in
VAT notice 701/16.
Howe, Geoffrey Conservative politician (1926- ) who was Chancellor of the Exchequer
from 4 May 1979 to 11 June 1983 in the government of Margaret
Thatcher. In economics, he defied conventional wisdom in 1981 by

deflating the economy during a recession. He reduced income tax,
increased VAT, and introduced enterprise zones.
hourly rate Rate per hour, particularly of pay or hire charge.
house (1) Unit of accommodation, usually one which stands on its own land.
(2) Term referring to the institution of a company, as in “on the house”
or “house policy”.
house “A building or part of a building consisting of one or more dwellings”

(Housing Act 2004 s99).
house agent Estate agent who specialises in selling houses.
house air waybill A forwarding agent’s bill of landing, that forms part of a consolidation.
houseboat Zero-rated under Value Added Tax Act 1994 Sch 8 Group 8. This
includes the non-commercial letting of houseboats.
household Group of people living together as one unit.
household debt Money owed by a household
household goods Essentials to everyday living which cannot be seized from a bankrupt.
They are also known as chattels.
For Customs purposes, “furnishing and fittings for the home, and
also personal items such as cameras, linen, jewellery and clothing”
(Customs notice 3).
Household Means Test Social security test introduced in 1934 to assess the needs of a
household. The test was greatly resented as it penalised savers.
house in multiple occupation (HMO)

In Scotland means “living accommodation ... occupied by 3 or more
persons who are not all members of the same family or of one or other
of two families” (Housing (Scotland) Act 2006 s125(1)).
house in multiple occupation (HMO)

Needs a licence under Housing Act 2004 s55.
housekeeper allowance Additional tax allowance available before 6 April 1988 when a taxpayer
engaged the services of a housekeeper.
It was introduced at £45 from 6 April 1920, subsequently changed
to £60 in 1924, £50 in 1931, £60 in 1953, £75 in 1960, £100 in 1973.
House of Commons One of the two Houses of Parliament. The Budget is presented in this
House by the Chancellor of the Exchequer. From this a Finance Bill is
produced. This is debated in the House of Lords, which cannot delay or
amend the Bill.
House of Commons Members’ Fund

Fund established under House of Commons Member’s Fund Act 1939
s1 to provide for widows, widowers and orphans of past or previous
members.
House of Lords One of the Houses of Parliament which has limited powers to the House
of Commons. It debates the Finance Bills but cannot reject them.
It was also the highest court in the land, until this function was
taken over by the Supreme Court on 1 October 2009.
house tax A supplement to window tax, charged from 1778 to 1834.
housing association Tax provisions for tax relief grants in Housing Act 1988 s54.
Gifts to housing associations are exempt from inheritance tax
(Inheritance Tax Act 1984 s24A).
housing benefit (HB) Means-tested social security benefit to help pay rent for people on low
incomes. It is paid under Social Security Contributions and Benefits Act
1992 s130.
hovercraft Vessel which travels across land and sea on a cushion of air. A
hovercraft first crossed the English Channel in 1959.
A legal definition is given in Hovercraft Act 1968. This definition is
used in tax statutes, such as for hold-over relief from capital gains tax
(Taxation of Chargeable Gains Act 1992 s155 class 2).
For VAT, it is generally zero-rated under Value Added Tax Act
1994 Sch 8 Group 8.
For all other tax purposes, a hovercraft is regarded as a ship.
HR Human resources
HS Harmonised System of Customs duties.
HSBC Hongkong and Shanghai Banking Corporation which took over

Midland Bank in 1992 and renamed it in 1999.
HSC Harmonised System Committee.
HSEN Harmonised System Explanatory Notes
HSWA Health and Safety at Work Act 1974
HU Country prefix code for Hungary.
human capital Seeing the workforce as an asset, equivalent to capital.
human capital accounting

Attempt to value the combined knowledge and skill of a workforce. It is
not a recognised intangible asset and cannot therefore appear on a
balance sheet.
human consumption One of the conditions which must be met for food to be zero-rated for
VAT.
This means that the item must have both nutrition and palatability.
So food does not include appetite suppressants, dietary supplements,
food additives and medicines (though some medicines may be zero-
rated under other provisions).
human resource accounting

Attempting to value the knowledge and skill of the workforce in
financial terms.
human resource Person who provides a function within an organisation.
human resources (HR) General term for the management functions relating to the staff of an
organisation. It includes such areas as personnel, pay, recruitment, and
grievance and discipline.
human rights Fundamental rights of the individual which should be upheld by law.
Although the scope varies from context to context, most lists
include freedom of:
● speech;
● religion;
● movement;
● association;
and privacy, and the right to a fair trial.
Some tax cases have been brought alleging that a tax or penalty
contravenes the fundamental right to enjoy personal property.
human rights Under Equality Act 2006 s9(2) this includes rights under Human Rights
Act 1998 and “other human rights”.
Human Tissue Authority Body corporate established under Human Tissue Act 2004 s13 for
dealing with human organs of deceased persons. This includes issuing
licences.
humanitarian assistance Provision of such basic supplies as accommodation, food, water and
medicine, and also advice and manpower, to alleviate a natural or man-
made disaster. The Secretary of State may provide any person or body
with such assistance under International Development Act 2002 s3.
hundredweight Imperial unit of weight, which was widely used for such purposes as
coal. It is equal to 112 pounds. There are 20 hundredweight in a ton.
A hundredweight is equal to 50.802 kilograms. There are 196.8
hundredweight in a metric tonne.
Hunt, George English Conservative politician (1825-1877) who was Chancellor of the
Exchequer from 29 February 1868 to 1 December 1868.
hunting Generally from 18 February 2005, hunting is illegal if it involves

hunting a wild mammal (such as a fox) with a dog, unless exempt
(Hunting Act 2004 s1).
Hunt point to point meetings are taxed as mutual trading
organisations, as is discussed in the Inspectors’ Manual at BIM24765.
From 1934 to 1998, all profits from point-to-point meetings were not
taxed.
hurdle rate Term sometimes used to mean discount rate.
husband Man to whom a woman is married.
husband and wife company

Company owned by a husband and wife.
hush money Money paid to someone to keep quiet about something. Such a payment
is usually not tax-deductible.
hybrid Mixture of two different things, such as an investment which combine

two types of financial instrument.
hybrid arrangement An arrangement where only one type of benefit will ultimately be
provided, but the type of benefit that will be provided is not known in
advance because it will depend on certain given circumstances at the
point benefits are drawn.
For example, a hybrid arrangement may provide the member with
other money purchase benefits based on a pot derived from the
contributions that have accrued over time, but subject to a defined
benefit minimum or underpin. If the benefits provided by the money
purchase pot at the point benefits are drawn fall below a certain defined
level, for example 1/60ths of final remuneration for every year worked,
that higher defined benefit will be provided. So the benefits will be
either other money purchase benefits, or defined benefits.
When benefits are drawn, if the benefits actually provided are other
money purchase or cash balance benefits then the arrangement will
become a money purchase arrangement. And if the benefits provided
are defined benefits then the arrangement will become a defined
benefits arrangement.
hybrid rate Rate which is calculated as a time-apportioned mixture of two or more

rates. There are various examples of hybrid rates in UK tax law, such as
the official rate for beneficial loans, or the rate for capital allowances
for an accounting period that spans a change in rate.
hybrid tax This was a novel hybrid levy charged in 1497 of tenths and fifteenths
with a subsidy. It was raised to fund the Scottish campaign, and was
challenged by Cornwall on the grounds that only scutage could be
levied for such a purpose.
hydrocarbon Compound of the elements carbon and hydrogen. This includes most
forms of oil used for heating and road fuel. These oils are subject to
excise duty for hydrocarbon oils.
hydrocarbon oil Liquid form of various compounds of carbon and hydrogen which are
used as road fuel.
Such oil is liable to hydrocarbon oil duty. For this purpose, oil is
dividend into five categories:
● light oil;
● heavy oil;
● fuel oil;
● gas oil; and
● biobutanol.
hydrocarbon oil “Means petroleum oil, coal tar and oil produced from coal, shale, peat
or any other bituminous substance, and all liquid hydrocarbons, but
does not include such hydrocarbons or bituminous or asphaltic
substances as are:
(a) solid or semi-solid at a temperature of 1°C, or
(b) gaseous at a temperature of 15°C and under a pressure of
1013.25 millibars” (Hydrocarbon Oil Duties Act 1979 s1(2)).
hygiene factor In human resources, a factor which does not improve an employee’s
productivity but whose absence reduces productivity. The amount of
pay is a hygiene factor.
hyperinflation When inflation is out of control. In economics, this is defined as

inflation of more than 50% a month, though accounting standards
consider hyperinflation is only 100% over three years. Special
accounting provisions then apply.
The most extreme example of hyperinflation occurred in Hungary
just after the second world war when prices doubled every 15 hours.
The most famous example is probably Germany in 1923 when inflation
hit 3,250,000%, and prices doubled every 49 hours. Inflation in
Zimbabwe in 2008 ran into billions of percent, and became
unmeasurable.
Other examples include Argentina 1989; Bolivia 1985; Brazil 1980-
1995; Greece 1941-1944; Mexico 1982-1988; Peru 1988-1990;
Venezuela 1989; Yugoslavia 1993-1994; and Zimbabwe from 2006.
Hyperinflation is caused by a rapid increase in money without the
supporting growth of goods and services it should represent, see
wealth. This is usually the consequence of bad economic management
by the relevant government.
The consequence is that savings are wiped out and economic
activity ceases, usually leading to civil unrest. Desperate governments
often resort to extreme protectionist measures which usually fail. The
citizens tend to switch to barter or using a hard currency.
Hyperinflation is usually ended by linking the currency to property
or to a hard currency. The latter practice is known as dollarization.
hyperlink Facility in a computer document or on a website to move immediately

to a particular page. This is usually done by clicking on a link indicated
by an icon or by a word printed in blue and underlined.
hypermarket Very large supermarket.
hyperterminal In computing, a facility whereby a computer may be connected to a

remote computer using a modem or other connection means.
hypothecation Process whereby income is dedicated to a particular expenditure.

Britain has generally avoided hypothecated taxes. An exception is
climate change levy which was hypothecated to reducing national
insurance. Historically vehicle excise duty was collected to pay for
road improvements. Arguably, all licence fees are hypothecated taxes.
I
I (1) Roman numeral for 1.
(2) For council tax, the highest band of property values. It only applies
in Wales from 1 April 2005. It applies to properties with a value above
£400,000 on that date. Such property is subject to council tax at a rate
of 2⅓ times the rate for an average band D property.
IA (1) Initial allowance

(2) International Assistance.
IAD accounts “Accounts drawn up in accordance with the Council Directive of 19th
December 1991 on the annual accounts of insurance undertakings (No
91/674/EEC)” (Income and Corporation Taxes Act 1988 Sch 19ABA
para 4(2)).
iaimbilanja One fifth of an ariary, currency of Madagascar.
IAS International accounting standard
IAS accounts “Accounts prepared in accordance with international accounting

standards” (Income and Corporation Taxes Act 1988 Sch 19ABA para
4(2)).
For insurance companies, this is an alternative to IAD accounts.
IASB International Accounting Standards Board, an independent body that

sets accounting standards accepted as a basis for accounting in many
countries, including all Member States of the European Union.
IASB system The accounting standards and guidance issued by the IASB.
IASC International Accounting Standards Committee
IAS group accounts Group accounts prepared under International Accounting Standards
rather than under Companies Act 2006 (Companies Act 2006 s406).
IAS individual accounts Accounts of individual companies prepared in accordance with

International Accounting Standards rather than the requirements of the
Companies Act 2006 (Companies Act 2006 s395(1)).
IATA International Air Transport Association
IB Intervention Board, now referred to as the Rural Payments Agency

(RPA).
IBAP Intervention Board for Agricultural Produce, now referred to as the

Rural Payments Agency (RPA).
IBB Independent Barring Board
IBEA Intervention Board Executive Agency, now referred to as the Rural

Payments Agency (RPA).
ibid Latin: in the same place.
ibidem Latin: in the same place.
IBNR Insurance business not reported.

“Claims that have been incurred but not reported arising out of
events that have occurred by the balance sheet date but have not been
reported to the insurance undertaking at that date” (FSA glossary).
IBR Independent Business Review.
ICA (1) International Co-operative Alliance.

(2) Individual capital assessment.
ICAAP Internal capital adequacy assessment process.
ICAEW Institute of Chartered Accountants in England and Wales
ICAI Institute of Chartered Accountants in Ireland
ICANZ Institute of Chartered Accountants of New Zealand.
ICAS Institute of Chartered Accountants of Scotland
ICD (1) Inland Clearance Depot.

(2) Investor Compensation Directive.
ice For VAT, this is usually zero-rated as water under Value Added Tax
Act 1994 Sch 8 Group 2. Details are given in VAT notice 701/16.
ice cream For VAT, this is standard-rated as it is specifically excluded from the
scope of zero-rated food.
ICG Individual capital guidance.

ICN (1) Intrastat Combined Nomenclature

(2) International consignment note
ICO Information Commissioner’s Office.
ICOBS Insurance: New Conduct of Business sourcebook, published by the

ICR Industrial Cases Reports, series of law reports from 1972.
ICSID International Centre for Settlement of Investment Disputes.
ICT Immediately chargeable transfer.
ICVC Investment company with variable capital.
ID Abbreviation: identity
IDAS ID Authentication Service. System introduced by HMRC in November

2009 to check the identities, particularly of tax credit claimants.
ID card Identity card, particularly one issued under Identity Cards Act 2006 s6.
id certum est quod certum reddi potest

Latin: that is certain which can be made certain.
idem Latin: the same
identifiable assets and liabilities

”The assets and liabilities of the acquired entity that are capable of
being disposed of or settled separately, without disposing of a business
of the entity” (FRS 7 para 2).
identifiable asset test Test in determining whether expenditure is capital or revenue. It

requires a first step of identifying the asset acquired by the expenditure.
This test is established in such cases as Tucker v Granada Motorway
Services Ltd [1979] 53TC92 and is discussed in the Inspectors’ Manual
at BIM35320.
identifiable part Part of expenditure that can clearly be related to a business activity.
In general, such a part may be deducted from taxable profits. This is
identification number Code which gives a customer access to a bank account on the Internet.
identification of securities Procedure in capital gains tax to identify the acquisition cost when a
taxpayer sells some of a holding in a particular security. The
identification rules are given in Taxation of Chargeable Gains Act 1992
ss104-109.
identity card Government issued document that proves the identity of its holder.
Some cards were issued under Identity Cards Act 2006, and the whole
population were to be issued with them. This provision has been
repealed by the Identity Documents Act 2010 s1(1). Issued cards are
cancelled by s2.
identity check Check made on the identity of a person by requiring them to produce an
ID card, other identification or both (Identity Cards Act 2006 s13(1)).
identity document Document which indicates the identity of a person. For limited
purposes, these are defined as:
“(a) an immigration document,
(b) a United Kingdom passport (within the meaning of the
Immigration Act 1971),
(c) a passport issued by or on behalf of the authorities of a country
or territory outside the United Kingdom or by or on behalf of an
international organisation,
(d) a document that can be used (in some or all circumstances)
instead of a passport,
(e) a licence to drive a motor vehicle granted under Part 3 of the
Road Traffic [Act] 1988 or under Part 2 of the Road Traffic (Northern
Ireland) Order 1981, or
(f) a driving licence issued by or on behalf of the authorities of a
country or territory outside the United Kingdom”
(Identity Documents Act 2010 s7(1)).
identity theft Fraud where a person assumes the identity of someone else.
IDK Internal derangement of the knee. Common abbreviation for sick notes
(HMRC leaflet E14).
idle capital Money that is not being used effectively.
idle time Time for which an employee is paid though not able to work, for factors
beyond their control.
IE (1) Country prefix code for Republic of Ireland.

(2) Independent examination.
IFA (1) Intangible fixed asset.

(2) Independent Financial Adviser.
(3) Institute of Financial Accountants
IFRIC International Financial Reporting Interpretations Committee.
IFRS International Financial Reporting Standard, issued by the IASB.
ignorantia eorum quae quis scire tenetur non excusat

Latin: ignorance of those things which everyone is bound to know does
not constitute an excuse.
ignorantia facti excusat; ignorantia juris non excusat

Latin: ignorance of the fact excuses; ignorance of the law does not
excuse
ignorantia juris quod quisque scire tenetur non excusat

Latin: ignorance of the law which everybody is supposed to know does
not afford excuse.
IH Inner House, of Court of Sessions in Scotland.
I have neither cross nor pile

Old expression meaning that I have no money. Cross and pile denotes
coins.
IHD Ischaemic heart disease. Common abbreviation for sick notes (HMRC
leaflet E14).
IHT Inheritance tax.
IIB Industrial injuries benefit.
IIP Interest in possession.
ijar Form of leasing that is acceptable under Islamic financing.
ILA Individual learning account.
il a inventé l’histoire French: he has invented history.
ILG Index-linked gilt.
ill health The tax consequences of ill health are:

• an employee may be entitled to statutory sick pay;
• a person may receive their pension before the age of 55;
• the person may benefit from provisions relating to disability.
ill health pension Pension provided by an occupational pension scheme under its rules
before retirement to a member who becomes too ill to continue
working.
illegal trade Trade which contravenes the law, such as prostitution, drug dealing and
illegal sales of firearms and alcohol. Such activities are subject to
income tax, corporation tax and VAT under the normal tax rules for
legal trade.
Other illegal activities, such as burglary and protection rackets, are
not taxable as trade.
illegitimate Not legitimate, particularly in the context of a child born to unmarried

parents, including parents who were divorced. An illegitimate child was
called a bastard, but this meaning has now generally been abandoned.
Historically, illegitimate children were often denied many rights.
These have been gradually withdrawn. Today the only restriction is that
an illegitimate child cannot inherit a title.
For tax purposes, an illegitimate child is now treated the same as a
legitimate child. The right to inherit was established by Family Law
Reform Act 1969.
illicit Not permitted. The term is usually distinguished from illegal in that it
refers to an act which is not against the law as such but which is done in
a way which is not permitted, such as selling alcoholic drink without a
licence. The illegality derives from the lack of licence not from the
activity itself.
illiquid Not easily converted to cash.
illiquidity Inability to convert an asset to cash.

The term is particularly used for current assets. Traditionally these
are listed in the balance sheet with the most liquid at the top, the order
runs:
● cash;
● prepayments;
● debtors;
● stock.
illusory correlation When a person makes an illogical link between a type of person and a
characteristic to create a stereotype. An example is where someone
speaks to two accountants who are both rude, and from that deducing
that all accountants are rude.
illustration An estimation of the returns you might get from an investment, based
on standard growth rates and taking charges into account. The actual
returns you get may be higher or lower than this.
IMA (1) Initial maintenance assessment

(2) Investment Management Association.
IMD Insurance Mediation.
IMF International Monetary Fund
I minus E basis In relation to taxation of insurance companies, “means the basis under
which a company carrying on life insurance business is charged to tax
on the relevant profits (within the meaning of section 88(3) of the
Finance Act 1989) of that business under Case I of Schedule D”
[The term defined is actually the I minus E basis.]
immaterial Not material. This refers to a figure which is so small that it does not
affect the picture painted by the accounts.
immediate annuity An annuity under which payments commence straight away, in contrast
to a deferred annuity, under which the payments do not commence until
later (possibly many years later).
immediately chargeable transfer (ICT)

From 22 March 2006, a transfer made to the trustees of a relevant
property trust or to a company. If sufficiently large, inheritance tax
may be payable at the lifetime rate when transferred. If the settlor dies
within seven years, additional inheritance tax may be payable.
Before 22 March 2006, an ICT could arise on a transfer to a
company or discretionary trust.
immediate post-death interest (IPDI)

This arises when a person has an interest in possession in settled
property and:
• the settlement is effected by a will or intestacy, and
• the beneficiary became beneficially entitled to the interest in
possession on the death of the deceased.
immediate post-RTD period

Term used in Income and Corporation Taxes Act 1988 s444AA(8) in
relation to taxation on transfers of annuity business. RTD stands for
relevant transfer date.
Immigration Acts These are:

“(a) the Immigration Act 1971 (c. 77),
(b) the Immigration Act 1988 (c. 14),
(c) the Asylum and Immigration Appeals Act 1993 (c. 23),
(d) the Asylum and Immigration Act 1996 (c. 49),
(e) the Immigration and Asylum Act 1999,
(f) the Nationality, Immigration and Asylum Act 2002 (c. 41), and
(g) this Act [Asylum and Immigration (Treatment of Claimants etc)
Act]
(Asylum and Immigration (Treatment of Claimants etc) Act 2004 s44).
Immigration and Nationality Directorate

Part of the Home Office which dealt with immigration. From 1 April
2007, it was renamed the Border and Immigration Agency (BIA).
immigration bail When an unlawful immigrant is released from custody on the deposit of
a recognizance or bail bond (Asylum and Immigration (Treatment of
Claimants etc) Act s36(d)).
immigration document “Means —

(a) a document used for confirming the right of a person under the
EU Treaties in respect of entry or residence in the United Kingdom,
(b) a document that is given in exercise of immigration functions
and records information about leave granted to a person to enter or
remain in the United Kingdom, or
(c) a registration card (within the meaning of section 26A of the
Immigration Act 1971)”.
(Identity Documents Act 2010 s7(2).

Such a document counts as an identity document.
immigration officer Person appointed to oversee immigration law (Asylum and Immigration
(Treatment of Claimants etc) Act 2004 s45).
immovable Description of something which cannot be moved. In finance, this

usually refers to buildings and structures attached to the ground.
immovable property Buildings and structures attached to the ground.
immunisation Term sometimes used in finance to mean a process which protects a

person or organisation from a risk, such as by insurance or hedging.
IMO International Maritime Organisation - a United Nations (UN) agency

responsible for promoting safety and technical co-operation in the
shipping industry.
IMPAC International Merchants Purchase Authorisation Card.
impact Consequence of an action, particularly when it is a shock or a strong

effect. Literally, the word means the consequence of being hit.
impaired life State whereby a person is not expected to live as long as would
normally be expected for their sex and age. This is usually because of a
medical condition, such as suffering from cancer.
A person suffering from impaired life may be able to receive a
higher than normal pension or annuity. Such a person is also likely to
be charged more for life insurance.
impairment A reduction in the carrying value of an asset, beyond the expected

depreciation, which must be reflected by reducing the amount recorded
in the balance sheet.
impairment review Testing assets for evidence of any impairment.
impairment test Test that the business can expect to recover the carrying value of the
intangible asset, through either using it or selling.
imperial dues Early empires taxed their citizens to fund the imperial power. Jesus was
born when Joseph and Mary went to pay such a tax to the Roman
empire.
Imperial Loan Co v Stone Court case of 1892 which established that a contract can only be set
aside on the grounds of insanity if it can be proved that the party was
both insane and that the other party knew this at the time.
imperial system Old system of historic measurements, such as inch, acre, gallon and
ounce. These were largely established by Weights and Measures Act
1824, subsequently amended, most recently in 1959.
From 1990, imperial measures (other than for time) have been
replaced for most legal purposes by metric units. From 1995, most
products must be supplied using metric units, though comparative
imperial measures may still be quoted.
These units were widely used throughout the old British Empire,
many countries of which have not adopted metric units. The USA uses
imperial units, though some (particularly the gallon and ton) are
different from the UK measure.
imperitia culpae adnumeratur

Latin: inexperience is accounted a fault
impersonal account Account which records transactions not involving other parties, as
against a personal account.
Impersonal accounts may be further categorised between real
accounts which deal with property, and nominal accounts which do
not. These distinctions are now little used.
impersonation of officers A criminal offence.

For social security, the offence is set out in Social Security
Administration Act 1992 s181.
implied terms Terms which may be implied in a contract, as against express terms.
import Bringing goods in from outside the country.

Since the Single Market, this term applies only to goods from
outside the European Union. Goods brought in from another EU state
are properly called an acquisition.
import ban Government order prohibiting items from being imported.
Import duties (1932-today) The abandonment of Free Trade agreements led to a significant
increase in the scope of import duties. Political problems had obstructed
this imposition since first mooted in 1915. Many were reduced in 1947.
Duties on EFTA goods were abolished in 1966, with some exceptions
for agricultural and fish products.
import duty General term for Customs duties and similar charges such as Common
Agricultural Policy Charges, and Anti-Dumping Duty.
import levy Tax on imports from outside the EU into the EU.
import quota Fixed amount of foreign goods which a country is prepared to allow to
be imported.
import restrictions Action taken by a government to reduce imports. These include bans,
duties charged, quotas and similar.
import surcharge Extra import duty added to imported goods in an attempt to discourage
their import and to encourage local production.
import VAT The VAT chargeable on imported goods. For the purposes of VAT, the
value of imported goods includes any other taxes or duties charged at
import.
import VAT Certificate Official evidence of VAT paid on imported goods before recovering the
VAT as input tax. The normal evidence is the monthly certificate,
known as Form C79.
importation of goods The entry of goods from a place (or places) outside the European Union
territory.
importation Action of importing goods.
imported goods Goods imported from outside the European Union (EU) and not in free
circulation.
imported services Services received from outside the UK.
imported tobacco products

Tobacco products which originate outside the UK and enter the UK
from either another European Union Member State or a third country.
importer Person who is responsible for bringing goods into the UK.
The importer must be identified for Customs purposes, but most of
the duties rest with the declarant.
A statutory definition is “in relation to any goods at any time
between their importation and the time when they are delivered out of
charge, includes any owner or other person for the time being possessed
of or beneficially interested in the goods and, in relation to goods
imported by means of a pipe-line, includes the owner of the pipe-line”
import-export Business which moves goods between the UK and other countries.
impose Issue an order which requires adds a charge or creates a new

requirement.
imposed penalty Penalty, particularly for a tax offence, which is imposed after
consideration of the circumstances, unlike an automatic penalty.
impossibility In law, impossibility usually defeats any legal transaction.

An impossible contract is usually void, though there may be
misrepresentation if one of the parties knew it was impossible.
In terms of regulation, the impossibility of compliance may be a
defence under the Wednesbury rule.
imposta sul valore Aggiunto (IVA)

Italian: value added tax.
imposto Portuguese: tax
imposto sobre o Valor Ascrescentado (IVA)

Portuguese: value added tax
impotent poor Classification of poor people used from the 16th to 19th centuries. They
were people whose poverty was due to age or sickness and who
deserved public support, against the undeserving poor of vagrants.
impound Take something and keep it until a tax or other charge is paid.
impressed stamp Indication by impression on paper that stamp duty has been paid.
imprest account An arrangement where a subsidiary fund is operated for administrative

convenience, and this fund is topped up to a set figure.
In local authority funding, this means small bank accounts set up by
departments, where using a central fund is impractical.
For petty cash, this is a system where the vouchers are periodically
removed and replaced by cash to the same value. This means that the
value of cash plus vouchers should always equal the same figure.
imprest system System where an account, such as petty cash, is topped up with the
value of vouchers so that the total of cash plus vouchers is always the
same figure.
improperly obtained In relation to an identity document means that:

“(a) false information was provided in, or in connection with, the
application for its issue to the person who issued it, or
(b) false information was provided in, or in connection with, an
application for its modification to a person entitled to modify it”
(Identity Documents Act 2010).
improved offer Second or subsequent offer which is close to what the other party
wants.
improvement A change in, or addition to, a non-current (fixed) asset that extends its
useful life or increases the expected future benefit. Contrast with repair
which restores the existing useful life or existing expected future
benefit.
An improvement in an asset is almost always regarded as capital
expenditure and not revenue expenditure.
improvement notice For housing, notice served under Housing Act 2004 s11, requiring a
hazard to be remedied.
improvement notice Notice served by Pensions Regulator on a pension fund under

Pensions Act 2004 s13 requiring the recipient to take appropriate steps
to address a contravention of regulations.
impuesto sobre el Valor Anadidio (IVA)

Spanish: value added tax.
imputation system System of taxation where the company pays advance corporation tax
when it pays a dividend, and the taxpayer is regarded as having
received the dividend on which the tax has been paid. The system
operated from 6 April 1973 to 5 April 1999.
IMRO The Investment Management Regulatory Organisation which regulates

the management of unit trusts.
IMS Industrial Methylated Spirits.
inaccuracy An inaccuracy may give rise to a penalty if it is a relevant inaccuracy

as defined in Finance Act 2007 Sch 24 para 1A(1).
inadequacy Amount or benefit in a contract which is disproportionately low for the

consideration received. Under English law, a contract is valid regardless
of the inadequacy of the consideration.
in aequali jure melior est conditio possidentis

Latin: where the rights of the parties are equal, the claim of the actual
possessor is stronger.
inalienability State when assignment is impossible. An example is child trust funds

(Child Trust Funds Act 2004 s4).
inalienable rights Political term for those rights of an individual which cannot ever be
legitimately removed.
in ambiguis orationibus maxime sententia spectanda est ejus qui eas protulisset
Latin: in dealing with ambiguous words the intention of him who used
them should be especially regarded.
in articulo mortis Latin: at the point of death.
in autre droit Latin: in right of another, such as when an executor holds property for a
beneficiary.
in banc In court.
in bonis Latin: in the goods of.
in camera Latin: in private, such as a court hearing to which the public is not
admitted.
incapacitated person For tax management, “any infant, person of unsound mind, lunatic,
idiot or insane person” (Taxes Management Act 1970 s118(1)).
incapacity benefit Means-tested social security benefit payable to people unable to work
because of illness or injury. It is replaced by employment support
allowance from October 2008.
in casu extemae necessitatis omnia sunt communia

Latin: in cases of extreme necessity, everything is common.
incentive Payment to encourage someone to do something.

In employment, an incentive from an employer to employee is
remuneration and is taxed as either pay or benefit in kind.
In tax, HMRC occasionally offers incentives to encourage
compliance. Those who operated PAYE electronically before they were
compelled to, could claim an incentive payment. Other incentives
include allowing a little longer to pay tax if payment is made
electronically.
incentive bonus Addition to an employee’s pay as a means of encouraging continued or

improved work.
incentive payment Payment made to someone to do something or not do something as

desired by the payer.
The payment must be made to persuade a person to act lawfully. If
the payment is to do something unlawful, it is a bribe.
incentive scheme Plan designed to encourage better work by a system of payments,

particularly when offered to employees.
inception Term used in SSAP 21 for the start of a lease.
inch Imperial unit of length equal to one twelfth of a foot or 25.4

millimetres.
inchoate instrument A partially completed but signed bill of exchange provided for
someone else to complete. A blank cheque is an example of an
inchoate instrument.
Such a cheque or bill of exchange is valid provided it is completed
within a reasonable time and in accordance with the authority given
(Bills of Exchange Act 1882 s20).
incidence of tax Indication of where the burden of a tax charge lies. While VAT is paid
to HMRC by the trader, the incidence of the tax is usually borne by the
customer.
incidental benefit The unavoidable personal benefit enjoyed on expenditure incurred for a
business. Examples include protective clothing (saving the need to wear
ordinary clothing), an overseas business trip (seeing a new location) and
even office facilities (not incurring heat and light bills at home). Such
incidental benefits do not in themselves prevent an expense being
“wholly and exclusively” for a business purpose and thus tax-
deductible. The matter is discussed in the Inspectors’ Manual at
BIM37007.
incidental expenses Small amounts spent beside larger amounts.
incidental overnight expenses

In relation to possible taxation of advances to employees as an
employment-related loan, means “expenses which —
(a) are incidental to the employee’s absence from the place where
the employee normally lives,
(b) relate to a continuous period of such absence in relation to
which the overnight stay conditions are met, and
(c) would not be deductible under Part 5 if the employee incurred
and paid them and Chapter 2 of Part 4 (mileage allowances and
passenger payments) did not apply”
(Income Tax (Earnings and Pensions) Act 2003 s179(6) and s240(1)).
The rates have been £5 a day in the UK, and £10 a day overseas
since the provision was first brought into effect in 1995.
It should be noted that this is just a relief to excuse such expenses
from an employee. It is not an allowance that may be claimed by the
employee.
incidental purposes In relation to share loss relief, “purposes having no significant effect
(other than in relation to incidental matters) on the activities of the
company in question” (Income Tax Act 2007 s137(7) and 181(8);
Corporation Tax Act 2010 s79(7))
inclusio unius est exclusio alterius

Latin: the inclusion of one is the exclusion of another
inclusive price Term which defines the value used in determining the tax payable by an
employee for having a company car. It comprises the list price of the
car plus any taxes paid and any delivery charge (Income Tax (Earnings
and Pensions) Act 2003 s123(2)).
income Money a person receives from all sources.
income accounts American term for accounts that record a company’s sources of income.
income and expenditure account

Form once used to record income and expenditure, now replaced by
receipts and payments account.
income beneficiary Person who is beneficially entitled to receive income, but not capital,
from a discretionary trust.
income disregard In social security, an amount of increase income that is ignored in

determining entitlement to tax credit and to some other benefits.
Provided a person’s income does not increase by more than figure
during the year, a person’s tax credit or benefit if not altered.
For tax credits, the disregard is £10,000 from 6 April 2011. It was
previously £25,000 from 2006.
income draw-down Option available to members of small self-administered pension

schemes, personal pension schemes and recently extended to
occupational scheme members with money purchase benefits or AVCs.
An annuity need not be purchased at retirement and can be delayed

up to age 75. In the meantime the individual can 'draw down' income
from his pension investment. This can be a high-risk approach to
pension provision and is subject to PSO regulation.
income gearing Ratio of interest a company pays on its borrowings as a percentage of

its pre-tax pre-interest profits.
income-generating unit Group of assets, liabilities, goodwill that generates income that is
largely independent of the main business (FRS 11).
income in kind Donations other than in cash.
income in possession (IIP) Type of trust where a life tenant receives income or a right during
their lifetime, after which the asset passes to the remainderman.
Typical examples are where one person is allowed to live in a property
until their death, then the property passes to someone else. Another
common example is when one person receives the interest on a capital
sum, and on their death the capital passes.
An IIP trust pays income tax at 10% on dividend income, and at
20% on other income. (Before 2008/09, it paid 22% on rent income but
20% on savings income.) There is no higher or additional rate tax. No
personal allowances may be offset against the income.
When received by the life tenant, the income must be split
according to its source between dividends, interest and rent. The
trustees usually do this using form R185.
income maximisation Any proposal designed to increase a person’s income. This is not
usually a significant factor in debt recovery.
income payments order Order requiring a bankrupt to give up income to pay his creditors.
income policy Life Insurance contract that provides income on a monthly or other
periodic basis, as opposed to a policy which pays proceeds in a lump
sum.
income protection insurance

Income Protection Insurance (also known as Permanent Health
Insurance or PHI) provides a monthly income during periods of long-
term illness or disability.
income-related Description of social security benefit that is means-tested.
income-related ESA Employment support allowance that is paid as a result of a means

test, as against contributory ESA.
income retention condition

One of the conditions set out in Income Tax Act 2007 s274 for an
investment to qualify for venture capital trust tax relief.
The condition is that the company may not keep more than 15% of
its income for its own purposes, rather than for distribution to
shareholders.
income shares Shares in a unit trust which provide an income which do not rise as the
capital value of the shares rise.
Most unit trusts provide both capital growth and regular income
from the shares which they hold. It is possible to have a split-level
trust where the capital growth and income elements are separated
between capital shares and income shares.
income smoothing Any arrangement which has the effect of reducing wide variations
between dividends or similar distributions made by a company to its
shareholders or by an investment vehicle to its members.
income splitting Process of apportioning part of one person’s income to another, usually
for an ulterior motive. Common motives are to save tax or to make the
donor eligible for a benefit.
income statement Financial statement presenting revenues, expenses, and profit. Also
called profit and loss account.
income support Social security benefit payable to people with a low income. From 27
October 2008, it is replaced by employment support allowance.
income support deduction notice (ISDN)

Notice which could be issued by the Benefits Agency to an employer
within 15 days of an employee returning to work after an industrial
dispute. The authority for issuing ISDNs comes from Social Security
Contributions and Benefits Act 1992. In practice, these notices are
extremely rare.
The notice is operated in a similar way to an attachment of earnings
order, and has equal priority if the payslip is insufficient. The ISDN
ends when the amount is recovered, the ISDN is 26 weeks old or the
employment ends.
income tax Tax imposed on the earnings of individuals (including partnerships). It

was first introduced from 1799 to 1802, reintroduced from 1803 to
1812, and finally reintroduced in 1842, though it is still, strictly, an
annual tax which requires a new Act of Parliament each year to
continue levying it.
It is a tax on income and cannot be extended to other sources of
wealth generation (Attorney General v London County Council [1900]
4TC265). The exact scope of what constitutes income has often proved
difficult. For example, benefits in kind for employees are brought into
the scope of income tax, even though the employee’s benefit is that of
reducing expenditure rather than generating income.
It is distinguished from corporation tax which is imposed on
companies and other corporate bodies, as well as from capital gains
tax which is imposed on capital gains of individuals.
In general, all individuals of any age are liable to pay income tax. It
is calculated by a minimum of three stages:

● adding up all income;
● subtracting allowances and deductions;
● multiplying by various rates.
Almost all taxpayers are entitled to a personal allowance. They
may have other items which may deductible from their taxable income.
From 6 April 2008, there are only two rates of income tax, a basic
rate of 20% and a higher rate of 40%. Historically there have often
been three or more rates.
Income tax is collected in various ways. By far the largest amount is
collected from employees’ pay packets under Pay As You Earn
(PAYE). In the construction industry, subcontractors have some tax
collected under Construction Industry Scheme. Payments of
dividends and other investments have tax deducted at source. Other
taxpayers complete a self-assessment return.
Income Tax Acts means all enactments relating to income tax, including any provisions
of the Corporation Tax Acts which relate to income tax” (Interpretation
Act 1978 Sch 1).
income tax advantage Term used in Corporation Tax Act 2010 s687 to denote a gain that may
arise from a transaction in securities.
income tax form Form which an individual completes to disclose his taxable earnings.
This term remains in use even though the correct term is simply tax
return. Since 1965 the same form has been used to disclose amounts
subject to capital gains tax.
income threshold figure Figure of income set each year, below which a household may claim a
tax credit.
income unit Unit in a unit trust from which the investor receives an income in the
form of income rather than capital gain.
income-replacement benefits
Social security benefits which are designed to replace income. Such
benefits are subject to income tax on the same basis as the income they
replace.
The main income-replacement benefits are jobseeker's allowance,
incapacity benefit, state retirement pension and similar.
incoming partner Newly joined partner. Such a partner is not liable for any debts of the
partnership which arose before he joined (Partnership Act 1890 s17).
A new partner means that the old partnership is dissolved and a new
partnership formed for tax purposes, unless all new and old partners
make a joint election for the partnership to continue.
incoming resources Figure in statement of accounts for all forms of income.
in commendam Latin: in trust
incomplete records Accounting records which do not used double entry bookkeeping.
Such records can be incomplete in many ways.
in conjunctivis oportet utrumque, in disjunctivis sufficit alteram

Latin: in conjunctives both must be true, in disjunctives it is sufficient if
one of them be true.
in consimili casu Latin: in a like case.
incontinence pad For VAT, these are generally standard-rated unless zero-rated as a
product for the handicapped, or reduced-rated as sanitary protection.
Details are given in VAT notice 701/18.
in contractis tacite insunt quae sunt moris et consuetudinis

Latin: the clauses which are in accordance with custom and usage are
an implied part of every contract.
inconvertible Description of something which cannot be converted, such as a security

which cannot be converted to cash.
in convertionibus contrahentium voluntas potius quam verba spectari placuit

Latin: in construing agreements the intention of the parties, rather than
the words actually used, should be considered.
incorporate Bring a company into existence.
incorporated friendly society

A friendly society that has become a limited company. Tax provisions
are found in Income and Corporation Taxes Act 1988 s461 and
following sections.
incorporation Process of bringing a company into existence, or the date when this
happened.
incorporation relief For capital gains tax, a relief that is given automatically when there is a
disposal of assets to a company incorporated to continue the same
business (Taxation of Chargeable Gains Act 1992 s142).
incorporeal chattels Personal rights and interests that are not tangible assets, such as shares,
patents and annuities.
incorporeal hereditament Intangible rights or interest in land, such as a right of way or a right of
pasture.
in course In regular order.
increment Increase, particularly one which is regular and pre-planned, such as

moving up a salary scale.
incremental budgeting Method of producing a budget for one year by increasing figures for the
previous year. The opposite approach is known as zero-based
budgeting.
incremental cost Cost of making an additional unit. This is basically the cost of materials
and labour, without any overheads. It usually means the same as the
marginal cost.
incremental increase Increase in salary in accordance with an established pay scale.
incremental scale Pay scale where salaries are determined according to a system of
grading, points or similar.
incumbent and churchwardens trust

Trust held for benefit of Church of England church. It is either a special
trust or must be separately registered as a charity.
incumbrance In law, something that affects or limits the title of a property.

Examples include mortgages, leases, liens, mortgages and various
types of legal restriction.
in curia Latin: in open court
incurred basis Old tax practice that expenses are always allowed when incurred
regardless of the accounting treatment.
Following the decisions in Jenners Princes St Edinburgh [1998]
and Threlfall v Jones [1993], the accounting treatment must generally
be followed. The incurred basis was in effect outlawed from 1 July
1999. The matter is discussed in the Inspectors’ Manual at BIM42220.
in custodia legis Latin: in the custody of the law
indecent material Customs may seize any indecent material that a traveller attempts to
bring into the UK.
Indecent material includes improper material featuring children,
material containing extreme violence, and any pornography that cannot
be legally bought in the UK.
indenture Formal agreement setting out the terms of a bond issue.
independence One of the requirements for an auditor.

“Independence is freedom from situations and relationships which
make it probable that a reasonable and informed third party would
conclude that objectivity either is impaired or could be impaired.
Independence is related to and underpins objectivity. However, whereas
objectivity is a personal behavioural characteristic concerning the
auditor’s state of mind, independence relates to the circumstances
surrounding the audit, including the financial, employment, business
and personal relationships between the auditor and the audited entity”
(APB ES 1 para 12).
independent Not under the control, authority or significant influence of another

party.
independent advocacy services

Services which must be provided for dealing with complaints against
the health service under National Heath Service Act 2006 s248.
independent assessor Person who conducts an independent report on poll as requested by

sufficient members of a quoted public company.
The appointment of such a person is governed by Companies Act
2006 ss343-345.
Independent Barring Board (IBB)

Body corporate established under Safeguarding Vulnerable Groups Act
2006 s1(1) to keep a register of people barred from working with
children or vulnerable adults.
independent broker “Person, who independently of the director or any person connected
with him, selects the person with whom the transaction is to be
effected” (Companies Act 2006 s194(2)(a)).
Under company law, members’ approval is required for a
substantial property transaction involving a director. There are
exceptions, including a transaction on a recognised investment
exchange through an independent broker.
Independent Business Review (IBR)

A statement made by a professional adviser in connection with a Time
to Pay request involving more than £1 million. The duty to submit such
a statement became a requirement from 1 April 2010.
independent company Company which is not under the control of another company.
independent examination Review of accounts which falls short of a full audit.
independent financial adviser (IFA)

A broker or other intermediary authorised to sell or advise on the
policies offered by any insurance company, as well as other financial
service providers.
independent foundation A private foundation that is no longer controlled by the original donor
or donor's family.
independent judiciary Principle that judges are not under the control or direction of
government ministers. It is now enshrined in Constitutional Reform Act
2005 s3.
Independent Labour Party

Name by which the Labour Party was initially known, and under
which its first member Keir Hardie stood in 1893.
independent measures design

In psychology and similar disciplines, method that involves comparing
results from separate groups of people.
independent mental capacity advocate

Person appointed under Mental Health Act 2005 s35 to provide support
and otherwise assist a person who may have lost mental capacity.
independent mental health advocate

Person who acts on behalf of mental patients under the provisions of
Mental Health Act 1983 s130A.
Independent Police Complaints Commission

Body corporate established under Police Reform Act 2002 s9.
independent report on poll

In company law, a report conducted by an independent assessor of a
poll taken by a quoted public company. Such a report must be requested
by either 100 members who each have paid up an average of £100, or
by members holding at least 5% of the voting rights (Companies Act
2006 s342).
independent trade union A trade union which

“(a) is not under the dominance or control of an employer or group
of employers or of one or more employers’ associations, and
(b) is not liable to interference by an employer or any such group or
association... tending towards such control” (Trade Union and Labour
independent trader Business which is owned by a person who is not under the control of a
larger business, such as a shop run by its proprietor and not as part of a
national retail chain.
independent variable In psychology, the variable that researchers manipulate in an

experiment.
index (1) Number which indicates a relative change in a financial measure.

An index is often applied by treating the number as half a fraction. For
example if an item was bought when an index of inflation (such as RPI
or CPI) was at 105, and the item was sold when the index was at 120,
the inflated purchase price can be calculated by multiplying the actual
price by 120/105.
(2) Alphabetical listing of subjects identifying the pages where
particular topics will be found in the book, report or other document.
indexation Adjusting a figure to reflect the change in value over time due to
inflation.
indexation allowance Amount that is added to the acquisition cost of an asset to reflect
inflation during the period to disposal by a company.
Suppose an asset was acquired for £1,000 when the retail prices
index was 180, and was sold for £2,000 when the index was 198. The
index has increased by 10%, so the acquisition cost is increased by 10%
to £1,100 and only the difference of £900 is taxed as a chargeable gain.
This stops the tax being charged on inflation.
Indexation allowance is given on chargeable gains of companies.
Since 1998, individuals paying capital gains tax have applied
indexation only from acquisition to 5 April 1998. For later periods, the
individual may claim taper relief, or pay a lower rate of tax.
indexation loss Loss created by applying indexation to a capital gain. For disposals
from 29 November 1993, no relief is given for an indexation loss
(subject to a two-year transitional period).
index number Number taken from an index.
index of members Alphabetical list of shareholders or guarantors which a limited company

must keep in addition to its register of members if there are more than
50 members (Companies Act 2006 s115).
index tracker Investor, fund or fund manager who aims to copy the results of an
index.
index tracking An index tracking fund aims to follow a particular index as closely as
possible. It does not aim to beat it. It invests only in the companies that
make up that index. Index tracking removes the need to employ fund
managers, which means charges tend to be lower.
indexation A method by which benefits are increased at periodic intervals by a

factor derived from an index of prices or earnings.
indexation allowance Factor that reduces the taxable amount of capital gain to allow for
inflation. This is achieved by uplifting the acquisition cost that is
subtracted from disposal proceeds.
This allowance was provided for capital gains tax until 5 April 1998
when it was replaced by taper relief. Indexation is still claimed for
chargeable gains by companies.
index-linked Description of an investment or other financial instrument whose value

is automatically adjusted in accordance with a published index.
index-linked pension Pension which increases each year according to an index to provide a
measure of protection against inflation. A pension which is not index-
linked is known as a level pension.
There are usually three choices for index-linking:
● full indexation: where the pension paid is increased in line
with an index (usually Retail Prices Index) regardless of how high the
index goes;
● limited price indexation: where the pension is increased in
line with an index to a maximum percentage (often 5%);
● escalation: where the pension increases each year by a fixed
amount (often 3%) regardless of the rate of inflation.
For a private pension, the member usually has a choice. This can
significantly reduce the amount of pension payable. for example, using
recent annuity rates, a 65-year old man retiring with a pension fund of
£100,000 could receive a monthly level pension of £615, or £419 with
3% escalation, or £392 with full RPI indexation.
For an occupational pension, the extent of indexation is set out in
the terms of the scheme. Public sector pensions enjoy full indexation.
indicator Something which indicates something, such as a direction.
individual One person, as against a company or a group of people.
individual For consumer credit, includes a partnership of unincorporated body

(Consumer Credit Act 1974 s189(1)).
individual accounts Term used in Companies Act 2006 s394 meaning the accounts for each
individual company, as against consolidated accounts.
individual savings account (ISA)

Tax-advantaged scheme whereby individuals may hold shares in
companies. Shares held in an ISA have no income tax charged on their
dividends, and no capital gains tax when sold.
They were introduced on 6 April 1999, as a replacement for
personal equity plans and tax-exempt special savings accounts.
The maximum value of an ISA is £7,200 (£7,000 before 6 April
2008). There are many rules which must be followed. These rules have
changed many times since ISAs were introduced.
individual savings account business

In relation to taxation of life assurance business, “means so much of a
company’s life assurance business as is referable to individual savings
account policies (but not including the reinsurance of such business)”
(Income and Corporation Taxes Act 1988 s431BB(1)).
individual savings account policy

“A policy of life insurance which is an investment of a kind specified
by regulations made by virtue of section 695(1) of ITTOIA 2005”
(Income and Corporation Taxes Act 1988 s431BB(2)).
individual voluntary agreement (IVA)

Legal arrangement between a debtor and creditors for paying at least
25% of the debts.
individual voluntary arrangement (IVA)

Arrangement by an insolvent person which provides a measure of
protection against bankruptcy.
indirect Not direct, such as where there is one step in between cause and effect.
If A causes B which causes C, A is an indirect cause of C.
indirect benefit Any form of consideration provided indirectly to someone, such as

from an employer to employee.
An example is when an employee receives a benefit which arises
indirectly from work such as winning a prize from an external body. In
general such benefits are taxable as a benefit in kind unless it can be
shown that the nature was unrelated to work such as a personal
testimonial.
indirect control Where an entity has control over an asset or business, but this is not
direct control. A common example is a subsidiary of a company.
indirect expenses Overheads and any other expenses which are not directly incurred in
producing goods or services, such as rent, insurance and administration
expenses.
indirect export Customs procedure which refers to goods declared in the UK leaving
the European Union via another member state.
indirect labour Cost of paying employees not directly involved in producing goods or
services.
indirect method (of operating cash flow) Calculates operating cash flow by adjusting operating
profit for non-cash items and for changes in working capital.
indirect representation A third party who makes a customs declaration in their own name, but
on behalf of a trader.
indirect taxation Collecting revenue from indirect taxes.
indirect taxes Taxes charged on spending rather than earnings. The term comes from
the fact that the tax is not paid directly to the taxing authorities.
Indirect taxes include value added tax, Customs duties, excise
duties, stamp duty, stamp duty land tax, stamp duty reserve tax,
landfill tax, air passenger duty, insurance premium tax, climate
change levy and aggregates levy.
indebtedness State of owing money to others
indemnify Agree to pay if someone else incurs a loss.
indemnity Payment to reimburse a specific quantifiable monetary loss or expense

incurred
In terms of commission, an indemnity may be paid in full at
commencement of a contract on the assumption that this will remain in
force for at least a certain minimum period. If the contract is terminated
within this period part of the commission may be required to be
refunded.
indemnity insurance Insurance against the costs of indemnifying someone.

The premium paid by an employer to indemnify an employee is not
generally a taxable benefit (Income Tax (Earnings and Pensions) Act

2003 s346).
independent examination (IE)

An alternative to a full audit for charities with income of less than
£500,000 a year (from February 2008). There are some restrictions
when a full audit is still required, particularly in Scotland.
The two main differences between IE and full audit are:
• the scrutiny of the accounts is less detailed; and
• the assurance is just that nothing has been found that needs
reporting.
individual learning account (ILA)

Tax-advantaged arrangement whereby a current or previous employer
may fund training (Income Tax (Earnings and Pensions) Act 2003
s255).
indoor relief Assistance once provided to the poor by their being a workhouse which
provided their accommodation and a small income.
indorsee A person to whom a bill of exchange is indorsed.
indorsement in blank When a bill of exchange has been indorsed but specifying no
indorsee. Such a bill becomes payable to bearer (Bills of Exchange Act
1882 s34(1)).
indorsement Same as endorsement. American usage favours the letter I.
indorsement The evidence that a bill of exchange has been negotiated.

This requires the signature of the indorser on the bill itself; no
further words are necessary (Bills of Exchange Act 1882 s32(1)).
Particular types of indorsement are indorsement in blank,
conditional indorsement, special indorsement and restrictive
indorsement.
indorser Someone who adds an indorsement to a bill of exchange.
inducement Payment or similar incentive designed to persuade someone to do

something legal. If the payment is do something illegal, it is a bribe.
inductive reasoning In logic, conclusions drawn from observations, as against deductive

reasoning that moves from one premise to another.
In tax appeals, more reliance is generally placed on deductive
reasoning.
industrial activities Activities that fallen within divisions 1 to 5 of the Standard Industrial
Classification. These are broadly energy, mining, engineering,
manufacturing and construction.
The provision of water for such activities is usually standard-rated
unlike water for domestic use (VAT notice 701/16).
industrial and provident society

Legal entity that provides benefits to its members. Many are old co-
operatives, working men’s clubs, allotment societies, mutual investment
companies, friendly societies, housing associations and similar.
They are currently regulated by Co-operatives and Community
Benefit Societies Act 2003 which replaced 19th century laws.
They are generally only taxed on their income from trading outside
their membership, as set out in Corporation Tax Act 2010 s47.
industrial arbitration tribunal

Tribunal which arbitrates in industrial disputes.
industrial building Building that attracted a capital allowance until 6 April 2011.
industrial hereditament Term used in Rating and Valuation (Apportionment) Act 1928 s3 to
determine how rates were calculated on certain premises used both as a
residence and industry. These definitions were used in Finance Act
1954 s28 in reducing the rate of estate duty payable.
The 1928 Act was repealed on 19 May 1997, and the relevant part
of Finance Act 1954 was repealed by Finance Act 1975.
industrial injuries benefit (IIB)

Social security benefit payable to someone who suffers from a personal
injury sustained at work or from an industrial illness. The injury must
lead to a loss of faculty.
The benefit is payble under Social Security Contributions and
industrial methylated spirits

One of the three classes of methylated spirits on which alcoholic
liquor duty is not payable.
industrial tribunal Old name for what is now known as an employment tribunal.
industrial union Term used from 1910 for trade unions which were related to a
particular industry rather than to a particular employer.
in esse Latin: in being. The term describes something that actually exists.
in extensio Latin: at full length.
inextricably linked property

Term used in Criminal Justice and Police Act 2001 in relation to seized
property, but which is not otherwise defined.
inflation Amount by which prices increase each year. Note that inflation
measures the amount by which prices increase, not the amount by
which the value of currency decreases.
“A rise in the general price level of goods and services. Often
measured over a 12 month period” (HM Treasury glossary).
inflation accounting System designed to allow for the fact that money has lost value during
the accounting period. No system of inflation accounting is currently
recognised in the UK.
Two systems of inflation accounting have been tried in the UK:
current purchasing power (CPP) and current cost accounting
(CCA).
inflationary gap Economic term describing when there is too much demand in the
economy.
This excess level of demand tends to lead to demand-pull
inflation.
inflation-linked Description of a sum whose amount increases in line with a measure of

inflation.
inflation-proof Description of a financial product or other item where provisions have

been made to ensure that its value in real terms is held against inflation.
in force business Insurance that is current and for which premiums are being paid or for
which premiums have been fully paid. The term is particularly used for
life insurance and health insurance.
inflow Cashflow of money coming into a business or other entity.
informal arrangement Work done on a casual basis, such as where a person helps his
neighbour start a car.
Where work is done on such a basis, the provisions of the national
minimum wage do not apply.
in forma pauperis Latin: in the character of a pauper
information Factual statements provided by counsellor which provide more

guidance than therapeutic counselling but just stops short of giving
advice.
information code Number on a driving licence which indicates a restriction on what the
holder may driver. For example, 40 means modified steering and 78
means restricted to vehicles with automatic transmission.
information order Court order requiring a debtor to attend court to explain why a debt has
not been paid.
information retrieval Process of finding stored data on a computer.
information rights In relation to shareholders, this is the right to receive a copy of:
● every communication to shareholders;
● a copy of the annual report and accounts; and
● the right to receive a written copy of them (rather than have
access to a website).
information systems Combination of information technology and the people who support
and operate such technology
information technology Term used from 1958 for all aspects of computing and
telecommunications.
infra Latin: below
infrastructure charges Charges made under Water Act 1989 towards costs of providing
sewerage services. Such charges are standard-rated for VAT and do not
come within the scope of zero-rating for sewerage charges (VAT notice
701/16).
Infrastructure UK (IUK) Body announced in the June 2010 Budget to promote private sector
investment in British infrastructure (Budget Red Book para 1.83).
ingot Bar of a precious metal made to a predetermined size and purity for use
as bullion.
Ingram Leading inheritance tax case on lease carve out schemes. Its full
citation is Ingram v Palmer-Tomkinson [1998].
Under the scheme the transferor granted herself a lease from a trust
she had set up. The House of Lords held that this was not a gift with
reservation. Such a scheme has now been blocked by Finance Act
1999 s104.
in gremio legis Latin: in the bosom of the law.
in gross In law, description of a right which is not attached to land.
inherit Receive something from a person who has died.

This happens either because the deceased stated in his or her will
that the person should inherit, or because the deceased left no valid will
and the inheritor is a close relation as defined in intestacy rules.
inheritance Something a person acquires from a person who has died.
inheritance tax Tax paid on the estate of someone who has died.
It was introduced in 1986 as a replacement for capital transfer tax.
A loan to pay inheritance tax may qualify for income tax relief
under Income Tax Act 2007 s403.
Inheritance Tax Act Act of Parliament originally enacted as Capital Transfer Tax Act 1984.
It was renamed by Finance Act 1986 s100(1)(b).
Inheritance Tax Direct Payment Scheme

Scheme introduced from 31 March 2003 to allow inheritance tax to be
paid from a bank account promptly. The personal representatives apply
to HMRC for form IHT423. This is signed by the personal
representatives and sent to the bank who will arrange payment without
waiting for probate or letters of administration.
inhibition In land law, an entry in the land register that has the effect of
prohibiting dealing in the land until either a specific event happens or a
further entry is made. An inhibition is often imposed when there is a
dispute over the ownership of the land.
in-house Description of an activity which is done within an organisation rather

than from outside.
in invitum In law, against a reluctant person
initial Description of something which applies first or at the start.
initial capital Capital with which a business starts.
initial chargeable event First chargeable event of an employee share ownership trust, as
defined in Finance Act 1989 ss69-71.
initial contribution Sum paid by HMRC to start a child trust fund (Child Trust Funds Act
2004 s8).
initial criteria The two factors considered by social security officers in deciding
whether someone is eligible for a budgeting loan from the Social Fund.
initial direct costs In accounting, costs incurred by a lessor in negotiating and otherwise
setting up a lease (SSAP 21).
initial extra accessory In the context of taxing company cars, a qualifying accessory which is
a non-standard accessory and is available with the car when it is first
made available to the employee (Income Tax (Earnings and Pensions)
Act 2003 s126(2)).
initial levy Levy under Pensions Act 2004 s174.
initial maintenance assessment (IMA)

An assessment issued by the Child Support Agency as an interim
measure while the proper figure is being calculated.
The IMA is often a high figure, which can result in a large
deduction from pay if a child support order has been served on the
employee.
initial period Period of two years from when a company receives its trading
certificate (Companies Act 2006 s598(2)).
This term is used to state a period that restricts a public company
from making certain arrangements relating to transfers for non-cash
assets.
initial repairs Repairs to an asset to bring it into useable condition.

In general, such expenditure is treated as capital and not as revenue
(Law Shipping Co Ltd v IRC [1924] 12TC621).
initial requirement The requirement that a public company may not commence trade or
borrow money until it has allotted share capital of at least the
authorised minimum (Companies Act 2006 s765).
initial sales First sales, particularly of a new product or service.
initial shareholdings The shareholders of the company at the time it is formed.

Under Companies Act 2006 s9(4), details of these shareholders
must be given when submitting the memorandum of association. The
details to be given of the initial shareholders are set out in s10.
initial sum First amount of money, particularly a small amount used to create a
trust where a much larger amount is to follow later.
initial yield Estimated yield of an investment fund when it is launched.
injection Provision of new funds, usually for a specific purpose.
injunction Order from a court requiring a person not to do something.
in jure non remota causa, sed proxima spectatur

Latin: in law the proximate, and not the remote cause, is to be regarded
injuria Latin: legal wrong
injuria non excusat injuriam

Latin: one wrong does not justify another
injurious affection Term used in valuing leasehold property.

It refers to the compensation which is payable to the landlord for
any adverse effect which a sale of the leasehold property has on other
property owned by the landlord. Such loss could reflect lost opportunity
for combined development, restricted site access and the opportunity to
extend existing property.
injury In law, the infringement of a right, or harm caused to a person or

property.
inland Within a country, not overseas.
inland bill Bill of exchange “which is or on the face of it purports to be (a) both
drawn and payable within the British Islands, or (b) drawn within the
British Islands upon some person resident therein” (Bills of Exchange
Act 1882 s4(1)).
inland clearance depot (ICD)

Export clearance facilities for goods imported or exported through the
Channel Tunnel. The English ICD is at Ashford in Kent.
inland clearance depot A place approved by HMRC to which goods imported in containers or
vehicles may be removed for entry, examination and clearance; and at
which goods intended for export in container or vehicles may be made
available for export control.
inland freight charges Charges for carrying freight within a country.
inland postage Charge for posting a letter to an address in the same country.
Inland Revenue Body charged with collecting direct taxes and other duties until it
merged with Customs and Excise into HMRC in 2005.
Inland Revenue Commissioner

Member of the Board of Inland Revenue. They are now replaced by
Commissioners of HM Revenue and Customs.
in limine Latin: on the threshold, at the outset.
in loco parentis Latin: in the place of a parent.
inmate Term used in Taxes Management Act 1970 s14 to mean the equivalent
of a lodger.
in media res Latin: in the midst of the matter
in misericordia Latin: at mercy.
inn Public house that offers food, drink and overnight accommodation. An
inn must accept anyone who needs such services, provided they are
willing to pay, they behave and the inn has room. The innkeeper has a
common law right of lien over the customer’s luggage to secure
payment.
Inner House Part of the Court of Session in Scotland. It comprises the Lord
President and seven other senior judges.
Inner Temple One of the Inns of Court. It is situated between the Strand and
Embankment and was established in 1440.
innocent explanation The Inspectors’ Manuals repeatedly state that an innocent explanation
for an event must be preferred to an assumption of illegality.
in nomine Latin: in the name of
inops consilii Latin: without advice
in pais Latin: in the country
in pari causa potior est condition possidentis

Latin: everyone may keep what he has got, unless and until someone
can prove a better title
in pari delicto, potior est condtio possidentis

Latin: where both parties are equally at fault, the condition of the
possessor is better
in pari materia Latin: in an analogous case
in perpetuum Latin: for ever
in personam Latin: against the person.

An act, proceeding, right or similar which relates to a particular
person, as against an action which is in rem.
in pleno Latin: in full
in posse In law, description of something which does not exist but which may
exist
in praseneti Latin: at the present time
in propria persona Latin: in his own proper person
input tax VAT paid or payable by taxable persons on goods or services supplied
to them (or acquired by them from another European Union (EU)
Member State), which are used, or to be used, for the purpose of their
business. VAT registered persons can reclaim input tax.
inputs Goods or services which have been acquired by a business. The VAT
on inputs is input tax and may be offset against a trader’s output tax.
inquartation Process of refining gold which involves nitric acid. This acid does not
dissolve gold, but does dissolve silver and base metals. This is the
origin of the expression acid test.
inquest Inquiry into death conducted by a coroner. It is an offence for an

executor to dispose of a body to frustrate an inquest.
inquiry office Office to which members of the public may go to have their questions
asked, particularly such an office operated by HMRC.
inquisitorial system System of court procedure whereby the court enquires into the truth
rather than letting opposing advocates argue the matter. In Britain, the
coroner’s court is the only one to use this system, though it is more
widely used in Europe.
inquorate When a meeting does not have a quorum of members.
in re Latin: in the matter of
in rem In law, an act, proceeding, right or similar which relates to the world at
large, as opposed to one which is in personam, that is against a specific
person.
insanity Defect of reason that can be a defence in criminal proceedings, as set

out in McNaghten rules. For other purposes, various provisions of
mental health law apply.
insider Person who works in or closely with a business and therefore is in

possession of sensitive or restricted information which is not known or
available to the general public.
insider buying Illegal purchase of shares by insiders contrary to the law.
insider dealing Another term for insider trading.
insider information Information gained by someone inside, or close to, a listed company
which could confer a financial advantage if used to buy or sell shares. It
is illegal for a person who is in possession of inside information to buy
or sell shares on the basis of that information.
insider trading Illegal buying or selling of shares, or other financial trade, which is
motivated by a desire to make a profit and exploits knowledge a person
has as an insider. It is a criminal offence under Criminal Justice Act
1986.
insignificant failure Failure to comply with a tax provision but where no adverse
consequence follows. The term is particularly used for personal
pension input amounts for a regular payment that is missed.
in situ Latin: in its original place.
insolvency Financial status of owing more than you own. It is not a legal status.
In itself, insolvency imposes no restrictions on the individual or
business and has no legal consequences. Insolvency only incurs legal
consequences when a procedure such as bankruptcy or liquidation is
started.
Capital gains tax implications are explained in Taxation of
insolvency law Branch of law which deals with insolvency.
insolvency practitioner Accountant who specialises in insolvency work, usually a qualified

accountant. The practitioner’s work is governed by Insolvency Act
1986.
Insolvency Service Agency of the Department for Department for Business, Innovation and
Skills (or its predecessors) which oversees insolvencies.
insolvent Financial status of owing more than you own.
in specie Latin: in form, in its actual state.

The term describes something which has the same nature as
something else, and is not in an equivalent form. An example is where
banknote are used in relation to a matter concerning banknotes.
inspection of property When a court adjourns to a site to examine the subject matter of
proceedings.
inspection stamp Stamp or equivalent mark placed on goods to show that they have been
inspected and found satisfactory.
inspection Examination to satisfy a person as to the quality of something.
inspector Person whose job it is to inspect, particularly a tax inspector.
inspector of rail accidents

Person appointed under Railways and Transport Safety Act 2003 s3(1)
and answerable to the Chief Inspector of Rail Accidents.
inspector of taxes Official of HM Revenue and Customs who is responsible for ensuring
that individuals and businesses pay the correct amount of tax.
inspector of weights and measures

Official of a local authority whose job is to check weighing machines
and goods sold in shops to ensure that they are of the correct weight or
size.
inspectorate The office of inspector, or inspectors viewed collectively.
inspectors’ manuals Guidance issued by Inland Revenue (now HMRC) to tax inspectors.
For decades they were regarded as confidential. Between 1990 and
1996, they have been made progressively available, including on
HMRC website: www.hmrc.gov.uk.
Some parts of the manuals are withheld where these could be used
for tax avoidance.
INSPRU Prudential sourcebook for insurers, published by the Financial Services

Authority.
installed or assembled goods

Goods where the supplier is obliged to install or assemble the goods,
such as in providing a recording studio.
When supplying such goods in another EU member state, the
supplier must be registered in that state, unless that state operates a
simplified procedure that allows the supplier to pay VAT without
registering. The UK operates the procedure. Further details are given in
VAT notice 725.
instalment (1) Regular payment, such as of a loan or mortgage.

(2) Part delivery of goods. Under Sale of Goods Act 1979 s31(1), a
customer is not obliged to accept such an instalment unless this is
specifically agreed.
instalment option Option given in Inheritance Tax Act 1984 s227 allowing tax to be paid
in ten annual instalments.
instalment option property

HMRC term for property for which the instalment option has been
exercised.
instalment sale Sale for which payment is made in instalments.
instant access Accounts where the customer may draw money immediately without
losing interest.
in status quo In the former position
institute Society or organisation which represents a particular profession.
Institute of Chartered Accountants in England and Wales (ICAEW)

Professional body which regulates chartered accountants in England
and Wales, and in some overseas areas. It was formed in 1880 and
given its Royal Charter on formation.
ICAEW is the largest professional accounting body in Europe. It
provides examinations and sets standards for its members, and provides
advice and oversight of the profession.
The ICAEW was formed in 1870 as the Institute of Accountants
from bodies formed earlier in the year.
Institute of Chartered Accountants in Ireland (ICAI)

Professional body which regulates chartered accountants in Northern
Ireland and the Irish Republic. It was founded in 1888.
Institute of Chartered Accountants of New Zealand

Professional accounting body in New Zealand.
Institute of Chartered Accountants of Scotland (ICAS)

Professional body which regulates chartered accountants in Scotland. It
is the oldest accountancy body, whose origins date back to 1853.
It should be noted that the name is “of” Scotland, and not “in” as for
the English and Irish institutes.
Members use the designatory letters CA, and not ACA and FCA.
Institute of Financial Accountants (IFA)

Professional body established in 1916 to set technical and ethical
standards in accounting.
Institute of Indirect Taxation (IIT)

Professional body established in 1991 for specialists in indirect
taxation. Members use the designatory letters AIIT and FIIT.
institutional investor An organisation whose business includes regular investment in shares

of companies.
Examples include an insurance company, a pension fund, a charity,
an investment trust, a unit trust, or a merchant bank.
instrument Written document that has legal consequences, such as will, deed or
conveyance.
instrument of transfer A document that transfers or transmits the ownership of shares to

another person (Companies Act 2006 s755).
instrument of variation Another name for a deed of variation.
insufficient evidence Direction that a judge may give to a jury that the evidence submitted
does not meet the necessary standard required by law.
insufficiently resourced Term used in Pensions Act 2004 s44(3) with regard to a service
company which is provided with insufficient funds to meet its
obligations under a final salary (or defined benefit) scheme.
insurable Description of something that may be insured.
insurable interest The right to insure something. A person may take out insurance on
someone else’s life or someone else’s property provided they can
demonstrate that they would suffer loss if the insured risk happened. An
employer may insure the life of a key employee, for example.
The requirement for insurable interest in someone else’s life is
contained in Life Assurance Act 1774 s1. The amount insured may not
exceed that interest (ibid s3).
insurance An agreement under which individuals, businesses, and other

organisations, in exchange for payment of a premium, are guaranteed
indemnity for losses resulting from certain risks specified in a policy.
Where the risk is certain, such as a policy paying on death at any
time, the term assurance is more accurate, though this distinction is not
always made.
The policyholder must have an insurable interest.
Insurance policies may be liable for insurance premium tax.
For value added tax, insurance is an exempt supply.
For income tax, some old life assurance policies may attract tax
relief at 12½%. There are detailed provisions in Income and
Corporation Taxes Act 1988 on how to tax insurance companies.
insurance business transfer scheme

Scheme by which insurance business is transferred between insurance
companies. The term is used in Income and Corporation Taxes Act
1988 s444AD which deals with the tax consequences.
insurance claim Claim for compensation made under an insurance policy.
insurance company Company which sells insurance policies.
insurance contract Contract between an insurance company and a policy holder.
insurance cover The amount and extent of protection an insurance policy holder has
against the risk of suffering a loss from an insured peril.
Insurance Mediation Directive

EC directive 2002/92/EC of 9 December 2002 on insurance mediation.
insurance policy Document which sets out the terms of an insurance contract.
insurance premium Amount a person pays to secure an insurance contract.
insurance premium tax A direct tax on insurance premiums, introduced in 1994.
Insurance Prudential Sourcebook

”The Prudential Sourcebook for Insurers made by the Financial
Services Authority under the Financial Services and Markets Act 2000”
insurance rates Amount of insurance premium required to provide a defined amount

of insurance cover. This is usually expressed as an amount per £100 of
cover.
insurance special purpose vehicle

“Any undertaking which assumes risks from insurance or reinsurance
undertakings and which fully funds its exposure to such risks through
the proceeds of a debt issue or some other financing mechanism where
the repayment rights of the providers of such debt or other financing
mechanism are subordinated to the reinsurance obligations of the
undertaking” (Income and Corporation Taxes Act 1988 s431(2)).
insure Take out a contract which pays compensation if a person suffers a loss.
insurer Insurance company.
intangible Without shape or form.

The term is used in accounting to describe assets which are
identifiable and whose value is measurable but which do not have a
physical form, such as copyright and know-how.
intangible asset Asset which has no physical form, such as copyright, patent or
goodwill.
intangible fixed asset (IFA)

Intangible asset which is accounted for as a fixed asset.
In so far as an intangible asset is quantified and accounted for at all,
it will almost always be a fixed asset. Examples include goodwill,
copyright and brand names.

The corporation tax treatment of such assets is contained in
Corporation Tax Act 2009 Part 8. Broadly, the tax treatment follows the
accounting treatment, particularly in the distinction between capital and
revenue. Goodwill may be amortized at 4% on a straight line basis.
Know-how and patents have their own capital allowance rates.
Rollover relief may be claimed for an intangible asset which is
replaced up to 12 months before or 3 years after disposal (Taxation of
Chargeable Gains Act 1992 s156ZA).
intangible income Benefit donated to a church or other charity, other than cash or a
tangible asset, such as free use of office space or free printing.
The general accounting rule is that such income is only included as
a donation if the donor incurred expense in providing it. So temporary
use of surplus space would not be included, but where a business paid
for space to be available, that would be included.
intangible property In law, property that has no physical existence, such as choses in action
and incorporeal hereditaments. In accounting, the term intangible asset
is used.
integral features In tax, parts of a building which are subject to the same 10% capital
allowance as the building itself. This provision was introduced from 1
April 2008.
integral features Term used from 1 April 2008 for parts of a building that attract a 10%
capital allowance and are part of the special rate pool, as against the
normal 20% capital allowance for plant and machinery.
Integral features include thermal insulation, electrical systems, cold
water systems, space or water heating, air cooling, air purification, lifts,
escalators, moving walkways, external solar shading.
integrated accounts Accounting records which perform the functions of both financial
accounts and management accounts. This means that the records
show how much profit is being made, and where it is being made.
integration Act of bringing several things together, particularly bringing several

businesses together under single control.
integrity In auditing, “prerequisite for all those who act in the public interest”
(APB ES 1 para 7).
This para goes on to say that it requires “related qualities such as
fairness, candour, courage, intellectual honesty and confidentiality”.
inter-group transfer Transfer of an asset between companies in the same group. The tax
treatment is explained in Taxation of Chargeable Gains Act 1992 s19.
intellectual property Copyright, patents, technical designs, trade marks, know-how and
similar. It is an intangible asset.
Customs may seize goods that infringe trade marks and copyright
under Goods Infringing Intellectual Property Rights (Customs)
Regulations SI 2004 No 1473 (as amended). These rights are explained

in Customs notice 34.
intending supplies Supplies a person plans to make in the course of a trade. A business
may register for VAT on the basis of intending supplies without having
to wait until actual supplies start.
intending trader Person or business that intends to make supplies. Such a person may
register for VAT before starting to make supplies.
intention In law, the state of mind of one who brings about a consequence. In
criminal law, it is one of the main forms of mens rea. In tax
prosecutions, innocent intention can reduce or avoid a penalty.
intention of testator Legal principle used to interpret a will, as evidenced in many court
cases. If a testator left money to “Mother” and it can be shown that he
referred to his wife, she will be the beneficiary.
intentions of Parliament What Parliament intended when drafting a law.

For tax, such intentions are usually irrelevant as only the wording of
the Act is considered. This was graphically illustrated in the case
Pepper v Hart where the courts repeatedly ruled against the clear
intentions of Parliament until the case reached the House of Lords.
The term “intentions of Parliament” however was used on HMRC
Guidance Note 10 regarding bank payroll tax. This represented a
departure from normal tax practice.
intention to contract When a party expresses a desire to make a contract. In itself, such
intention does not create a contract.
inter- Prefix which means between, as in inter-bank or international.
inter alia Latin: among others, among other things.
inter arma leges silent Latin: between armies the law is silent
interbank Between banks.
interbank loan Loan from one bank to another.
intercepted goods For Customs, goods where Customs has taken temporary possession
while it investigates whether any relevant law has been breached.
intercompany Between companies.
intercompany dealings Transactions between companies.
interesse termini Latin: interest of a term.

This term was used to mean the date when a lessee is deemed to
have started the tenancy. This doctrine was abolished by Law of
Property Act 1925 s149.
interest “In relation to investment deposits, includes any bonus or other

payment, whether payable annually or otherwise, which constitutes
income derived from the whole or any part of the deposits” (National
Savings Bank Act 1971 s27).
interest sum paid to borrow money (interest payable), or received for lending or
depositing money (interest receivable).
interest (on loans) The percentage return on capital required by the lender (usually
expressed as a percentage per annum).
interest bearing deposits Deposit in a bank or similar institution which pays interest on the
deposit.
interest charges Charges made on a loan or similar which are calculated according to the
amount borrowed and length of time for which it is borrowed.
interest cover Ability to pay interest, usually expressed as a percentage of available

earnings divided by interest payable.
interest elasticity of demand for investment

In economics, the responsiveness of a particular investment to changes
in interest rates.
interest free Description of a product or situation when interest is not charged,

particularly when it would normally be charged.
interest free period Period when a lender offers to provide money without charging interest.
interest held exclusively with a view to subsequent resale

“An interest for which a purchase has been identified or is being sought,
and which is reasonably expected to be disposed of within
approximately one year of its date of acquisition; or an interest that was
acquired as a result of the enforcement of a security, unless the interest
has become part of the continuing activities of the group or the holder
acts as if it intends the interest to become so” (FRS para 11).
interest held on a long-term basis

“An interest which is held other than exclusively with a view to
subsequent resale” (FRS 2 para 10, italics from FRS).
interest in a company’s shares

A right in the shares of a company other than ownership. The term is
defined in Companies Act 2006 s820.
For a public company, there are special provisions for such an
interest set out in Companies Act 2006 ss791-796. There are no such
provisions for private companies.
interest in a settlement The capital gains tax implications are given in Taxation of Chargeable
Gains Act 1992 from s169F.
interest in expectancy Term used in Finance Act 1969 s38 in relation to estate duty. The
provisions has now been repealed by Finance Act 1975.
interest in land For the purposes of excluding property development from the tax
provisions for venture capital trusts, term which is defined as:
“(a) any estate, interest or right in or over the land, including any
right affecting the use or disposition of land, or
(b) any right to obtain such an estate, interest or right from another
which is conditional on the other’s ability to grant it”. (Income Tax Act
2007 s307(3)).
Section 307(4) excludes from this definition interests that arise from
mortgages, secured loans and similar.
interest in possession (IIP)

Type of trust where a beneficiary has an immediate right either to trust
income or to enjoy a property, and another beneficiary has other rights.
A common examples is when beneficiary A receives the interest from a
capital sum, and on A’s death the capital passes to B. Another common
example is when beneficiary C is allowed to live in a property rent-free
for the rest of C’s life; the house passes to D on C’s death.
In these examples, A and C are the life tenant. They have the
interest in possession. It should be noted that the right to the income
must exist before the income arises. If a decision is made as to who
should receive income already arisen, the trust is discretionary.
B and D are the remaindermen. They are said to have a
reversionary interest.
There have been many cases on whether an IIP trust exists.
It is a requirement that all beneficiaries in an IIP trust are named. It
is not sufficient merely to identify them, such as by saying “my
grandchildren”.
interest in shares Another term for interest in a company’s shares (Companies Act
2006 s820).
interest on late payment A statutory right for late payment of an invoice properly issued in the
course of business.
interest on tax Additional charge automatically imposed if tax is paid late.
interest only Description of a mortgage method, where the borrower only pays the
interest each month. This differs from a repayment mortgage where
some capital is also repaid each month.
interest rate A percentage which determines how much interest is charged on a loan
or earned on an investment.
interest rate in a lease Interest rate that is implicit in a lease (SSAP 21).
interest rate margin Difference between the rate of interest a financial institution pays on
money borrowed and money deposited. This is also known as the turn.
interest rate swap Agreement between two organisations to exchange borrowings. This
often happens when one loan is at fixed interest and the other at
variable interest. Such a swap is also known as a pure vanilla swap.
interest reipublicae ne maleficia remaneant impunita

Latin: it is a matter of public concern that wrongdoings are not left
unpunished
interest reipublicae ne sua re quis male utatur

Latin: it concerns the state that no one should make a wrongful use of
his property.
interest reipublicae ut sit finis litem

Latin: it concerns the state that lawsuits be not protracted
interest yield Yield on a fixed interest investment.
interested party Person or company with a financial interest in a company, such as a

lender or shareholder.
interest-only mortgage Mortgage where regular payments are only made of interest leaving the
whole principal to be repaid.
interfering with trade or business

Deliberately interfering with the trade or business of another person by
unlawful means. It is a tort for which legal proceedings may be
brought.
interim (1) Description of a financial provision which applies part of the way
through the year.
(2) Description of a licence, order or similar which is issued on a
temporary basis until the full equivalent can be issued.
interim accounts Accounts prepared halfway through the year.
interim authority notice In relation to licensed activities, a notice which may be served on a
local authority on the death, incapacity or insolvency of a licence holder
which allows a person to act as a temporary replacement for the licence
holder (Licensing Act 2003 s47).
interim charging order Court order which prevents property being sold which may be subject
to a charging order.
interim designation Order that may be made by the Treasury against a suspected terrorist
under Terrorist Asset-Freezing etc Act 2010 s6. Such an order lasts for
30 days.
interim dividend Dividend payable on the basis of part of the year’s trade, often the first
six months.
interim financial statement

Financial statement which covers a shorter period than a year, usually
the first or last six months of such a year.
interim gender recognition certificate

Provisional certificate issued to a person who has applied for re-
registration of their sex under Gender Recognition Act 2004.
interim measures In competition law, temporary sanctions that the European Commission
may impose on a business that appears to be breaching European
competition law.
interim order In an IVA, temporary protection from creditors while a formal IVA is
being prepared.
interim payment Payment made either as a provisional payment (such as in a legal

judgment) or payment of an interim dividend.
interim periodical payments order

Order that may be made against one partner in a divorce to be paid to
the other, pending a full determination.
interim receiver (1) Receiver appointed to deal with the affairs of an insolvent person
until a bankruptcy order is made.
(2) Temporary receiver of seized goods, whose powers are set out in
Proceeds of Crime Act 2002 s247.
interim receiving order Order made under Proceeds of Crime Act 2002 s246 to seize property.
interim relief Under employment law, an order which may be made by an

employment tribunal requiring an employee to be paid his normal
wages until a case is heard. An application for this relief must be
notified to the tribunal within seven days
This relief may only be sought for dismissal arising from:
• whistle blowing;
• health and safety representative work;
• accompanying a colleague at a discipline or grievance
hearing;
• acting as a worker’s representative in various matters;
• for membership or involvement in trade union matters.
interim rent Rent that a court can order a tenant to pay when the tenant has given
notice to quit and the tenant has applied for a new tenancy.
interim reports Financial statements issued in the period between annual reports,
usually half-yearly or quarterly.
intermediary (1) In financial planning, a person or organisation that offers advice and
arranges policies for clients. Under UK regulations, intermediaries must
be either a tied agent, whereby they represent only one company in the
case of life business or a limited number of companies for general
business, or an independent agent, whereby there is no limit on the
number of companies with which they can deal.
(2) In taxation of employees, a third party who engages the services of a
worker, as defined in Income Tax (Earnings and Pensions) Act 2003
s49(1)(b).
intermediate debt Debt which must be repaid in four to ten years’ time.
intermediate supplier A supplier (B) who provides goods to C on the instructions of A.

For all legal, accounting and tax purposes, A is the customer of B.
In this example, B is not concerned with the relationship between A and
C.
For VAT purposes, there are some special provisions when A, B
and C are in different EU member states, an arrangement known as
triangulation. The intermediate supplier must be registered in the
member state of C unless he can use a simplified procedure. Details are
provided in VAT notice 725.
internal audit Audit by the company’s own employees.
internal auditor Person employed by an organisation to audit its finances.

The appointment of an internal auditor does not usually avoid the
need to appoint an external auditor but it can reduce the fees of such
an auditor to the extent that the external auditor can rely on the work of
the internal auditor.
internal control Management system designed to ensure that the organisation is properly
controlled.
internal growth When a business increases in size by expanding its existing activities.
internal linked fund In relation to insurance companies, “means an account:

(a) to which linked assets are appropriated by the company, and
(b) which may be divided into units the value of which is
determined by the company by reference to the value of those assets”
Internal Market The provision of support services to other departments within the
County Council.
internal migration Relocation of people within a country, usually to secure better earnings
in a more industrialised area.
internal rate of return (IRR)

A figure that indicates what interest rate corresponds to the profitability
of a company.
This is calculated by plotting the inflows and outflows of cash at
different dates, and then determining what interest rate this represents.
Suppose a company spent £100,000 and received £30,000 in each of
the following four years.
This can be expressed as:
100,000.r – 30,000.r2 – 30,000.r3 - 30,000.r4 = 0
This cannot be solved algebraically. The mathematics requires
iteration (of software that can do this).
The IRR can be determined as 7.714% thus:
Start Cashflow Balance Interest Final balance

100,000 - 100,000 7,714 107,714
107,714 (30,000) 77,714 5,995 83,709
83,709 (30,000) 53,709 4,143 57,852
57,852 (30,000) 27,852 2,148 30,000
30,000 (30,000) - - -
internal reporting Reporting financial information to those users inside a business, at

various levels of management, at a level of detail appropriate to the
recipient.
Internal Revenue Code (IRC)

The laws governing taxation in the United States, administered by the
Internal Revenue Service.
Internal Revenue Service (IRS)

The federal agency of the USA which collects federal taxes. It also has
responsibility for regulating public charities and foundations, as part of
its authority under the Internal Revenue Code.
internal telephone Telephone system which links people working within an organisation.
internal trade Trade conducted by businesses operating in the same country.
internal transit One of the transit procedures which Customs may apply to goods
presented on importation.
Internal transit allows the goods to pass through a third country on
their way to another EU member state without any further Customs
formalities.
international Description of anything which relates to more than one country.
international accounting standard (IAS)

Accounting standard intended to be applied internationally, issued by
International Accounting Standards Board.
international accounting standards

“the international accounting standards, within the meaning of the IAS
Regulation, adopted from time to time by the European Commission in
accordance with that Regulation” (Companies Act 2006 s474).
International Accounting Standards Board (IASB)

Independent body based in London which seeks to harmonise the
accounting standards of different countries.
International Accounting Standards Committee (IASC)

Body based in London which sets international accounting standards
International Air Transport Association

An international trade organisation for the airline industry.
International Bank for Reconstruction and Development (IBRD)

A body formed in 1945 as part of the World Bank Group. It provides
loans to governments and to government-backed bodies.
Transfers of its stock is exempt from stamp duty (Finance Act 1951
s42).
International Centre for Settlement of Investment Disputes (ICSID)

One of the five institutions which comprises the World Bank. ICSID
was established in 1966 to assist in resolving disputes between
governments and private investors.
international consignment note (ICN)

Document issued under the provisions of the Convention on the
Contract for the International Carriage of Goods.
International Co-operative Alliance (ICA)

International body formed in 1895 as a forum for co-operative societies.
international currency
international development
Commitment to move towards 0.7% of gross national income
(International Development (Reporting and Transparency) Act 2006 s3.
An annual report must be issued on how far this target is being met.
International Monetary Fund (IMF)

Bank which is part of United Nations. In 2010 it was thus an
organisation of 186 countries.
It provides loans and assistance to countries which get into financial
difficulties. Such loans are usually conditional on the government
abandoning bad economic practices. The UK government applied to the
IMF in 1976.
international money market

Market which specialises in trading in different currencies.
international qualification examination

Examination that may be sat in the USA by an accountant who
qualified in another country to become a certified public accountant.
international services Category of supplies which are zero-rated under Value Added Tax Act
1994 Sch 8 Group 7. It largely relates to goods imported for work to be
done before being exported. Work of intermediaries is also included.
international supply contract

A business contract for the supply of goods from territories which have
different legal system.
This term is used in Unfair Contract Terms Act 1977 s26 to apply
that Act when goods are supplied under English law.
international trade Trade between businesses in different countries.
international transport Transport between the UK and another country. It is generally zero-
rated under Value Added Tax Act 1994 Sch 8 Group 8.
international unitary business

Two or more associated businesses that work together to expand their
international markets.
This term was used in the case Robinson v Scott Bader [1981]
54TC757 in allowing one company to claim tax relief for assistance to
the other. The matter is discussed in the Inspectors’ Manual at
BIM38250.
Internet The global network through which computers communicate. The

internet includes the World Wide Web, Usenet user groups and
newsgroups.
Internet Advertising Bureau

An association dedicated to helping companies increase their revenues
from on-line, interactive and similar activities.
Internet banking Banking where transactions are effected on the Internet.
Internet sales Many sales are now made using the Internet. The main ones are eBay,
eBid, CQout, QXL and Tazbar. There are also specialist sites for a
limited range of goods.
Sites usually operate on the auction basis whereby the sale is made
to the person who has bid the highest amount by a certain date. Other
sales are made on the buy now principle where a sale is made
immediately for a fixed price. A third alternative is for the site to match
buyers and sellers and allow them to make their own arrangements.
All sites are funded by a mixture of charging commission (usually
to the seller alone) and from displaying advertising on their web pages.
Internet sales are regulated by the Distance Selling Regulations
(DSR) and E-Commerce Regulations (ECR). The main sites have
also agreed with the Office of Fair Trading to state whether a sale is
made by a business or an individual.
inter partes Latin: between the parties.
Interpretation Act Interpretation Act 1978, which provides guidance on how Acts of
Parliament are to be understood.
Interpretation Service Term used by HMRC for its facilities to provide guidance in languages
other than English and Welsh.
inter-rater reliability In statistics, psychology and other disciplines, measure of how well
independent observers score the same event, where 1 represents an
exact match and 0 a complete lack of matching.
in terrorem Latin: in terror

The term describes a provision in a will which is designed to
frighten or intimidate. Such a provision is void.
interrupt-driven Description of a worker who spends all his time dealing with
interruptions.
inter se Latin: among themselves.
intersectional discrimination
When a person suffers discrimination on more than one ground, none
of which is sufficient to justify a claim on its own.
intervening year Tax year that falls between the year of departure and year of return
for a temporary non-resident (Taxation of Chargeable Gains Act 1992
s10A(8)).
Intervention Board Executive Agency (IBEA)

Organisation now known as the Rural Payments Agency (RPA).
Intervention Board for Agricultural Produce (IBAP)

Organisation now known as the Rural Payments Agency (RPA).
intervention mechanism Method used by central banks to maintain the value of their currency.
intervention stocks Agricultural products which have been bought from the market as part
of the European Union market support arrangements.
inter vivos Latin: between living people, during a lifetime.
inter vivos trust Trust established for the benefit of a living person.
intestacy State of not having a will which deals with all the property of a person
on death.
Total intestacy is where no property may be disposed of by a will,
usually because the deceased did not make one.
Partial intestacy is where some but not all property may be
disposed of by a will.
Where a person is intestate, the property passes under the
Administration of Estates Act 1925 and subsequent legislation.
intestate Without having a will.
in the black In funds, or profitable. The expression comes from the old practice of
banks to use black ink for cash balances and red ink for overdrawn
balances.
in the cards Business jargon for a likely outcome.
in the red Overdrawn, or unprofitable. The expression comes from the old
practice of banks to use black ink for cash balances and red ink for
overdrawn balances.
intimate search “Search which involves a physical examination (that is, an examination
which is more than simply a visual examination) of a person’s body
orifices” (Customs and Excise Management Act 1979 s164(5)).
This may only be conducted by a registered medical practitioner or
a registered nurse.
The person to be searched, known as the suspect, may require this
to be authorised by a justice of the peace or the superior of the Customs
officer.
in totidem verbis Latin: in so many words
in toto Latin: entirely, wholly
intra-Community Between member states of the European Union.
intra-EC supplies For VAT, supplies made by a business in an EU state to a business or

consumer in another state. The VAT position is explained in leaflet 725.
in transitu Latin: in the course of transit
intra vires Latin: within the power of
Intranet A private network of computers. There are many intranets scattered all
over the world. Some are connected to the Internet via gateways.
Intrastat The system for collecting statistics on the trade in goods between
European Union (EU) Member States. The system exists throughout the
European Union (EU) and requirements are similar in all Member
States.
Intrastat Combined Nomenclature

A listing of codes to be used for classifying goods traded within the
European Union. This information is used for statistical purposes.
intra-union duties Customs duties or other import tax charges between members of the
European Union.
The original member states had phased out all intra-union duties by
31 December 1969. States which subsequently joined were allowed a
period to phase them out. The UK phased out intra-union duties by 30
June 1977.
intrinsic value Material value of something which derives from the item itself.
The intrinsic value of a watch is the value of the watch as a
timepiece and item of jewellery. If the watch had been owned by a
famous person it may also have extrinsic value.
introduction (1) When one person introduces another person to a third person.
(2) Preliminary part of a book or report which sets the scene for the
substantive material that follows.
introductory offer Special price or terms when a product or service is launched designed
to encourage customers to try it.
introspection In psychology, an individual’s observation and recording of his or her

own perceptions, thoughts and feelings.
invalid (1) As an adjective, the opposite of valid.

(2) As a noun, a disabled person.
invalid care allowance Social security benefit which was paid to those who provided care for a
disabled person. It was replaced by carer’s allowance from 1 April
2003.
invalidation Process of removing the validity of something.
invalidity The state of something being invalid, or of a person being disabled.
inventory Stock of items held for sale. The term is sometimes preferred to “stock”
to avoid confusion with other meanings of the word.
inventory financing American term for when the money from working capital is used to
purchase stock for resale.
inventory system Computer system that controls the arrival and departure of
consignments at most ports and airports in the UK. See also Direct
Trader Input system (DTI system).
inventory turnover Accounting ratio calculated as value of stock sold divided by value of
goods in stock at the end of the accounting period.
investigating officer Civilian who is so designated by a chief officer of police under Police
investing activities The acquisition and disposal of long-term assets and other investments
not included in cash equivalents.
investment An asset held for the primary purpose of generating income.
investment analyst Person who analyses shares, securities and markets with a view to
producing information to aid investment decisions.
investment bank Bank which deals with such areas as underwriting new share issues.
investment bond arrangements

of Chargeable Gains Act 1992 s151N).
investment company Company whose shares may be traded on a stock exchange, and whose
business is trading in shares of other companies.
In relation to distributions, the term is defined in Companies Act
2006 s833(1).
investment date For CITR, date on which a company makes an investment in a CITR
investment gold coin For VAT, this is

“(a) a gold coin minted after 1800 that:
• is of a purity of not less than 900 thousandths
• is, or has been, legal tender in its country of origin, and
• is of a description of coin that is normally sold [see normal
selling price] at a price that
does not exceed 180% of the open market value of the gold
contained in the coin, or
(b) a gold coin on the lists in section 3”
(VAT notice 701/12A). Section 3 lists the bullion coins of various
countries.
investment grant Government grant to a company, particularly to help it acquire plant

and machinery.
investment income Alternative name for unearned income. It comprises all income from
investments, rent, licence fees and royalties (unless the taxpayer created
the work).
Historically investment income was taxed at a higher rate than
earned income. This ended with the abolition of investment income
surcharge from 6 April 1984.
investment income surcharge (IIS)

Additional rates of income tax charged from 6 April 1973 to 5 April
1984 on investment income.
The rates went as high as 15%. When the rate of income tax could
go as high as 83%, this meant that the tax rate could be 98%, though
most taxpayers liable to pay this penal rate either emigrated or used a
tax avoidance scheme.
Investment Management Association (IMA)

Trade body for the investment industry established in 2002 from the
merger of the Association of Unit Trusts and Investment Funds
(AUTIF) and the Fund Managers’ Association (FMA).
Investment Management Regulatory Organisation (IMRO)

A regulatory body which governs the way investors’ money is handled
and invested.
investment principles Stated principles followed by trustees of an occupational pension

scheme in accordance with Pensions Act 1994 s35 (as amended).
investment property Property which is owned primarily as an investment rather than for
occupation.
investment revaluation reserve

Capital reserve where changes in the value of a company’s investment
properties are first disclosed.
investment trust Unlike a unit trust, which is 'open-ended', an investment trust is

effectively a company which, for a management fee, invests the pooled
money of small investors in securities for stated investment objectives.
An investment trust is 'closed-end' in that it has a fixed number of
shares that are traded like stock, often on many different exchanges.
investor protection Laws, regulations, procedures and similar measures which are designed
to protect investors from unscrupulous offers. They provide no
protection for properly made investments which perform badly.
investor Person or organisation who has bought shares or otherwise committed

his money with a view to receiving it back with additional money.
Investors in Industry (3i)

Finance group partly owned by High Street banks which provides
finance for smaller companies.
Investors in People (IIP) UK national standard which sets out a level of good practice for the
training and development of people to achieve business goals.
invisible assets Assets which have a value but cannot be seen. In practice, they are the
same as intangible assets.
invisible earnings Income from services such as banking and insurance, rather than from
selling goods.
invisible exports Exports of services such as banking and insurance.
invisible hand The invisible hand is an expression that came about from work by
Adam Smith. He argued that the 'invisible hand' would organise
markets and ensure that they arrived at the optimum outcome. This
would all happen by individuals and firms pursuing their self-interest,
yet despite this apparent selfishness, the invisible hand of markets still
ensured the best outcome for all concerned.
invisible imports Imports of services such as banking and insurance.
invisible trade Trade in services such as banking and insurance.
invisibles Invisible imports and invisible exports.
invitation Asking someone to do something, such as to buy goods or attend a

function.
invitation to treat A suggestion that a person may wish to make an offer, such as to buy
goods. Most advertisements and price tickets are invitations to treat.
An invitation to treat is not an offer under contract law. A person
who accepts the invitation is regarded as making an offer. The contract
is only made if the other person accepts that offer. A leading case is
Pharmaceutical Society of Great Britain v Boots Chemists (Southern)
Ltd [1953].
invoice Document which confirms that a supplier has supplied his goods or
services, and states the price charged for the goods.
The form of an invoice is largely a matter for the discretion of the
supplier, though some requirements are stipulated for specific purposes,
particularly for VAT. An invoice may be validly sent by fax or e-mail.
An invoice is not necessarily a demand for payment, as the
customer may have paid in advance. In such a case, it is good practice
(though not legally necessary) to note on the invoice that payment has
already been received.
In most businesses invoices received from suppliers are checked
and then entered on a bought ledger (also known as a purchase
ledger) against the name of the supplier. The check typically needs to
answer these questions:
● have the goods or services been received?
● are they satisfactory?
● did we order them?
● did we agree the price?
● is the invoice arithmetic correct?
The invoice should only be entered on the bought ledger if all the
answers to the questions above are yes. If any of them is no, the matter
must first be resolved with the supplier.
The bought ledger is a memorandum account outside the double
entry bookkeeping. Purchase invoices are brought into the bookkeeping
by a purchase day book (or computer equivalent). The debits are to the
various expense accounts, and the credit is to “creditors” with any
recoverable VAT subtracted and posted to “VAT”.
Sales invoices are similarly recorded on both a sales ledger and in
the double-entry bookkeeping. The sales ledger is used for the purposes
of credit control to obtain payment. The double-entry for sales is to
debit debtors, and to credit VAT and sales.
invoice clerk Employee whose job involves processing invoices in the accounts
department.
invoice discounting Form of secured lending against a business’s debts.
invoice price Amount charged for goods or a service, as shown on the invoice.
invoice register List of invoices either issued or received (more commonly the latter).
invoicing department Part of the accounts department which issues invoices.
involuntary bankruptcy When a person is made bankrupt against his will.
inward To or towards the home country.
inward processing Process whereby goods are brought into the UK for a process before
being exported again. Any process can bring the goods with the scope
of inward processing, including repair, repackaging and assembly.
In general, no Customs duty is payable for inward processed goods,
though a payment is usually required for later refund.
Relief for inward processing is given in one of two ways:
suspension system and drawback system. The former allows for relief
when the goods are exported. Such goods are known as compensating
products. The drawback system requires the duty to be deposited with
Customs for refund.
in-work credit Social security benefit that may be payable for up to 52 weeks when
starting in a new job. It is paid under Employment and Training Act
1973 s2.
in-work emergency discretion fund payment

Social security payment that may be made under Employment and
Training Act 1973 s 2.
in-work emergency fund payment

Northern Ireland equivalent to in-work emergency discretion fund
payment.
in-year forms Forms filed with HMRC during the tax year, rather than at the end of it.
For payroll, this includes the various P45 and P46 forms.
in-year PAYE payment Payment of monthly PAYE. The term is particularly used for the new
penalties introduced from 6 April 2010 for late payment.
in-year rise For tax credits, increase in income from the start of the year when
income was declared. An in-year rise may be disregarded up to a limit.
IOB Insurance Ombudsman Bureau.
IOSCO International Organisation of Securities Commissions.
IOU Personal loan authorised by the borrower.

This practice is not generally recommended in business as it can
easily lead to fraud.
IP Intellectual property.
IPA Individual pension account.

[This is also the abbreviation for Indian Pale Ale.]
IPDI Immediate post-death interest.
IPR Inward Processing Relief. This is a Customs procedure providing

import duty relief for goods imported to the European Union (EU) or
removed from a customs warehouse, for process and re-export outside
the European Union (EU).
IPR/CS Inward Processing Relief/Continental Shelf - special arrangements are

available for the transfer of Inward Processing Relief (IPR) goods to or
from locations on the Continental shelf outside UK territorial waters.
I promise to pay Words on a promissory note. If the note bears more than one signature,
all signatories are jointly and severally liable to pay (Bills of Exchange
Act 1882 s85(2)).
IPRU Interim Prudential sourcebook, published by the Financial Services

Authority.
ipsissima verba Latin: the identical words
ipso facto Latin: by the mere fact.
IP&T Butterworths Intellectual Property and Technology Cases, a series of

law reports first published in 1999.
IR (1) Inland Revenue.

(2) Insolvency Rules.
IR 35 Common name for personal service company.

The provisions apply where an individual provides his or her own
services through a limited company, particularly when he or she is the
company’s only employee. IR35 provisions apply when the individual
works in circumstances that would otherwise make the individual an
employee.
Such an arrangement remains legal, and fairly common, but the
company must calculate and pay a sum equivalent to the PAYE that
would have been payable had the individual been an employee.
These provisions have been controversial, as they are based on what
a person does not do. Saying that a self-employed person is avoiding
tax payable by an employee is like saying that someone who walks to
work is avoiding petrol duty by not driving a car.

Suppose:
• A works for B Ltd, and
• B Ltd provides the services of A to C Ltd, and
• but for B Ltd, A would be seen as an employee of C Ltd.
What has happened is that B Ltd has broken the direct link between
A and C Ltd. For tax purposes, B Ltd must make the IR35 payment.
Note that C Ltd still pays the invoices from B Ltd in the normal way,
without putting A on the payroll.
Income tax provisions are contained in Finance Act 2000 s60,
National insurance provisions are found in Social Security
Contributions and Benefits Act 1992 s4A with effect from 6 April
2000.
Iraq Country that invaded Kuwait on 2 August 1990. A UK worker unable

to leave either country as a consequence may benefit from the
provisions of Finance Act 1991 s46 in relation to time spent in the UK.
IRC Inventory Return Code - used by the Cargo Community System (CCS-
UK) to indicate that inventory details sent by the Customs Handling of
Import and Export Freight (CHIEF) system are incorrect or invalid.
IRC (1) Internal Revenue Code

(2) Inland Revenue commissioner
Irish land boundary The boundary between Northern Ireland and the Republic of Ireland.
Goods that cross the boundary to the Republic are regarded as removed
to another EU member state for VAT purposes. Notice 725 states what
evidence is required for such removals.
Irish loan “Means a loan to Ireland by the United Kingdom” (Loans to Ireland Act
2010 s1(2)).
IRLR Industrial Relations Law Reports, first published in 1972.
Iron Curtain Symbolic division between Eastern and Western Europe between 1945
and 1991, indicating that the West did not know what the East was
doing.
IRR Internal rate of return
irrecoverable debt Sum of money owed to you for which you are unable to obtain
payment.
irrecoverable loss Loss which a person must bear himself without being able to claim on
an insurance policy or otherwise be compensated from someone else.
irrecoverable Description of a payment, goods or similar which cannot be got back.
irredeemable Description of something which cannot be redeemed, such as a form of

debt instrument which cannot be converted to ordinary shares.
irredeemable bond Government bond which has no maturity debt. It earns interest but its
value can only be recovered by selling it.
Irretrievable Loss When goods have been rendered unusable by any person (taken from
Code Article 206).
irrevocable Description of something which cannot be revoked.
irrevocable letter of credit

Letter of credit against which a bank must make payment if the
conditions are met. There is no facility for the person who issued the
letter to revoke it or otherwise countermand payment.
irrevocable trust A trust arrangement that cannot be revoked by the settlor who created
it.
IRS Internal Revenue Service, the taxing authority in the United States.
IRTC Individual resettlement training costs (in armed forces).
IRU Union Internationale des Transports Routiers (International Road

Transport Union) - an international trade organisation for the road
transport industry.
IS Information systems.
ISA Individual savings account
ISBN number International Standard Book Number.

A system of allocating a unique set of digits to each book that is
published. The system was introduced in 1966 and is widely used,
though it is not compulsory.
ISD Investment Services Directive.
ISDN (1) Integrated Services Digital Network. Digital phone connections that
are faster for computer.
(2) Income Support Deduction Notice.
Islamic Development Bank

Bank established in 1975 to provide financing in Islamic countries in
accordance with Sharia law.
Islamic finance Financial arrangements that are consistent with Sharia law for
Muslims.
The main provision is the prohibition of charging any interest. This
is circumvented by arranging for an equivalent sum to be paid as a
share of profits, which is permitted.
For tax, these arrangements are known as alternative finance. They

seek to tax Islamic equivalents on the same basis as the financial
products they copy. This has not always been achieved. Alternative
finance is not restricted to Muslims, and so has provided scope for tax
avoidance.
There are also special Islamic banks.
Islamic law Another name for Sharia law.
Isle of Man Part of British Isles that is not part of the United Kingdom. For the
purposes of VAT, the Isle of Man is treated as if it were part of the UK.
ISO codes Three-letter codes which identify currencies and stores of value. These
are allocated by the International Organization for Standardization
(ISO) under their standard ISO 4217.
For most currencies, the code typically comprises two letters
denoting the country and one letter denoting the currency, so the US
dollar, British pound and Japanese yen are respectively USD, GBP and
JPY. The euro is EUR
Stores of value are often denoted by X followed by two letters (such
as the atomic symbol) so gold and silver are XAU and XAG. There are
some symbols for currencies for particular applications, such as special
drawing rights and the US dollar for next day funding.
isolated transaction Unique transaction that is not repeated. Such a transaction may be
regarded as a trade if of a commercial nature, such as in CIR v Fraser
[1942] 24TC498 which related to an isolated transaction of buying a
large quantity of whisky and reselling it at a profit. The matter is
ISPV Insurance special purpose vehicle.
ISSN International Standard Serial Number. Unique number given to a

publication so it can be identified internationally.
issue (1) To make available, as in issuing shares.

(2) Children and their children, viewed collectively (Wills Act 1837
s33).
Strictly, “issue” means sons and daughters, and remoter issue
means subsequent generations. However for inheritance tax, HMRC
uses the word to mean all descendants of any generation.
issue at a discount When a security is issued for less than their par value.
In general, shares may not be issued at a discount but debentures
and other forms of debt instrument may be.
issue at a premium When a security is issued for more than its par value. This is legal for
shares and all other forms of security.
issue costs “The costs that are incurred directly in connection with the issue of a
capital instrument, that is, those costs that would not have been
incurred had the specific instrument in question not been issued” (FRS
4 para 10).
issue price Price at which shares or other financial instrument are issued to
investors.
issue requirement Conditions which must be met by the terms of an issue of shares for
them to qualify for tax such relief, such as for EIS relief under Income
Tax Act 2007 s173A-174.
issued capital Amount of authorised capital which the company has issued to
members.
issued share capital “Shares of a company that have been issued” (Companies Act 2006
s546(1)(a)).
issuer Person who issues something, particularly financial instruments.
issuing arrangements In the context of EIS relief, “means:

(a) the arrangements under which the shares are issued to the
individual, and
(b) any arrangements made before the issue of the shares to the
individual in relation to or in connection with them”
issuing company Company which issues equity notes (Income and Corporation Taxes
Act 1988 s209(2)(e)(vii)).
IT (1) Country prefix code for Italy.

(2) Information technology.
Italy Member state of European Union, for which purpose these territories
are excluded: Campion d’Italia, the Italian waters of Lake Lugano, and
Lvigno.
IT department Department in an organisation that deals with its information

technology.
ITDLO International Trade Development Liaison Officer.
item (1) An object defined by a property, such as an entry in a statement or

something offered for sale.
(2) Colloquially, a couple in an acknowledged romantic relationship.
itemise List the items which make up something, such as the constituent parts
of a bill explaining how the charge has been calculated.
itemised pay statement Payslip which gives details of gross salary or wages, the amount of any
variable element, the net amount payable, and a breakdown of any part
which is paid differently from the rest. Such a statement must be
provided with every payment (Employment Rights Act 1996 s8).
items subject to legal privilege

Term used in Taxes Management Act 1970 s20C(4A) to describe
documents which cannot be taken by HMRC when they enter premises
with a warrant.
iteration Mathematical method used for solving problems which can be defined
but not easily solved by other branches of mathematics. An example is
calculating internal rate of return or a square root (when only the
basic arithmetic functions are available).
Iteration works by guessing at an answer, testing it, and refining it
in the light of that test, until the answer is sufficiently accurate.
For example, suppose we want to know the square root of 10 to four
decimal places. We might guess that the answer is 2. Dividing this into
10 gives us 5, so we know the answer lies between 2 and 5. We then
divide by the average of these two numbers, and continue this process.
This will give these answers:
number 10 ÷ number average
2 5 3.5
3.5 2.857 3.1785
3.1785 3.1461 3.1623
3.1623 3.1623 3.1623
Even though our first guess was some way out, it took only three
iterations to get an accurate answer.
itinerant trade Trade or employment that necessarily involves travelling.

In such cases, the costs of meals and hotel accommodation are
generally tax-deductible and are not caught by the duality principle.
ITLR International Tax Law Reports, a series of law reports first published
in 1998.
ITP International Trade Prototype - a system for facilitating trade by using

electronic data transmission. This allows the export declaration in the
country of despatch to function as the import declaration in the
destination country.
IVA (1) Individual Voluntary Agreement

(2) Imposta sul valore Aggiunto, Italian for “value added tax”.
(3) Imposto sobre o Valor Ascrescentado, Portuguese for “value added
tax”.
(4) Impuesto sobre el Valor Anadidio, Spanish for “value added tax”.
IVA equity release When a person subject to an IVA raises funds by selling property
before the IVA ends.
IVA proposal Document submitted to the court to obtain an IVA.
IVA Individual voluntary agreement (or arrangement).

ivory Material from the tusks of elephants. Ivory and goods made from ivory
may be seized by Customs if brought into the UK unless the holder has
a CITES permit.
iXBRL Inline Extensible Business Reporting Language. This is a protocol for

identifying financial data that must be used when submitting
corporation tax returns from 2011.
J
J (1) Abbreviation for judge, or “Mr Justice ....”
(2) Suffix for a tax code used only in 2001/02. It indicated that the
taxpayer was entitled to the married couple's allowance and only paid
tax at the then starter rate of 10%.
Jaffa cake For VAT purposes, this is a zero-rated cake and not a standard-rated
biscuit.
January effect Tendency of share prices to rise at the start of a new calendar year.
Japanese knotweed Plant whose Latin name is Fallopia japonica. It was introduced to the
UK in Victorian times as an ornamental garden plant and as a means of
stabilising railway embankments. The plant has no natural predators
and can be very destructive. For example, it can push through tarmac. It
can be a problem to eradicate.
For landfill tax purposes, HMRC stated in HMRC Business Brief
62/2008 that the plant is regarded as a substance which qualifies for
land remediation relief. Previously HMRC did not accept that a plant
could qualify for this relief.
Jarvis v Swan Tours Court case of 1973 which held that a person could sue for mental
distress.
JBL Journal of Business Law. It contains some law reports.
JC Justiciary Cases, a series of Scottish law reports.
JCCC Joint Customs Consultative Committee - a forum for discussion and

consultation between HM Customs and Excise and various trade bodies
and other organisations representing companies involved in
international trade.
JCT contract Contract used for most forms of building project.
J curve Shape on a graph which looks like an elongated letter J. It illustrates the
effect of a falling exchange rate on a country’s balance of trade.
JDI Just do it, business jargon.

Jenkins, Roy Labour politician (1920-2003) who was Chancellor of the Exchequer
from 30 November 1967 to 19 June 1970 in Harold Wilson’s
government. He raised taxes to deal with economic crises and got the
national current account into surplus by 1969. He went on to hold other
senior positions.
Jeroboam Champagne bottle with a capacity of four standard bottles.
jetsam Goods jettisoned from a ship and then washed up on shore. Some
authorities limit the term to goods washed up from a ship that has sunk.
jiao One tenth of a yuan, currency of China.
job (1) Employment position held by an individual.

(2) Piece of work to be done.
job lock Situation where someone wants to leave their job but does not want to
lose the pay or benefits that go with it.
Job Release A scheme introduced in 1977 under Job Release Act 1977 which
allowed tax-free payments to be made to people approaching retirement
age to create job vacancies which would otherwise not exist.
It was originally planned to last for 18 months, but was twice
extended by Statutory Instrument, finally ending on 29 September
1988.
jobseeker's allowance (JSA)

Social security payment to someone looking for work.
joining fee Fee charged by a body for joining it. It is generally treated as the same
as the annual subscription.
The VAT position is given in VAT leaflet 701/5.
joint account Account which is shared by two people, particularly a married couple.
joint and several liability Legal right to sue any member of a group when a sum is owed by that
group. This liability only arises in specific situations, such as in a
partnership.
joint claim Claim for tax credits made by two people together, as against a single
claim.
joint committee In relation to local authorities, water boards and similar, documents
relating to conveyance of property are exempt from stamp duty
(Finance Act 1952 s74).
joint cost Cost borne by two or more people, or where a cost is apportioned
between two or more cost centres.
joint funding A grant project supported by more than one donor, each of whom may
provide monies for a specific component of the overall project or who
may contribute to a common pool of funds.
joint life annuity An annuity contract that pays a benefit throughout the joint lifetime of
two people.
joint management Management undertaken by two or more people or bodies.
joint ownership Ownership by two or more people or bodies.
joint property Property that is owned by two or more people. The legal and tax
treatment can depend on whether it is owned as a joint tenancy or as a
tenancy in common.
joint stock bank Bank which is a quoted public company.
joint stock company Public company whose shares are owned by many people. The term is
now generally replaced by public limited company.
joint tenancy Arrangement whereby two people co-own property, as against a

tenancy in common where each person owns half the interest in the
property. The distinction is important as only a tenant in common may
leave his interest in the property in his will.
joint unit-holder In the context of commonhold property, two people who jointly are a
unit-holder (Commonhold and Leasehold Reform Act 2002 s13).
joint venture two or more companies working together on a project.
jolly (1) Exercise undertaken more for pleasure than purpose.

(2) In gambling, the favourite in a race, such as the horse with the
shortest odds
Jones v Vernon Pools Court case of 1938 which established that parties may agree that their
arrangements shall not constitute a legal contract.
jottings book Bound book in which a person records odd scraps of information, such
as details from telephone calls or answering machines.
The date is recorded. The advantage of a bound book is that scraps
of paper are not lost.
joule Unit of energy. Its symbol is J.
journal (1) In accounting, the prime book of account which records

transactions which are not recorded in any other prime book of account.
The journal is particularly used to record depreciation, accruals,
prepayments, adjustments to provisions and reserves, bad debts,
acquisitions and disposals of business, prior year adjustments, changes
caused by adopting a new accounting policy, changes to share capital
and any unusual or novel transactions.
(2) A publication issued at least once a year. It is generally zero-rated

for VAT under Value Added Tax Act 1994 Sch 8 Group 3. Details are
given in VAT notice 701/10.
journal entry Record in a journal.

In double-entry bookkeeping, it records a transaction as one or
more debits and one or more credits. The total debits must equal total
credits. By convention, the debits are indented to the left in manuscript
journals.
journals For VAT, a journal is zero-rated if it is issued at regular intervals at

least once a year. They must essentially consist of reading matter.
Catalogues and journals primarily consisting of advertising matter are
standard-rated.
JP (1) Justice of the peace, ie a magistrate

(2) A series of law reports first published in 2003.
JSA Jobseeker’s allowance.
jubilee National celebration of landmark anniversaries. In ancient Jewish

history, this was every 50th year when slaves were freed and debts were
cancelled.
Jubilee 2000 Campaign for debt relief launched during the 1990s requiring poor
countries to have their unpayable loans written off by 2000. The
campaign was led by Christian groups who saw it as appropriate to
revive the ancient custom to write off debts at a time of jubilee.
The campaign led to the HIPC programme.
judgment Decision of court, usually requiring a person to make a payment.
judgment creditor Person who has acquired a court order against a debtor.
judgment debt A debt due under a judgment.
judgment in litigation Judgment of a county court or higher court when HMRC is involved in
litigation with a taxpayer. Under HMRC Notice of 19 March 2010, the
terms of a judgment must be obeyed even when the judgment is under
appeal. This means that the taxpayer must pay any tax owed and
HMRC must refund any tax overpaid. Previously, payments or
repayments were sometimes not made pending the appeal.
Under a transitional provision, an agreement made before 9
December 2009 not to collect tax pending an appeal is honoured.
HMRC also states that it will not enforce a judgment if the
consequence is to put the taxpayer into bankruptcy or insolvency. The
taxpayer should apply to HMRC to have the tax held over.
judgment summons A summons issued requiring a person against whom a judgment has
been obtained to attend court to answer questions about their means
(County Courts Act 1984 s147(1)).
judicature Authority and power to dispense justice.
judici officium suum excedenti non paretur

Latin: effect is not given to the decision of a judge delivered in excess
of his jurisdiction
Judicial Appointments Commission (JAC)

Body corporate established under Constitutional Reform Act 2005 s61
to appoint judges and tribunal members
juke box For VAT purposes, this is regarded as an amusement machine (VAT
notice 701/13).
jumbo loan American term for a mortgage loan which does not correspond to US
federal government guidelines because it is too large.
jump the broomstick Go through an irregular form of marriage.
junior Person who is younger or lower in rank. A person who holds such a
position.
junior capital Term occasionally used to described funds such as deferred shares.
Such capital is only repaid after claims for senior capital have been
satisfied.
junior counsel Barrister who is not a Queen’s Counsel.
junior ISA Tax-advantage savings product similar to an individual savings

account (ISA). Its main provisions are:
• the beneficiary must be aged under 18;
• there must be no child trust fund for the beneficiary;
• the ISA is administered by the person with parental
responsibility until the beneficiary is 16;
• contributions of up to £3,000 a year may be made into the
fund by anyone, including parents;
• a beneficiary may have one cash ISA and on shares ISA, but
the annual limit applies to the two together;
• all returns on the ISA are tax-free;
• no amount may be withdrawn until the age of 18, except on
terminal illness or death;
• at age 18, the junior ISA becomes an ordinary ISA.
junior mortgage Term occasionally used to mean a second mortgage.
junior partner Member of a partnership who holds a junior position, such as having
contributed less capital or having less management responsibility than
the senior partner.
junior security Any security which ranks after other security.
jura eodem modo destituuntur quo constituuntur

Latin: laws are abrogated by the same means they are made
jura publica anteferenda privatis

Latin: public rights are to be preferred to private
jura regalia Latin: sovereign rights
jus accrescendi inter mercatores pro beneficio commercii locum non habet
Latin: the right of survivorship among merchants, for the benefit of
commerce, does not exist.
jus canonicum Latin: canon law.
jus in personam Right against a specific person.
jus in rem Justice against the whole as a whole.
jus mariti Latin: right of the husband.
jus publicum privatorum pactis mutari non potest

Latin: Public law is not to be superseded by private agreements.
jus quaesitum tertio Latin: right on account of third parties.
jus spatiandi et manendi Latin: the right to stray and remain.
jus tertii Latin: the right of a third person.
justice (1) System of law.

(2) Magistrate, when the word is short for justice of the peace.
justice of the peace (JP) Magistrate.

For Customs purpose, the word “in Scotland includes a sheriff and
in Northern Ireland, in relation to any powers and duties which can
under any enactment for the time being in force be exercised and
performed only by a resident magistrate, means a resident magistrate”
Justice of the peace court Form of court similar to a magistrates’ court established in Scotland
under Criminal Proceedings etc (Reform) (Scotland) Act 2007 s59.
justices’ clerk Person appointed by the Lord Chancellor to assist magistrates (Courts
Act 2003 s27). There are also assistant clerks.
JVCC Joint VAT Consultative Committee - a forum for discussion and

consultation between HMRC and various trade bodies and other
organisations representing parties concerned with VAT policy and
practice.
K
K (1) Abbreviation for a thousand, as in £20K means £20,000.
(2) Form of tax code where the letter appears before the number. This
code is used in the PAYE system for employees where an amount must
be added to their gross pay to determine their taxable pay. The more
common arrangement is that an amount is deducted to reflect a portion
of the annual personal allowance. A K code commonly arises when an
employee has many taxable benefits in kind or has a large amount of
unpaid tax from a previous period.
The amount that is added may be determined from the same tables
(Table A) used to calculate the deductions for other tax codes. K codes
operate cumulatively, but the amount of tax collected cannot exceed
half of the gross pay in any pay period. Any excess is carried forward to
a future pay period.|
Käibemaks Estonian: value added tax.
kangaroo For VAT, live kangaroos are standard-rated, but kangaroo meat
prepared for human consumption is zero-rated (VAT notices 701/14
and 701/15).
kapitalvinningsskattur Tax on capital gains in Faroe Islands. It comes within the scope of the
UK/Faroes Double Taxation Convention.
KB or KBD King’s Bench Division. Since 1875, part of the citation of a court case
heard in this division of the High Court during the reign of a king (ie
from 1900 to 1952).
keeping in touch (KIT) Day in which a woman may work during a maternity pay period
(MPP) without that period ending.
KIT days have only been permissible for births expected from 1
April 2007. A woman may take up to ten KIT days.
She is entitled to be paid statutory maternity pay (SMP) for KIT
days. Any additional payment is a matter to be agreed between her and
the employer. It is usual to add a sum equal to a normal day’s pay less
one day’s SMP.
If a woman works more than ten KIT days, her SMP is stopped for
the whole of the week in which she works each additional day.
A day is only a KIT day if she returns to work. A return to show
colleagues for purely social reasons, such as to show her baby to her
colleagues, is not a KIT day.
keeping open account Situation when merchants agree to honour each other’s bills of
exchange.
keg Small barrel used to store beer.

In the USA, the standard size is 15.5 US gallons (12.7 UK gallons),
which is half the standard barrel.
keine Antwort is auch eine Antwort

German: no answer is still an answer.
kerb appeal Making a house for sale look attractive from the street to increase its
sale price.
kerogen Organic matter in oil-shale which gives oil on distillation.
key area One of 12 objects which a body must meet to be given charitable
status.
key management “Those persons in senior positions having authority or responsibility for
directing or controlling the major activities and resources of the
key money Premium paid to acquire use of rented premises.
Keynesian Relating to the economic policies of the economist Maynard Keynes.
key person insurance Insurance designed to protect a business against the loss of income
resulting from the disability or death of an employee in a key position.
key rate Main rate from which other interest rates are calculated.
khoum One fifth of a ourgiya, currency of Mauritania.
KIA Killed in action.
kicker Business jargon for something added to a deal to make it more

attractive.
kidnap Forcible removal of someone, often with a view to securing a ransom

for their release.
Payment to a kidnapper is not tax deductible, as it is a criminal
payment under Corporation Tax Act 2009 s1304.
killed in action (KIA) Scheme that provided tax relief from estate duty for people killed or
missing in action during the second world war. There were two
schemes for deaths before 12 March 1952. These provisions can still be
relevant if claiming transferable nil rate band for inheritance tax, as
explained in HMRC Inheritance Tax and Trusts Newsletter April 2009.
The first scheme was of complete exemption, and applied to a death
from any cause (not necessarily related to military action) while a
person was serving in the armed forces, and had the rank up to corporal
(army), chief petty officer (navy) or equivalent air force rank.
The second scheme was of conditional exemption, and applied to all
service ranks and all civilians drowned or killed within 12 months from
war injuries suffered between 3 September 1939 and 31 March 1948.
(The later date allowed for deaths from the blitz and torpedoing). The
remission was for the first £5,000 of property. A reduced rate of estate
duty was charged on any excess if the property passed to a close
relation.
These schemes are entirely separate from the reliefs for death from
active service, as set out at Inheritance Tax Act 1984 s154.
Kimberley Process Certificate

Certificate that is needed to import rough diamonds into the UK from
outside the European Union.
kip Currency of Laos.
kith Friends, as opposed to relations. The term is often used in kith and kin,
meaning friends and relations.
kitty Informal collection of funds, usually of a small amount, for a particular

purposes such as paying for an office party.
KMC Kerosene Marker Concentrate - a commercially-available solution

which complies with the requirements for marker to be added to duty-
rebated kerosene.
knock for knock An arrangement between motor insurance companies where each
company pays for its own clients' claims and does not cross claim from
the other company, even if the driver at fault is insured with the other
company.
knock-out agreement Agreement whereby a buyer at an auction pays another potential buyer
not to bid as a means of reducing the sale price. Generally such an
agreement is illegal.
know-how Knowledge or skill in a particular field. It is an intangible asset. A

capital allowance may be claimed.
knowing card Sharp person who knows how to trick people.
knowledge General term for information acquired by a person. The term has
acquired more specific meanings, such as the knowledge of an area
required by a taxi driver to be licensed.
knowledge management Human resources term for the systematic process of acquiring, creating,
analysing, sharing and using information with a view to better
achievement of the organisation’s goals.
known facts Personal Information provided by the customer so they can be

identified by the department. This is a security tool.
koi carp Ornamental fish that is standard-rated for VAT. The VAT tribunal held
that it could not be zero-rated as food in J R Chalmers LON/82/99.
koruna Currency of Czech Republic.
kommunuskattur Municipal tax on income in Faroe Islands. It comes within the scope of
the UK/Faroes Double Taxation Convention.
KPI Key performance indicator.
Kretztechnik European Court of Justice decision in the case Kretztechnik AG v

Finananzant Linz Case C-465 [2005].
The case established that the issue of shares by a public limited
company in return for capital invested is not a supply for VAT
purposes.
HMRC produced Guidance Note 8 in January 2010 explaining how
this applies in the UK.
krona Currency of Sweden before it adopted the euro in 2001. The plural is
kronor.
króna Currency of Iceland, comprising 100 aurar.
krone (1) Currency of Denmark, divided into 100 re.

(2) Currency of Norway, comprising 100 öre.
(3) Term for various old coins, such as a silver coin in Austria and a
gold coin in Germany.
kroon Currency of Estonia.
Krugerrand Bullion gold coin issued by South Africa. It contains one troy ounce of
fine gold, and bears a portrait of President Kruger.
ktēma es aei Greek: a possession for ever.
kuna Currency of Croatia.
Kuwait Country that was invaded by Iraq on 2 August 1990. Workers who were
in the country for any time in the previous 62 days and who were
unable to return to UK as a consequence may benefit from the
provisions of Finance Act 1991 s46 in relation to determining their
period overseas.
kwacha Currency of Malawi.
kwanza Currency of Angola.
L
L (1) Suffix for a tax code which indicates that the taxpayer is entitled to
the basic personal allowance. Before 1990/91, this was known as the
lower personal allowance (hence the letter) to distinguish it from the
higher allowance paid to married men and single mothers.
laari One hundredth of a rufiyaa, currency of Maldives.
Lady Day Quarter day on 25 March. This is based on the Christian festival of the
annunciation to the Virgin Mary that she would give birth to Jesus. It is
therefore nine months before Christmas.
Lammas Festival of the wheat harvest, celebrated on 1 August. Before 1991, it

was one of the four old Scottish term days.
Lamont, Norman Conservative politician (1942- ) who was Chancellor of the Exchequer
from 28 November 1990 to 27 May 1993 in the government of John M
Major. He was Chancellor when Britain was forced out of the exchange
rate mechanism. Lamont made no secret that he welcomed this. He
abolished some minor taxes and reduced the rate of income tax.
land (1) Area of the earth’s surface.

Legally this “includes building and other structures, land covered
with water, and any estate, interest, easement, servitude or right in or
over land” (Interpretation Act 1978 Sch 1).
There are many special legal provisions relating to land:
• a trust for land must have a trust corporation or at least two
individuals as trustees; it may not have more than four trustees;
• a trust for land must be written; it cannot be oral as can other
trusts;
• ownership of land means ownership of everything under and
over it, though there are some special provisions. Therefore a building
is owned by the person who owns the land, though that person may
grant a lease or licence to another person;
• two people cannot own the same piece of land though a trust
can. Many couples are trustees of land without realising this.
In accounting, land is never depreciated, though the buildings on
land are. Land and buildings must be periodically revalued, usually
every three years.
For stamp duty land tax, most acquisitions and some other
transactions in land attract the tax
Dumping material on land can attract a liability to landfill tax or
aggregates levy.
For VAT, a licence to occupy land is exempt. The treatment for
other supplies involving land depends on the nature of the supply;
For income tax, income from property (such as rent) is taxable
income, subject to some exceptions such as rent-a-room.
For inheritance tax, if land is sold within three years of death for a
lower price than at death, that lower price may be substituted for the
original valuation, provided it was the best reasonably obtainable price.
If some land is sold at a profit and some at a loss, the profits and losses
are netted off for this purpose.

(2) Bring an aircraft back to the ground. For Customs purposes, this has
the same definition as landing.
land Taxation of insurance companies means “any estate, interest or rights in

or over land” (Income and Corporation Taxes Act 1988 s432AA(6)).
land agent Person who administers a large are of land, such as a farm, on behalf of
its owner.
landed cost Cost of imported goods which includes all costs of delivery to port,
unloading and passing through Customs.
Landeszcentralbank Regional divisions of the Bundesbank in Germany.
landfill “A site for the deposit of waste onto or into land where the site is:
(a) a waste disposal site, or
(b) used for the storage of waste”
(Waste and Emissions Trading Act 2003 s22(1)).
landfill allowance Maximum amount of biodegradable waste which a local authority

allows to be sent to landfill for disposal (Waste and Emissions Trading
Act 2003 s4).
landfill tax A tax on dumping in landfill sites, introduced in 1996.
land law Provisions, some ancient, governing legal rights about land.
landing For Customs purposes, “in relation to aircraft, include[s] landing on

water” (Customs and Excise Management Act 1979 s1(1)).
landing charges Payment for getting goods from a ship or aircraft on to land, including
through Customs.
landing order Permit which allows goods to be unloaded into a bonded warehouse
without paying Customs duty.
land-interest Collective interests of those who own land.
landlady Female landlord.
landline duty Tax announced in the March 2010 Budget to fund greater broadband
access. It was repealed in the June 2010 following a change of
government.
landlord Person or business who owns property to be let.
land register List of plots of land indicating the owner of each.
land registration A record, held by the Land Registry, which lists the registered owner of
a plot and whether there are any legal charges upon it.
land registration Main law is Land Registration Act 2002.
land registry Continues under Land Registration Act 2002 s99.
land remediation relief Scheme that allows 150% tax relief of the cost of cleaning up
contaminated land acquired from a third party. The scheme started on 1
April 2009.
Details of the relief are discussed in the Inspectors’ Manual from
CIRD 60051.
Lands Clauses Acts Means̶

(a) in relation to England and Wales, the Lands Clauses
Consolidation Act 1845 and the Lands Clauses Consolidation Acts
Amendment Act 1860, and any Acts for the time being in force
amending those Acts;
(b) in relation to Scotland, the Lands Clauses Consolidation
(Scotland) Act 1845 and the Lands Clauses Consolidation Acts
Amendment Act 1860, and any Acts for the time being in force
amending those Acts;
(c) in relation to Northern Ireland, the enactments defined as such
by section 46(1) of the Interpretation Act (Northern Ireland) 1954.”
landside Any area outside the Customs controlled boundary of an airport. The
other side is airside.
landsskattur National tax on income in Faroe Islands. It comes within the scope of
the UK/Faroes Double Taxation Convention.
Land tax (1688-1949) Introduced by William and Mary to replace revenues of

hearth tax. It was a revival of earlier forms of land tax, but assessed on
a town basis. (Many histories say land tax was introduced in 1692,
though clearly enacted in a 1688 statute.) This was the first serious
attempt at a tax based on the principal of “ability to pay”.
lands tribunal Tribunal that has power to determine questions relating to land.
If the value of land is disputed for capital gains tax or inheritance
tax purposes, the matter may be resolved by the lands tribunal.
land tax Tax and owning land and the right to receive tithes. It was first charged
in 1693. By the 20th century, the tax had reduced considerably in yield
as many land-owners exercised their right to “redeem” their tax liability
by making a single payment equal to 25 years’ tax. The tax was
completely abolished in 1963.
land taxes Temporary tax on land imposed only in 1671.
land-use planning system The name for the planning system in the UK introduced on 1 January
1949 under the Town and Country Planning Act 1947. The relevant law
is now Town and Country Planning Act 1990 as amended, particularly
by Planning and Compulsory Purchase Act 2004.
land value tax Tax on the unimproved value of land. Such taxes have been
implemented in China, Estonia, Russia and Singapore. An attempt was
made to introduce such a tax in the UK in 1909. A leading exponent of
the tax was Henry George (USA, 1839-1897).
The term is used in Finance Act 1931 s28 (still in force) in relation
to stamp duty payable on documents to transfer land.
LAPR Life assurance premium relief.
la propriété c’est le vol French: property is theft. (Quote from Prodhou)
lapse Expire by inactivity during the passing of time. An example is the

termination of an insurance policy due to non-payment of premiums.
lapsed option Option which was not taken up and has now expired and become
worthless.
lapsed policy A policy terminated for non-payment of premiums.
laptop Portable computer with the same power and capability as a desktop
system, but which can run for a short time on rechargeable batteries.
larceny Old legal term for theft.
la reyne le vault Normal French: the queen wills it. Words of Royal Assent.
large company For corporation tax, this means a company that must pay its tax in four
instalments because its taxable profits either exceeded the upper limit in
the previous year or exceeded £10 million in the current year.
large goods vehicle (LGV) Vehicle which weighs more than 3,500 kilograms. Such vehicles are
category C1 up to 7,500 kilograms and category C above 7,500
kilograms. There are some exceptions where holders of an ordinary car
licence may drive such a vehicle.
large letter Scale of postal rates for packages between C5 and C4 size.
large pack For beer duty, a container in size greater than 10 litres and up to 400
litres. Most kegs and casks come within this scope.
Customs notice 226 sets out the procedure for determining the
quantity of such packs.
large raised reservoir Term defined in Reservoirs Act 1975 sA1 as introduced by Flood and
Water Management Act 2010 Sch 4.
large vehicle A vehicle which weighs more than 3.5 kilograms and has a trailer
weighing up to 750 kilograms. This is category C on the driving
licence. A driver must generally be aged 21 to obtain a licence for this
category.
laria Currency of Georgia, former state of USSR.
last in, first out (LIFO) Method of stock valuation which assumes that a stock item sold is the
last to be bought.
So if a company has three widgets in stock which cost it £3, £4 and
£5 respectively, and it sells one, LIFO assumes that the £5 one is sold.
(It matters not whether the item shipped was actually the last one to be
acquired.) The remaining stock is therefore valued at £7.
Using LIFO reduces profit and reduces stock values and is therefore
generally not acceptable for financial accounting or tax purposes.
In general the accepted method is first in first out (FIFO). Under
this method, it would be assumed that the £3 widget had been sold first,
and the remaining stock is valued at £9 (that is £4 plus £5).
lasting power of attorney (LPA)

Arrangement made by an individual who is 18 and has mental capacity,
that appoints a person to act for the individual should he or she lose
their mental capacity. Such a power became available from 1 October
2007 under Mental Capacity Act 2005. This replaces the previous
enduring power of attorney (EPA), though existing EPAs remain
effective.
The two main types of LPA are property and affairs LPA and
personal welfare LPA.
last quarter Final three months of a year.
last will and testimony Final document prepared by someone during their life in which they
state how their property should pass on their death.
late (1) Arriving after the time expected.

(2) Dead.
late entrant Individual who joins a pension scheme after the date by which he
should have joined.
late night working There is not a taxable benefit in kind if an employer pays for transport
home after occasional light night working as set out in Income Tax
(Earnings and Pensions) Act 2003 s248.
latent allowance Amount by which the written down value of a fixed asset for tax
purposes exceeds the net book value in the balance sheet.
Under Finance Act 2010 s26 and Sch26 and other law, the latent
allowance of an acquired company may not be allowable against the tax
liability of an acquiring company. This provision is an anti-avoidance
measure to prevent companies reducing taxes by acquiring loss making
companies.
late payment fee Charge made by a credit card company for being late with a repayment.
late registration penalty A penalty HM Customs and Excise may impose when a business does
not register for VAT on time, when the registration threshold is
reached.
latent ambiguity Word or expression which proves to have more than one meaning, as
against a patent ambiguity.
An example of a latent ambiguity is where a will leaves a bequest to
“my nephew John” when the testator has two nephews called John. In
general, a latent ambiguity may be resolved by external evidence, such
as a letter to John.
later accessory In the context of taxing company cars, a qualifying accessory which
was not available when the car was first made available to the
employee, was made available from 1 August 1993 and has a price of at
least £100 (Income Tax (Earnings and Pensions) Act 2003 s126(3)).
later tax calculation currency

“The tax calculation currency of the company in the accounting period
in which the loss arises” (Corporation Tax Act 2010 s12(3)).
later years provider Provider of services for children from the age of five (Childcare Act
2006 s96(7)).
late stamping For stamp duty, stamping a document after the due date. This includes
stamping the document for insufficient amount and then further
stamping the document.
Late stamping may attract interest and penalties under Stamp Act
1891 s15A and s15B respectively.
latet anguis in herba Latin: there is a snake in the grass.
lats Currency of Latvia.
launder Process of taking dirty money, such as from criminal activity, and
making it appear clean.
laurel Gold coin worth 20 shillings minted between 1619 and 1625.
law Rules by which everyone is bound.
law agent Scottish term for a solicitor.
law of supply and demand

Fundamental rule of how the market economy words, namely that
prices rise when the demand for an item starts to exceed its supply, but
that encourages other suppliers to offer the item and thus reduce the
price again.
law of the vital few Term sometimes used for Pareto principle.
law officer of the Crown “the Attorney General or for the purpose of criminal proceedings in
Scotland, the Lord Advocate or, for the purpose of civil proceedings in
Scotland, the appropriate Law Officer within the meaning of section 4A
of the Crown Suits (Scotland) Act 1857n or in Northern Ireland the
Attorney General for Northern Ireland” (Customs and Excise
Law Soc Gazette Law Society’s Gazette.
Law Society Body that licenses solicitors in the UK.
Law Society Regulation Board

Part of the Law Society that once regulated solicitors. Since 29 January
2007, this task has passed to the Solicitors Regulation Authority.
Lawson, Nigel Conservative politician (1932- ) who was Chancellor of the Exchequer
from 11 June 1983 to 26 October 1989 in the government of Margaret
Thatcher. His long tenure led to the Lawson Boom followed by a
recession in 1990. He abolished many minor taxes, replaced capital
transfer tax with inheritance tax and reduced the basic rate of income
tax.
Lawson Boom Economic boom of the late 1980s attributed to chancellor Nigel
Lawson. It saw unemployment reduce, the budget move into surplus
and the pound shadowing the deutschmark at £1 = 3DM. It was
followed by a recession in 1990.
lay justices’ allowances Amounts paid to magistrates for discharging their duties. The allowance
has three elements:
● travelling allowance;
● subsistence allowance; and
● financial loss allowance.
(Courts Act 2003 s15(1)).
lay rector Landowner who is liable to repair the chancel of a Church of England
building.
lay subsidies Important revenue-raising taxes of the 12th and 13th centuries, widely
used to fund crusades.
lb Pound weight.
LBO Leveraged buyout.
LC Lord Chancellor.
L/C Letter of credit.
LCJ Lord Chief Justice.
LCM Lower of cost or market.
LCP Local Clearance Procedure - a simplified procedure involving pre-

shipment notification to the Customs Handling of Import and Export
Freight (CHIEF) system, and entry in commercial records. A
subsequent submission of a supplementary declaration to CHIEF is
required within a specified period.
LDT Licensed deposit taker.
lead agent One member of a Professional Group who works on a local Working
Together Steering Group (WTSG) with HMRC to discuss tax issues.
lead case Case that is selected to establish a point of law when more than one
case has been started on that point. The other cases are stayed (or sisted
in Scotland) until the lead case is determined.
The rules permitting this are set out in The Tribunal Procedure
leading and principal object

For stamp duty, provision that a document is not stamped more than
once if second or subsequent transactions are merely incidental to the
main object.
lead manager Person who organises a syndicate to underwrite a new issue of shares.
lead time Time between placing an order and receiving the goods.
lead underwriter Underwriting business which organises the underwriting of a share

issue.
leader (1) Person who is in charge of a team.

(2) Product which is a business’s main or best-selling item.
(3) Main opinion piece in a magazine or newspaper.
leaflet Document that may be zero-rated for VAT under Value Added Tax Act
1994 Sch 8 Group 3.
VAT notice 701/10 identifies these characters of a zero-rated
leaflet:
• no larger than A4 page size when folded
• intended for reading rather than display
• conveys information
• not part of a larger work
• supplied in at least 50 copies for distribution
• printed on limp paper
• either is intended to be thrown away after reading or
accompanies a product or service.
leap year Year which has a 366th day of 29 February. A leap year is also known
as a bissextile.
This happens every fourth year, except for centuries (that are not
leap years), except for every 400th year (that is a leap year). This is set
out in Calendar (New Style) Act 1750 s2 with effect from 1752.
When a tax year ends in a leap year, week 53 has two days instead
of the usual one.
Learning and Skills Council (LSC)

Public body formed in April 2001 to provide young people with
business skills. It was formed under Learning and Skills Act 2000 when
it replaced 72 Training and Enterprise Councils (TECs) and the
Further Education Funding Council for Britain.
In April 2009, it was replaced by Young Peoples Learning Agency
and the Skills Funding Agency.
learned society The VAT position is explained in VAT leaflet 701/5.
leas-Chéad Aire Irish Gaelic: deputy First Minister, of Northern Ireland Executive.
lease Contract where someone pays a sum to hire property or occupy land for
a defined period.
For assets, a lease is either an operating lease or a finance lease
[amend].
An operating lease is a simple hire, usually for a short period. The
asset is not included as a fixed asset on the lessee’s balance sheet, and
the lease payments are shown as expenses in the profit and loss account.
A finance lease [amend] is accounted as a means of acquiring a
fixed asset. The asset is included with fixed assets on the balance sheet
and depreciated in the normal way. The lease payments are treated as a
reduction in a long-term liability.
For land and buildings, a lease is always treated as a fixed asset.
leaseback A method of raising finance in which an organization sells its land or

buildings to an investor (usually an insurance company) on condition
that the investor will lease the property back to the organization for a
fixed term at an agreed rental. This releases capital for the organization,
enabling it to be used for other purposes.
lease for life A lease that is granted for the remainder of a person’s lifetime, after
which the lease or other property interest passes to another person.
Such leases are often created in wills where they create an interest
in possession trust. The inheritance tax consequences are set out in
Inheritance Tax Act 1984 ss49-50.
There was once a special provision for stamp duty for such leases.
leasehold Method of owning property to a predetermined date. Once that date has
been reached, the property reverts to the original owner.
leasehold land Land held under a lease. The land will eventually revert to the freehold
owner, although there has been some statutory modification of this right
to repossession (e.g. in the Rent Acts). This is the most common way
for blocks of offices to be owned. The landlord maintains possession of
the common parts and creates separate leases for each office. The
ownership of each office may subsequently change as leases are
assigned.
leasehold valuation tribunal

Body which values leaseholds.
leaseholder Person who holds the lease on property.
leasing Hiring equipment, such as a car or a piece of machinery, to avoid the

capital cost involved in owning it. In some companies it is
advantageous to use capital for other purposes and to lease some
equipment, paying for the hire out of income. The equipment is then an
asset of the leasing company rather than the lessor. Sometimes a case
can be made for leasing rather than purchasing, on the grounds that
some equipment quickly becomes obsolete.
leasing agreement Contract for lease land or property.
leasing of ships Activity which excludes a company from the scope of EIS relief or
venture capital trusts. It is defined for this purpose in Income Tax Act
2007 s194 (EIS) and s305 (VCT).
.
leave (1) Finish a period of work at a particular place or for a particular
business.
(2) Period of authorised absence from work.
leave travel Travel by a member of the armed forces while on leave.

The provision of facilities for such travel is exempt from income tax
under Income Tax (Earnings and Pensions) Act 2003 s296.
Lebanese pound Currency of Lebanon.
LEC (1) Local Export Control.

For Customs purposes, this allows exporters and freight forwarders
who regularly export goods, to have their consignments cleared at their
own inland premises without having to present normal pre-shipment
documents at the UK port of loading or office of exit.
(2) Low emissions certificate.
LECD Landelijk Expertise Centrum Diversiteit.

National Expertise Centre for Diversity, Netherlands.
ledger Record of transactions outside the double-entry bookkeeping system

but needed for other purposes, such as a sales ledger to identify who
owes you money.
ledger sheet Pre-printed form for use in a stationery system for recording details of a
ledger.
legacy Gift of cash or other personal property in a will.
legacy cash Term used to denote values of domestic currency held by countries
when they changed to using the euro.
legacy duty One of the death duties. It was charged under Legacy Duty Act 1796
and was repealed by Finance Act 1949 s27 from 30 July 1949. The
equivalent tax is now inheritance tax.
legal Either pertaining to the law, or permitted by law.
legal activity Term used in Legal Services Act 2007 s12(2) to mean any legal activity
including giving advice and assistance, and providing representation.
legal charge Claim on property, such as when a mortgage is secured on land.

The charge is evidence by a legal document held at the Land
Registry. This identifies who has a claim on the property. For a
mortgage, the main lender is normally be identified as the first charge.
There may be other charges registered.
legal claim Statement that someone legally owes something.
legal costs Expenses incurred in asserting a legal right or defending a claim from
someone else.
Whether such expenses are tax-deductible can be marginal. A
leading case is Spoffotth & Prince v Golder [1945] 26TC310 which is
legal currency Money which may be legally spent in a country.
legal date of redemption Date by which a mortgage must be repaid.
legal entity A legal person; the body to whom the funds belong.
legal estate Estate of land recognised by the courts.
legal expenses Costs and other expenses from participating in a legal action.
legal expenses insurance Insurance against legal expenses either in bringing or defending a claim
whether or not the matter goes to court.
legal fiction Any assumption which the law knows not to be true but which it allows
to be accepted for convenience. An example is the rule of
commorientes.
legal form Representing a transaction to reflect its legal status, which might not be
the same as its economic form.
Legal Hub On-line legal source provided by Sweet & Maxwell. It provides
directories of barristers, expert witness, in-house lawyers and similar
information.
legal notebook Notebook, usually bound and with perforated pages, for use by lawyers.
legal obligation Obligation that arises from a contract, legislation or other operation of
law (FRS 12).
legal person Entity recognised by law but which is not a natural person (a living
human being). A limited company is a legal person. It is sometimes
known by the Latin name “persona ficta”.
legal personality Status of a body to be regarded in law as an identity comparable to a

human person.
Examples include limited companies, corporations, local
authorities, and clubs. Such a legal person can sue, be used, make
contracts, incur debt and own property.
legal privilege The absolute right of confidentiality in advice from a lawyer to a client.
In relation to seizure of goods, the term is defined in Criminal
Justice and Police Act 2001 s65.
legal relations An intention to create legal relations is a requirement of a contract.
legal relations Requirement of a contract that the parties intended to be bound by the
law of contract.
Arrangements which appear to be domestic arrangements are
usually excluded as contracts.
legal scrub Colloquialism for the process of rewriting a document with a view to
removing anything that could prompt a legal action.
Legal Services Board Body corporate established under Legal Services Act 2007 s2 to
promote the regulation, education and training in law.
legal tender Notes and coins which comprise the legal currency of a country.
In England and Wales, legal tender comprises certain banknotes
issued by the Bank of England and coins issued by the Royal Mint.
There is no legal concept of legal tender in Scotland.
Banknotes which are legal tender comprise £5, £10, £20 and £50
notes which have yet to be demonetised.
Coins which are legal tender include both ordinary coinage and
special coins for collectors (or numismatists). The full list of coins
which are legal tender in England and Wales are:
● Britannia coins in gold and silver;
● sovereigns, half-sovereigns and £2 and £5 gold coins
minted since 1838;
● pound coins and two-pound coins;
● silver coins for 5p, 10p, 20p and 50p;
● copper coins for 1p and 2p;
● double florins for 20p;

● commemorative crowns;
● Maundy money.
Banknotes and £1 and £2 coins are legal tender to any value. Coins
of lower denomination may only be used to a maximum amount, thus:
● 20p, 50p to £10
● 5p, 10p to £5
● 1p, 2p to 20p
This prevents large amounts of small coins being offered as payment
for a debt.
legatee Someone who receives a legacy.

For capital gains tax, a definition appears in Taxation of Chargeable
Gains Act 1992 s64.
Leggatt Report Report published in 2001 by Sir Andrew Leggatt into the functioning of
tribunals. It led to provisions in Tribunals, Courts and Enforcement Act
2007 which sets up First Tier Tribunals and Upper Tier Tribunals.
Lehman Brothers American financial services institution. It filed for bankruptcy on 15

September 2008 as the largest bankruptcy in US history. It is generally
credited with triggering the worldwide banking crisis.
legislation Written laws, as against common law.
legitim In Scots law, the rights a child has to a share of a parent’s estate,
regardless of what is in the will. The spouse has similar rights; the two
together are called legal rights.
If the estate is insufficient to meet claims for legitim because of
intended disposition to the spouse, the executors or judicial factor may
choose whether inheritance tax is charged on the basis that the spouse’s
disposition is fully paid or is reduced by any legitim not renounced.
legitimacy State of being born in wedlock. All legal bars of illegitimacy have now
been removed except that an illegitimate child cannot take an inherited
title. For all other purposes, there is no longer any distinction between
legitimate and illegitimate children.
An illegitimate child may inherit property under Family Law
Reform Act 1969.
Legitimacy Act 1976 s1 makes a child legitimate if the parents
subsequently marry.
For tax purposes, legitimate and illegitimate children are treated the
same.
lek Currency of Albania.
leke Gold coin issued by Albania, that may be a gold investment coin for
VAT purposes.
lempira Currency of Honduras.
Lennartz accounting System of record keeping for VAT when assets are acquired for both
business and non-business use. This system may be used from 1
November 2007.
A VAT-registered business may not reclaim input tax for a
purchase unless it is to be used for a business. If an asset is to be used
for both a business and non-business purpose, the purposes must be
apportioned and input tax only claimed for the business element.
Under Lennartz accounting, the whole input tax may be claimed,
and the business may invoice itself for the non-business use.
leopard Gold coin worth 3 shillings minted in the reign of Edward III.
le roy le vault Normal French: the king wills it. Words of Royal Assent.
lessee accounting The regime of accounting requirements for leases.

Under SSAP 21, the main requirement is to distinguish between
finances leases and operating leases. The former are accounted for
exactly as for a hire purchase contract, with the leased asset included as
fixed assets subject to depreciation. An operating lease is treated as an
overhead of the business, charged to the profit and loss account.
lessee Person who leases property from a lessor.
lessor Person who leases property to a lessee.
lessor accounting How someone who leases goods accounts for them.
Under SSAP 21, this is generally the mirror image of the lessee
accounting.
lessor company Company that leases equipment. There are specific provisions in
Corporation Tax Act 2010 Part 9 to stop their sale being used for tax
avoidance purposes.
let Allow someone the use of property for a period.
letter For VAT, the sale of a letter or letters is usually standard-rated. If

letters are bound into a book, they may be zero-rated under Value
Added Tax Act 1994 Sch 8 Group 3 as explained in VAT notice
701/10.
If a letter qualifies as a leaflet, it may be zero-rated.
letter of advice Document from a merchant to a banker regarding a transaction in which

they are both engaged.
letter of comfort Letter from a holding company to a bank in respect of a loan to a

subsidiary. The letter usually seeks specific assurances from the holding
company.
letter of credit (L/C) Means of arranging payment, particularly in international trade.

An L/C is arranged by the buyer’s bank. It requires the bank to
make payment when certain documents are presented to it by the seller.

These are mainly shipping documents.
letter of engagement Letter sent by an auditor to a client outlining the rights and duties of the
parties in the audit.
letter of representation Letter required by auditors from the directors in which they provide
factual information.
letters of administration Legal appointment of an administrator for an intestate, someone who

dies without leaving a will.
letters of guarantee Letter from a seller providing safeguards to the buyer, except for
payment which is usually secured by a letter of credit.
Types of letter include:
● tender guarantee, that the seller will supply goods if
offered a contract in accordance with a tender;
● performance guarantee, that the goods or services will be
satisfactory;
● advance payment guarantee, that any advance payment
made by the buyer will be used properly or repaid.
Letters of guarantee may also deal with compliance matters, such as
ensuring compliance with local law and payment of taxes.
letters patent Formal term for patent.
letting agency Business which deals with property which may be let.
level pension Pension which does not increase in amount to offset the effect of
inflation. The opposite is an index-linked pension.
A level pension slowly loses value because of inflation. This
process is known as withering on the vine.
level premium Payments which do not change during the lifetime of the agreement,
such as paying the same premium each month for an insurance policy.
level term insurance A type of life insurance policy for a fixed term where the cover remains
the same from the effective date until the expiration date.
leverage American term for gearing.
leveraged buyout (LBO) Buyout of a business where all or most of the funding is borrowed.
leveransen noterar Swedish: delivery note.
lever de rideau French: curtain-raiser.
levy ceiling Maximum amount of pension protection levy which may be charged
in a year (Pensions Act 2004 s178).
levy free percentage Percentage of cereal as calculated in accordance with Customs notice
39 under the Whisky Export Relief Scheme.
levying distress The process of a bailiff seizing goods to sell.
lex Angliae sine Parliamento mutari non potest

Latin: the law of England cannot be changed except by Parliament.
lex domicilli Latin: the law of a person’s domicile.
lex fori Latin: the law of the forum. The term refers to the procedures and
formalities of the law according to the place.
lex loci contractus Latin: the law of the place of performance.
lex mercatoris Latin: mercantile law.
lex non cogit ad impossibilia

Latin: the law does not compel the impossible.
lex non requicit verificari quod apparet curiae

Latin: the law does not require that which is apparent to the court to be
verified.
lex non scripta Latin: the unwritten law. This is another term for common law.
lex posterior derogat priori

Latin: a later Act overrules an earlier one.
lex rei situs Latin: the law of the situation of the thing.
lex scripta Latin: the written law. This is another term for statute law.
lex situs Latin: the law of the place. This means the law of the country which is
relevant for determining the matter.
lex spectat naturae ordinem

Latin: the law has no regard to the order of nature.
LFT Landfill tax.
LGC Laboratory of the Government Chemist.
LGR Butterworth’s Local Government Reports, a series of law reports

published from 1997.
LHA Local housing allowance.
liabilities Obligations of an entity to transfer economic benefits as a result of past

transactions or events. It is the opposite to asset.
There is a specific definition in relation to net asset restriction

liabilities amount Total of a company’s liabilities as shown in its balance sheet. In relation
to distributions of a company being wound up, the term is defined in
liability Obligation to make a payment; the opposite to an asset.

Liabilities are defined as “an entity’s obligations to transfer
economic benefits as a result of past transactions or events” (FRS 5
para 4).
liability limitation agreement

“An agreement that purports to limit the amount of a liability owed to a
company by its auditor in respect of any negligence, default, breach of
duty or breach of trust, occurring in the course of audit of accounts, of
which the auditor may be guilty in relation to the company”
Unless such an agreement meets all the conditions set out in the
Act, the agreement is void under s532.
The main conditions are that the agreement:
● is only for one financial year which must be stated,
● does not include provisions which are prohibited under
separate regulations,
● does not inhibit competition,
● is approved by ordinary resolution of members.
The agreement does not have to specify an exact amount, nor
contain a formula by which such amount may be calculated (ibid
s535(4)).
liability method Method of calculating deferred tax on the basis of the rates of tax
expected to apply when the timing difference reverses (SSAP 15).
liability order Notice issued by a magistrates’ court confirming that a person is liable
to pay council tax.
If the council can demonstrate that council tax is payable but has
not been paid, the court must issue a liability order. The only defences
are that the person is not liable, the council tax has been paid, or that the
council has not followed the proper procedure. A liability order may be
issued while a claim for council tax benefit is being considered.
Once the council has the liability order, it may enforce it by distress,
a council tax attachment of earnings order, deductions from income
support or bankruptcy.
liability order Order from a magistrates’ court confirming that unpaid rent is owed .
This allows the landlord to continue proceedings.
liar loan Colloquial term for a loan provided on a self-certified basis to a person
who may not tell the truth.
liberated member Person who is the victim of pension liberation.
Liberian dollar Currency of Liberia.
libel Defamation in permanent recorded form.

The costs and penalties of a libel action against a publication are
generally allowable, are discussed in the Inspectors’ Manual at
BIM38530. In other cases, costs and damages may fail the business
purpose test.
liberty Freedom from captivity or similar restraint.
liberty to apply Right which a judge may give to either party in a case allowing them to
return without needing to take out a new summons.
liberum tenementum Latin: freehold or frank tenement.
LIC Local Import Control.
licence (1) A paper or electronic document issued by the competent authority,

authorizing and requiring the import or export of the goods specified
and/or imposing other special requirements as necessary.
(2) Right to occupy property without acquiring any ownership, such as
when staying in a hotel room.
licence fees A business established to receive licence fees is an excluded activity for
venture capital trust purposes under Income Tax Act 2007 s306.
licence year “In relation to an excise licence issuable annually, means the period of
12 months ending on the date on which that licence expires in any year”
licensable activities Activities which require a local authority licence under Licensing Act
2003 s1.
These are the sale of alcohol, regulated entertainment and late night
(11pm to 5am) sales of refreshments.
licensable body Term used in Legal Services Act 2007 s72 to describe a body which
may need a licence under that Act.
license (1) In English, the verb as in “you are licensed”. The noun is spelled
licence.
(2) In American English, the noun or verb.
licensed deposit taker (LDT)

Body which is licensed to accept deposits from members of the public
and to pay interest on those deposits. An LDT is a form of junior bank.
licensed family entertainment centre

“Premises in respect of which a family entertainment centre premises
licence has effect” (Gambling Act 2005 s238).
licensed premises Any premises that are licensed by the local authority under licensing
laws.
licensee Person who is licensed.
licensing committee Body established by a local authority to grant licences (Licensing Act
2003 s6).
licensing hours order Order issued under Licensing Act 2003 s172 which permits licensed
premises to remain open outside their licensed hours for the duration of
a celebration period.
Liechtenstein Small European state that is not part of the European Union, but is part
of the European Economic Area.
lien Right one person may have over the goods of another, particularly
under the common law.
A repairer has a lien which allows him to keep possession of the
goods until his repair bill is paid. An innkeeper has a lien over a
customer’s luggage until his bill is paid.
life annuity A contract that provides an income during the remaining lifetime of the
purchaser.
life annuity loan Loan to buy an annuity.

Certain loans taken out before 9 March 1999 may attract tax relief
under Income and Corporation Taxes Act 1988 s365.
life assurance Life insurance which lasts to death and is therefore always payable.
Under Life Assurance Act 1774, a person may not insure the life of
another unless the insured is named in the policy and there is an
insurable interest in that person’s life. Any policy issued contrary to
these principles is void.
Life assurance policies were subject to stamp duty before 1 January
1990.
Life assurance premium relief may be available for income tax.
Life Assurance and Unit Trust Regulatory Organization (LAUTRO)

Body originally set up under Financial Services Act 1986 to regulate
unit trusts and life assurance.
This recognition was revoked in June 1994 and the body ceased to
exist. Since then those functions have been undertaken by the Personal
Investment Authority (PIA).
Life Assurance Consolidation Directive

EC directive 2002/83/EC of 5 November 2002.
life assurance part of the excess

Term used in Income and Corporation Taxes Act 1988 s444AC(2B)
regarding the tax consequences of a transfer of annuity business.
life assurance premium relief (LAPR)

Income tax relief for insurance premiums paid on the life of the
taxpayer or spouse provided the policy was written before 14 March
1984.
From 1988, relief is equal to 12½% of the premium (Income and
Corporation Taxes Act 1988 s266).
life assurance provisions of the Corporation Tax Acts

Term is defined in Income and Corporation Taxes Act 1988 s431(2),
although its meaning is obvious.
life assurance trade profits

Term used in Finance Act 1989 s89 in relation to taxation of life
assurance companies.
lifeboat Zero-rated under Value Added Tax Act 1994 Sch 8 Group 8.
Lifeboats have been Royal National Lifeboat Institution (RNLI) zero-
rated since VAT was introduced in 1973. The zero-rating has been
extended thus:
1 May 1990: non-RNLI lifeboats, and slipways for lifeboats
1 April 1992: spare parts for lifeboats
1 April 2002: life-saving equipment on lifeboats
1 April 2006: fuel for a charity-operated lifeboat.
life cycle costing Cost of a fixed asset viewed over its entire life, typically including
acquisition and disposal costs. This method may be used for purposes
of evaluation.
life cycle funds A form of fund of funds that aims to provide an extremely safe
investment for retirement funds.
life expectancy Number of years a person can expect to live, as determined by their age
and sex, from life expectancy tables.
life expectancy tables Tables indicating how long people are expected to live according to
their sex and current age. They are also known as actuarial tables or
mortality tables.
life imprisonment Criminal punishment of imprisonment for the rest of a person’s life.
This is the only sentence for murder. It is an option for a first offence
and sometimes mandatory for a second offence of arson, manslaughter,
rape and malicious wounding. Despite the name, a person may be
released on licence on the recommendation of the Parole Board after a
minimum sentence, typically of 12 years.
life insurance Insuring a person’s life. Strictly speaking, life insurance is when
someone dies and is therefore always payable eventually, whereas life
assurance is only payable if someone dies by a certain date and is
therefore not always payable. In practice, this distinction is not always
made. Life assurance is now more commonly called term insurance.

Life insurance and assurance is subject to Life Assurance Act 1774
which prescribes that:
● no-one may insure a life unless they have an insurable
interest (s1);
● the names of the person having such insurable interest must
be stated on the policy (s2); and
● no-one may insure someone else’s life for a sum greater than
their insurable interest (s3).
life interest Benefit a person can enjoy for the rest of their life but which they
cannot pass on to anyone else. A life interest commonly arises when a
will allows a person to continue living in a house but on their death, the
property passes to someone else.
life interest trust (LIT) An interest in possession trust with one or more fixed interests in the
income. A beneficiary who has an interest during his lifetime is often
known as the life tenant.
The benefit of a life interest trust may be for a fixed period (eg ten
years), for the beneficiary’s lifetime, or may be defeasible, which
means that the trustees may divert the income to a new beneficiary.
What happens on the death of the life tenant or earlier termination
depends on what is in the trust deed. There are often successive life
interests, or the life tenants may benefit absolutely (such as when the
life tenant reaches the age of 25).
Under provisions of Finance Act 2006, LITs are taxed as
discretionary trusts unless they have transitional serial interests, are
for a disabled beneficiary or convey immediate post-death interests
under a will.
life membership For VAT, life membership of a club or association is treated on the
same basis as the annual subscription unless additional benefits are
provided that justify different treatment (VAT leaflet 701/5).
life peer Person who has a peerage for the duration of his or her life, but where
the peerage does not devolve on death, as for a hereditary peer. Life
peerages were created by Life Peerages Act 1958.
life policy Policy of life assurance. It is a form of property and may therefore be
assigned to another person, such as to a bank when used as a collateral
security for a mortgage.
For inheritance tax, a life policy taken out by a person on their own
life becomes part of their taxable estate. This can be avoided by
someone else taking out the policy (assuming they have sufficient
insurable interest), or holding the policy in a trust.
lifestyle break Form of sabbatical where an employee is allowed extended leave to try
a different lifestyle, such as working overseas or doing different work.
Employers may be prepared to allow unpaid leave for this, guaranteeing
the person’s old job on return. The advantage for employer and
employee is a broadening of experience and attitude.
life tenant Person who has a right for their life, after which the interest passes to
someone else.
In an interest in possession trust, the life tenant has the interest in
possession. On the death of the life tenant, the property of the trust
passes to a remainderman.
lifetime allowance charge Tax charge on an individual’s pension rights which exceed the lifetime
allowance for pensions.
On 6 April 2006, the regime for tax relief on pensions was radically
changed. One of these changes was the introduction of a lifetime limit
of contributions to pension funds, initially set at £1.5 million but
subsequently increased. Any contributions above this allowance do not
qualify for income tax relief unless there is lifetime allowance
protection.
lifetime allowance excess lump sum

Lump sum benefit paid to a member of a registered pension scheme
(who is aged under 75) because they have used up their available
lifetime allowance, and which meets the conditions of paragraph 11 of
lifetime allowance protection

Relief from tax imposed by the lifetime allowance charge.
Generally, if a person has cumulative contributions to pension plans
which exceed the lifetime allowance, additional contributions do not
qualify for tax relief unless they benefit from lifetime allowance
protection. The lifetime allowance was £1.5 million on 6 April 2006
when these provisions were introduced.
The protection takes two forms:
● primary protection; and
● enhanced protection.
Primary protection applies to an individual who already had £1.5
million or more in pension contributions on 6 April 2006. Such a person
could apply to HMRC by 5 April 2009 for this protection. If a person
had pension contributions of, say, £2 million on 6 April 2006, the
protection applies to the additional £500,000. So as the lifetime
allowance increase as in subsequent years, the individual has protection
for the lifetime allowance plus £500,000.
Enhanced protection excludes a person completely from the lifetime
allowance charge without any financial limit.
lifetime annuity Annuity contract purchased under a money purchase arrangement from
an insurance company of the member's choosing that provides the
member with an income for life, and which meets the conditions
imposed through paragraph 3, Schedule 28 to the Finance Act 2004.
lifetime annuity with capital protection

“This is where the member has used all or part of his retirement fund to
purchase an annuity with a limited lump sum death benefit.
The lump sum death benefit will be determined as the purchase

price of the annuity less any instalments of annuity that have already
been paid prior to the date of his death less a recovery charge. The
recovery charge is 35% where the member dies before 6 April 2011,
and 55% where he dies on or after that date.
Prior to the changes, effective from 6 April 2011, such a lump sum
could only be paid where a member died before his 75th birthday. After
the changes there is no age restriction on when such a lump sum can be
paid, although this will be subject to the policy provisions of the
annuity contract concerned”
(website glossary for article by John Woolley of Technical Connections
Ltd, in Taxation magazine of 3 March 2011).
lifetime gift A gift made during the lifetime of the donor, particularly of cash with a
view to avoiding inheritance tax.
Provided the donor lives for seven years after making the gift, it
avoids any liability for inheritance tax.
If the donor dies within seven years, the gift is added to the donor’s
estate for the purpose of calculating inheritance tax unless the gift falls
within the scope of another tax exemption.
If the donor lived for at least three years after making the donation,
the amount of inheritance tax is reduced.
In some circumstances, a lifetime gift is subject to tax at the
lifetime rate of 20%. If the transferor agrees to pay the tax, it must be
grossed up. This gives a sum equal to 25% of the gift. So a chargeable
lifetime transfer of £10,000 is subject to 25% tax of £2,500. This means
that 20% tax has been paid on the total of the gift and tax of £12,500.
lifetime limit Maximum amount a person may have paid into a pension plan for it to
qualify for full tax relief.
lifetime mortgage Form of regulated mortgage contract whose main terms are:
• the mortgagor is above a specified age,
• the loan is not repaid while the mortgagor is alive and
occupying the property.
lifetime rate Rate of inheritance tax that is payable for transfers made during the
transferor’s lifetime, such as to certain types of trust.
The rate is set out in Inheritance Tax Act 1984 s7(2) as being half
the death rate. As this has been 40% since the tax was introduced in
1986, the lifetime rate has been 20% for the same period. If the
transferor dies within seven years, the other 20% is payable (subject to
any other reliefs) so that the total transfer is taxed at the death rate of
40%.
lifetime exemptions Term used in inheritance tax for those payments that are not regarded as
lifetime transfers.
They include the annual exemption, small gifts exemption,
normal expenditure out of income, wedding presents, gifts to spouse
or civil partner, and gifts to charities and political parties.
lifetime transfer For inheritance tax purposes, the same as a lifetime gift.
LIFFE London International Financial Futures and Options Exchange.
LIFO Last in, first out

This is a method of stock valuation which assumes that a stock item
sold was the last one to be bought. This method is generally not
acceptable in financial accounting or for tax purposes, per Minister of
National Revenue v Anaconda American Brass Ltd [1956] Privy
Council, a Canadian case. The matter is discussed in the Inspectors’
Manual at BIM33120.
lift For capital allowance purposes, a lift is treated as an integral feature,

which means that it is included in the special rate pool and is subject to
lift the veil of incorporation

When the court departs from the principle that a limited company has a
separate identity from its owner. The principle is known as the veil of
incorporation.
The veil is lifted when it is being abused. An example was Gilford
Motor Company v Horne [1933]. An employee agreed to a restraint of
trade clause not to approach his employer’s customers. He left, and set
up a company which made such approaches. The corporate structure
could not be used to defeat legal responsibilities.
In USA, the term is piercing the veil of incorporation.
light crude oil Naturally occurring oil before processing which contains a high
concentration (up to 97%) of the more valuable hydrocarbons.
light motorcycle Motorcycle with an engine capacity of up to 125cc and a power output
not exceeding 11kW.
Such a vehicle may be driven from the age of 17. It is category A1
on a driving licence.
light oil Oil of which at least 90% of which distils at a temperature of 210C and
which gives off an inflammable vapour at 23C. Petrol is the commonest
light oil.
This is subject to hydrocarbon oil duty and VAT.
light oil “Means hydrocarbon oil:

(a) of which not less than 90 per cent by volume distils at a
temperature not exceeding 21°C, or
(b) which gives off an inflammable vapour at a temperature of
less than 2°C when tested in the manner prescribed by the Acts relating
to petroleum” (Hydrocarbon Oil Duties Act 1979 s1(3)).
light pen Computer input device where a light is shone at a computer screen to
select items from a menu.
light touch Period when regulations are enforced gently and where penalties are
either not imposed or easily mitigated.
New tax provisions are often introduced with a light touch period,
often of six months. Examples include reverse accounting for VAT,
and the Construction Industry Scheme.
light vehicle Vehicle with an unladen weight of up to 550 kilograms. This is

category B1 on the driving licence.
lighterage Transference of goods between ships, usually to a smaller ship to gain

access to a port which is too shallow for the original ship.
LIH Left lingual hernia. Common abbreviation for sick notes (HMRC leaflet
E14).
limitation In law, a period in which an action must be brought. This is to ensure

that disputes are settled, and not to allow someone to leave a dispute
hanging over someone’s head.
The period for contract is six years, and for land disputes is 12
years. For personal injury, the period is three years. All these time
limits are subject to special rules. There are also limitation periods in
other laws, particularly tax law.
Generally the period starts from the date the relevant dispute was
discovered. This can lead to a longer period, such as for latent defects
or if the victim was a child (when the period may run from the 18th
birthday).
The expiry of a limitation period does not mean that the matter is
completely dead, just that civil proceedings can no longer be brought.
A limitation period can start again, such as if an expired libel is
repeated, or if a debt is acknowledged. The latter is commonly done by
paying a nominal £1 a month. Each payment is the start of a fresh six-
year limitation period.
The main laws are Limitation Act 1980, Latent Damage Act 1986
and Consumer Protection Act 1987.
In financial services, the term also means a restriction in a firm’s
trading activities.
limitation period Period of limitation in which a legal action must be brought, failing
which the right to bring the action expires.
limited administration Administration of the estate of a deceased person for limited purposes
specified by the court in the letters of administration. A common
example is the grant of administration when the executor is a child.
limited by guarantee A company is so described if the liability of its members is limited to

paying a defined sum, often a nominal figure such as £1 each, if the
company is wound up (Companies Act 2006 s3(3)).
Since 22 December 1980 (1 July 1983 in Northern Ireland), a
company limited by guarantee may not have a share capital (CA s5(1)).
However, companies already so formed may remain in that form.
limited by shares A company is so described if the liability of its members is limited to

any unpaid amount on their shares, which is usually zero (Companies
Act 2006 s3(2)).
limited capability for work

State of a person whose physical or mental condition restricts his ability
to find work.
Such a person may be assessed under the provisions of Welfare
Reform Act 2007 s8 for a payment of employment and support
allowance. The main provision is that the person suffers such mental or
physical incapacity as to restrict their ability to find work.
limited company A company where the liability of its members is limited (Companies
Act 2006 s3(1)).
A company may be limited by shares or limited by guarantee.
limited executorship In law, arrangement when a person is appointed in a will to act as

executor for some property, but not all of it.
limited interest Interest to income arising from a beneficiary’s entitlement to the estate
of a deceased person, where it is not an absolute interest.
limited liability A phrase used to indicate that those having liability in respect of some
amount due may be able to invoke some agreed limit on that liability.
limited liability company Company where the liability of the owners is limited to the amount of
capital they have agreed to contribute. It is the same as a limited
company.
limited liability partnership (LLP)

Form of legal entity created from 6 April 2001 under Limited Liability
Partnerships Act 2000. Note that it is not the same as a limited
partnership. LLPs have been available in Northern Ireland since 13
September 2004 under separate legislation.
An LLP is legally a body corporate, though run as a partnership. It
must be registered, the liability of all partners is limited, but the limited
partners may take part in running the business. Many accountancy and
law firms are now LLPs.
The tax law was originally in the Limited Liability Partnership Act
2000 s 10.
In general, the LLP itself is not usually taxed. It is a largely
transparent body whose profits are taxed in the hands of the partners.
The capital gains tax provisions are contained in Taxation of
It is similarly regarded for inheritance tax. An LLP itself can only
be taxed when liquidated, when it may be liable to corporation tax.
LLPs are discussed in the Inspectors’ Manual at BIM72110 to
72155.
limited owner Tenant for life who does not have a fee simple (Settled Land Act 1025
s20).
limited partner Member of a limited partnership whose personal liability is limited

(Income Tax Act 2007 s103A; Corporation Tax Act 2010 s58). There
are restrictions of how much tax loss relief such a partner may claim in
respect of his share of a partnership loss.
limited partnership Partnership where not all members have unlimited liability. There are
now two different types.
The term “limited partnership” usually refers to a body established
under Limited Partnerships Act 1907. This is an ordinary partnership
where there must be at least one partner with unlimited liability. These
are rare in practice.
There is the separate limited liability partnership (LLP) where the
liability of all members is limited.
limited period annuity An annuity which does not last to the death of the annuitant but for a
fixed period, typically five years.
Limited period annuities have been possible for private pensions
since 6 April 2006. At the end of the period, the pensioner takes out
another annuity (which may be another limited period annuity) on the
basis of the size of the pension fund at that time.
limited price indexation (LPI)

Where a figure increases in line with an index up to a limit. This term is
used for index-linked pensions.
A common form of LPI is to offer indexation according to the retail
prices index (RPI) up to 5%. If the RPI increases by 3%, the pensioner
receives an increase of 3%. If the RPI increases by 6%, the pensioner
receives an increase of just 5%.
From 5 April 1997, every occupational pension scheme must offer
indexation of at least LPI on all benefits, including deferred benefits.
This is different from full indexation where the pensioner receives
the full increase in RPI regardless of how large the increase is, and level
pension where there is no increase at all.
limited prize machine Gaming machine which provides no opportunity to win a prize other
than having a refund of the sum paid (Gambling Act 2005 s249).
limited probate Arrangement where an executor is appointed in respect of only certain

assets, such as for a person’s literary works.
limited use area In the context of commonhold property, those common parts which
not all unit-holders may use (Commonhold and Leasehold Reform Act
2002 s25(2)). The commonhold community statement must record
details of any limited use area.
limiting Restricting or capping
limiting factor The factor which imposes a restriction; a constraint. Examples include
workforce, machine time, storage and legal restrictions.
limit of indemnity In insurance, “sum available to indemnify a firm in respect of each

claim made under its professional indemnity insurance”.
limit order Order to buy or sell a share or other financial instrument at a specified
limit price or better, and in a specified quantity.
limit price The price in a limit order. A buy order must be executed at the limit
price or lower; a sell order must be executed at the limit price or higher.
Lincoln, Abraham See Abraham Lincoln.
Lincoln’s Inn One of the Inns of Court. It is situated between Carey Street and
Holborn, and has existed at least since 1422. Traditionally, barristers
based in Lincoln’s Inn practise in the Chancery Division of the High
Court.
line 51 Reference to line 51 on Form 14 completed by life assurance

companies. It is referred to in Income and Corporation Taxes Act 1988
s432CA.
lineal descendant Direct descendant, such as a son or grand-daughter, but not a son-in-
law.
line of credit Agreement whereby a bank agrees to lend money to a customer up to a

maximum figure.
link company “A company which is a member of a consortium and is also a member

of a group of companies” (Income and Corporation Taxes Act 1988
s406(1)).
linked assets In relation to taxation of life assurance companies, “means assets of an

insurance company which are identified in its records as assets by
reference to the value of which benefits provided for under a policy or
contract are to be determined and in a case where only part of an asset
is so identified, references to a linked asset are references to that part”
(Income and Corporation Taxes Act 1988 s432ZA). Following sections
expand this definition.
linked bingo Another name for combined bingo.
linked liabilities In relation to taxation of life assurance companies, “means liabilities in

respect of benefits to be determined by reference to the value of linked
assets” (Income and Corporation Taxes Act 1988 s432ZA(6)).
linked loan “Any loan which:

(a) would not have been made, or
(b) would not have been made on the same terms,
if the investor had not subscribed for the relevant shares, or had been
proposing to do so” (Income Tax Act 2007 s164(2)).

The existence of such a loan prevents the investor from claiming
EIS relief for a shareholding in the company to which the loan is made.
linked PIW For statutory sick pay, when a period of incapacity for work (PIW) is
regarded as one period. This happens when a person goes sick within
eight weeks of returning to work after a previous PIW.
linked presentation When two transactions are shown together in the financial statements.
FRS 5 para 26-28 requires two transactions to be part of a linked
presentation when an asset is acquired subject to ring-fenced financing.
linked transaction When one transaction is made on the back of another, such as an
extended warranty on the sale of goods.
linking letter Letter provided by Jobcentre Plus or its equivalent to people who have
recently received certain benefits. This may affect the maximum linked
PIW for which statutory sick pay may be payable.
linking period Period that is regarded as being a continuation of a previous period.

Certain social security benefits are payable for a finite period. For
example, statutory sick pay is payable for up to 28 weeks. If the
person returns to work and is off sick again within eight weeks, the
second period is linked to the first. For employment support
allowance, the linking period is 12 weeks.
link papers In tax, “those papers which show how the figures in the return are
derived from the figures in the prime records, are held by the agents,
but are available to the taxpayer” (Inland Revenue Tax Bulletin of 2
August 1997).
linseed oil For VAT, this is standard-rated as it does not come within the scope of
food (VAT notice 701/14).
lipa One hundredth of a kuna, currency of Croatia.
liquefied petroleum gas (LPG)

Form of road fuel and heating material.
As a road fuel, it attracts a lower rate of duty than hydrocarbon oils.
Cars that use LPG attract a lower car benefit to employees.
When supplied for heating, it qualifies for the reduced rate of VAT
under Value Added Tax Act 1994 Sch 7A Group 1 when supplied for
residential or charity use. VAT notice 701/19 states that this will be
assumed when LPG is supplied in cylinders of less than 50 kilograms
net weight (and not intended for resale) or where supplied to premises
that cannot store more than two tons.
liquid In finance, the ease with which something may be converted to cash.
Cash is therefore the most liquid asset of all.
liquid assets Current assets which can easily be turned into cash.
These are cash, debts and any investments which can be turned into
cash within one month. Stock is specifically excluded.
liquidated damages Ascertained amount of damages, particularly when such a figure is put
into a contract to avoid the necessity of proving and calculating a loss.
liquidated demand Demand for a fixed sum of money, such as £1,000. It is distinguished
from an unliquidated demand, where the amount is to be determined by
the court.
liquidation Process of killing off an insolvent company.

A liquidation automatically starts a new accounting period for
corporation tax.
The ownership of the assets has changed, so it is not possible to
claim group relief between solvent and insolvent companies.
For capital gains, an insolvency does not itself count as a disposal.
liquidation committee Committee appointed by the creditors to oversee a liquidation

(Insolvency Act 1986 ss101, 141).
liquidator Insolvency practitioner whose task is simply to close down a business

and sell what he can for as much as he can (Insolvency Act 1986, s91,
ss135-140).
liquidity Ease with which an asset may be turned into cash. Cash is the most
liquid asset; fixed assets the least liquid.
“Liquidity refers to the ease with which something can be converted
to cash with little or no loss of value” (HM Treasury glossary).
liquidity ratio Liquid assets divided by current liabilities, where liquid assets are
current assets minus stock. This ratio is sometimes called the acid test.
A ratio below 1 could suggest financial problems, though this
depends on the nature of the business. A cash positive business such as
a supermarket can safely trade with a low ratio.
Conversely a business with a liquidity ratio much above 1 could
indicate a business with excess cash.
liquid natural gas (LNG) Natural gas that is superchilled to 1/600 of its normal size, making it
economical to transport.
liquid resources Current asset investments that are held because they are readily
disposable.
lis Suit or action where there is a dispute between the parties.
lis alibi pendens Latin: a suit pending elsewhere. This comprises grounds for staying a
legal action.
lisente One hundredth of a loti, currency of Lesotho.
lis mota Existing or expected legal action.
lis pendens Latin: pending suit. The term particularly applies to disputes about land.
Lisbon Strategy Economic policy adopted by the European Union in 2000 for the period
up to 2010. It aimed to make the EU “the most dynamic and
competitive knowledge-based economy in the world capable of
sustainable economic growth with more and better jobs and greater
social cohesion, and respect for the environment by 2010”. The
Strategy was revived in 2003 by the Sapir Report. The Strategy was
reviewed by the European Parliament in 2005.
listed building Another name for a protected building.
listed building consent A form of planning permission which allows work to be done to a
protected building (or listed building).
Such work may qualify for VAT zero-rating under Group
listed company A company whose shares are listed by the Stock Exchange as being
available for buying and selling under the rules and safeguards of the
Exchange.
listed place of worship (LPW)

Listed building which is primarily used for worship of any formally
constituted religion, and where acts of worship take place at least six
times a year.
Certain types of work for LPWs attract a special grant which is
equal to the VAT charged on that work. VAT is charged on the work
and paid in the normal way, and the grant is then claimed. The amount
is the whole VAT charged from 1 April 2004. It was an amount equal to
5/7 of the VAT previously from 1 April 2001 (which made the net VAT
borne equivalent to 5%).
There are special rules for claiming the grant. The scheme is due to
end in 2011, having been extended twice.
listed security Share, debenture, warrant or other form of security which may be
bought and sold on an exchange.
listing Process or state of a share, debenture, warrant or other form of security

being available for purchase or sale on an exchange.
Listing Agreement Document which a company signs outlining the conditions it must
follow to be listed on the New York Stock Exchange.
listing condition One of the conditions which must be met for shares to be eligible for
venture capital trust tax relief under Income Tax Act 2007 s274.
The condition is that the shares must be the ordinary shares of the
company.
listing paper Paper used to print lists from a computer printer. The paper comes in
packs of continuous pages with serrations for each page. Typically the
paper also has sprocket holes down each side allowing the paper to be
fed through the machine. These sprocket holes are often also on a
narrow perforated strip allowing them to be removed.
listing requirements Rules imposed by the Stock Exchange on companies whose shares are
listed for buying and selling.
Listing Rules Issued by the UK Listing Authority of the Financial Services Authority
to regulate companies listed on the UK Stock Exchange. Includes rules
on accounting information in annual reports.
list of trade unions Register of trade unions kept by the Certification Officer under Trade
Union and Labour Relations (Consolidation) Act 1992 s2.
list price Tax term used to calculate the taxable benefit of a company car.
An employee provided with a company car for personal use must
pay income tax on the notional benefit of the car. This is based on a
percentage of its list price.
The list price is defined as the price at which the car is sold in the
UK singly in a retail sale in the open market on the day immediately
before the car’s first registration. (Income Tax (Earnings and Pensions)
Act 2003 s123(1)).
lists In law, lists of cases awaiting trial. In practice, courts maintain several
lists according to the nature of the case.
LIT Life interest trust.
litas Currency of Lithuania.
literal rule One of the methods for interpreting an Act of Parliament. (The other
main methods are the golden rule and mischief rule.)
The literal rule was summarised in Sussex Peerage Case [1844] as
meaning that words are to be given their ordinary meaning if precise
and unambiguous. This usually means that their meaning is taken from
an authoritative dictionary.
In tax cases, any disputed term that is not specifically defined
follows the dictionary definition.
literalism Process of interpreting laws by giving words their dictionary meanings.

In the terms of wills, literalism was abandoned by the House of
Lords in the case Perrin v Morgan [1943] when it was decided that
terms should be interpreted according to their context. The case
concerned the word “moneys” in a will.
LITRG Low Incomes Tax Reform Group.
littera scripta manet Latin: what is written down is permanent.
livery For VAT, livery services are generally standard-rated, though stabling
may be exempt. VAT notice 701/15 gives details.
livestock “Cattle, horses, asses, mules, hinnies, sheep, pigs, goats and poultry,
and also deer not in the wild state and, .... while in captivity pheasants,
partridges and grouse” (Animals Act 1971 s11).
Another definition is given in Dogs (Protection of Livestock) Act
1953 s3.
Agriculture Act 1967 restricts livestock to cattle, sheep and pigs,
whereas Agriculture Act 1947 s109 includes any animal kept for the
production of food, wool, skins or furs, or for farming the land.
living Term for the right of a vicar, rector or other person to receive a stipend
in a parish in the Church of England.
living accommodation Certain expenses in relation to employer-provided accommodation are

exempt from tax under Income Tax (Earnings and Pensions) Act 2003
from s313.
living apart In law, a condition for establishing desertion or separation for divorce.
The provision was introduced in 1973 and abolished in 1996.
living as husband and wife

Another term for living together.
living memory Within the memory of people who are still alive. The term is sometimes
used in legal proceedings. The term should be distinguished from legal
memory and time immemorial.
living on immoral earnings

Criminal offence of earning money by providing the services of
prostitutes. The maximum penalty is seven years imprisonment.
living over the shop Living in accommodation acquired to be near a workplace in addition to
one’s main residence. The term is used in the Inspectors’ Manual at
BIM37928 where the matter is discussed. Generally, such expenditure
is not tax deductible however commercially justified. A leading case is
Mason v Tyson [1980] 53TC333.
living together Co-habiting. This can affect certain entitlement to social security
payments.
Even for a married couple, living together can be a further
requirement, such as in Taxation of Chargeable Gains Act 1992 s282.
living wage Wage which is sufficient to support a person and, usually, his family.
living with you Term used in social security legislation to determine eligibility to claim
certain benefits.
For child benefit, the child or young person must “live in the same
house or other residence as [you] and also be carrying on there with
[you] a settled course of daily living” (R(F) 2/81). The child must not
have been away for more than 56 days in any 16-week period.
LJ (1) Lord Justice of Appeal.

(2) Law Journal Newspaper County Court Reports, published from
1831 to 1949.
LJNCCR Law Journal Newspaper County Court Reports, published from 1934 to
1947.
LJ(OS) Law Journal (Old Series), law reports published from 1822 to 1831.
LL Lower limit.
LLA Long-life assets. These are placed in the special rate pool and subject
to capital allowances at the rate of 10% as against the usual 20% for
plant and machinery.
Lloyd George, David English politician (1863-1945) who was Chancellor of the Exchequer
from 12 April 1908 to 25 May 1915 under the Liberal government of H
H Asquith.
He introduced the controversial People’s Budget of 1909 that
triggered a constitutional crisis and led to the House of Lords losing its
power of veto. Lloyd George sharply increased taxes on spending and
incomes, and introduced national insurance.
He was prime minister from 7 December 1916 to 22 October 1922.
Lloyd, Selwyn English Conservative politician (1904-1978) who was Chancellor of the
Exchequer from 27 July 1960 to 13 July 1962 in the government of
Harold Macmillan. He was sacked after struggling with the country’s
economic problems. He subsequently became Speaker of the House of
Commons.
Lloyd’s The London-based insurance market, best known for marine and
aviation cover. The name is taken from Edward Lloyd who owned the
coffee shop in Tavern Street from where the market began in 1689. It
was incorporated by an Act of Parliament of 1871.
Insurance is arranged by syndicates of private underwriters,
commonly known as Names, each of which is managed by a
professional underwriter. Each Name has unlimited liability in
meeting claims. Since 1992, limited companies may also join.
Note that the apostrophe is only used for the insurance market. The
bank with the same name has no apostrophe.
Lloyd’s broker Agent who arranges insurance through a syndicate at Lloyd’s.
Lloyd’s register Register of ships.
Lloyds Bank v Bundy Court case of 1974 which held that a bank could not rely on a guarantee
on a person’s property where there was improper pressure and
inequality of bargaining power. This case led to a series of similar
cases, variously decided, and a change in how banks offer secured

loans.
Lloyds Banking Group One of the Big Four UK banks. The name was adopted on 19 January
2009 from the merger of Lloyds TSB and HBOS. Soon afterwards the
bank had to accept significant government help to remain solvent.
The former is itself a merger of Lloyds Bank and TSB (Trustee
Savings Bank) in 1995.
Lloyds Bank was formed in 1765 in Birmingham.
The Bank has taken over banks and other financial institutions, such
as Scottish Widows and Cheltenham and Gloucester Building Society.
Its trade mark is a black horse.
Lloyd’s syndicate “A syndicate of underwriting members of Lloyd’s formed for an

underwriting year” (Finance Act 2007 Sch 11 para 3(9)).
LLP Limited liability partnership.
LLP trade Trade conducted by a company as a member of a limited liability

partnership (Corporation Tax Act 2010 s59(1)).
Ll Rep Lloyd’s Reports, series of law reports from 1951.
LNG Liquid natural gas.
LO Local office, of DVLA.
load in bulk Put cargo on board in loose form, not in packaging.
loading In business, the extent to which an individual is charged more than the
"standard" or "average" rate for a product or (more usually) a service.
An example is an additional insurance premium for a high risk
customer.
loading list A commercial document which may be used when more than one item
is being shipped.
It may be used instead of continuation sheets to supplement Single
Administrative Document (SAD) Community Transit (CT) documents.
loading pass Document for the purpose of obtaining authority to load Local Export
Control (LEC) goods boarding a ship or aircraft, after they have been
removed from the trader’s approved premises.
Load List A list of goods intended for export also providing their destination.
loan Sum of money lent, for which interest is often charged.

Loan interest for the purpose of a trade is generally deductible
from taxable profits. Interest on loans for a non-trade purpose generally
may only be deducted from any income to which the loan relates.
A loan to an employee which is either interest-free or at a rate
below the commercial rate is a taxable benefit in kind. For this purpose
a loan is any form of credit, including arranging, guaranteeing or in any

way facilitating the loan (Income Tax (Earnings and Pensions) Act
2003 s173(2)).
Such am employment-related loan does not trigger a tax charge if
the amount is less than £5,000. If it does, the taxable benefit is the
amount by which any interest paid is less than the loan multiplied by an
official rate. This rate is usually announced when there is a change in
the bank base rate.
loan capital Funding for a business which has been acquired by borrowing.
loan covenants Agreement made by the company with a lender of long-term finance,
protecting the loan by imposing conditions on the company, usually to
restrict further borrowing.
loan creditor “In relation to a company, means a creditor in respect of any debt of the
incurred by the company:
(a) for any money borrowed or capital assets acquired by the
company; or
(b) for any right to receive income created in favour of the
company; or
(c) for consideration the value of which to the company was (at the
time when the debt was incurred) substantially less than the amount of
the debt (including any premium thereon);
or in respect of any redeemable loan capital issued by the company.”
(Income and Corporation Taxes Act 1988 s417(7).
loan interest Interest charged on a loan.

Before 6 April 1969, interest on almost all loans was tax-deductible.
From 6 April 1969 to 5 April 1972, loan interest was tax deductible
only to the extent that it related to a mortgage, acquiring an interest in a
partnership or close company, or for a qualifying trade purpose.
From 6 April 1972 to 27 March 1974, interest relief was granted on
most payments to banks and similar UK bodies.
From 27 March 1974, loan interest was generally restricted to
mortgages and business loans. Mortgage interest relief ended on 6
April 2000.
loan notes A method of borrowing from commercial institutions such as banks. A

loan note may itself be tradeable on a stock exchange.
loan on ordinary commercial terms

Employment-related loan but where the employee pays the same rate
of interest as one of the employer’s customers. Such a loan is not taxed
as a benefit in kind.
Act 2003 s176(2).
loan relationship Term used for what is now Part 5 of Corporation Tax Act 2009. This
broadly allows a company to claim tax relief only for those loans that
are used to finance trading.
loan shark Someone who lends money at high rates and uses unlawful means to
enforce repayment.
loan society Body established to lend money to the “industrious classes” under Loan
Societies Act 1840. Such bodies were similar to friendly societies, and
were similarly registered.
The last such society was removed from the register on 3 April
1996, so the Act was repealed on 19 November 1998.
loan stock Loan finance traded on a stock exchange, a form of debt instrument.
loan to participators Money lent by a company to a participator, which usually means a

shareholder. If the company is close company, a tax charge may arise
loan to value (LTV) Amount of the mortgage expressed as a percentage of the value of the
property, or the price you are paying for the property. So a £60,000
mortgage on a £80,000 property would mean a LTV of 75%.
local Description of something which applies just to the country or other area
in which it is operating. So the term “local currency” means the
currency where that branch or business is operating.
local charity “A charity established for purposes which are by their nature or by the
trusts of the charity directed wholly or mainly to the benefit of that area
or of part of it” (Charities Act 1960 s45(1)). This definition was
introduced from 1 August 1993.
local colour Colloquialism for background information about an area, event or

market.
local clearance For Customs purposes, entry of imported goods into commercial
records at designated premises away from the frontier.
local currency Currency of the area where a business or branch is operating, as against
the currency in which the business prepares its accounts.
Local Dental Committee Body which may be formed to represent the interests of dentists in an
area. Such a body may be recognised by an NHS Primary Care Trust
under National Health Service Act 2006 s113.
Local Employment Act Act of Parliament of 1970, now largely repealed, which allowed
Parliament to make grants to local councils to employ people to clear
derelict land.
local government Elected authorities which have certain powers and duties within a
defined area, such as a city or borough.
local government boundaries

(a) in England, the boundaries of counties and their electoral divisions,
districts and their wards, London boroughs and their wards and the City
of London,
(b) in Wales, the boundaries of counties, county boroughs, electoral
divisions, communities and community wards,
(c) in Scotland, the boundaries of local government areas and the
electoral wards into which they are divided under section 1 of the Local
Governance (Scotland) Act 2004, and
(d) in Northern Ireland, the boundaries of wards.
(Parliamentary Voting System and Constituencies Act 2011 s9(3)).
local holding company Term used in Income and Corporation Taxes Act 1988 Sch 25 in
relation to controlled foreign companies.
local housing allowance (LHA)

An element of housing benefit that relates to the type of property
occupied by the claimant.
local labour Workforce recruited by a branch or similar from people in that area.
local land charges register

“In relation to England and Wales, means a register kept pursuant to
section 3 of the Local Land Charges Act 1975” (Interpretation Act 1978
Sch 1).
local reinsurance contract In the context of controlled foreign companies, means “a reinsurance
contract —
(a) which is made in the territory in which the controlled foreign
company is resident; and
(b) the parties to which are resident in that territory”.
(Income and Corporation Taxes Act 1988 Sch 25 para 11(8)).
local tax Tax charged in a country in which a controlled foreign company

operates. The term is defined in Income and Corporation Taxes Act
1988 s750(1).
If the local tax is less than 75% of the UK equivalent, the UK
owners may be liable to pay UK tax.
location of assets Inheritance tax rules that determine whether assets are regarded as
being in the UK. A non-domiciled taxpayer is not liable to inheritance
tax on assets outside the UK. The rules are given in Inheritance Tax Act
1984 s275.
location of errors In bookkeeping, various methods have been developed to find an error
when the books do not balance or do not crosscast.
The method starts by identifying the difference between the two
totals. If the difference is divisible by 9, this indicates that two numbers
were reversed in one addition, such as 56 being added as 65.
By taking 10/9 of the difference, it is possible to establish the
position of the wrong number and its difference with the other number.
In this example, the difference is 9, of which 10/9 is 10. This means that
the difference is in a multiple of £10 where a number in that column
differs from the unit by 1.
If the difference is of a specific amount, such as £43.29, this often
indicates that a sum of that amount was omitted from one of the
additions.
Lochgelly principle Principle that a member of a trade protection organisation may claim
part of the subscription as tax-deductible expenditure.
The name comes from the case Lochgelly Iron & Coal Company
Ltd v Crawford [1913] 6TC267 and is discussed in the Inspectors’
Manual at BIM24805.
lock (1) Device to hold a door, lid or similar secure unless a key is used.
(2) In banking, when a person is barred from using a credit card, debit
card or similar from entering too many wrong PIN numbers. If the card
is not confiscated, the holder who remembers the PIN can usually
unlock it by following a procedure at an ATM machine.
lock-out (1) In contract law, an agreement that one party will not seek to make a
contract with anyone else. It is sometimes used in property sales that are
subject to contract.
(2) In employment law, when the employer refuses to let the employees
work. It is the converse of a strike.
LOCOG London Organising Committee of the Olympic Games Ltd.
locum tenens Latin: a substitute.
locus citato Latin: at the passage quoted.
locus in quo Latin: the place in which.
locus poenitentiae Latin: place (or opportunity) for repentance.

The term is particularly used for the time between the provision of
goods for an illegal purpose and that purpose being carried out. During
this time, the provider of the goods may claim them back.
locus regit actum Latin: the place governs the act.
locus sigilli Latin: the place of the seal.
locus standi Latin: the place of standing. This is the right to be heard in court.
lodger Person who resides at premises owned by another person.

For tax purposes, a notice may be served under Taxes Management
Act 1970 s14 on the owner of any dwelling requiring the recipient to
list “every lodger or inmate resident in his dwelling house”.
Loi Monory French tax relief from 1978 to 1989, on which UK personal equity
plans were based.
The term is French for Monory’s law, after the French finance
minister René Monory (1923-2009). It allowed purchasers of French
shares to deduct a limited amount of annual investment from their
taxable incomes.
Ironically, Loi Monory was replaced by Plan d’Epargne Populaire
modelled on the UK personal equity plan.
London Olympics “The Games of the Thirtieth Olympiad that are to take place in 2012”
and the Paralympic Games of the same year (London Olympic Games
and Paralympic Games Act 2006 s1(1)(a)).
London Olympics period Period from four weeks before the start of the London Olympics of
2012 to five days after the closing ceremony (London Olympic Games
and Paralympic Games Act 2006 s1(3)(c)).
London Organising Committee (LOCOG)

Organising committee for the London Olympics 2012 formed under
section 2 of the Host City Contract.
London Stock Exchange (LSE)

The main stock exchange of the United Kingdom.
lone parent conditionality Term used in June 2010 Budget Red Book para 1.101 for the policy of
moving lone parents, where the youngest child is 5 or more, from
income support to jobseeker's allowance.
long In finance, a long period. In securities, this usually means at least 10 or

15 years.
long bond Bond which will mature in ten or more years’ time.
long credit Terms of business that allow the customer a long time to pay.
long dated bill Bill which is payable in more than three months’ time.
long dated stocks Government stocks which mature in 15 or more years’ time.
Long Friday Old name for Good Friday, in allusion to the long fast on that day.
long funding lease Term used from April 2006 to describe a lease which lasts for at least
seven years, or which lasts for at least five years and meets some other
conditions. Such leases were previously generally known as finance
leases. It is a funding lease which is not a short lease.
In a long funding lease, the lessee may claim a capital allowance
for plant and machinery.
long-run aggregate supply

The amount of supply of products at all price levels over a long period.
longs Long-dated stocks, that is government stocks which mature in 15

years’ or more time.
long service award Award to an employee for at least 20 years’ service.

A tax-free award may be made up to £50 for each year’s service
long-term benefit Contributory social security benefit payable indefinitely.

They are defined in Social Security Contributions and Benefits Act
1992 s20(2) as:
(a) long-term incapacity benefit
(b) a widowed mother’s allowance
(c) a widow’s pension
(d) a Category A or Category B retirement pension
(e) a shared additional pension.
long-term business In relation to taxation of insurance companies, means “business which

consists of the effecting or carrying out of contracts of long-term
insurance” (Income and Corporation Taxes Act 1988 s431(2)).
long term care insurance A health-insurance variation designed to cover the costs of long term
care at home or in a nursing home.
long term disability insurance

Insurance to provide a reasonable replacement of a portion of a person's
income lost through serious illness or injury.
long-term incentive plan Any scheme that provides a long-term incentive to employees, such as
through restricted stock units. The provisions of such plans can give
rise to an income tax charge for employment income.
long-term effect For the purposes of disability discrimination, this describes a disability
which has lasted for 12 months or is expected to last for 12 months
(Disability Discrimination Act 1995 Sch 1 para 2).
long-term finance Money lent to a business for a fixed period, giving that business a
commitment to pay interest for the period specified and to repay the
loan at the end of the period
long-term insurance fund In relation to taxation of insurance companies, means “the fund
maintained by an insurance company in respect of its long-term
business” (Income and Corporation Taxes Act 1988 s431(2)).
long-term investment An investment which will take more than one year to turn into cash.
Such an investment is excluded from the scope of current assets.
long-term liability A liability which is due in more than a year’s time. Such a liability
must not be included in current liabilities.
long-term service contract

In company law, a contract for the engagement of a director which lasts
for more than two years.
Under Companies Act 2006 s188, such a contract requires

members’ approval.
long ton Term used for the ton in the UK equal to 2,240 pounds as against the
short ton in the USA equal to 2,000 pounds.
longus usus nec per vim, nec clam, nec precario

Latin: long use not by violence, stealth or entreaty. Part of a claim for
title of property.
look-back Type of tax provision which looks back to circumstances in

determining the tax treatment of a transaction.
Lords of the Treasury Term used since the 17th century for the people who run HM Treasury.
There are usually seven. The first Lord of the Treasury is the prime
minister, and the second is Chancellor of the Exchequer. The other
five are usually Treasury ministers.
lorry driver There are some special tax provisions that allow for the cost of evening
meal and breakfast, as explained in the Inspectors’ Manual at
BIM37670.
lorry road-user charge Tax to be paid by lorries for using UK roads.

Legislation was introduced by Finance Act 2002 s137 and
subsequently amended. Despite that, the tax has yet to be introduced.
loss (1) Reduction in wealth generated by the activities of a commercial

entity. It is the opposite to profit.
For a non-commercial body, the equivalent term is deficit.
(2) For fraud, means a loss in money or other property, whether that
loss is temporary or permanent. Property means any property, real or
personal, including things in action and other intangible property (Fraud
Act s5(2). It includes not getting what one might get, as well as losing
what one has (ibid s5(4)).
loss adjuster Independent third party who may be used by an insurance company to
assess the value of a claim, particularly if there is a disagreement
between the insurer and the insured.
loss assessor Person employed by a claimant to value a loss and present the insurance
company with a supporting case for this valuation. Loss assessors are
most often encountered in respect of claims under home contents or
buildings insurance.
loss leader Product which a retailer sells at a loss with a view to attracting
customers into the store to buy other products.
loss-making year Year in which a trade makes a loss (Income Tax Act 2007 s64,
s120(1)).
loss of faculty Damage or impairment of part of the body or mind caused by the
industrial accident or disease.
Someone who suffers such a loss of faculty may be eligible to claim
industrial injuries benefit.
loss of profits policy Insurance policy which pays for losses sustained when a business is
Such policies are also known as consequential loss policy or
business interruption policy.
loss on sale of land If land is sold within four years of death for less than its probate value,
a claim may be made on form IHT38 for the sale proceeds to be
substituted for probate value.
loss on sale of shares If shares or other quoted securities are sold within 12 months of death
for a sum less than the probate value, a claim may be made on form
IHT35 for the sale proceeds to be substituted for probate value.
The claim must be in respect of the totality of all shares and
securities in the estate; a claim cannot be made just for those shares and
securities that lost value.
loss relief Means by which a taxpayer may offset a loss against a taxable profit.
For a company, the four most common forms of loss relief are:
• sideways relief: offset loss against other income in the
current accounting period (Corporation Tax Act 2010 s37)
• carry back: offset loss against profit in the previous 12
months (Corporation Tax Act 2010 s37)
• carry forward: offset loss against profits of the same trade
in any future period (Corporation Tax Act 2010 s45)
• group relief: offset loss against profits earned by a company
in the same group (Corporation Tax Act 2010 Part 5). There is a similar
consortium relief.
In a final year, it is also possible to claim terminal relief by
offsetting a loss against profits of the previous three years.
For accounting periods ending between 24 November 2008 and 23
November 2010, there was a separate limited right to offset a loss
against profits of the previous three years.
All of these forms of loss relief are subject to legal conditions.
loss to the estate The method of valuing gifts for inheritance tax purposes.
This method is most likely to lead to a different figure from the
value to the recipient where shareholdings or sets of objects are split.
lost bill Bill of exchange which has been mislaid.

Under Bills of Exchange Act 1882 s69, a holder may require the
drawer to provide a duplicate bill but must indemnify the drawer
against any loss from having issued two bills.
lost pension Pension scheme in a company which collapsed.

About 200 company schemes collapsed, leaving 140,000 members
out of pocket without any refund of contributions or expected pension.
In 2008, the government accepted the recommendations of the
Young Review which recommended that the funds be taken over by the
government and topped up. This led to the creation of the Financial
Assistance Scheme which provides a measure of recompense for
individuals with a lost pension.
lost sacrifice Benefit that an employer may receive under a salary sacrifice scheme.
Under such a scheme, the employee sacrifices part of his or her
salary in return for a tax-free or tax-advantaged benefit in kind.
Sometimes the value provided to the employee is less than the salary
sacrificed. This difference is the lost sacrifice.
loti Currency of Lesotho.
lottery distribution of prizes between those who payers on a basis which does
not require any skill by the payers. A lottery may need a licence.
lottery Form of gambling where participants pay a sum in return for a number
of similar identification, and the prizes are awarded by lot. In law, a
lottery s is either a simple lottery or complex lottery (Gambling Act
2005 s14).
lottery operating licence Licence issued by Gambling Commission to someone who promotes a
lottery (Gambling Act 2005 s65(2)(j)).
louma One hundredth of a dram, currency of Armenia.
love contract Agreement between an employer and two employees in a romantic

relationship. The agreement acknowledges the romance and
indemnifies the employer from any charge of harassment by one of
them in respect of the other.
Such contracts are rare in the UK, but more common in some US
states.
lowballing Putting in a very low quote to buy business.
low carbon project Project which produces low amounts of carbon dioxide compared with
the project it is intended to replace.
low cost endowment A savings plan which includes decreasing term insurance. It pays out at
the end of the term, and also if the policy holder dies during the term.
Such an endowment is usually used to pay off an interest only
mortgage.
Lowe, Robert English politician (1811-1892) who was Chancellor of the Exchequer
from 9 December 1868 to 11 August 1873.
low emissions certificate (LEC)

Certificate that indicates that a vehicle first registered before 1 October
2001 meets the required standard not to pay the charge in the Low
Emissions Zone.
lower-paid employments Employments where the wages (or equivalent) plus the value of
benefits does not exceed £8,500 and where the the employee is not a
director. Certain benefits in kind are taxed more leniently for such
employees (Income Tax (Earnings and Pensions) Act 2003 s217).
For such an employee, any taxable benefits are reported on form
P9D and not on form P11D.
low emission car Car which carbon dioxide emissions below 75gm/km. For the period
2010/11 to 2014/15, an employee provided with such a car was subject
to tax on 5% of its list price (8% for diesel) instead of the higher rates
that otherwise applied. No such car was available in 2010.
Low Emission Zone Area, approximately corresponding to the Greater London area, where
large vehicles must either meet strict standards for vehicle exhausts or
pay a daily charge. The M25 is excluded.
The scheme started on 4 February 2008 for lorries, caravans and
horseboxes which weigh more than 12 tonnes. If they do not meet the
emission standard, they must pay £200 for each day they travel in the
zone. The charge is levied on every day of the year at all times of day.
It is additional to any congestion charge.
On 7 July 2008, this extended to similar vehicles which weigh
between 3½ and 12 tonnes, and to buses and coaches weighing more
than 5 tonnes.
On 4 October 2010, a £100 daily charge is payable for vans and
horseboxes between 1.205 tonnes (unladen) and 3.5 tonnes, motor
caravans between 2.5 and 3.5 tonnes, and all minibuses.
From 3 January 2012, vehicles must meet the Euro IV standard for
particulate matter, as against the less strict Euro III standard.
The scheme is monitored by cameras at entrance points which can
recognise registration numbers.
At its introduction, the cost of converting an old vehicle to meet the
standard was estimated to be between £3,000 and £10,000. The
conversion could therefore cost-justified if the vehicle is to make a
minimum of 150 to 500 journeys in the zone.
lower earnings limit For national insurance, the amount of earnings which start to count as a
class 1 contribution to the national insurance record, though an
employee and employer do not pay any national insurance until a higher
earnings threshold is reached.
This is the figure for a category A state retirement pension
rounded down to the nearest whole pound per week (Social Security
lower limit This term is sometimes used to mean the limit at which a company no
longer pays the small profits rate of corporation tax. Details are in
Corporation Tax Act 2010 s24. The limit was introduced at £25,000 in
1973, and has been £300,000 since 1994.
lower limit annual accounting

VAT scheme which is an alternative to annual accounting for
businesses with an annual turnover below £100,000. This allows the
business to make three quarterly payments each equal to 20% of the
previous year’s VAT liability. If the liability for any quarter is less than
£2,000, no payment need be made. The business makes one annual
return within two months of the end of the year when any balance is
paid.
lower of cost or market (LCM)

Usual method of valuing stock for the balance sheet.
An item of stock is valued at its cost to make, grow or otherwise
acquire the item unless it can only be sold for a lower amount.
lower personal allowance Allowance against income tax which could be claimed by all taxpayers
other than married men. A single parent could claim lower personal
allowance plus an additional personal allowance, which provided the
same tax relief as the higher personal allowance.
The lower personal allowance was replaced by the personal
allowance from 6 April 1990.
lower rate Rate below a basic rate, particularly for income tax.
Between the tax years 1992/93 to 1998/99, there was a lower rate of
income tax of 20% on the first slice of taxable income. Between
1978/79 and 1978/80 there was a lower rate of 25% on the first £750 of
taxable income.
lower rate tax Term used for any tax which is lower than a main rate, such as the
small profits rate for corporation tax.
low gearing When the amount of borrowed capital is small relative to the amount of
equity capital.
Low gearing means that the return enjoyed by holders of equity
capital is less affected by the amount of net profit, unlike a high geared
business.
low income exemption Relief for income tax given by Republic of Ireland.
Low Incomes Tax Reform Group (LITRG)

“An initiative of the Chartered Institute of Taxation to give a voice to
those who cannot afford to pay for tax advice” (LITRG website).
low risk body Organisation defined by Legal Services Act 2007 s108 and which is
relieved from some provisions of the Act.
low risk loan Such a loan to be paid off by future earnings is one of the hallmarks of
a tax planning scheme of which taxpayers are advised to be wary.
low user fee Charge made to someone who makes little use of a service, particularly
by a bank or credit card company.
low value estate For inheritance tax, a category of excepted estate.

This is one where the total estate does not exceed the nil rate band
and so no inheritance tax is payable.
low value invoice Invoice for a low amount where some of the VAT requirements are
relaxed. The upper limit has been £250 since 1 January 2004.
low wines “Weak spirits obtained from the distillation of wash” (Customs notice
39).
low yield Description of the dividends or other distributions from a share or

equivalent which is low compared with similar securities.
loyalty bonus Addition provided by finance companies to customers who stay with
them.
They are most commonly encountered in pensions and investments.
For pensions, a loyalty bonus must be considered when looking at the
open market option.
LPA Lasting power of attorney.
LPG Liquid Petroleum Gas, a road fuel alternative to petrol and diesel.
LPG is the generic name for commercial propane and commercial
butane. They have the special property of becoming liquid at
atmospheric temperature if moderately compressed, and reverting to
gases when the pressure is sufficiently reduced.
LR (1) Listing Rules sourcebook, published by the Financial Services

Authority.
(2) Law reports. This is the citation for most court cases reported
LRC Law Reports of the Commonwealth, a series of law reports first

published in 1995.
LRR Land remediation relief.
LRT Lower rate tax.
LS Locus sigilli.
LSC Learning and Skills Council.
LT (1) Country prefix code for Lithuania.

(2) Life tenant of a trust.
(3) Law Times Reports, law reports from 1859 to 1947.
LTAHAW Living together as husband and wife.
ltd Limited. A limited company which is not a public limited company

must put the letters “ltd” after its name unless either permission has
been given for the company not to do so (as often happens for non-
commercial companies) or the company is registered in Wales and uses
“cyf” (Companies Act 2006 s59).
LTICR Long-term insurance capital requirement.
LTIP Long-term incentive plan
LTV Loan to Value. This is the amount of the mortgage expressed as a

percentage of the value of the property, or of the price paid for the
property. So a £60,000 mortgage on a £80,000 property would mean a
LTV of 75%.
LU Country prefix code for Luxembourg.
lump sum An amount provided as a single payment rather than as regular income.
lump sum death benefit Lump sum benefit paid by a pension scheme on the death of a member.
Such a benefit may be paid before the member has crystallised any
benefits or, in limited circumstances, after such benefits have
crystallised. In the latter case, the benefit is treated as a drawdown
lump sum death benefit and is taxed.
lunar month Period of four weeks.
lunch break Period of about 45 minutes to an hour in the middle of the day to allow
workers to have lunch.
luncheon voucher Document provided to workers by the employer and which may be
exchanged in local eating establishments for food.
luxury goods Term used for VAT between 18 November 1974 and 1976. Items that
fell within this description paid a higher rate of VAT of 25%, reduced
to 12.5% from 12 April 1976, until subsumed into the standard rate of
(then) 15%.
luxury tax Any tax which is imposed on luxury goods.
LV (1) Country prefix code for Latvia.

(2) Luncheon voucher.
LVT Leasehold valuation tribunal.
lwei One hundredth of a kwanza, currency of Angola.
Lynn v Bamber Court case of 1930 which established that a person could sue outside
the limitation period where there was fraudulent misrepresentation.
Lysaght Court case of 1928 that established rules that are still followed in
establishing ordinary residence. The full citation is CIR v Lysaght
[1928] HL. 13TC511.
M
M (1) Roman numeral for 1000.
(2) Macpherson. Series of Scottish law reports.
Maastricht treaty European treaty. In December 1991 the leaders of the 12 EC countries
met at Maastricht in the Netherlands to negotiate a treaty on the
European Union. The treaty was finally signed in February 1992. The
treaty moved significantly towards economic, political and social union
and set out the detailed timetable for economic and monetary union
(EMU). It also set out the convergence criteria for economies who
wanted to join in EMU.
Macfarlane Trust Trust established to provide ex gratia help to people who have been
infected with HIV through contaminated blood or blood products used
in the NHS. These payments are now made by MFET Ltd.
Such payments are disregarded when determining entitlement to
income tax.
Macleod, Iain Conservative politician (1913-1970) who was Chancellor of the

Exchequer for just one month from 20 June 1970 to 20 July 1970 when
he died of a heart attack. He never presented a Budget though he
worked on the one later presented by Anthony Barber.
Macmillan, Harold English Conservative politician (1894-1986) who was Chancellor of the
Exchequer from 20 December 1955 to 13 January 1957 in the
government of Sir Anthony Eden. He cut bread and milk subsidies, and
introduced premium bonds.
He was prime minister from 10 January 1957 to 18 October 1963.
Macq Macqueen’s Reports, Scottish law reports of House of Lords from 1851
to 1865.
macro-economics Study of economics on a large scale, such as for an entire country or for
the whole world.
“The study of overall economic headlines e.g. inflation, trade,
output and the level of employment” (HM Treasury glossary).
macroeconomic stability Requirement for the world’s financial systems to function properly. The
term was extensively used in the 2008/09 financial crisis.
MAD Market Abuse Directive.
mad money Emergency stash to insulate a person from dependency. Examples

include a stash by a woman planning to leave her husband or by an
employee about to leave work.
made-wine Term which is no longer used, but which has been used in two different
contexts for alcoholic liquor duty.
Before 15 March 1988, made-wine meant any drink made from
fermenting a fruit other than grapes, apples or pears.
Between 1 January 1997 and 26 April 2002, the term was used for
any drink made from mixing spirits with non-alcoholic drinks
(commonly known as mixers). Examples of these made-wines include
alco-pops and ready mixed gin and tonic.
made-wine “Means... any liquor which is of a strength exceeding 1.2% and which
is obtained from the alcoholic fermentation of any substance or by
mixing a liquor so obtained with any other liquor or substance but does
not include wine, beer, black beer, spirits or cider” (Alcoholic Liquor
Duties Act 1979 s1(5)).
MAFF Ministry of Agriculture Fisheries and Food - now referred to as the

Department of Environment, Food and Rural Affairs (DEFRA).
magazine If a magazine is issued at least once a year, it may be zero-rated under

Value Added Tax Act 1994 Sch 8 Group 3. Details are given in VAT
notice 701/10.
magistrates’ court “has the meaning assigned to it—

(a) in relation to England and Wales, by section 148 of the
Magistrates’ Courts Act 1980;
(b) in relation to Northern Ireland, by Article 2(2) of the
Magistrates Courts (Northern Ireland) Order 1981.” (Interpretation Act
1978 Sch 1).
magna est veritas et praevalebit

Latin: truth is great and will prevail.
magnum Champagne bottle with a capacity of two standard bottles.
maiden name Name by which a woman was known before she was married.
There is no law which requires a woman to adopt her husband’s
surname and many women choose not to.
Where the convention is followed, UK and US practices differ. If
Mary Ann Smith marries Harry Jones, she would be Mary Ann Jones
under the UK convention, but Mary Jones Smith under the US
convention.
However, it is stressed that these are merely conventions, and the
woman is entitled to use whatever name she wishes.
mail order The same as distance selling.
main compensating product

The product which results from the processing of goods imported under
Inward Processing Relief.
The main compensating product is the product which forms the
basis of the IPR authorisation and which is to be exported.
mainly trading subsidiary

“Subsidiary which, apart from incidental purposes, exists wholly for
the purpose of carrying on one or more qualifying trades...” (Income
Tax Act 2007 s137(7) and 181(8)).
main market The stock exchange operated by London Stock Exchange for
companies will comply with its strict admittance rules, as opposed to
the Alternative Investment Market.
main objects rule In company law, the main purpose for which a company was formed, as
set out in the memorandum of association. Other objects are regarded
as subsidiary.
If the main object no longer exists, the company may be wound up.
Modern practice avoids this either by making all objects independent,
or by registering the company as a general trading company.
main phase Period for which employment support allowance is paid after the
assessment period, usually of 13 weeks.
During the main phase, the basic allowance may be supplemented
by either the support component or work-related activity
component.
main primary percentage The rate of class 1 national insurance paid by employees on their
earnings between the earnings threshold and upper earnings limit.
The equivalent paid by the employer is known as the main secondary
percentage.
The terms are contained in National Insurance Contributions Act
2002. They were required to allow for the additional 1% class 1
national insurance introduced on earnings above the upper earnings
limit, which are known as the additional primary percentage and
additional secondary percentage.
main purpose rule In law, principle in interpreting an exclusion clause in a contract. This
principle is that a clause must not be interpreted to defeat the main
purpose of the contract.
In Glynn v Margetson [1893], Lord Halsbury said, “looking at the
whole of this instrument, and seeing what one must regard... as its main
purpose, one must reject words, indeed whole provisions, if they are
inconsistent with what one assumes to be the main purpose of the
contract”.
main register In company law, the main register of members as against an overseas
branch register (Companies Act 2006 s131(1)).
main secondary percentage

Rate of class 1 national insurance payable by an employer on an
employee’s earnings which lie between the earnings threshold and the
upper earnings limit.
mainstream corporation tax (MCT)

Total corporation tax paid by a company, including any advance
corporation tax (which is generally abolished from 1999).
maintain In finance, to provide funds on a continuing basis, such as to support a

partner or a child, or for a charity or project.
maintained school “A community, foundation or voluntary school, a community or

foundation special school or a maintained nursery school” (Childcare
Act 2006 s106).
“Any of the following schools in England:
(a) a community, foundation or voluntary school,
(b) a community or foundation special school, or
(c) a maintained nursery school”
(Education and Inspections Act 2006 s59).
maintenance Payment made by a person to support a former husband, wife or civil

partner, or by a person to support a child.
Payments of family maintenance are excluded from the scope of
inheritance tax (Inheritance Tax Act 1984 s11).
maintenance funds for historic land and buildings

Form of discretionary trust established for the maintenance of
specified lands and buildings.
Such funds are relieved from the various tax charges that would
otherwise apply to such a fund.
maintenance order Notice which a Scottish local authority may serve on the owner of a
house in a housing renewal area requiring the property to be
maintained to a reasonable standard (Housing (Scotland) Act 2006 s42).
maintenance trust A tax-advantaged discretionary trust established to maintain a historic

building, work of art or similar.
Major, John Conservative politician (1943- ) who served as Chancellor of the

Exchequer from 26 October 1989 to 28 November 1990 in the
government of Margaret Thatcher whom he succeeded as prime
minister. Major presented only one Budget, in which he introduced the
TESSA and joined the EU exchange rate mechanism.
major audit Audit which is either of a listed company or where “there is a major
public interest” (Companies Act 2006 s525(2)). A major public interest
is determined by guidance from the Secretary of State.
major infrastructure project

Major planning project such as an airport or power station, for which
different planning procedures apply (Town and Country Planning Act

1990 s76A).
major interest in land This means either a freehold interest or a lease on which there is at least
21 years to run.
Such a supply may be zero-rated for VAT under Group 5.
majority At least half of a defined population, such as voters.
Majority Report This specifically refers to a report of 1909 into the working of the poor
laws. It recommended that poverty originates in immorality, the poor
laws should remain and that too much outdoor relief was provided. A
Minority Report was also published. Neither was acted upon.
majority shareholder Shareholder who owns or controls at least 50% of the company’s
shares.
majority stake Holding of more than 50% in any enterprise. This allows the holder to
exercise control over the enterprise as he can outvote all other holders.
Company law provides exceptions for some special resolutions
which require a super-majority (usually 75%), and also protects
minorities from abusive behaviour.
major public interest Declaration made by the Secretary of State in respect of an unlisted
company. Where such an interest is declared, the audit of the company
is a major audit. This means that if the auditor is obliged to resign that
position, he must state his reasons to the Secretary of State under
Companies Act 2006 s523, rather than to his professional body.
making an investment Term used in Income Tax Act 2007 s336 and Corporation Tax Act
2010 s221 in relation to community investment tax relief.
Sub-section 1 states that “an individual makes an investment in a
body at any time when —
(a) the individual makes a loan (whether secured or unsecured) to
the body, or
(b) an issue of securities or of shares in the body, for which the
individual has subscribed, is made to the individual”.
making sausage Business jargon for discussing potential financial gains in front of a
customer.
mala fides Latin: bad faith.
mala grammatica non vitiat chartam

Latin: bad grammar does not vitiate a deed.
mala in se Latin: bad in itself.

This term means an act which is bad in itself, such as murder, rather
than mala prohibita deriving its badness from context, such as
smuggling.
mala praxis Latin: bad practice. The term is commonly used when a doctor injures a
patient by neglect of lack of skills. This is actionable.
mala prohibita Latin: bad by prohibition.

This term refers to an act which is not mala in se, that is bad in
itself, but is bad only by being prohibited.
maladministration Incompetent or bad administration, particularly in a public body.
Malaysian dollar Currency of Malaysia.
male servant tax Excide duty charged from 1777 to 1885 at one guinea for every servant
kept.
maledicta expositio quae corrumpit textum

Latin: it is a bad exposition which corrupts the text.
malfeasance Commission of an act which is unlawful.

This should be distinguished from:
• non-feasance: failure to do what the law requires; and
• misfeasance: doing what the law requires improperly.
Mallalieu v Drummond Leading case from the House of Lords on allowability of personal
expenditure. It concerned the plain skirts and blouses a lady barrister
was obliged to wear in court. It held that the clothes had a dual purpose
and so were not allowable. Its full citation is Mallalieu v Drummond
[1983] 57TC330.
malmsey duty An excise duty first introduced in 1490 on this sweet wine.
Maltese lira Currency of Malta.
maltote An additional export tax charged between 1294 and 1297. Some forms
of it continued into the 14th century.
man hour Work done by one man (or woman) in one hour.
managed fund A pooled investment fund which is actively managed by a fund

manager.
Often, investment is only possible through a linked life insurance
policy issued by the insurance company which is managing the fund.
managed on a unified basis

“Two or more undertakings are managed on a unified basis if the
whole of the operations of the undertakings are integrated and they are
managed as a single unit. Unified management does not arise solely
because one undertaking manages another” (FRS 2 para 12).
managed payment plan Scheme due to be introduced in April 2011 allowing payment of tax to
be made over several months instead of in a single payment.
managed rate Rate of interest charged or offered on investments which is neither

predetermined nor related to base rate, but is fixed by management.
managed service company (MSC)

A company where:
“(a) its business consists wholly or mainly of providing (directly or
indirectly) the services of an individual to other persons,
(b) payments are made (directly or indirectly) to the individual (or
associate of the individual) of an amount equal to the greater part of all
the consideration for the provision of the services,
(c) the way in which those payments are made would result in the
individual (or associates) receiving payments of an amount (net of tax
and national insurance) exceeding that which would be received (net of
tax and national insurance) if every payment in respect of the services
were employment income of the individual, and
(d) a person who carries on a business of promoting or facilitating
the use of companies to provide the services of individuals (“an MSC
provider”) is involved with the company” (Income Tax (Earnings and
Pensions) Act 2003 s61B(1)).
This term was introduced on a change in the law in 2007. This
extends the scope of IR35 regulations to a company that provides the
personal services of individuals to other companies on the basis that
would otherwise be similar to employment.
managed unit trust Another term for managed fund.
management Collective term for those persons responsible for the day-to-day running
of a business.
Accounting standards (such as FRS 8) distinguish between
management and control. Both involve running a business or, to be
more precise, power over assets. The distinction is that a person
exercise management when this power is exercised for someone else’s
benefit, and control when exercised for his own benefit.
management accounting Reporting accounting information within a business, for management

use only.
management added prize money

In bingo, the amount by which the total value of prizes won in a week
exceeds the stake money less duty.
management buyout (MBO)

Acquisition of a business by people who work there.
Such an acquisition is often funded externally. As the new
management will intimately know the business, this can be an attractive
prospect for investors and lenders.
For accounting and tax purposes, an MBO is simply a takeover of
an existing business.
management charges These are tax deductible, provided they are commercially justified and
reasonable in amount.
They may be investigated if it appears they are being used to

manipulate loss relief.
If the companies are in different tax jurisdictions, they also may be
investigated for transfer pricing. Notes are given in the Inspectors’
Manual at BIM38230.
management expenses The term has a specific meaning in relation to loss relief in Corporation
Tax Act 2010 s103.
management letter Letter often sent by accountants to a business before issuing an audit
report, setting out suggestions as to how the accounting and internal
control procedures could be improved.
management receiver Person appointed under a restraint order to receive property (Proceeds
of Crime Act 2002 s48).
Managing Deliberate Defaulters (MDD)

Scheme launched by HMRC in 2011. It involves closer monitoring of
tax defaulters, namely anyone who has incurred a penalty for deliberate
tax evasion. The close scrutiny lasts until HMRC is satisfied that the
person’s tax affairs are in order. This is usually between two and five
years.
managing director Person who is the most senior manager in a business.
managing trustees Trustees who manage the church on a day-to-day basis, unlike holding
trustees.
managing underwriter American term for a lead underwriter.
mandamus Writ ordering a person to discharge a legal duty. An order cannot be

made on the Crown (government) itself, but can be made against a
minister. An example of this is R v Secretary of State for Social
Services, ex parte Grabaskey. The Times 15 December 1972. A
mandamus order can only direct that a duty be carried out; it cannot
direct how that duty is to be discharged.
mandatarius terminos sibi positos transgredi non potest

Latin: a mandatory cannot exceed the limits imposed upon him.
mandate (1) Instructions to the bank on who may sign cheques.

(2) Authority claimed by a successful political party to implement its
manifesto after winning an election.
mandatory bid Compulsory bid, particularly the requirement to mount a takeover bid
when someone owns 30% or more of the shares of a listed company.
mandatory e-filing Requirement that certain tax returns must be filed electronically and not
on paper. The power to require this is Finance Act 2002 s135.
mandavi ballivo Latin: I have commanded the bailiff.

Man Friday Faithful, willing and versatile attendant.

The term comes from a character of that name in Robinson Crusoe.
manipulate Contrive to make different, particularly when accounts are subject to

creative accounting to make the underlying entity seem healthier.
manipulation of price Artificial arrangements that affect a price to achieve a tax saving.
There are anti-avoidance provisions to counter this, such as in
Taxation of Chargeable Gains Act 1992 s151D.
manna from heaven Unexpected provision or benefit. The term comes from the food God
showered on the Israelites in the wilderness (Exodus 16:15, the Bible).
manners-bit Old term for the practice of a guest leaving some food on a plate to
indicate to the host that the food provided was more than adequate.
manpower Number of people or quantity of man hours available or required.
manpower forecasting Process of calculating how many people will be required and how many
will be available.
manpower planning Process of planning to have sufficient workforce available when

required.
Manpower Services Commission (MSC)

Non-departmental body of Department of Employment created in 1973
to co-ordinate employment and training in the UK. It pioneered Youth
Training Scheme (YTS) and other programmes.
It started to be wound down from 1987, was briefly branded the
Training Agency, before being replaced by training and enterprise
councils (TECs) in 1990. These were themselves replaced in 2001 by
the Learning and Skills Council. This was itself abolished in April
2009 and replaced by Young Peoples Learning Agency.
mansion tax Name given to a tax proposed by Vince Cable MP at the Liberal
Democrat party conference in 2009. The proposal was to introduce a
wealth tax of 0.5% on properties worth more than £1 million each year.
mansuetae naturae Latin: tame by nature. Description of animals such as a cow, horse or
dog.
mantolen Welsh: balance sheet.
manual tagging Insertion of iXBRL tags on corporation tax other than automatic
tagging.
Tags are entered from a list either from that supplied free by HMRC
for simple companies, or from commercial software. The use of these
tags is compulsory from 1 April 2011.
manual transmission Arrangement in a car where the gear is selected by the driver using a
gear lever, as against automatic transmission where the gear is
determined according to the speed of the vehicle.
A driver who passes a test in car with manual transmission may
drive cars with either manual or automatic transmission.
manufacture For the purposes of Customs preference, this covers any processing,
working, specific operations or assembly (except for certain minimal
processes) carried out in the manufacture of the product in the European
Union (EU).
manufactured dividend Payment due under a contract to replace a dividend that the recipient
would otherwise have received. An example is when shares have been
“lent” to another person or business. These arrangements have been
used for tax avoidance.
Since 1960, there have been provisions to counter such
arrangements by treating a manufactured dividend (whether or not
actually paid) as if it were a real dividend.
manufactured gas plant Place where coal gas was produced.
manufacturing In economics, the section of industry which makes products, as against

those which provide services.
manufacturing profit Difference between the cost of buying in an item as against making it
in-house.
manuscript Any document which is hand-written.

The term is also used for documents which have been personally
produced on a typewriter or word processor.
manuscript accounts Accounts which are written by hand on paper, as against accounts kept
on a computer or other machine.
manuscript paper Paper that is ruled with five-lined staves for writing music.
As blank paper, it is standard-rated as stationery. If sold as finished
music, it may qualify for zero-rating under Value Added Tax Act 1994
Sch 8 Group 3 as explained in VAT notice 701/10.
MAPPA Multi-Agency Police Protection Arrangements.
maps For VAT, maps are zero-rated under Value Added Tax Act 1994 Sch 8
Group 3, provided that they are designed to present the natural or
artificial features of countries, towns, seas or the heavens. They may be
produced on any material, and may be a single sheet, in a book or
folded. Framed maps and decorative maps are standard-rated. Further
MAR Market Conduct Sourcebook, published by the Financial Services

Authority.
MARD Mutual Assistance Recovery Directive.
Mareva injunction Order of a court that prevents a person transferring assets to outside the
country. They are usually now called freezing orders.
The name comes from the case Marevia Compania Naviera SA
[1980] 1 All ER 213. CA.
margin The amount by which the selling price of an item exceeds the price paid
on its purchase.
margin calculator Calculator which is particularly designed to calculate profit margins.
margin call Request to a purchaser of an option or futures contract to make a further

payment because a fall in the value of the underlying security has
reduced the value of the original margin deposited.
margin of safety Any additional facility to provide additional safety. In finance, this
commonly refers to units of production which are certain to sell above
the breakeven point.
margin scheme Any financial arrangement which is related to the profit margin rather
than turnover. In particular, it refers to a special VAT scheme for
second-hand goods.
margin scheme package

A single transaction which includes one or more margin scheme
supplies. For example - a margin scheme supply sold together with an
in-house supply or an agency supply.
marginal cost Cost of producing one additional item.

This figure is often used to determine whether to accept an
additional order after existing orders have in effect recovered all the
overheads through normal sales.
marginal costing Costing which uses marginal costs, such as calculating the
contribution each item makes to overheads.
marginal decision Decision which is finely balanced.
marginal items of pay Expenses and other elements of the remuneration package paid to an
employee but of which the payroll department did not know at the time.
HMRC guidance allows such items to be taxed and subjected to
national insurance in the later pay period when discovered, except
where to do so would affect an employee’s benefit entitlement.
marginal land Land where its planned use is barely justifiable, such as when the clean-
up costs would consume any profit from development, or where
farming is particularly difficult.
marginal pricing Practice of determining the price of a product or service as the marginal
cost plus a contribution to fixed overheads plus profit.
marginal propensity to consume (MPC)

Economic term for the proportion of the last pound earned that is spent
on consumption. For example, if a person earns £1 more and consumes
70p of it, the MPC is 0.7.
marginal purchase Purchase which the buyer thinks is just worth making.
marginal rate of tax The marginal rate of tax is the rate of tax paid on the next pound
earned. In the case of income tax this will increase as a person moves
from one band to the next. For more details on the UK income tax
system, you may want to look at the explanation of the tax system.
For corporation tax, the marginal rate (MR) is calculated as:
MR = (U x M) – (L x S)
(U – L)
where: U is the upper limit, L is the lower limit, and M and S are the
main corporation tax rate and the small profits rate respectively, both as
decimals (so 26% is 0.26).
The marginal rate for corporation tax is higher than the main rate.
For the main rate of 26% and small profit rate of 20%, the marginal rate
is 27.5%.
The marginal rate is expressed as a decimal, and so must be
multiplied by 100 to become a percentage.
marginal relief Amount by which the full rate of corporation tax is relieved when
taxable profits lie between the lower and upper limits. The formula uses
a standard fraction. The law is Corporation Tax Act 2010 s19.
The standard fraction is calculated as:
SF = (M – S)
(U-L)/L
where U is the upper limit, L is the lower limit, and M and S are the
main corporation tax rate and small profits rate respectively, both as
decimals (so 26% is 0.26).
In practice, the numerator and denominator are usually multiplied
by 10, 50 or 100 to avoid having decimals in the answer. The numerator
and denominator are calculated separately; the answer is not reduced to
a decimal.
For 2011/12 rates of 26% and 20%, the fraction is 0.06/4. This is
more conveniently expressed as 3/200.
marginal revenue Income generated by selling one more item.
marine adventure Risk incurred at sea, as defined in Marine Insurance Act 1906 s3
marine insurance “A contract whereby the insurer undertakes to indemnify the assured, in
manner and to the extent thereby agreed, against marine losses, that is
to say, the losses incident to marine adventure” (Marine Insurance Act
1906 s1).
mariner Term often used in tax law to mean a seaman.
marine underwriter Person who insures ships and their cargoes.
marital acquest Property acquired by a couple during their marriage.

When the couple divorce, there is an assumption that the marital
acquest will be divided equally unless there is good reason to the
contrary. Assets brought by the parties to the marriage are usually
viewed differently, though the court can order them to be shared also.
marital coercion Defence to a criminal charge that a wife was pressured by her husband.
marital status Whether a person is married.

Strictly a person is either married or not. However it usual to
classify people as one of:
● single (never married);
● married (currently married);
● widowed (husband or wife has died):
● divorced or separated (marriage has ended but husband or
wife is still alive):
● civil partnership (relationship with a person of the same sex).
maritime lawyer Lawyer who specialises in matters to do with shipping.
mark German currency until the country adopted the euro in 2002. In 1945,
the currency was divided with West Germany adopting the
deutschmark and East Germany the ostmark. On reunification in 1990,
the deutschmark was worth more than 100 times the ostmark.
mark banco The German mark of fixed value used as a currency standard at the old
bank in Hamburg.
mark-down Item sold at a reduced price, particularly an item of food sold by a

retailer as it nears its sell-by date.
marked gas oil Gas oil on which hydrocarbon oil duty has not been paid. Customs
notice 75 imposes conditions on its storage and use.
marked kerosene (MKO) Heavy oil of which more than 50% by volume distils at a temperature
not exceeding 240C and contains the prescribed kerosene marker
coumarin. It is normally used for home heating purposes where it is
exempt from hydrocarbon duty.
market Any place or arrangement which allows people to buy and sell from
each other.
marketability Ease with which an item can be sold.
market analysis Study of a market, usually with a view to effective selling or investing.
market capitalisation The value of a company as measured by the total stock market price of
its issued and outstanding shares. This is calculated by multiplying the
number of shares by the current market price of a share. It is also
widely used as a definition of company size - hence, big corporations
are usually referred to as large cap stocks (See also Small Caps)
market capitalization rate

Method of valuing the shares of a quoted company by using the return
from the shares and dividing it by this rate.
market development strategy:

Selling an existing product/service in a new and developing market.
market economist Person who specialises in the economics of stock markets.
market for loanable funds

Money market where companies borrow for investment, and where
consumers put their savings.
market forces Influences caused by the normal action of markets.
market gardening In the first five years, a loss from this trade may only be offset against
other profits to the extent that the activity is run commercially (Income
Tax Act 2007 ss67-68; Corporation Tax Act 2010 s48).
market housing Accommodation acquired at normal market rates, as opposed to social

housing.
marketing Process of making products and services known with a view to

increasing their sales.
The Chartered Institute of Marketing definition is “the management
process responsible for identifying, anticipating and satisfying customer
requirements profitably”.
Traditionally marketing comprises advertising, distribution and
selling. However there are many other elements which play a part, such
as packaging and general customer service. Ultimately all dealings
between a supplier and customer may be seen as a manifestation of
marketing.
marketing The discipline which involves packaging, advertising, selling, and

distributing products or services, and the public relations used to
support this process.
marketing agreement Contract under which one company agrees to sell another’s products.
marketing board Statutory board entrusted with the sales of a particular commodity or
food product. Subscriptions to such a body are generally tax-deductible
as is discussed in the Inspectors’ Manual at BIM24850.
marketing concept Recognition of a customer’s needs or wants, and producing products or

services which satisfy those needs or wants.
marketing cost Cost of selling a product.
marketing department Part of company which is responsible for marketing.
marketing mix Those factors which promote marketing. The term was coined by Prof
E Jerome McCarthy at Harvard Business School in the 1960s.
The marketing mix traditionally comprises the four Ps:
● product: what is being sold must have inherent quality;
● pricing: the price must be acceptable to the customer (not
necessarily the lowest, but a higher price must be justified);
● placement: how the product or service is distributed or
otherwise supplied to the customer; and
● promotion: advertising, sales promotion, publicity and the
suchlike.
marketing orientation Perceptions and attitudes of an organisation towards the products or

services it sells, and to the customers to whom they are sold.
Depending on circumstances, the marketing orientation could be
product-oriented, sales-oriented, production-oriented, among others.
Product orientation means developing such a wonderful product that it
will sell itself. Sales orientation means concentrating on sales
techniques, while production-orientation means shifting as many units
as possible.
market maker Member of a stock exchange who is required to provide a continuous

service of prices at which he or she will buy or sell securities.
market neutral Investment strategy that seeks to produce the same return regardless of
what happens in the financial markets.
market order Instruction to buy or sell at the best available price, usually to be
executed immediately.
market overt An open market where a buyer obtained good title to goods even if they
were stolen. This ancient right was abolished from 3 January 1995 by
Sale of Goods (Amendment) Act 1994.
market price Price at which goods are offered for sale in a market.
market rate Usual price in a market.
Markets in Financial Instruments Directive

EC directive 2004/39 of 12 April 2004.
market value In investment, the price for which a share or other security could be
transferred between a willing buyer and a willing seller.
For options, the market value rule may be required for
determining the capital gains tax.
For pensions, the market value of an asset held for the purposes of a
pension scheme is to be determined in accordance with section 272 of
the Taxation of Chargeable Gains Act 1992 and section 278(2) to (4)
Finance Act 2004 (where dealing with a right or interest in respect of
money lent directly or indirectly to certain parties).
For property made available to an employee, market value “at any
time is the price which the asset might reasonably be expected to fetch
on a sale in the open market at that time” (Income Tax (Earnings and
market value (of a share) The price for which a share could be transferred between a willing
buyer and a willing seller.
market value rule For capital gains tax, a rule used to calculate the gain on an option
(Taxation of Chargeable Gains Act 1992 s144ZA).
marking to market Another name for mark to market, when a marketable asset is valued
at its current market price.
Marks and Spencer case Term often used to mean the 2005 decision of the European Court of
Justice that a loss made by a foreign subsidiary may be offset against a
profit earned in the UK when all other forms of loss relief have been
exhausted. This was not then permitted under UK tax law. UK law was
changed in 2006.
[The company has also been involved in extensive litigation with
HMRC on VAT matters relating to the three-year cap and the doctrine
of unjust enrichment.]
mark to market (MTM) Basis of stock valuation using market value.

It is defined as “bringing assets into account in each period of
account at a fair value” (Finance Act 2002 s65(2)).
This was commonly used for liquid assets, particularly financial
products and commodities. From 1 August 2001, the use of this method
is restricted as explained in the Inspectors’ Manual at BIM33160.
Marren v Ingles Court case from 1980. It established that there is a capital gains tax
liability on ascertainable deferred consideration, such as when part of
the consideration is based on future profits in an earn-out.
marriage The voluntary union of one man to one woman to the exclusion of
others. Although the term does not include civil partnership, all the tax
consequences of marriage apply equally in that relationship.
In employment law, it is generally an offence for an employer to
discriminate against an employee because he or she is married or is not
married (Sex Discrimination Act 1975 s3).
For inheritance tax, gifts in consideration of marriage were, from 4
April 1963, free of estate duty without limit under Finance Act 1963
s53 (repealed by Finance Act 1975). Limits were introduced by Finance
Act 1968 s36 of £5,000 if made by a parent or ancestor or party to the
marriage, and £1,000 otherwise in respect of gifts made from 19 March
1968.
There are many tax provisions that relate to marriage. These

include:
• a couple may be entitled to a marriage allowance for income
tax;
• transfers between them are regarded as being on a no gain/no
loss basis for capital gains tax (Taxation of Chargeable Gains Act 1992
s58(1));
• inheritances are free of inheritance tax;
• the parties are regarded as connected persons for various tax
provisions.
marriage brocage Procuring a marriage for reward. It is illegal.
marriage relief Customs term for the relief from duty when goods are brought into the
UK consequent upon marriage. Details are given in Customs notice 3.
marriage settlement Settlement made between husband and wife before or after the
marriage. The terms of such a settlement may be considered in any
divorce proceedings.
marriage tax A tax charged between 1695 and 1706 to fund the war with France. It
imposed a tax on marriage, birth, death, and being a bachelor or
widower.
marriage value Latent increase in value of property when the leasehold and freehold
interests are combined.
Such a combination is usually effected by creating an RTE
company. The marriage value is shared equally by the landlord and
RTE company.
It should be noted that the marriage value may be much greater than
the freeholder’s existing interest. The longer the term of the lease, the
lower is the marriage value. For a very long lease, the marriage value
may be a nominal sum.
married couple For general use, see marriage.

For pension credit, “means a man and a woman who are married to
each other and are members of the same household” (State Pension
Credit Act 2002 s17(1)).
married couple’s allowance (MCA)

Additional tax allowance that is still available at 10% for a married
couple where either was born before 6 April 1935. (Income Tax Act
2007 s45).
Between 6 April 1990 and 5 April 2000, a married couple’s
allowance could be claimed by a couple regardless of age. The rate of
relief was reduced to 20% in 1994; 15% in 1995; 10% in 1999 and
abolished from 2000.
Between 6 April 1920 and 5 April 1990, a married man could claim
a higher personal allowance.
marshalling Finding, identifying and valuing property, particularly in insolvency.

Martens clause Clause in an international treaty. It states that anything not specifically
provided in the treaty is subject to international law and is therefore not
necessarily permissible. It was first used in the Hague Conventions of
1899 and 1909 at the behest of the Russian delegate Friedrich von
Martens (1845-1909).
Martinmas Christian festival of St Martin’s Day on 11 November. Before 1991, it

was one of the four old Scottish term days.
Maslow’s hierarchy Model which identifies the different psychological needs of people.
master (1) For Customs purposes, “in relation to a ship, includes any person
having or taking the charge or command of the ship” (Customs and
(2) Judge, namely Master of the Supreme Court or Master of the Bench.
(3) Old term for an employer, as in “master and servant”.
Master of the Rolls Judge who presides over the Civil Division of the Court of Appeal.
Masters of the Supreme Court

Judicial officers of the Queens Bench and Chancery Divisions of the
High Court. They are the equivalent to a district judge.
matched expenditure Expenditure that it is taken into account in the same accounting period
as related income. A simple example is that the cost of goods sold is
taken into the accounts for the same period as the revenue from their
sale. This is part of the accruals concept.
matched income Income that corresponds to matched expenditure.
matching Accounting transaction that expenses are matched against revenues in

the period they are incurred. It is part of the accruals concept.
This principle is also used in foreign exchange following the
Midland Marine case, are discussed in the Inspectors’ Manual at
BIM39520.
matching concept Another name for accruals concept.
matching grant A grant or gift made with the specification that the amount donated
must be matched from other sources on a one-for-one or some other
prescribed basis.
material In accounts, significant in amount.
material acquisition The purchase of an item whose amount is so substantial that it

significantly reduces the liquid funds. Such an acquisition must be
material disposal of business assets

For entrepreneurs’ relief, the capital gains tax implications are given
in Taxation of Chargeable Gains Act 1992 s169I.
material facts Important and relevant facts, such as those which must be included in a
prospectus for potential shareholders.
material interest in a company

For the purpose of determining the tax liability of a director to benefits
in kind, this expression is defined in Income Tax (Earnings and
Pensions) Act 2003 s68. Broadly it means a director who owns at least
5% of the share capital.
materiality Accounting principle that the accounts should not be cluttered with
detail about amounts which are so small that they do not affect the
picture painted by the accounts.
The concept of materiality is not imported into tax law although
many tax provisions have specific de minimis limits. The matter is
material news Development in a company which is of such significance that it could

affect the share price. A listed company is required to disclose such
news.
material reconciliation account

A reconciliation of the products manufactured against the quantities of
materials received. This can identify conversion factors and wastage.
materials requisition Internal document within an organisation whereby a production

department lists the materials it needs from stores.
materials transfer note Document which records goods transferred between one workplace and
another.
maternity The period of pregnancy, childbirth and immediately after childbirth.

Adoption is not regarded as pregnancy, though employees have some
similar adoption rights.
A female employee has these rights in respect of maternity:
● maternity leave;
● paid leave for ante-natal care;
● statutory maternity pay if the relevant conditions are met,
and maternity absence in some cases if they are not;
● the right not be unfairly dismissed or to suffer any other
employment detriment because of maternity.
A man has some equivalent paternity rights.
Apart from statutory maternity pay, there is no minimum qualifying
period for any of these rights.
From 1 December 1994, employers must make an assessment of
how employment conditions affect a new or expectant mother. There
are separate regulations about specific processes, chemicals and other
activities from which a pregnant employee must be protected.
maternity allowance Social security benefit which may be paid to a woman who is not
eligible for statutory maternity pay.
It is paid under Social Security Contributions and Benefits Act 1992
s35.
The benefit is not subject to income tax (Income Tax (Earnings and
maternity leave When a female employee is absent from work because of maternity.
The law prescribes three types of maternity leave:
● compulsory maternity leave, where a woman may not
return to work for two weeks after the birth (four weeks if she works in
a factory);
● ordinary maternity leave, a period of 39 weeks (from 1
April 2007) which usually coincides with the maternity pay period;
● additional maternity leave, a period which brings the total
maternity leave to 52 weeks. The woman is not entitled to any pay or
statutory maternity pay during additional maternity leave.
Other than pay, a woman is entitled to all other benefits under the
contract of employment. So she is entitled to keep a company car and
use any social facilities. Her pension payments continue to accrue.
An employer and employee are entitled to agree to provide more
maternity leave or for additional maternity pay to be made on whatever
terms they wish.
If a woman becomes pregnant again during maternity leave, a fresh
set of maternity leave starts even though it overlaps with the existing
leave. This appears to be the ruling in the European Court of Justice
case Busch v Klinikum Neudstadt GmbH und Co Betriebs-KG [2003].
maternity pay period (MPP)

Period for which statutory maternity pay is payable. This is 39 weeks
for births expected from 1 April 2007, and 26 weeks for births expected
before this date. The maternity pay period is not necessarily the same as
a woman’s entitlement to maternity leave.
In general, the employee may choose when to start the MPP. This
may be no earlier than 11 weeks before the expected week of
childbirth (EWC) and no later than the day after the actual birth. If a
woman contracts a pregnancy-related illness in the four weeks before
the EWC, the start of that illness automatically starts the MPP.
The MPP ends on the earliest of:
● 39 weeks after it started;
● when she returns to work, other than as an allowed keeping
in touch day;
● when her employment ends;
● when she is imprisoned or taken into legal custody;
● the Saturday after she dies.
Before 1996, a MPP also ended if a woman went outside Europe.
This rule has been repealed, so a MPP may continue wherever she is in
the world.
If a woman becomes entitled to a pay rise before the end of her
MPP, her SMP must (from 6 April 2005) be recalculated in accordance
her new pay. This is known as the Gillespie ruling.
maternity pay Money paid to a woman who is absent from work during pregnancy,
childbirth and the period immediately after childbirth.
There are two types of maternity pay:
● statutory maternity pay, which is paid by the employer
under rules laid down by the government; and
● occupational maternity pay, which may be paid by the
employer under his own rules.
maternity rights Legal rights of an employed woman in respect of pregnancy and

childbirth. They are broadly:
• paid time off work for ante-natal visits
• protection from dismissal
• maternity leave
• maternity pay
• right to return to work.
mates’ rates Colloquialism for a reduced price offered to a seller’s friends.
Matrimonial Causes Act Laws passed in 1923 which gave women the same rights as men to sue
for divorce. A second Act in 1937 allowed divorce after desertion for
three years.
matrimonial home Home in which a married couple lived together. The term is usually
used in the context of divorce settlements.
Where a wife has no proprietary, contractual or statutory right to
occupy the property, she may have rights under Matrimonial Homes
Act 1983 not to be evicted if in occupation, and to enter and occupy the
home otherwise.
matrimonial proceedings Legal action intended to lead to divorce or separation.
Matrix Churchill Company which manufactures machine tools.

Its name became associated with the scandal which followed an
attempt to prosecute four directors for breaching export control orders
in sales to Iraq. The Ministry of Defence co-operated with the company,
only for Customs and Excise to prosecute them. The government issued
public interest immunity certificates which prevented much evidence
being put to the court, until the judge overturned them. The trial
collapsed when defence minister Alan Clark MP said on oath that he
had been “economical with the actualité” in answering questions in
Parliament. This led to the Scott Report which criticised the
government.
matter in issue between the defendant and a co-defendant

matter in issue between the defendant and the prosecution

maturity Date on which either an investment completes its term or when a

liability becomes due for repayment.
maturity date The date on which a payment becomes due at the end of the term of an
endowment policy or a fixed term security or loan.
maturity profile of debt

The timing of loan repayments by a company in the future.
maturity value The amount payable to the insured at the maturity date of an
endowment policy.
Maudling, Reginald English Conservative politician (1917-1979) who was Chancellor of the
Exchequer from 13 July 1962 to 16 October 1964 in the governments of
Harold Macmillan and Sir Alec Douglas-Home. He reduced purchase
tax and interest rates. He abolished the Schedule A charge for owner-
occupiers of homes, and scrapped the duty on home brewing of beer.
His 1963 Budget was nicknamed the “dash for growth”.
MAWB Master Air Waybill - refers to the bill of landing on a consolidated air
shipment.
maxi-ISA Term used between 6 April 1999 and 5 April 2008 to distinguish
individual savings accounts between maxi-ISAs and mini-ISAs. An
investor was only allowed to invest in one maxi-ISA.
maxims of equity Statements that summarise the legal principles to be used in equity. The
exact scope of each statement is not always obvious. The maxims are:
• equity acts in personam
• equity acts on the conscience
• equity aids the vigilant
• equity will not suffer a wrong without a remedy
• equity looks at the intent not at the form
• where the equities are equal, the earlier in time prevails
• he who seeks equity must do equity
• he who comes to equity must come with clean hands
• equity looks on that as done which ought to be done
• equity imputes an intent to fulfil an obligation
• equity will not assist a volunteer.
maximum authorised mass (MAM)

The weight of a vehicle plus the maximum weight of the load it may
carry. MAMs are used for determining categories of driving licence.
Maxwell pension scandal In 1991 it was discovered that the late entrepreneur Robert Maxwell
had raided £460 million of his companies’ pension funds to prop up his
businesses, many of which failed, meaning that many workers faced not
receiving their pension.
This scandal led to a tightening of laws on occupational pension
schemes, particularly with regard to who may be trustees. These

provisions were contained in Pensions Act 1995.
Mayor’s and City of London Court

County court for the City of London. Before 1971, it referred to a
special court formed in 1922 to have civil jurisdiction over all matters
in the City.
MB Megabytes.
MCAS Mortgage Code Arbitration Scheme.
MCD Miscellaneous Cash Deposit.
McKenna, Reginald English politician (1863-1943) who was Chancellor of the Exchequer
from 25 May 1915 to 10 December 1916 under the coalition
government of David Lloyd George. He introduced a 33.3% levy on
luxury goods.
McKenzie friend Someone who is not legally trained but who the court is prepared to
allow to sit and help a party in a case. The name comes from the case
McKenzie v McKenzie [1971].
McKenzie man Another name for a McKenzie friend.
MCOB Mortgages and Home Finance: Conduct of Business sourcebook,

published by the Financial Services Authority.
MCR Minimum capital requirement.
MCT Mainstream corporation tax.
MD Managing director.
MDD Managing Deliberate Defaulters.
me judice Latin: in my opinion.
meal voucher “non-cash voucher which:

(a) can only be used to obtain meals,
(b) is not transferable, and
(c) is not of the kind in respect of which no liability arises under
section 266(3)(e) (subsidised meals)” (Income Tax (Earnings and
meals There is generally no tax charge when an employer provides subsidised

meals to workers in a canteen (Income Tax (Earnings and Pensions) Act
2003 s317).
This includes free or subsidised tea and coffee (ibid s317(6)).
mean hourly output rate Quantity of units which a worker can reasonably produce in one hour
when paid on the basis of output work. This is when the worker is paid
for a unit of production (such as items assembled or envelopes filled
with literature) rather than per hour.
A worker paid on an output work basis is entitled to the national
minimum wage (NMW) determined either by the number of hours
worked or under a system of rated output work. This requires the
worker to be paid 120% of the NMW for each unit of production.
means of exchange One of the two functions of money. The other is as a store of value.
The use of money avoids the need for coincidence of supply in a
barter transaction. The prerequisite is that the parties to a transaction
both accept the form of money.
means-testing When provision of any facility depends on the claimant proving that
their income is sufficiently low.
measure Law enacted by General Synod of the Church of England.
measurement bases In accounting, “those monetary attributes of the elements of financial

statements — assets, liabilities, gains, losses and changes to
shareholders’ funds — that are reflected in financial statements” (FRS
18 para 6).
measure of damages Principle used to determine how much damages to award in a case.
Meat and Livestock Commission Levy

Charge for services provided to an abattoir.
The element which relates to the general levy is a supply to the
abattoir on which VAT is charged which may be reclaimed as input tax.
median The middle number in a list of numbers. It is widely used as an average

for earnings where an arithmetic mean would be skewed by a few very
high figures.
mediation Process whereby two people try to resolve a difference themselves with
the assistance of a third person, the mediator. A mediator does not
judge the issue himself (which is arbitration) but assists the parties to
work out their solution.
medical check-up “Means a physical examination of the employee by a health

professional for (and only for) determining the employee’s state of
health” (Income Tax (Earnings and Pensions) Act 2003 s320B(3)).
Such a check-up is usually exempt from tax.
medical evidence Evidence produced by an employee to justify absence due to sickness.

For statutory sick pay, an employee must produce evidence of sickness
such as a doctor’s certificate. An employer may agree that an employee
can self-certificate sickness up to seven days. From SC2 is provided for
this purpose.
medical expenses Generally these are not tax-deductible by an individual. A leading case
is Norman v Golder [1944] 26TC293 which concerned treatment to a
shorthand writer’s hand. The case is discussed in the Inspectors’
Manual at BIM37940.
The principle extends to surgery as held in the case Prince v Mapp
[1969] 46TC169 which related to a guitarist’s finger and is discussed in
medicinal product For VAT, “a substance presented as a medicine, or an ingredient for a

medicine, capable of being administered to people or animals for a
medicinal purpose” (VAT leaflet 701/1). Such a product may be zero-
rated for VAT.
medicinal purpose For VAT purposes, this “means:

• treating or preventing disease;
• diagnosing disease, or ascertaining the existence or degree of a
physiological condition;
• contraception;
• inducing anaesthesia:
• otherwise preventing or interfering with the normal operation of a
physiological function, whether permanently or temporarily, and
whether by terminating, reducing or postponing, or increasing or
accelerating the operation of that function, or in any other way” (VAT
leaflet 701/1).
The existence of a medicinal purpose, can establish that a
substance is a medicinal product and may therefore qualify for zero-
rating for VAT.
medical treatment When provided to an employee overseas, this may be exempt from tax
under Income Tax (Earnings and Pensions) Act 2003 s325.
medicine For VAT .....

For Customs control, details are set out in Customs notice 4. There
are no restrictions on medicines sold without prescription. For
prescription drugs, imports are restricted to 15 days’ supply unless a
Home Office licence permits a larger quantity.
medium of exchange Currency, assets, tokens or anything else which is used for the purposes
of allowing trade. By far, the commonest medium of exchange is
currency.
medium-sized company Company which is neither a large company nor a small company.
The definition is contained in Companies Act 2006 s465.
Basically, a company is medium-sized if it meets two out of three
conditions for both the current financial year and the previous year.
The three conditions currently are:
● annual turnover up to £22.8 million;
● balance sheet total up to £11.4 million;
● no more than 250 employees.
Lower financial limits have applied in earlier years. The odd
amounts arise because they come from an EU directive expressed in
euros.
Certain companies are excluded from this scope even if they meet
these conditions.
medium term Between short-term and long-term, as defined for the context.
medium term bond Government bond which matures after 5 to 15 years.
mediums Government stocks which mature in 7 to 15 years’ time.
medium-sized company A company that meets two of the following criteria:

• annual turnover not more than £25.9 million
• balance sheet total of not more than £12.9 million
• no more than 250 employees.
These limits apply for accounting periods beginning after 5 April
2008.
The previous turnover and balance sheet limits were £22.8 million
and £11.4 million respectively. These definitions are found in
Companies Act 2006 s465(3).
The odd amounts are because the limits are set by the European
Union in euros.
medium-sized vehicle Vehicle with a weight between 3,500 and 7,500 kilograms. This is
above an ordinary car but below a large goods vehicle.
This is category C1 on the driving licence. A driver must be 18 to
obtain a licence.
Meg Megone’s Company Cases, series of law reports published from 1888 to
1890.
Mehrweststeuer (Mwst) German for “value added tax”, as used in Austria and Germany.
melior est conditio possidentis et rei quam actoris

Latin: the position of the possessor is the better; and that of the
defendant is better than that of the plaintiff [now called the claimant].
member Person who owns a share in a company or who belongs to a club or

association.
member bank In the USA, a bank which is part of the Federal Reserve system.
member firm Stockbroking firm which is a member of a stock exchange.
member-nominated trustee
Trustee of an occupational pension scheme nominated by its members
(Pensions Act 2004 s241). At least one third of the trustees must be
member-nominated.
member of a company Person who is a shareholder in a company limited by shares or a

guarantor in a company limited by guarantee.
A person becomes a member either by being an original subscriber
or who subsequently becomes a member (Companies Act 2006

s112(2)).
member of another undertaking

“For the purposes of section 258 [of Companies Act 1985] an
undertaking shall be treated as a member of another undertaking:
(i) if any of its subsidiary undertakings is a member of that
undertaking; or
(ii) if any shares in that other undertaking are held by a person
acting on behalf of the parent undertaking or any of it subsidiary
undertakings.
“Any shares held, or powers exercisable, by a subsidiary
undertaking shall be treated as held or exercisable by its parent
undertaking” (FRS 2 para 14, following definition of parent
undertaking).
Member of Parliament (MP)

Person who is elected to serve as a member of the House of Commons.
Income Tax (Earnings and Pensions) Act 2003 provides special tax
exemptions for their:
• termination payments : s291
• accommodation expenses: s292
• overnight expenses: s293
• UK travel and subsistence expenses: s293A
• European travel expenses: s294
• transport for ministers: s295.
The number of MPs elected for a party determines whether that
party qualifies for inheritance tax relief on donations.
Member of the Legislative Assembly (MLA)

Term to describe a member of the devolved Northern Ireland
Assembly.
members’ necessary overnight expenses

Term used in Income Tax (Earnings and Pensions) Act 2003 s293 in
relation to tax-deductible expenses of Members of Parliament.
members of a group of companies

For the purposes of loss relief within a group or consortium is where
one company is a 75% subsidiary of the other, or where both are 75%
subsidiaries of a third company (Income and Corporation Taxes Act
1988 s413(3)).
Member’s pensionable salary

Term used in Income and Corporation Taxes Act 1988 s629 in relation
to the pension of a government minister.
member state A country which is part of the European Union (EU).
members’ statement Statement issued by members of a company in connection with a

resolution they are seeking. Such statements are governed by
Companies Act 2006 ss314-317.
members’ voluntary winding-up

Winding up of a solvent company by its members.
memorandum account Any form of financial record outside the double-entry bookkeeping. A
ledger is a memorandum account (other than the nominal ledger).
The sales ledger and bought ledger are examples of memorandum
accounts. Entries to a memorandum account do not affect the overall
position as recorded in the nominal ledger. However the memorandum
account balance should be reconciled to agree with the relevant figure
in the nominal ledger.
memorandum in writing Provision that related to property transactions before Law of Property
(Miscellaneous Provisions) Act 1989 came into effect. This now
requires both parties to sign a contract in a property transaction.
memorandum of association
“A memorandum of association is a memorandum stating that the
subscribers:
(a) wish to form a company under this Act, and
(b) agree to become members of the company and, in the case of a
company that is to have a share capital, to take at least one share each”
(Companies Act 2006 s8(1).
The memorandum or accompanying documents must state:
● the company’s proposed name;
● whether the company’s registered office is in England or
Wales or Scotland or Northern Ireland;
● whether the liability of members is to be limited, and, if so,
whether by shares or guarantee;
● whether the company is to be a public company or a
private company;
● the name and address of any agent acting for the subscribers;
● (for companies limited by shares) a statement of the capital
and details of initial shareholdings;
● (for companies limited by guarantee) a statement of
guarantee;
● proposed address of registered office;
● statement of proposed officers;
● copy of the proposed articles of association, unless the
relevant model articles are to be adopted; and
● statement of compliance.
memorandum of understanding
An agreement between parties defining the roles and responsibilities of
each in relation to the other or others. Such an agreement is not legally
enforceable.
memorandum rule For stamp duty, the rule that a memorandum evidencing an oral
contract may need to be stamped as if it were the original document.
mens rea Latin: guilty mind. It is one of the two conditions that must usually be
proved to obtain a criminal conviction. The other is actus reus.
mental capacity Ability to make decisions for oneself. This is now governed by Mental
Capacity Act 2005 which took effect in October 2007. It generally
replaced the Mental Health Act 1983. A person who lacks mental
capacity is called a patient.
The law assumes that everyone has mental capacity until the
contrary is established (Mental Capacity Act 2005 s1(1). A person lacks
capacity “if at the material time he is unable to make a decision for
himself in relation to the matter because of an impairment of, or a
disturbance in the functioning of, the mind or brain” (ibid s2(1)).
The 2005 allowed a person, a trustee, to act for a patient in making
decisions on health and welfare, in addition to finance (which was the
only area allowed for in the 1983 Act). The 2005 also provides a
checklist and is supported by a Code of Practice.
The trustee is usually a close relation or close friend. If no-one is
able to act in such a capacity, the Office of the Public Guardian may
provide one. This may require an application to the Court of
Protection.
In general, the law upholds agreements made by patients to the
extent that the patient can understand them. It is possible for a patient to
be capable of buying food, but not of entering into a mortgage.
A decision made by a person while they have capacity remains valid
when capacity is lost, though a trustee may vary such a decision if it
seems to be in the patient’s interests to do so.
The trustee will usually deal with the patient’s tax affairs, and may
sign the tax return in such capacity.
mental disorder “Any disorder or disability of the mind” (Mental Health Act 2007
s1(2)).
Dependence on drugs or alcohol is not considered a disorder of the
mind (Mental Health Act 1983 s1(3).
mental health treatment requirement

Requirement that a person subject to certain types of order of a court
must under treatment and comply with directions of a registered
medical practitioner or chartered psychologist (Criminal Justice Act
2003 s207).
mental impairment Mental Health Act 1983

This term is dropped under Mental Health Act 2007 s1(3)(a).
Although a person has sufficient mental impairment under the Act,
that person does not necessarily come within the scope of Disability
Discrimination Act 2005 (McDougall v Richmond Adult Community
College [2007]).
mental impairment This is defined differently under Disability Discrimination Act 1995
s68 and Sch 1 para 1(1) as “an impairment resulting from or consisting
of a mental illness only if the illness is a clinically well-recognised
illness”.
mental incapacity Lack of mental capacity as shown by an inability of a person to

manage their own affairs because of some mental illness or injury or
similar.
MEP Member of the European Parliament.
Mer Merivale’s Reports, law reports of Chancery from 1815 to 1817.
mercantile agent “A mercantile agent having in the customary course of his business as
such agent authority either to sell goods or to consign goods for the
purpose of sale, or to buy goods, or to raise money on the security of
goods” (Factors Act 1889 s1(1)).
mercantile law Law which relates to commerce.
mercantile marine The commercial ships that belong to a country.
merchandise inventory American term for stock of finished goods.
merchant (1) Person who buys and sells for business reasons.
(2) In banking, a business which accepts credit cards.
merchant bank Bank which deals with companies rather than individuals. They
particularly deal with funding new issues of shares.
mere equity Right relating to property that is lesser than an equitable right or legal
right. It only affects parties to a transaction. An example is the right to
amend a document.
merge Come together to make one.
merger (1) Process of combining two businesses into one.

An official definition is: “A business combination that results in the
creation of a new reporting entity formed from the combining parties, in
which the shareholders of the combining entities come together in a
partnership for the mutual sharing of the risks and benefits of the
combined entity, and in which no party to the combination in substance
obtains control over any other, or is otherwise seen to be dominant,
whether by virtue of the proportion of its shareholders’ rights in the
combined entity, the influence of its directors or otherwise” (FRS 6
para 2).
(2) Extinguishment of a lesser right over land when it comes into the
same ownership as a greater one, such as when a freeholder acquires a
leasehold interest.
merger arbitrage Investment prompted by mergers, take-overs and similar events.
merger relief Relief from company law rules on share premium account on a
merger, providing that one company acquires at least 90% of the shares
of the other.
These provisions are set out in Companies Act 2006 s612 onwards.
Mergers Directive EC Council Directive 90/434/EEC.

Its tax provisions are contained in Finance Act 2007 s110.
Provisions relating to capital gains tax are given in Taxation of
Chargeable Gains Act 1992 ss140E-140L.
merging companies For the purposes of venture capital trusts, this is defined in Income Tax
Act 2007 s323(1). This states that “there is a merger of two or more
companies (the merging companies) if —
(a) shares in one of the merging companies (“company A”) are
issued to members of the other merging company or companies, and
(b) the shares issued to members of the other merging company or,
in the case of each of the other merging companies, the shares issued to
members of that other company, are issued —
(i) in exchange for their shares in that other company, or
(ii) by way of consideration for a transfer to company A of the
whole or part of the business of that other company”.
Section 323(2) further states that “there is also a merger of two or
more companies (“the merging companies”) if —
(a) shares in a company (“company B”) that is not one of the
merging companies are issued to members of the merging companies,
and
(b) in the case of each of the merging companies, the shares issued
to members of that company are issued —
(i) in exchange for shares in that company, or
(ii) by way of consideration for a transfer to company B of the
whole or part of the business of that company”.
merit award Award added to pay which an employee has earned by merit.
MERV Minimum Efficiency Reporting Value.
Mervardeskatt (MOMS) Swedish: value added tax.
Mesher order “An order by the courts that a spouse holding an interest in the
matrimonial home should hold it on trust for a limited period, for
example until remarriage of the other spouse or death of the other
spouse or the 18th birthday of the youngest child of the marriage and
entitling the other spouse to occupy the home for the trust period”
(Trust manual 65365).
Where the home is the main residence, the usual main residence
relief is available for capital gains tax. The trust will usually be a
discretionary trust which may trigger inheritance tax charges. For this
reason, divorce settlements often seek to avoid Mesher orders.
mesne profits Money that a landlord may claim from a tenant who remains in
occupation after the tenancy has ended.
mess allowance Such a payment to a member of the armed forces may be exempt from
tax under Income Tax (Earnings and Pensions) Act 2003 s297.
messuage House with associated garden, outbuildings and orchard.
metadata General information about a document or other collection of data.

Under Freedom of Information Act 2000, all information provided
must include its metadata. This includes its author, version number,
reference number, security details and instructions for disposal.
metallic thread Security feature in Bank of England notes.

The thread looks like silver dashes normally but becomes a solid
line when held up to the light. It is sometimes called Stardust.
Methuselah Champagne bottle with a capacity of eight standard bottles.
methylated spirits Name for liquid which largely comprises ethyl alcohol but which is
made unsafe to drink and therefore avoids the excise duty for alcoholic
liquor.
Methylated spirits contain methyl alcohol, which is a poison rather
than an intoxicant. It may also contain purple dye.
Customs has three classes of methylated spirits:
● Mineralised Methylated Spirits (MMS);
● Industrial Methylated Spirits (IMS);
● Denatured Ethanol B (DEB).
From 1 July 2005, the general Customs term is denatured alcohol.
The relevant law is Alcoholic Liquor Duties Act 1979 s75. It is an
offence to use such spirits as a beverage or medicine (ibid s80).
methylation The manufacture of methylated spirits.
metric carat Unit of weight equal to one fifth of a gram.
metric system System of units or length, mass etc that use the base ten, as against old
imperial system that used historic measures of other multiples. The
exception is time, which uses traditional measures of 60 seconds to a
minute, 24 hours to a day etc.
The main metric units are the metre for length, litre for capacity
and gram for weight. Other units include the ampere for electric
current, Kelvin for temperature, candela for luminosity, radian for plane
angle and steradian for solid angles.
The units are sometimes prefixed to indicate multiples and
submultiples, such as “kilometre” for 1000 metres. The full list is:
Prefix Abbreviation Multiple
yocto y 10-24
zepto z 10-21
atto a 10-18
femto f 10-15
pico p 10-12 (one trillionth)

nano n 10-9 (one billionth)
micro µ (Greek letter) 10-6 (one millionth)
milli m 10-3 (one thousandth)
centi c 10-2 (one hundredth)
deci d 10-1 (one tenth)
deca da (or dk) 101 (ten)
hecto h 102 (one hundred)
kilo k 103 (one thousand)
mega M 106 (one million)
giga G 109 (one billion)
tera T 1012 (one trillion)
peta P 1015
exa E 1018
zetta Z 1021
yotta Y 1024.
Under Measurement Regulations 1995, almost all measures must be
expressed in metric units with some exceptions for pints and miles. It
was intended to make it illegal to quote imperial units, even for
comparison purposes, from 1 January 2010, but that law was repealed
in 2007.
mezzanine finance Finance provided to a company after it has started up.
mezzanine level Stage of a company’s development before it goes public.
MFET Ltd Company set up by Department of Health to make payments to

individuals who have contracted AIDS through contaminated blood or
blood products used in the NHS. The name comes from the Macfarlane
and Eileen Trusts that formerly provided this funding.
Such payments are disregarded when determining payments of
income tax as set out in SI 2010 No 673.
MGO Marked Gas Oil, a heavy oil of which not more than 50% by volume
distils at a temperature not exceeding 240 degrees C and of which more
than 50% by volume distils at a temperature not exceeding 340 degrees
C. Marked gas oil also contains the prescribed markers quinizarin and
Solvent Red 24 to allow for rebated off-road use.
MGP Manufactured gas plant.
MI Myocardial infarction. Common abbreviation for sick notes (HMRC

leaflet E14).
MIA Missing in action
MIB (1) Merchandise in Baggage.

(2) Motor Insurers Bureau.
MICEX Stock exchange, recognised by HMRC from 5 January 2011.

Michaelmas English quarter day of 29 September. It is the Western Church’s

festival of the feast of St Michael and All Angels.
Michaelmas is also used for the law term from September to
December.
microeconomics Study of economics at the lowest level, such of individual people or

businesses.
“The study of how economic resources are allocated in and between
parts of the economy, including individuals and households” (HM
Treasury glossary).
micro-entity EU accounting term for a business which meets at least two of these
criteria:
• balance sheet total of €250,000
• net turnover of €500,000
• maximum of ten employees.
Such businesses are to be grant relief from some business requirements.
This includes producing a simplified profit and loss account amd profit
and loss account. The announcement was made on 31 May 2011. The
UK government says it supports this proposed directive.
microfiche Plastic slide on which text is printed in a size that requires a special
reader to be legible. Company records were widely available on
microfiche before computers replaced them.
For VAT, microfiches are generally standard-rated and do not
benefit from the zero-rating for books (VAT notice 701/10).
microgeneration Facilities for a home to produce electricity. The law is Energy Act 2004
s82.
Use for the generation of electricity of any plant which uses
apparatus that derives its energy solely from renewable sources such
as sunshine or wind (Climate Change and Sustainable Energy Act 2006
s26(1)). The maximum amount for electricity is 50 kilowatts and for
heat 45 kilowatts thermal.
microlettering Very small letters that look like dots to the naked eye.
This is used as a security feature on modern Bank of England notes.
Using a strong lens, the dots under the Queen’s portrait appear as letters
and numbers indicating the note’s value.
Micropal star ratings Rating system for unit trusts.

Micropal continually monitor all UK unit trusts, measuring the
balance between each fund's performance over three years against the
up or down movements in its unit price (i.e. the volatility). They then
award stars on a scale from 0 to 5, with the highest number going to
those funds with the lowest volatility - and therefore risk - in relation to
their overall performance. Five stars is the top award.
microperforation Perforation which is so small that it is not noticed by the naked eye.
Middle Temple One of the four Inns of Court. It dates from 1404.
Midland Bank One of the Big Four banks in the UK, which is now part of HSBC
under which name it trades.
The bank was formed in Birmingham in 1836 as the Birmingham
and Midland Bank. By 1918 it was the largest bank in the world.
It adopted the name Midland Bank in 1923. Its logo was a griffin in
a circle of dots. It also styled itself “the listening bank”.
The bank expanded through acquisitions including Montagu Trust
in 1967, and travel agents Thomas Cook in 1972 (which it sold in
1992).
The Hongkong and Shanghai Banking Corporation acquired a
14.9% holding of Midland in 1987, and bought out the bank in 1992.
Midland Bank was renamed HSBC bank in 1999.
Midland Marine Leading court case on the matching of foreign exchange assets and
liabilities.
Its full citation is Pattison v Marine Midland Ltd [1983] 57TC219.
It is discussed in the Inspectors’ Manual at BIM39520-39521.
Midsummer Day The English quarter day of 24 June, marking the summer solstice
when nights are their shortest.
MiFID European Parliament and Council Directive on markets in financial

instruments, as given effect in UK by SI 2004 No 39.
migrant settlement Trust that moves from being UK-resident. The capital gains tax
implications are given in Taxation of Chargeable Gains Act 1992 s89.
migrating trustee Trustee who ceases to be UK-resident. The capital gains tax
implications are given in Taxation of Chargeable Gains Act 1992 s82.
MIIC Motor Insurers’ Information Centre.
mile Imperial unit of length, still widely used in transport. It equals 1,760
yards, 5,280 feet or 1609.344 metres.
mileage allowance payments

“Amounts, other than passenger payments (see section 223), paid to
an employee for expenses related to the employee’s use of such a
vehicle for business travel (see section 236(1))”
mileage allowance relief Amount per mile that may be paid to an employee for use of a personal
vehicle on the employer’s business, without triggering a liability to
income tax or national insurance (Income Tax (Earnings and Pensions)
Act 2003 s251).
If the employer reimburses at a lower rate, the employee may claim
income tax relief on the shortfall.
milk quota Producer’s right to sell a fixed amount of milk each year. It is an asset
its own right, independent of the milk itself. As such it can be part of a
farmer’s estate for inheritance tax purposes.
Since 1994, it has been possible for milk quota to be sold separately
from the land to which it relates, and for quota to be temporarily
transferred between farmers.
These quotas are issued under European Union rules from 2 April
1984 to restrain excessive milk production. The quota is now allocated
by the Rural Payments Agency.
The current EU regulations are 3950/92 given effect in the UK by
the Dairy Produce Quota Regulations 1994.
The VAT position is that the sale of a quota without land is a
standard-rated supply. The sale of quota with land is usually regarded
as part of the supply of the land. The matter is discussed in the
Inspectors’ Manual at VFOOD9950.
milk retention Part of the income earned by a dairy farmer who chose to sell his milk
through Dairy Farmers of Britain. These retentions are part of the
taxable income of the farmers even though many could not be realised
when Dairy Farmers went into receivership on 3 June 2009.
mill A mill is specifically included in the definition of industrial building.
millennium bug The set of problems occurring (or expected to occur) on January 1,
2000 and other related dates caused by short-sighted programming that
coded the years with only 2 digits. The problem largely did not
materialise. The extent to which such expenditure was capital or
revenue is discussed in the Inspectors’ Manual at BIM35865.
milliard Old term which meant one thousand million or 109. This term is now
conveyed by the word billion.
millième One thousandth of an Egyptian pound, currency of Egypt.
miner A coal miner may receive free coal or an allowance in lieu of coal. Such
coal or allowance is tax free under Income Tax (Earnings and Pensions)
Act 2003 s306.
Mineral Oil Reliefs Centre (MORC)

Office of HMRC that allows rebated oil to be used in vehicles on
payment of the duty.
mineral royalties Payment to someone for extracting or winning minerals. Its tax
provision is given in Income and Corporation Taxes Act 1988 s122(5).
mineral water For VAT, this is standard-rated. It does not benefit from the zero-rating
for water.
mineralised methylated spirits (MMS)

Mixture of 90 parts by volume of spirits, 9.5 parts wood naphtha and
0.5 parts crude pyridine. To each 1000 litres of this is added: 3.75 litres
of mineral naphtha (petroleum oil) and 1.5 grams of methyl violet.

It is one of the three classes of methylated spirits on which
alcoholic liquor duty is not payable.
minibus Vehicle with between nine and 16 passenger seats. It is category D1 on

the driving licence. A driver must generally be 21 to obtain a licence for
this category.
A person who has a driving licence for cars obtained before 1
January 1997 may drive a minibus provided it has no more than 17
seats (including the driver’s) and is being driven other than for hire or
reward.
For the purposes of works transport service, a minibus is “a
vehicle constructed or adapted for the carriage of passengers which has
a seating capacity of 9, 10 or 11” (Income Tax (Earnings and Pensions)
Act 2003 s242(3)).
minibus permit Permission which allows certain organisations to operate minibuses for
hire or reward without having to obtain a passenger carrying vehicle
licence.
mini-ISA Term used between 6 April 1999 and 5 April 2008 to distinguish
individual savings accounts between maxi-ISAs and mini-ISAs.
An investor was allowed to invest in only one maxi-ISA but could
invest in more than one mini-ISA which had a separate cash limit.
minimum Lowest amount possible.
minimum age Age at or above which a person is allowed to do something, such as buy
alcohol or drive a car.
minimum amount Term used in relation to personal allowances (Income and Corporation
Taxes Act 1988 s256B).
minimum contribution Amounts of class 1 national insurance that HMRC refunds to an

approved personal pension scheme. The provisions are contained in
Pension Schemes Act 1993 from s43.
Minimum Efficiency Reporting Value (MERV)

Building measurement scale devised in 1987 to rate the effectiveness of
air filters.
minimum guarantee The lowest amount of total income received by a person receiving a tax
credit.
minimum guaranteed future value (MGFV)

The minimum sum a seller of domestic goods, particularly cars, is
prepared to pay after a set number of years to buy back the item under a
personal contract purchase.
minimum lending rate (MLR)

The lowest rate charged by the Bank of England to lending houses. It is
now replaced by the base rate.
minimum reserves The smallest amount of reserves an organisation may hold, particularly
a bank.
minimum share capital The smallest legal amount of share capital that a limited company may
have.
There is no lower limit for a private company. For a public
company, the lower limit is £50,000 or the equivalent in euros
(Companies Act 2006 s763(1)). This amount is known as the
authorised minimum.
minimum wage Lowest wage which may be lawfully paid. This is the national
minimum wage unless an organisation sets a higher minimum.
mining concession Right to dig a mine on a piece of land.
mini-skirt Short skirt which stops above the knee. They became fashionable from
around 1965 to 1973, and have been fashionable several times since.
When first introduced, the government lost purchase tax because
shorter skirts came within the scope of untaxed children’s clothing.
This led to a change in the law defining children’s clothing according to
other measurements and how they are held out for sale. These
provisions are still included in current VAT law (VAT notice 714).
Short skirts are also seen as a fanciful measure of the economy
known as the hemline theory.
ministerial office In relation to allowable expenses, is defined in Income Tax (Earnings

and Pensions) Act 2003 s295(3).
ministerial trust Special trust which requires just normal business skills to administer.
minister of religion Tax exemption for their accommodation is given in Income Tax
(Earnings and Pensions) Act 2003 from s290.
The matter is discussed in the Inspectors’ Manual at EIM60001.
minor Person under 18. Note that child means a person under 14.
A minor has a limited capacity to contract. This is generally
restricted to buying necessities at a fair price. A minor cannot own
property, so there are some tax-advantaged forms of trust that may be
used. These include 18-25 trusts and trusts for a bereaved minor.
A trust for a minor may be voidable during minority or soon after
the 18th birthday.
Minors are generally liable to pay tax on the same basis as adults.
There is an exception for national insurance where the tax is not paid
for those under 16.
Income from a parent is regarded as the child’s only up to £100 a
year. Thereafter, the income is regarded as still being the parent’s.
Minors qualify for a lower rate of national minimum wage.
minor benefits Benefit that the Treasury may by Order exempt from being treated as a
benefit in kind when provided to an employee (Income Tax (Earnings
and Pensions) Act 2003 s210). Orders have been made for certain
meals, bus and minibus services, pensions advice and recreational
facilities, among others.
minority Less than half the votes or people.
minority interest The amount of a subsidiary not owned by the holding company.
minority interest in a subsidiary undertaking

“The interest in a subsidiary undertaking included in the consolidation
that is attributable to the shares held by or on behalf of persons other
than the parent undertaking and its subsidiary undertakings” (FRS 2
para 13).
minutes Formal record of a meeting.

Company law requires that minutes are kept of board meetings and
general meetings.
The minutes are generally regarded as provisional until accepted as
true and fair record by the next meeting of the same group.
MIRAS Mortgage Interest Relief at Source. Although this is no longer

available, tax relief may still be claimed for some old years under
Income and Corporation Taxes Act 1988 s369.
mirror legislation When text in one Act is reproduced in the same or similar terms in
another Act.
There are many examples where text in an income tax Act is
mirrored in a corporation tax Act.
misappropriation Illegal use of money by someone who had access.
miscellaneous transactions
Term used in Corporation Tax Act 2010 s91 in relation to income and
losses, particularly from offshore activities.
mischief rule One of the methods for interpreting an Act of Parliament. (The other
main methods are the golden rule and literal rule.)
The mischief rule asks for what purpose the Act was passed. It was
expressed in Hayden’s case [1543]. It is now only followed when
words are ambiguous.
In the leading tax case Pepper v Hart [1992], the House of Lords
held that the courts could look to Hansard, the record of Parliamentary
proceedings to see the purpose of the Act. In the case Madeley v HMRC
SpC 547 [2006], the Special Commissioners made reference to an
Inland Revenue press release.
misdeclaration Incorrect information on any declaration made to HMRC, particularly

relating to VAT.
misdemeanour Old term for a less serious crime, as against a felony.

In the UK, this distinction was abolished by Criminal Law Act 1967
s1. The distinction remains in US law.
misleading statement Statement which is expressed to make a person believe that it says
something which is untrue.
It is a criminal offence for a director to make a false statement in the
directors’ report, directors’ remuneration report or summary financial
statement (Companies Act 2006 s463(1)).
mismanage Manage badly.
misrepresentation State of fact which the person making it knows or believes it to be

untrue and which is intended to induce a person to make a contract. An
obvious example is any false statement about the quality of goods
offered for sale.
Misrepresentation is covered by Misrepresentation Act and by
common law. It usually allows the injured party to claim damages. In
some circumstances, it can allow the contract to be rescinded.
Misrepresentation may be fraudulent misrepresentation,
negligent misrepresentation or innocent misrepresentation. The
legal consequences are different.
misrepresentation State of fact which the person making it knows or believes it to be

untrue and which is intended to induce a person to make a contract. An
obvious example is any false statement about the quality of goods
offered for sale.
Misrepresentation is covered by Misrepresentation Act and by
common law. It usually allows the injured party to claim damages. In
some circumstances, it can allow the contract to be rescinded.
Misrepresentation may be fraudulent misrepresentation,
negligent misrepresentation or innocent misrepresentation. The
legal consequences are different.
Missing in Action (MIA) Scheme of relief from estate duty suffered by those killed in the war.
Details are given in the entry for killed in action. These provisions can
still be relevant if claiming transferable nil rate band for inheritance
tax where the first death was before 12 March 1952.
This relief is quite separate from the inheritance tax relief for those
killed on active service.
missing trader fraud (MTIC)

Simple but widespread fraud whereby goods are brought into the UK
free of VAT. They are then sold subject to VAT at the standard rate.
Input tax is claimed by the importer from HMRC. The importer then
absconds. It is also known as missing trader-intra community fraud.
The UK is, by far, the worst affected EU state.
Goods most commonly used are high value low bulk items such as
mobile phones and computer chips. Reverse charging was introduced
for these items from 1 June 2007 to counter fraud.
Sometimes innocent companies are duped into participating by
offers of easy profits. HMRC may refuse to pay the input tax if there is
evidence that the company knew or should reasonably have known that
it was fraudulent. HMRC routinely suspends payment of input tax while
this is investigated. MTIC cases are frequently litigated, usually with
HMRC winning. Guidance is provided by the Bond House decision.
Variations include carousel fraud which is where the same goods
are passed from business to business in difference EU member states.
Another variation is to run a dirty chain of MTIC fraud with a
clean chain of legitimate trade. The input tax from the dirty chain is
offset against the output tax from the clean chain. As this does not
trigger a VAT repayment, it is less likely to be immediately challenged.
This is known as contra-trading.
missing trade intra-community fraud (MTIC)

Full name of missing trade fraud.
mission statement Precise description of what an organisation does. It asks the question
“why?” rather than “how?”
mistake In civil cases at common law, a mistake may be relieved in three

situations:
• to recover money paid under a mistake of fact;
• in deceit, to recover money paid by fraudulent
misrepresentation;
• as a defence under contract law where the nature of the
mistake was such that a contract could not have been formed.
In equity, a wider range of mistakes may be relieved. To claim such
relief it is generally necessary for each party to be informed of the mind
of the other.
In written documents, obvious mistakes are usually corrected by the
court.
In tax, relief for a mistake may be claimed under Taxes
Management Act 1970 s33. Current practice is to regard all mistakes as
arising from carelessness, and therefore to impose a penalty if any tax
has not been paid by the due date.
misunderstanding A type of extra-statutory concession applied in exceptional

circumstances. It allows tax relief, where VAT is undercharged by a
registered business on account of a bona fide misunderstanding.
Conditions apply.
misuse Wrong use.
misused stamp For stamp duty, when too much duty has been paid. It is treated as a s
spoiled stamp.
Mitchell v Finney Lock Seeds

Landmark court case of 1983 on exclusion clauses. It was the last case
heard by Lord Denning. It broadly established that an exclusion clause
is only enforceable if reasonable.
mitigation The reduction of a penalty by HM Customs and Excise or the VAT and
Duties Tribunal. Applies only to certain types of civil penalties. For
example, misdeclaration penalty and belated notification penalty.
mitigation When a charge is reduced, such as a tax penalty where the taxpayer has
been co-operative.
Mitt joint In gambling, a club where the house cheats the players, or one that turns
a blind eye to cheating in general.
mittimus Latin: we send. A name for a writ.
mixed economy Mixture of state control and capitalism. Most British political parties
support the mixed economy though they may disagree on where the
boundaries should be.
mixed expenditure Expenditure that contains two or more elements that are treated
differently for tax. The expression is used in the Inspectors’ Manual at
BIM24460 in relation to expenditure related to mutual trading which is
not allowable against the taxable profits of non-mutual trading.
mixed holding A single holding including shares that qualify for share loss relief and
shares that do not. The tax treatment is addressed in Corporation Tax
Act 2010 s76.
mixed loan Loan which has more than purpose that qualifies for relief against
income tax. The types of loan are set out in Income Tax Act 2007
s383(2) and the provisions for mixed loans are set out in ibid s386.
mixed question of fact and law

Court case where the jury establishes the facts, and the court determines
the legal consequences of those facts.
mixed supply For VAT, where a charge is made on a single inclusive price for a
number of separate supplies of goods or services. This is different from
a single supply of a mixture of goods or services, to which a single rate
of tax applies.
mixing beer “Mixing of beer from one brew with that from another and the mixing
of beers of different alcoholic strengths” (Customs notice 226).
There are certain restrictions for beer duty purposes, and special
record keeping requirements for calculating the duty.
MKO Marked kerosene.
MLA Member of the Legislative Assembly, of Northern Ireland.
MLAR Mortgage Lending and Administration Return, as required by the

MLC Meat and Livestock Commission - a trade organisation for the British
meat industry. The MLC was established by the Agriculture Act 1967.
It is a non-departmental public body and is partly funded by grants from
the UK Government and the EU.
MLRO Money laundering reporting officer.
MMC Monopolies and Mergers Commission.
MMS Mineralised methylated spirits.
mobile crane Vehicle which is used for high construction work. From 1 January 1999
it is classed as a large goods vehicle for driving licence purposes.
mobile phone Mobile telephone.
mobile telephone The provision of a mobile telephone to an employee is not a taxable

benefit (Income Tax (Earnings and Pensions) Act 2003 s319). This
section provides a definition.
mobo Motherboard in a computer.
MOD (1) Manufactured overseas dividend.

(2) Ministry of Defence
model articles Draft articles of association which a company may use, with whatever
modifications it wishes. These are produced by under the authority of
If a company fails to adopt its own articles, the model articles apply
to it by default (Companies Act 2006 s20).
modelling (1) In mathematics, producing a mathematical representation of a

situation so that it can be examined when subject to various
circumstances.
(2) In employment law, modelling agencies are exempt from some of
the restrictions that generally apply to employment agencies.
modest private use Term used in Income Tax (Earnings and Pensions) Act 2003 s238.
Modest private use of a heavy goods vehicle, as set out in the
section, is not a taxable benefit in kind.
modified PAYE Part of original PAYE scheme whereby the week 1 basis could be used
for two weeks and the cumulative code for the third week.
modus et conventio vicunt legem

Latin: custom and agreement overrule law.
This is the legal maxim that parties are free to contract what they
wish.
modus legem dat donationi

Latin: Agreement gives law to the gift.
This means that a transfer of land settles the conditions on which

the land is to be transferred.
modus operandi Latin: plan of working.
moiety One half.
MOMS Mervardeskatt, Swedish for “value added tax”.
monetarism (1) Accounting principle that the accounts only reflect items to which a
value in money terms may be ascribed.
(2) Economic principle that markets determine economic policy.
monetary Related to money or capable of being expressed as an amount of

money.
monetary assets Assets to which a monetary value can be ascribed.
monetary attributes Term used in FRS 18 para 6 in defining measurement bases. The term
basically means the value of an item in the accounts.
monetary base control The stock of cash that an economy has. i.e. the level of notes and coins.
The closest measure of the money supply that we have to this in the UK
is M0. Some Monetarists argued that the level of the money supply in
the economy could be controlled by strict control of the monetary base.
By tightly limiting the level of notes and coins available, financial
institutions would be unable to expand their assets too quickly. They
would have to be sure they had enough cash to operate. This process is
known as monetary base control.
monetary items Assets and liabilities to which a value in money can be ascribed.
monetary policy “The regulation of money supply and interest rates by a central bank,
such as the Bank of England, to achieve economic objectives” (HM
Treasury glossary).
Monetary Policy Committee (MPC)

Committee of nine people chaired by the Governor of the Bank of
England. It is independent of the government.
It meets monthly to set the level of interest rates in the economy.
They set interest rates according to the targets they have been set for
inflation. If they feel inflation is set to rise they may increase interest
rates and vice-versa.
money Means of exchange and store of value.

Within a defined area, money takes the form of currency which
may be regarded as legal tender.
Sometimes the word is used in a narrower sense, such as to means
banknotes and coins rather than sums in a bank account. The word can
also be used in a broader sense to mean wealth, including illiquid
assets.
money advice Professional or expert advice offered to a debtor in relationship to a

debt payment programme in Scotland (Debt Arrangement and
Attachment (Scotland) Act 2002 s3). A debtor may not enter such a
programme until he has received money advice.
money at call Money which a lender can demand at will.
money at call and short notice

Balance in an account to which the owner may have access immediately
or within 14 days.
money bill Public Bill in Parliament that the Speaker of the House of Commons
has certified contains only provisions dealing with finance and taxation
(Parliament Act 1911).
money broker Dealer operating in the interbank and foreign currency markets.
money earnings Term used in Income Tax (Earnings and Pensions) Act 2003 s18 in
relation to salaries and wages paid in money rather than in benefits in
kind.
money laundering Any process which is designed to take dirty money (such as from
crime) and make it look clean. It is a crime not to report suspicion of
money laundering.
Proceeds of Crime Act 2002 s340(11) extends this to include
attempts, conspiracy, incitement, aiding, abetting, counselling and
procuring of the offence.
money laundering Process of turning dirty money into clean money, such as taking
proceeds from drug trafficking or terrorism and making it appear as
coming from a legitimate source. There are strict laws designed to
counter laundering.
Money Laundering Use for assets derived from an illicit activity, such as drug trafficking.
money laundering offence

Offence under money laundering regulations. A full definition is given
under Proceeds of Crime Act 2002 s447(9).
money lender Person who lends money as a business by charging interest. Such a
business requires a licence under Consumer Credit Act 1974.
money lying idle Money which is not being used, such as by being employed in a
business or earning interest.
money machine Term used in Treasury management to describe something which is

guaranteed to produce profits. Even if such a money machine were
invented, it would quickly be killed off by investors flocking to it.
Money machine is often used to mean arbitrage.
money machine Device which supposedly produces money, such as printing notes from
plain paper, and sold to the gullible. They all work by hiding a real
bank note or coin in the mechanism.
money making Description of an activity which is undertaken to generate a profit.
money market Any market where money may be borrowed and lent, usually for a short
term.
money market fund Investment fund which invests only in money market activities.
money market instrument

Short-term investment which can easily be turned into cash.
money order Document which can be used for sending money through the post. It is
similar to a postal order. The service is offered by several companies.
money purchase Another name for a defined contribution pension scheme.
money purchase arrangement

An arrangement is a money purchase arrangement if, at that time, all
the benefits that may be provided to or in respect of the member under
the arrangement are cash balance or other money purchase benefits.
money purchase benefits Benefits provided under a pension scheme, the rate or amount of which
is calculated by reference to an amount available for the provision of
benefits to or in respect of the member (whether the amount so
available is calculated by reference to payments made under the scheme
by the member or any other person or employer on behalf of the
member, or any other factor).
money purchase scheme
Pension scheme where the pension is based on the value of the fund
accumulated. It is also known as a defined contribution scheme.
money rates Rates of interest for lenders or borrowers.
money service business (MSB)

Business which handles money, such as a bureau de change or third
party cheque clearer and is not covered by other provisions. From 1
June 2002, an MSB must register with HMRC under laws on money
laundering.
money’s worth Tax term used in Income Tax (Earnings and Pensions) Act 2003 s62(3)
to mean the taxable value of a benefit in kind.
moneys worth Something that is used as a substitute for money, such as when gold
bars or gilts are used to pay employees. For tax purposes, such items are
treated in the same manner as cash rather than as a benefit in kind. In
some contexts, such items are known as readily convertible assets.
The inspectors’ manual at EIM 00570 explains that the item must
be worth money to the employee or be capable of being turned into
money by the employee. For the latter, the manual says that the scope is
wider then selling the item; it includes rent or hire. So a company car
provided to an employee who is banned from driving is still a taxable
benefit in kind.
Monopolies and Mergers Commission (MMC)

Body entrusted with investigating possible monopolies, and with some
other functions such as control of newspapers. It was administered
under Fair Trading Act 1973.
On 1 April 1999, it was replaced by the Competition Commission.
monopoly Supply by one person, who is then a position to dictate prices in a

manner which may not be in the interests of competition. Under Fair
Trading Act 1973 ss6-7, a monopoly existed when a supplier controlled
at least 25% of the market.
Control by two people is called duopoly, control by a small number
of people is oligopsoly.
Where one, two or a small number people control the markets or
demand, the terms are respectively monopsony, duopsony and
oligopsony.
monopsony When a market has one customer.
monosodium glutamate Flavour enhancer. When supplied alone, it is standard-rated for VAT. It
is not zero-rated as food because it has no nutritional value (VAT notice
701/14).
Month A period ending on the last Sunday of a calendar month or any other
period HM Customs and Excise may specify.
month “Means calendar month” (Interpretation Act 1978 Sch 1). This
provision has applied since 1850.
month One of 12 periods into which a year is divided.

The calendar month normally comprises these months in order with
the number of days as stated:
January 31 May 31 September 30
February 28 or 29 June 30 October 31
March 31 July 31 November 30
April 30 August 31 December 31
February normally has 28 days, except in leap years when it has 29.
In law, month “means calendar month” (Interpretation Act 1978
Sch 1). This provision has applied since 1850.
For certain Customs purposes, a month is a period ending on the
last Sunday of a calendar month or any other period HMRC may
specify.
In legislation, the term “month” usually means a calendar month
unless otherwise stated. A time limit of one month therefore means by
one less than the day in the following month. This is known as the
corresponding day rule. This has been demonstrated in cases such as
re O’Connor Utilities Ltd [2009] EWHC 3704 (Admin) where it was
held that the time of one limit specified in Customs and Excise
Management Act 1979 Sch 3 para 3 from 4 November 2008 expired on
3 December 2008. The consequence was that a notice served on 4
December 2008 was held to be late.
A tax month is from the 6th day of a calendar month to the 5th day
of the next calendar month.
A lunar month is a period of four weeks.
month end End of a calendar month, when accounts may have to be drawn up.
Monthly assessment (1642-c1700) A direct tax combining elements of subsidy, forced loan and
ship money. It was originally imposed weekly, but changed to monthly
in 1645. Amounts for each county were fixed by 1649. This tax
established commissioners, and regional officers called surveyors.
Appeals commissioners were established in 1659. It laid the foundation
for an administrative tax system still in evidence today.
monthly return Return, particularly of VAT, which is made once a month.
moonlighter Person who works in a second job. The term comes from those who
worked at night.
In tax, the term means a person whose second job is not known to
the tax authorities, as against a ghost who is not known to them at all.
Moore Ind App Moore’s Indian Appeals, law reports of Privy Council hearings from
1836 to 1872.
mopping up Description of any provision that deals with matters not otherwise
addressed. Schedule D Case VI was seen as a mopping up provision for
income tax not assessable under other schedules or cases.
Mor Morison’s Decisions, series of law reports from 1540 to 1808.
moral A precondition for a legally binding contract is that it must be for a

moral purpose.
This has been used to void contracts relating to gambling or to
sexual immorality.
moral hazards Risks which derive from trying new and innovative ideas, particularly
by a bank.
The term was coined in 2007 by the Bank of England to describe
the problems encountered by Northern Rock in borrowing heavily from
lenders affected by the sub-prime lending crisis. The Bank of
England’s view was that it should not provide more support against
moral hazards as this could encourage banks to take greater risks.
morality tax Term used from the 1960s to 1980s to describe the tax disadvantages
that a couple could suffer by marrying compared with living together.
moral obligation When a person is obliged to do something because of the requirements

of honourable conduct rather than because of any legal requirement.
A moral obligation may arise when a person has promised

something but not completed the legal formalities.
moral rights In relation to copyright, means the right of a creator of the work to be
identified as such, and not to have his work subjected to derogatory
treatment (Copyright Designs and Patents Act 1988 s77).
moral test Test used by the Irish court in Hayes v Duggan [1926] where the Irish
Supreme Court held that profits from illegal fruit machines could not be
taxed because it was immoral for the state to profit from what it forbids.
This view was specifically disavowed in the UK, particularly in Mann v
Nash [1932]. The matter is discussed in the Inspectors’ Manual at
BIM22008.
moratorium Temporary cessation of payments while a company in difficulty

attempts to sort itself out.
This is now permitted in UK insolvency law.
In the USA, this is permitted under chapter 11.
moratorium period In relation to recovering proceeds of crime, means a period of 31 days

from when a nominated officer is given notice that consent for certain
acts has been refused (Proceeds of Crime Act 2002 s336(8)).
moratur in lege Latin: he tarries in the law. A demurrer.
morbidity Relative incidence of disease and accidents in a well-defined class or

classes of persons.
morbidity table Actuarial statistics showing the frequency and duration of a sickness.
MORC Mineral Oils Relief Centre, a department of HM Revenue and

Customs.
more than 50% test Requirement in tax law that replacement expenditure for an integral
feature qualifies for a capital allowance, provided that more than 50%
of the asset is replaced within a 12-month period.
more than one document Principle of stamp duty that, where a transaction is given effect by two
or more documents, only one document needs to be stamped.
more than one transaction

Principle of stamp duty that a document must be stamped more than
once if it gives effect to more than one stampable transaction (Stamp
Act 1891 s3(2)).
Morgan Crucible v Hill Samuel

Court case of 1990 on professional liability which held that a liability
can be owed to a third party when documents are prepared knowing that
the third party will rely on them.
mortality tables Tables indicating how long people are expected to live according to
their sex and current age. They are also known as actuarial tables or
life expectancy tables.
mortgage A secured loan used to buy a fixed asset, most commonly a domestic
home.
There are three main types of mortgage:
A repayment mortgage - you pay off the loan by instalments of capital
and interest so that after the agreed period you have paid off all the loan
An interest only mortgage - you pay only interest on your mortgage and
make other arrangements to repay the capital, like an endowment
policy.
A flexible mortgage allows you to make overpayments and take
payment holidays.
mortgage bond Certificate which established the existence of a mortgage.
mortgage debenture Debenture which can be recovered by selling the borrower’s property.
mortgage deed The legal document that is signed to say that the lender has a legal
charge over the borrower’s property.
mortgage famine Period when it is difficult to obtain a mortgage.
mortgage indemnity Insurance taken out by a mortgagor to protect the lender should the
property be repossessed and sold for less than the outstanding
mortgage. It should be noted that this indemnity protects the lender and
not the borrower.
mortgage indemnity fee Addition to a mortgage indemnity premium when the sum borrowed
exceeds the ratio for a normal mortgage indemnity. The fee is, in effect,
a second premium.
mortgage indemnity policy

Insurance policy of mortgage indemnity that protects the lender.
mortgage indemnity premium (MIP)

Insurance that covers the lender in case your property is repossessed
and the lender cannot get the money.
mortgage interest relief Tax relief that was available for ordinary mortgages before 6 April
2000.
Originally, relief was given for any amount. This was capped at
£25,000 from 6 April 1974, increased to £30,000 from 6 April 1983.
From 1 August 1988, the limit applied to the property and not to the
borrower. From 6 April 1983, relief was given at source at Mortgage
Interest Relief at Source (MIRAS).
Tax relief was restricted to basic rate from 6 April 1991, to 20%
from 6 April 1994, to 15% from 6 April 1995, and to 10% from 6 April
1998 until abolition.
Mortgage Interest Relief at Source (MIRAS)

The mortgage lender will reduce the monthly payment required from a
borrower by the amount of tax relief applicable to the interest on the
loan. The lender can claim the balance from the Inland Revenue.
mortgage rescue Scheme which allows a mortgagor to sell all or some of his interest in
the home and continue living there as a tenant.
mortgagee Person to whom a property is mortgaged, such as a bank or building

society.
mortgagor Person who mortgages a property, the owner or occupier.
Morton’s fork Test to which there is only one answer.

The term comes from John Morton (c1420-1500) who was
Archbishop of Canterbury and a minister of Henry VII. He raised taxes
by using the argument called a fork. If people appeared rich, they could
afford to pay. If people appeared poor, they were obviously concealing
their wealth and could afford to pay.
mortuum vadium Mortgage.
motherboard (mobo) The main circuit board of a computer that contains the slots and sockets
which interfaces, drives and peripheral devices plug into. On most PCs,
memory can be directly added to the motherboard and you may also be
able to upgrade to a faster PC by replacing the CPU. Motherboard is
sometimes abbreviated as mob0.
motivation Matching an employee’s objectives to the employer’s to maximise

productivity. It is one of the main functions of human resources
management.
motor insurance Insurance of a car, its driver and passengers, and against third parties
who may be injured or killed by the car.
Since 1930, it is a legal requirement that a car may only be driven if
third party insurance is in place (Road Traffic Act 1988 s143(1)(a) as
amended). In practice, almost all third party insurance sold exceeds the
statutory minimum.
This insures against death and injury to third parties and passengers,
and against damage to third party property. There is no statutory
requirement to insure the car itself, the driver or third parties or their
property on private land.
Third party, fire and theft is the common name for a policy that
also insures the car against theft (but not usually against vandalism) and
against fire whether caused by arson or from mechanical failure.
Comprehensive insurance also adds damage to the vehicle caused
by the driver, and other damage to the vehicle from third parties.
Some policies add further cover for legal expenses, a courtesy car,
protection should the car be damaged by an uninsured driver and
breakdown cover.
A disc evidencing vehicle excise duty (road tax) for the year cannot
be bought unless there is evidence that the vehicle has at least the
statutory insurance.
When an employer pays the insurance for a company car, there is no
additional taxable benefit in kind.
Motor Insurers’ Bureau (MIB)

The Motor Insurers' Bureau is a body funded by motor insurance
companies, which deals with claims for injury compensation when the
driver at fault is not insured, or cannot be traced.
motor spirit duty Tax which was first imposed in 1909 at 3d per gallon (on the current
price of 6d).
This tax is now known as hydrocarbon oil duty.
motor tricycle Vehicle with three wheels and an engine. A driving licence is needed to
drive it, though if it has an unladen weight of up to 550 kilograms, it is
regarded as a light vehicle.
motorhome Vehicle which has facilities for everyday living, such as facilities for
eating and washing. Provided the vehicle is not more than 12 metres in
length and 2.55 metres wide, it may be driven by the holder of an
ordinary car driving licence provided the weight limit is not exceeded.
motorcycle Two-wheeled vehicle with an engine. For the purposes of driving

licence, they are divided into four categories:
● mopeds (up to 50cc)
● light motorcycles (up to 125cc and 11kW)
● motorcycles to 25kW;
● larger motorcycles.
These may be driven by qualified drivers who must be 16, 17, 17 and
21 respectively.
MOU Memorandum of Understanding
movable property Chattels and other possessions which can be moved, as against land and
buildings.
movables Furniture, books and other goods that may be easily transported.
moveables tax Tax charged in 1489 and 1490. It complemented the direct subsidy. It
was levied on moveable items other than personal possessions and sea
ships. Individuals were assessed in the place “where they were most
conversant”.
moving walkway For capital allowance purposes, is treated as an integral feature, which
mowing machine Road vehicle which is category K on the driving licence.
MP Member of Parliament, for whom there are some special tax

provisions.
MR Master of the Rolls, senior judge who presides at Court of Appeal.
MS Multiple sclerosis. Common abbreviation for sick notes (HMRC leaflet

E14).
M&S Maule and Selwyn’s Reports, law reports of King’s Bench Division
from 1813 to 1817.
[This is also the abbreviation for the company Marks and Spencer.]
MSB Money service business.
MSCI World Index of world share prices produced by Morgan Stanley Capital
International. It draws share prices from 24 countries.
MSC Managed service company.
MSC provider “A person who carried on a business of providing or facilitating the use
of companies to provide the services of individuals” (Income Tax
(Earnings and Pensions) Act 2003 s61B(1)(b)”.
MSF Most Similar Force(s), military term.
MSP Member of the Scottish Parliament.
MT Country prefix code for Malta.
MtCO2 Million tons of carbon dioxide.
MTF Multilateral trading facility.
MTIC Missing trade fraud, also known as missing trader intra-community

fraud.
MTM Mark to market.
mudaraba Limited partnership and profit sharing under Sharia law.

[This is sometimes spelled mudharabah.]
mufawada Bill of exchange, joint venture partnership under Sharia law.
mulier Latin: wife.
multicurrency Description of an account which is recorded in more than one currency.
multilateral Between more than one person, business or country.
Multilateral Debt Relief Initiative

Programme launched in 2005 to provide further debt relief to countries
whose loans have become unpayable. Its main provision is to write off
100% of loans owed to the World Bank, IMF and African Development
Bank.
multilateral development bank

“An international financial institution having as one of its objects
economic development, either generally or in any region of the world”
(International Development Act 2002 s11(2)).
multilateral netting Financial method of aggregating sums from different sources into one
currency. It is used by banks operating in different countries.
multimedia The use of a combination of text, pictures, audio, and or video to

communicate information.
multimodal operation Transport operations where a container or trailer is conveyed by two or

more means of transport during a single journey, e.g. by air and then by
road.
multiple bet Bet where any winnings became the stake for another bet. This process
is known as the accumulator.
multiple birth Where more than one baby is born at a time, such as twins or triplets.
Only one amount of statutory maternity pay is payable for a multiple
birth. There is a separate entitlement to child benefit for each child.
multiple occupancy When premises are occupied by several unrelated people. The term is
not used when a house is occupied by people who are related to each
other.
Under English planning law, an ordinary residence is not in
multiple occupancy unless it has more than five people who are not
related.
multiple ownership When an item of property is owned by more than one person.
multiple promoter A promoter with more than one set of premises.
multiple site commonhold A commonhold which involves two ore more parcels of land, which
need not be contiguous (Commonhold and Leasehold Reform Act 2002
s57(1)).
multiple step income statement

US term for a statement of income and expenditure that provides details
of how the totals and sub-totals have been determined.
multiple windows In computing, when the user has more than one window open at a time.
multiplication Mathematical process of determining a product achieving by adding a

number so many times. The process is indicated by the multiplication
sign x. So 6 x 7 = 42 means that if you add 6 to itself seven times, you
will have 42.
multiplier In economics, a concept developed by Keynes. It says that any increase

in injections into the economy (investment, government expenditure or
exports) would lead to a proportionally bigger increase in National
Income. This is because the extra spending would have knock-on
effects creating in turn even greater spending. The size of the multiplier
depends on the level of leakages.
Multipurpose Internet Mail Extensions (MIME)

The standard used for attaching files to e-mail messages.
This allows audio, video, graphics, word-processed documents and
similar to be attached to be sent by e-mail.
multi-skilling Increase of the skills base of the workforce, by training existing staff in
new functions.
multi-tasking Skill of doing more than one task. The term can apply to multi-skilled
staff or to computer software.
multi-tasking Ability to do more than one thing at a time, particularly in relation to

computer operations, and in terms of functions which an employee can
perform.
multi-tier adviser Financial adviser who advises on the financial products of a few
companies, but not on all companies.
mum Form of black beer which is exempt from alcoholic liquor duty
municipal bond In USA, a bond issued by a local authority.
municipal waste “(a) Waste from households, and

(b) other waste that, because of its nature or composition, is similar to
waste from households” (Waste and Emissions Trading Act 2003
s21(3)).
Munro Inheritance tax case that helps to determine whether a gift is a gift with
reservation. In particular, the case established the principle of shearing
where an outright gift may be made of less than the whole property.
The case was a Privy Council case on stamp duty in Australia, but is
still regarded as a valid precedent. The full name is Munro v
Commissioners of Stamp Duties (New South Wales) [1934].
murabahah Cost-plus form of financial transaction that is an acceptable form of

Islamic finance.
mushroom kits For VAT, these are specifically zero-rated as being an item to prepare
food for human consumption. A reusable container for this purpose is
standard-rated.
mushroom-shaped stopper
Stopper shaped like a mushroom, and usually attached to a bottle with
wire to keep in the internal pressure of its contents.
If cider is sold in a bottle with such a stopper, it attracts a higher
rate of cider duty (Alcoholic Liquor Duties Act 1979 s62A(3)).
music For VAT, sheet music is zero-rated under Value Added Tax Act 1994
Sch 8 Group 3 whether in bound books or loose. The music may be in
any notation, handwritten or printed. However the commission of a
work from a composer is not zero-rated. Further details are given in
VAT notice 701/10.
Music rolls and blank manuscript paper are standard-rated.
Recorded music is generally standard-rated however provided (eg
vinyl records, CDs, downloads).
music roll Roll of paper or cards containing perforations, designed to operate a

fairground organ, player piano or similar musical instrument.
VAT notice 701/10 states that these are standard-rated for VAT and
do not benefit from the zero-rating of Value Added Tax Act 1994 Sch 8
Group 3 that covers printed music.
mutatis mutandis Latin: the necessary changes being made.
mutual A commercial organisation owned by its members (as opposed to being

owned by shareholders). Examples are building societies and some life
insurance companies.
Mutual Assistance Recovery Directive (MARD)

EU Council Directive 2008/55/EC that requires EU member states to
assist each other in recovering tax. This is given effect in English law
by Finance Act 2002 s134 and Sch 39.
mutual debt When two people each owe money to the other.
mutual exclusivity Tax concept that income that is assessed under one source (or Schedule)
cannot be assessed under another.
The principle is set out in BIM14005 and in cases such as Edon v
Ross [1961].
mutual insurance company

Mutual company that provides insurance.
mutual organisation A body which is owned by its members and not by shareholders.
Examples of mutual organisations include building societies, clubs and
similar, professional bodies and mutual insurance companies.
There is a tax implication that a person cannot trade with himself,
so transactions within a mutual organisation may not be taxable.
As mutual organisations do not have shareholders, they do not need
to earn a profit and in effect provide that profit to members by means
of a reduced charge for services.
mutual wills When two people each make wills leaving their estate to the other.
MV Motor Vehicle.
M&W Meeson & Welsby’s Reports, law reports of Exchequer from 1836 to
1847.
Mwst Abbreviation of Mehrwertsteuer, German for “value added tax”.
Mycel great gyld A form of Danegeld imposed in 1083 and 1084 by William I.
My & Cr Mylne & Craig’s Reports, law reports of Chancery from 1835 to 1841.
Myl & K Mylne & Keen’s Reports, law reports of Chancery from 1832 to 1835.
N
NAD No abnormality detected. Common abbreviation for sick notes (HMRC
leaflet E14).
naked Description of any financial arrangement which is not hedged or

otherwise protected.
nakfa Currency of Eritrea.
nag box Box that appears unprompted on a computer screen to remind you to do
something, such as to upgrade your software.
nama al-mal Capital accumulation under Islamic finance.
Name Member of Lloyd’s insurance market who underwrites insurance

policies.
name The words by which a person, company, business or other item is

generally known.
For individuals, the name is broadly whatever a person wishes to be
called. This usually comprises Christian name and surname.
For company directors, the name means a person’s Christian name
and surname (Companies Act 2006 s163(2)) with exceptions for titled
people. The register of directors must also give any former name.
name and shame Popular name given to the provisions of Finance Act 2009 s94. This
section allows HMRC to publish the names of those who attempt to
cheat HMRC of at least £25,000 tax from 1 April 2010.
named sums Tax charged between 1514 and 1516. A sum of £160,000 was ordered
to be raised each year according to wealth, but with no precise formula.
The sum raised each year was less than £50,000.
NAO National Audit Office.
NAO-approved services Services approved by the National Audit Office in accordance with
Budget Responsibility and National Audit Act 2011 Sch 3.
napoleon French gold bullion coin issued in 19th and early 20th centuries.
NAREIT National Association of Real Estate Investment Trusts, a US body.
narration Brief text which appears in the journal and other books of account to
provide such details of the transaction as are not obvious from the
information otherwise recorded.
narrative reporting Reporting on a business expressed in text rather than figures.

Narrative reporting for companies is required by Companies Act
2006 s417, with additional requirements from 1 October 2007. The
Accounting Standards Board has produced a Reporting Statement
on narrative accounting.
NAS National Advice Service - the HM Customs and Excise network of

advice centres that exist to provide advice and assistance on Customs,
Excise and VAT matters. The local rate national telephone number is
0845 010 9000.
NASDAQ National Association of Securities Dealers Automated Quotation

System. It is pronouned as nazz-dak.
NASDAQ is the largest electronic securities trading system in the
world. It started on 8 February 1971 as the first electronic exchange. It
is now owned and operated by NASDAQ OMX Group which is listed
on NASDAQ.
nation Strictly speaking, a nation is a political area whereas a country is a

geographical area. However this distinction is not always made.
National Anti-Sweating League

Organisation formed in 1906 from union campaigns. The League
campaigned against sweated labour in the clothing industry. They were
succeeded in the Trade Boards Act 1909.
National Assembly for Wales

Proper name for the devolved authority, generally known as the Welsh
Assembly.
National Audit Office (NAO)

Independent of Government the National Audit Office (NAO) audit the
accounts of all government departments and agencies as well as a wide
range of other public bodies. They report to Parliament on the economy,
efficiency and effectiveness with which government bodies have used
public money.
Its functions are now governed by Budget Responsibility and
National Audit Act 2011 s20 and Sch 2.
national bank Bank which operates throughout the whole country and not just in part
of the country.
In the USA, the term means a bank which is part of the Federal
Reserve system, as against a state bank.
national broadcasting company

In relation to capital allowances on shared transmission facilities,
“means a body corporate engaged in the broadcasting for general
reception by means of wireless telegraphy of radio or television
services or both on a national basis” (Finance Act 1991 s78(8)).
National Consumer Council

Body established under Consumers, Estate Agents and Redress Act
2007 s1 to represent interests of consumers.
National Debt “The total amount of debt owed by a government, raised through
borrowing from individuals and institutions. It is the sum total of all
previously incurred deficits that have not been paid” (HM Treasury
glossary).
national defence contribution

An additional tax on profits used to pay for war. It was charged
between 1937 and 1946 when it was replaced by profits tax which
operated on the same rules despite the name change until its abolition in
1966.
national expenditure Total level of expenditure in an economy. It will also be equivalent to

the total level of output and the total level of income in the economy.
National Export System (NES)

An electronic system of managing declarations to Customs officers at
HMRC. It was introduced in 2003 as New Export System, and was
renamed in 2007. Large businesses may deal with NES direct. Smaller
businesses may use export agents to do so. Details are given in Customs
notice 276.
national flood and coastal erosion risk management strategy

Strategy that must be developed by the Environment Agency under
Flood and Water Management Act 2010 s7. The Agency may issue
levies under s17 to local flood authorities.
National Grid National network of cables and pylons established from 1926 to provide
everyone in the country with access to electricity at a standard voltage.
National Health Service (NHS)

Publicly funded health care service in UK which was created on 5 July
1948 under National Health Service Act 1946. Since formation, it has
provided about 92% of all health care in the UK with only 8% from
private health care.
The NHS is funded from general taxation with a contribution from

the national insurance fund.
National Identity Register

Register of individuals (Identity Cards Act 2006 s1).
National Identity Scheme Commissioner

Person appointed as such under Identity Cards Act 2006 s22.
National Import Reliefs Unit (NIRU)

Customs office located in Enniskillen. It is the office mainly
responsible for administering a wide range of import duty reliefs.
national income Value of all sales of goods and services from businesses in a country.
national income accounts Economic statistics for a country over a defined period.
national insurance A charge on earnings which funds social security.

Strictly, this is not a tax but a compulsory insurance premium. Since
its introduction in 1911 it has evolved from an insurance premium into
a tax, though some elements of the insurance principle remain.
The system was recast and made more generous in 1948, since
when it has progressively lost the character of insurance (premium is
related to amount of cover and likelihood of claiming) and assumed the
nature of a second income tax.
National insurance is now collected under six classes, known as 1,
1A, 1B, 2, 3 and 4. Most national insurance is collected as class 1.
Class 1 national insurance is paid by employees and their employers
on earnings which lie between an employment tribunal and upper
earnings limit. Class 1A and 1B are paid by employers only (not by
employees) on the value of benefits provided to employees. Classes 2
and 4 are paid by the self-employed. Class 3 is a voluntary contribution
payable by anyone who needs to maintain their contribution record.
National Insurance Commissioners

Officers responsible for administering national insurance. They were
renamed Social Security Commissioners from 23 May 1980 (Social
Security Act 1980 s12).
national insurance contributions

Payments of national insurance, particularly class 1, 2 or 3. These
payments contribution to a person’s entitlement to certain state benefits.
national insurance holiday

Short-term form of government relief by excusing an employer from
paying employers' national insurance. There have been two such
schemes.
There is a regional secondary contributions holiday under
National Insurance Contributions Act 2011 s4. The main elements of
this scheme are:
• it runs for three years from 6 September 2010 with
retrospective effect from 23 June 2010

• it applies for defined regions, which are the whole UK except
Greater London, and East Region and South East Region England
• relief is given for new businesses (in any form) established
from 23 June 2010. It does not include newly acquired businesses
• the scheme is voluntary
• it only affects employers' national insurance. It does not
affect any other tax, or employee’s national insurance
• it provides relief for newly engaged employees for their first
12 months
• it applies for the first ten employees, and for employees first
engaged within one year of engaging the first employee
• the relief is restricted to the employee’s first year and to a
maximum of £5,000 per employee
• there are some restrictions in accordance with rules on EU
state aid.
The previous scheme ran from 6 April 1996 to 31 March 1999 and
provided exemption from employers' national insurance for one year for
each employee who had been unemployed for two years or had been
working as a carer. This was introduced by SI 1996 No 195.
national insurance number

A number which denotes a particular individual. Once allocated it stays
with that individual for life, even if the individual changes sex. A
national insurance number is only revoked or amended to correct an
error or to remove a temporary number.
The number is in the form of two letters, six digits and a final letter.
These are usually written in pairs in the form AB 12 34 56 C. The first
two letters indicate where the number was issued. The final letter has no
purpose. Originally it indicated where national insurance returns were
to be sent.
national insurance surcharge (NIS)

A payroll tax imposed by the government between 1977 and 1985 when
it lost a parliamentary vote to increase income tax.
nationalisation “The act of bringing a privately owned asset such as a company or

property under state control” (HM Treasury glossary).
Documents in connection with nationalisation are exempt from
stamp duty (Finance Act 1946 s52).
National Land Fund Body established to acquire land for the state. It was originally set up in
1946 to acquire property to commemorate victory. It was replaced by
National Heritage Memorial Fund in 1980 which can acquire other
assets such as works of art and historic vehicles.
Under estate duty laws, a person could surrender property in lieu of
estate duty. Finance Act 1946 s50 required the National Land Fund to
reimburse Inland Revenue for such property accepted.
[This should be distinguished from the 19th century National Land
Company that was set up by Chartists for political purposes.]
National Lottery Participation in this is not regarded as gambling (Gambling Act 2005
s15).
national minimum wage (NMW)

The minimum hourly rate which an employer must legally pay a
worker. This term is wider than “employee” and includes agency
workers, seconded staff and....
The NMW was introduced from 1 April 1998 at a rate of £3.60 an
hour. It is now increased each year from 1 October.
NMW is paid at three rates:
● the standard rate;
● the reduced rate; and
● the rate for those aged 16 or 17,
The last of these was introduced from 1 October 2004.
A worker must be paid the NMW for a pay reference period. This
means that the total pay for such a period must be at least the NMW
multiplied by the number of hours. It is not a requirement that every
hour must be paid at the NMW; some may be paid at lower rate
provided sufficient is earned during other hours in the same period.
The NMW is determined on one of four basis of which time work is
by far the most common. These four bases are:
● time work;
● salaried-hours work;
● output work;
● unmeasured work.
national purpose Purpose considered of benefit to the country as a whole. A gift for such
purpose is exempt from inheritance tax (Inheritance Tax Act 1984 s25).
The scope of relevant bodies is set out in Sch 3 of this Act.
National Registration Service (NRS)

An HMRC registration service that process National Export System
(NES) authorisations and updates and maintains the electronic register
on authorised operators.
National Savings Part of the Treasury which sells investment, savings and deposit
products to the public to raise extra finance for the government. Before
1969, it was known as Post Office Savings Department.
The products are designed as safe investments for medium to long-
term vehicles and are sold at post offices.
National Savings and Investments

Part of the Exchequer which raises loans for the government in the form
of low value investments, such as National Savings certificates and
premium bonds.
National Savings Bank (NSB)

Savings scheme operated by the government as a means of generating
short-term loans for the government. It was formed in 1861. Its current
existence derives from National Savings Bank Act 1971 s1(1).
National Savings certificate (NSC)

Savings product issued by the National Savings Bank as a safe low
cost investment for ordinary citizens and as a means of raising funds for
the government. Typically they comprise either fixed interest or index-
linked investments for between two and five years.
National Savings Stock Register

Organisation run by the Department of National Savings which allows
ordinary investors to buy government bonds without using a
stockbroker.
National Tax Credits (NTC)

American term for a tax allowance that may be claimed in the USA for
construction work.
National Transit A procedure for moving goods under customs control when import or
export formalities are carried out away from the place of importation or
exportation, and the movement does not involve another European
Union Member State. Also known as UK Transit.
National Working Together Team (NWTT)

Body comprising representatives of HMRC and taxpayers which
discuss matters of mutual interest. It is part of the Working Together
activity which started in 1999.
Nativity of Christ Christian festival celebrated on 25 December, and more commonly

known as Christmas. It is also a quarter day and a bank holiday.
NATO North Atlantic Treaty Organisation. This is an alliance of 26 countries

in Europe and North America, including the United Kingdom
established in 1949 with the purpose of safeguarding the freedom and
security of all its members by political and military means.
natural gas Combustible gas which is found naturally in the earth, as against
producer gas which is created by a process.
Natural gas is primarily methane. It is found either in oilfields,
where it is known as associated gas, or in fields of its own, known as
non-associated gas.
Natural gas requires processing which removes other gases such as
ethane, propane and butane. As natural gas is tasteless and odourless,
small amounts of odorant are added to warn people of gas leaks and gas
escapes.
On its own, natural gas is normally harmless to the human body
unless it explodes or asphyxiates.
natural justice Rules and procedures that must be followed by any court, tribunal or
other body charged with adjudicating the rights of others. A decision
may be set aside if these rules or procedures have not been followed.
The principles of natural justice include a duty:
• to act fairly, in good faith, without bias, and in a judicial
temper;
• to give each party the opportunity to present his case, and to

correct anything in the other party’s case;
• not to hear one side of a case behind the back of the other
party;
• not be a judge in your own case, and to declare any personal
interest;
• to give everyone notice of what they are accused;
• to disclose all relevant documents to both parties.
The rules of natural justice must be followed in tax appeals
(Inspectors’ Manual at AH 3935).
natural law The law of nature, seen as the emanation of divine providence.
natural love and affection Term often used in legal gifts to close relations. They are said to be in
“consideration” for the natural love and affection of the donor to the
done.
Such donations are not usually tax deductible. Any business loans
between close relations may be examined to see if they are disallowed.
natural person Living human person as recognised by law. This is in distinction to a

legal person such as limited company, which is also recognised by law.
Natural Petroleum Gas (NPG)

Natural gas consists predominantly of methane. As a road fuel, it is
available as Compressed Natural Gas (CNG) - stored at high pressure
and ambient temperature, or as Liquefied Natural Gas (LNG) - stored at
lower pressure and low temperature.
natural rate of unemployment

Level of unemployment that still exists in the economy when the labour
market is in equilibrium. This will usually be equivalent to the level of
voluntary unemployment as at equilibrium everyone who wants a job
has got one. Friedman argued that the only way to reduce the natural
rate would be to use supply-side policies.
naturally occurring difference

In statistics, the selection of people for an experimental group because
they meet certain conditions, such as being above an age or below a
particular weight. People outside this scope become the control group.
nature and nurture Term commonly used for discussions on how far personality is
hereditary (nature) and how much is acquired (nurture).
nature conservation “The conservation of flora and fauna and geological and
physiographical features” (Commons Act 2006 s 61(1)).
nature of income condition

One of the conditions which must be met for an investment to qualify
for venture capital trust relief, as set out in Income Tax Act 2007
s274.
The condition is that the company’s income is derived wholly or

mainly from shares or other securities.
nautical mile Imperial measure of length used at sea. Since 1970, it has been
defined as 1,852 metres. Previously it was 1,853.184 metres which is
the equivalent of 6,080 feet or 1.056 miles.
NatWest One of the Big Four banks in UK. It has been owned by the Royal
Bank of Scotland since 2000.
The bank was formed in 1968 by the merger of the Westminster
Bank and National Provincial Bank, both of which were themselves
mergers of other banks. The oldest bank which formed part of NatWest
was Smiths of Nottingham, formed in 1650.
The company adopted a logo of three chevrons in a triangle to
indicate both the circulation of money, and the three banks which
formed the new bank. (The third was the District Bank which National
Provincial took over in 1962.)
NatWest three Name given to three officials from NatWest Bank: Gary Mulgrew,
David Bermingham and Giles Darby. They were extradited to the USA
on 18 July 2005 to face fraud charges relating to the collapse of Enron.
They were each jailed for 37 months on 22 February 2008.
The extradition was controversial and attracted much protest as it
was under a treaty which does not provide the usual safeguards of a first
hearing in a UK court before extradition.
NAV Net asset value.
NAVC National Approval and Verification Centre for Excise Warehousing.
navigation aid In computing, facilities provided on a website to assist the user to find
the desired page.
n’avoir ni croix ni pile French: I have neither cross nor pile.

This expression simply means I have no money. Cross and pile
denote coins.
Nazi National Socialist government of Germany from 1933 to 1945 lead by

Adolf Hitler.
Its invasion of Poland in 1939 triggered the start of the second
world war which ended with Germany’s defeat in 1945 at the hands of
Allied Forces led by Britain, USA and Russia. The party is particularly
remembered for the atrocities it inflicted on millions, particularly Jews.
Nazi compensation Compensation paid in respect of suffering at the hands of the Nazi
government of Germany (1933-1945).
Originally such payments were only tax-free if paid by the German
or Austrian government and were tax-free under their laws. The scope
was gradually widened, many decades after the event:
● 6 April 1986: the requirement for the payment to be exempt
under German or Austrian law was abolished;
● 8 May 2000: compensation paid on dormant accounts of

Holocaust victims became tax-free;
● 18 January 2001: compensation paid to owners or heirs of
assets seized by the Nazis became tax-free;
● 19 July 2005: tax exemption for payments to Holocaust
victims and their descendants under the Restore UK scheme.
nb Abbreviation for nota bene, Latin for note well.
NBV Net book value.
NC Nomenclature Committee.
NCCT Non-cooperating country or territory.
NCIS National Criminal Intelligence Service
NCS National Crime Squad.
ND North Dakota.
NDPB Non-Departmental Public Body
nearest relative Person who is most closely related to a person for whom an application
may be made under Mental Health Acts 1983 and 2007.
Such a person may be asked to act for the patient, in which case
they become the acting nearest relative.
Nebuchadnezzar Champagne bottle with a capacity of 20 standard bottles.
necessaries “Goods suitable to the condition of life of the... person concerned and to
his actual requirements at the time of the sale” (Sale of Goods Act 1979
s3(3)).
Under contract law, someone who otherwise lacks capacity to
contract may be required to pay a reasonable price for necessaries.
necessary expenses In relation to possible taxation of advances to an employee, “are

expenses (including travelling expenses) which —
(a) the employee is obliged to incur and pay as holder of the
employment, and
(b) are necessarily incurred in the performance of the duties of the
necessitas inducit privilegium quoad jura privata

Latin: necessity gives a privilege as to private rights.
necessitas non habet legem

Latin: necessity knows no law.
necessitas publica major est quam privata

Latin: public necessity is greater than private.
necessity Legal defence that what would otherwise be a criminal offence is

justified on ground of public policy. An example is smashing a window
to rescue a person in a house on fire, or shooting a dog which is
savaging sheep. Necessity cannot justify a private need, such as
shoplifting when hungry.
negative carry Situation where the cost of finance is greater than the return on an
investment.
negative cash flow Situation where an organisation’s expenditure is greater than its
income.
negative equity When the amount owed in a mortgage or other secured loan is less than
the value of the secured asset.
negative externalities Adverse consequences of a decision made by an organisation on those

outside that organisation. Examples include pollution, noise, and traffic
congestion.
negative goodwill When the amount paid to acquire a business is less than the value of net
assets.
negative taxation When the rate of taxation is such that a person receives a benefit rather
than make a payment.
Although negative taxation has often been considered as a means of
integrating taxation with social security, the problems of harmonising
two different objectives and establishing realistic rates have always led
to such plans being abandoned.
Despite this, there are some elements of negative taxation in the UK
system, particularly the enhanced research and development tax
credits and capital allowances which can exceed 100%.
negative yield curve Situation where the return on a long-term investment is less than that on
a short-term investment.
negativity Human resources term for the feeling and expression of unhappiness in
any area of life. In the workplace, it can lead to low productivity,
absenteeism and dissent.
Negativity usually arises from a loss of one of confidence, control
or community. Identifying the cause is the first step to addressing the
problem.
negatur Latin: it is denied.
negligence Carelessness that leads to loss or injury to someone else. To sue for
negligence it is necessary to prove:
• that a duty of care was owed and not excluded,
• that this duty of care was not met, and
• that loss was suffered as a consequence, and that loss was not too
remote from the carelessness.
negligent misrepresentation
Misrepresentation which falls between fraudulent misrepresentation
and innocent misrepresentation.
Historically, any misrepresentation which was not fraudulent was
considered innocent. This changed with the House of Lords’ decision in
Hedley Byrne v Heller [1964] which held that a more serious view
could be taken when there was a special relationship between the
parties. This applies when one party has an expert of specialist
knowledge and is careless in making statements before a contract.
Misrepresentation Act 1967 distinguishes between negligent and
wholly innocent misrepresentation. For the former it prescribes the
same penalty as for fraudulent misrepresentation unless the person can
show that he had reasonable grounds for believing and did believe his
representation.
negligible value Term used in capital gains tax to describe shares and other securities
whose value is close to zero. The securities are usually ones quoted on
the London Stock Exchange. HMRC periodically publish lists of such
securities with the dates on which each security was so declared.
A taxpayer may treat negligible value as being a disposal and
acquisition for zero, usually triggering a capital loss. The taxpayer
must make an election within two years of the end of the accounting
period in which the security was so declared.
The relevant law is Taxation of Chargeable Gains Act 1992 s24(2).
negotiable In banking, subject to negotiation.
negotiable instrument Document which can be exchange for cash, such as a promissory note
or bill of exchange.
negotiable paper Document whose ownership can be transferred for cash.
negotiation In banking, a procedure whereby a payee may assign a cheque to

someone else.
This is done by writing instructions and signing on bank. An
“account payee” cheque cannot be negotiated. For a bill of exchange
“when it is transferred from one person to another in such a manner as
to constitute the transferee the holder of the bill” (Bills of Exchange Act
1882 s31(1)).
Nelson’s Column Monument to Lord Nelson (1758-1805) erected in Trafalgar Square

It is widely used as an informal measure of height. It is 51.6 metres
(169 feet 3 inches) high. Before 2006, it was assumed to be about four
metres taller.
nem con Abbreviation of nemine contradicente, no-one saying otherwise. The

term is used when recording votes. It is not the same as unanimous as a
vote may be nem con when there are abstentions.
nem dis Abbreviation of nemine dissentiente, no-one dissenting.
nemine contradicente Latin: no-one saying otherwise.
nemine dissentiente Latin: no-one dissenting.
neminem oportet legibus esse sapientorum

Latin: it is not permitted to be wiser than the laws.
nemo admittendus est inhabilutare seipsum

Latin: nobody is permitted to incapacitate himself.
nemo agit in seipsum Latin: no-one can take proceedings against himself.
nemo contra factum suum proprium venire potest

Latin: no-one can go against his own deed.|
nemo dat qui non habet Latin: no-one gives who possesses not.
nemo debet bis puniri pro uno delicto

Latin: no-one should be punished twice for one fault.
nemo debet esse judex in propria causa

Latin: no-one can be a judge in his own cause.
nemo est haeres viventis Latin: no-one is the heir of anyone alive.
nemo ex proprio dolo consequitur actionem

Latin: no-one obtains a cause of action by his own fraud.
nemo ex suo delicto meliorem suam conditionem facere potest

Latin: no-one can improve his position by his own wrongdoing.
nemo plus juris ad alium transferre potest, quam pise haberet

Latin: the title of an assignee can be no better than that of the assignor.
nemo potest esse simul actor et judex

Latin: no-one can be at once suitor and judge.
nemo potest facere per alium, quod per se non potest

Latin: no-one can do through another what he cannot do himself.
nemo potest plus juris ad alium transferre quam ipse habet

Latin: no-one can transfer a greater right to another than he himself has.
nemo prohibitur pluribus densionibus uti

Latin: no-one is forbidden to use several defences.
nemo tenetur ad impossibile

Latin: no-one is required to do what is impossible.
nemo tenetur se ipsum accusare

Latin: no-one is bound to incriminate himself.
NES (1) National Export System.

(2) New Export System. This is the name by which the National Export
System was known until 2007.
nescit vox missa reverti Latin: a word published cannot be recalled (quote from Horace).
nest egg Money which is saved by an individual to provide additional funding if

needed and to augment income in retirement. Some money put aside to
encourage further saving. The term comes from the ancient practice of
putting an egg in a bird’s nest in the belief that this will encourage the
bird to lay more eggs.
nesting Colloquialism for staying in business premises or a home instead of

moving as would otherwise have been expected.
net A figure which excludes an element found in the gross equivalent.

Net profit is gross profit from which overheads have been excluded.
Net pay is gross pay from which income tax and national insurance has
been deducted. Net interest is gross interest from which tax has been
deducted.
NETA New Electricity Trading Arrangements.
net asset restriction Restriction on a public company paying a dividend when the value of
its net assets is less than the aggregate of its called-up share capital and
its undistributable reserves, or where payment of the divided would
so reduce the value of its net assets (Companies Act 2006 s831).
There is no such restriction for a private company.
net asset value per share Value of a company’s assets less liabilities, divided by the number of
issued ordinary shares.
net asset value (NAV) Value of a company’s assets less liabilities.
net assets Total assets minus total liabilities, as shown on the balance sheet.
For purposes of the net asset restriction, the term is defined as “the
aggregate of the company’s assets less the aggregate of its liabilities”
net book value (NBV) Book value of a fixed asset from which accumulated depreciation
has been subtracted.
Suppose an asset is acquired for £1,000 and is depreciated over five
years on the straight line method. After two years, the accumulated
depreciation is £400, so the net book value is £600.
The balance sheet records all fixed assets at their net book value.
net borrowings Amount an organisation has borrowed minus amounts of cash it holds.
net cash flow Difference between the amount of money coming in and money going
out of an organisation.
net cash investment In leasing, the amount invested in a lease at any moment in time.
net current assets Current assets of an organisation minus liabilities.
net current liabilities Current liabilities of an organisation minus its current assets.
net debt Borrowings of an entity, including sums owed on derivatives and under
finance leases (FRS 4).
net dividend Dividend excluding the tax credit.
net dividend per share Dividend per share after deductions for income tax.
net division approach Method of apportioning an estate when the residue of the estate is
shared between exempt and non-exempt beneficiaries (such as a
charity) so that they each receive the same net figure after deducting
inheritance tax. This can require double grossing up. The matter was
considered in the case re Ratcliffe [1999] STC 262.
Netherlands Member state of European Union, sometimes called Holland. For EU

purposes, the state excludes the Antilles.
net income For tax, total income less reliefs.
net interest Gross interest less tax.
net investment (1) In accounting, the effective equity stake an organisation has in a
foreign enterprise (SSAP 20).
(2) In economics, where companies buy new machinery or equipment.
It is this type of investment that actually adds to the capital stock of the
economy.
net liabilities Value of liabilities minus assets.
net liquid funds Organisation’s cash plus marketable investments, minus its short-term
borrowings.
net loss Loss after deducting overheads, expenses, depreciation and tax.
net margin Difference between sales price and total cost of an item, including its
share of overheads. The difference is usually expressed as a percentage,
but may be expressed as an amount.
net monthly account (NMA)

A form of settlement terms where the customer is supposed to pay the
invoice by the end of the month following that in which it was issued.
net off Process of deducting a liability from an asset and showing a single
figure as an asset or liability. For example if A owes B £6,000, and B
owes A £4,000, they could agree to net off these transactions and settle
them by A paying B £2,000.
For the accounting requirements see offset.
NETP Non-established taxable person.
net pay Pay after tax and national insurance has been deducted.
Further adjustments may be made to produce take-home pay.
net present value (NPV) Value of future cashflows reduced by factors to represent inflation. The
method of calculation is known as discounted cash flow.
net present value rule Treasury management rule of thumb which states that a person or
business should only invest in something which produces a net present
value, in other words where the return more than compensates for
opportunity cost of capital.
net price Price of an item which cannot be reduced by a discount.
net proceeds “The fair value of the consideration received on the issue of a capital
instrument after deduction of issue costs” (FRS 4 para 11).
net profit Turnover minus cost of sales and expenses (or overheads).
Alternatively net profit may be defined as gross profit minus expenses.
Net profit is further distinguished as net profit before tax and net
profit after tax.
net profit after tax Net profit from which income tax or corporation tax has been
deducted.
net profit before tax Net profit before income tax or corporation tax has been deducted.
net profit ratio Ratio of an organisation’s net profit to its net sales.
This ratio may be compared with organisation’s of similar size and
activity to see which are the most efficient.
net realisable value Proceeds of selling an item, less the costs of selling.
net receipts Amount of money received after deductions for the cost of collection.
net relevant earnings (NRE)

A definition of pensionable income once used in determining the
maximum contributions to a retirement annuity or personal pension
scheme that qualify for tax relief. It was defined in Income and
Corporation Taxes Act 1988 s646.
net residual value (NRV) Expected proceeds from disposing of an asset at the end of its life, less
the cost of disposing of it. Disposal may be by sale or salvage.
If an asset has an NRV, depreciation is calculated on the difference
between acquisition cost and NRV. For example, a press cost £1,000
and is expected to be disposed of for £100 after five years. The
depreciation charge for the five years is £900. On the straight line basis,
that is £180 per year.
net return Return on an investment after tax and any expenses.
net salary Salary after deduction of tax, national insurance and other permitted
deductions.
net sales Value of sales less returns from customers, discounts, commission and
similar expenses of sales.
net spending The cost of providing a service after allowing for specific grants and
other income from fees and charges (i.e. not including Council Tax and
money from the Government).
net taxable earnings (NTE)

Total of taxable earnings less deductions. This is expressed in the
formula TE – DE in Income Tax (Earnings and Pensions) Act 2003
s11(1).
net taxable specific income (NTSI)

Taxable specific income less specific deductions from that income.
This is expressed in the formula TSI – DSI in Income Tax (Earnings
netting Traders approved for duty deferment must also be approved to set off
drawback and certain other repayments of excise duty against the duty
due from them under the deferment arrangements. This set-off
procedure is known as netting.
netting off process where expenditure is deducted from matching income, such as
showing only the profit from magazine sales rather than separate
figures for magazine sales and magazine costs. In general, figures
should not be netted off.
net turnover Income from turnover or sales, after discounts have been subtracted,
and excluding VAT.
net working capital Another term for net current assets.
network Two or more computers connected together to share resources.
net worth How much a person or organisation is worth. It represents how much
they own minus how much they owe.
net yield Profit from investments less tax, expressed as a percentage of the value
of the investments.
neutral One of the five requirements for accounts to meet the requirement for
reliability. This in turn is one of the four requirements for accounting
Accounts are neutral if they are free from deliberate or systematic
bias, such as presenting the accounts to resist a takeover bid or to assist
in raising finance. In practice, it can be difficult to differentiate between
deliberate bias and undue optimism.
neutral citation Citation for law reports that is given by the courts themselves and not
by the publishers of law reports. These citations were introduced in
2001 for the House of Lords (now Supreme Court), Court of Appeal
and Privy Council. They were extended to the High Court in 2002.
Such cases can be accessed on the bailii website free.
Nevada corporation Corporation incorporated in the US state of Nevada. It is regarded as

the main corporate haven of the USA after Delaware. It is particularly
popular with businesses whose headquarters are in California.
Nevada corporations are favoured by privately-owned corporations,
as its laws give them much freedom of action and the courts are very
reluctant to lift the corporate veil. In the period from 1987-2007, only
one such case has succeeded, and that involved fraud by the
management.
new accessory In the context of taxing company cars, a replacement accessory.

Provision of a new accessory does not increase the taxable benefit of
the car if it is no superior to the old accessory. If it is superior, the
whole cost of the accessory is added to the list price for calculating the
taxable benefit (Income Tax (Earnings and Pensions) Act 2003 s131).
new adult Term used by Passport Office for a person applying for their first
passport since reaching the age of 16.
new annuity In relation to the taxation of general annuity businesses, “means any
annuity, so far as paid under a contract made by an insurance company
in an accounting period beginning on or after 1st January 1992 and so
far as referable to the company’s basic life assurance and general
annuity business” (Income and Corporation Taxes Act 1988 s437(1C)).
new area In relation to relocation expenses, is defined in Income Tax (Earnings

newborn child Child born alive, or stillborn after 24 weeks of pregnancy. Ordinary
statutory paternity pay may be claimed for such a child (Social
Security Contributions and Benefits Act 1992 s171ZA(5)).
new business Commercial activity that did not previously exist. Sometimes short-
term tax reliefs are provided for a new business.
In relation to the national insurance holiday provided in 2010,
new business is defined in National Insurance Contributions Act 2011
s5. It excludes a business started by the same person within six months
of discontinuing an old business in the same activities.
Newco Term sometimes used in tax cases to mean a new company that has a
similar name to an old company (called Oldco), such as in a takeover or
restructuring.
new code Superannuation fund that was originally approved before 1970 and
which has been re-approved as a registered pension scheme from 6
April 2006.
new consideration Payment or other consideration for a normal commercial loan. The
term is used in Corporation Tax Act 2010 s162(1).
New Deal Government scheme introduced in 1998 to assist people back into work.
It became nationwide for all age groups from June 1998 having being
more restricted previously.
The scheme provides tax-free payments to participants.
new duties In relation to relocation expenses, the term is defined in Income Tax
New Electricity Trading Arrangements (NETA)

The VAT implications are discussed in VAT notice 701/19.
New Export System Electronic system for disclosing export details to Customs officers at
HMRC. It was renamed National Export System in 2007.
new-for-old Insurance cover for property or equipment where an item lost or

destroyed is replaced by the equivalent new item without deduction for
age or wear and tear of the old item and regardless of price inflation.
new issue Issue of shares which creates additional capital for a business, unlike a
bonus issue.
new issues department Department of a bank which deals with issues of new shares.
new means of transport (NMT)

VAT term for some types of ships, aircraft and motorised land vehicles
for the transport of passengers or goods which, when bought new in one
member state for removal to another, can be bought VAT free.
new media Digital media such as CD-Rom, websites, broadcast e-mail and web
casting.
new name Term used by Passport Office for the first passport to be issued to a
person since they changed their name.
new oil Oil after it has been charged under Hydrocarbon Oil Duties Act 1979
s6, as oil of one description becomes oil of a different description as a
result of approved mixing in a pipeline with other oil which has been
charged with duty.
new or expectant mother Term used in health and safety regulations for a female employee who:
● is pregnant;
● is breastfeeding; or
● has given birth in the last six months.
The employer must make an assessment of how employment conditions
affect such an employee.
new pence The divisions of a pound from when the UK switched to decimal
currency on 15 February 1971. There are 100 new pence to the pound,
as against 240 old pence in the pre-decimal system.
The word “new” was officially dropped in 1982.
news agency Body which disseminates news.

In particular it refers to bodies authorised by the Financial Services
Authority to make announcements about listed companies.
Until 1 April 2002, the only authorised news agency was RNS, run
by London Stock Exchange. From 2 April 2002, other authorised
news agencies are Business Wire Regulatory Disclosure, Newslink
Financial, PimsWire and PR Newswire Disclosure.
news feature In marketing, a special story or article in a print publication or

broadcast program that goes in detail about concepts and ideas of
specific market interest
Newsom v Robertson Leading case on the disallowance of travel expenses to a place of work.
The full citation is Newsom v Robertson [1952] 33TC452. The case is
Newslink Financial News agency. From 2 April 2002, it is one of five news agencies
authorised by Financial Services Authority to make announcements
about listed companies.
newspaper advertisements
These were zero-rated for VAT before 1 May 1985. They are now
standard-rated.
newspapers For VAT, a publication “issued at least once a week in a continuous

series under the same title” (VAT notice 701/10). They must contain a
substantial amount of news and be national, international or local.
A newspaper is zero-rated under Value Added Tax Act 1994 Sch 8
Group 3.
newspaper trust Tax-advantaged trust established by a newspaper publisher of holding

company and similar in operation and tax treatment to an employee
trust.
new shares Term used in tax law and elsewhere to mean a share which replaces an
existing share in a company reconstruction.
New York Stock Exchange (NYSE)

The main stock exchange of USA, situated in Wall Street in New York.
It was founded on 17 May 1792, and located to its present premises
on 22 April 1903. These have subsequently been expanded.
next annual return Term used in Companies Act 2006 s410(3) to mean the return after the
current one. The term is used when the directors have used alternative
compliance with regard to not producing an excessively long list of
related undertakings. Such a list must be produced in the next annual
return.
next of kin Nearest blood relative. This is reckoned in degrees, so from parent to
child (or vice versa) is one degree, to a grandparent or grandson is two
degrees.
Under Statute of Distribution 1671, an intestate’s estate was
distribited to next of kin. This was repealed in 1925.
ngultrum Unit of currency in Bhutan, comprising 100 chetrum.

Indian currency is also legal tender in Bhutan.
NHS (1) National health service

(2) Nugatory health expenditure (in armed forces).
NHS foundation trust “A public benefit corporation which is authorised... to provide goods
and services for the purposes of the health service in England” (Health
and Social Care (Community Health and Standards) Act 2003 s1).
NHS hospital trust Form of NHS trust which looks after National Health Service hospitals
for a defined area. In England there are 290 NHS hospital trusts looking
after 1600 hospitals.
NHS trust Organisation in the National Health Service which oversees health care
in a defined area or in a defined speciality for an area. The commonest
forms are primary care trusts (PCTs) and NHS hospital trusts. There
are other types of NHS trust for areas such as the ambulance service
and mental health care.
NI (1) National insurance

(2) Northern Ireland.
(3) Citation for Northern Ireland law reports, published from 1925.
NIC National insurance contribution.
NIC&EO National insurance Contributions and Employer Office, part of HMRC

based in Newcastle.
NIC settlement return An arrangement to pay national insurance in respect of tax equalised
employees from overseas. This is known as an Appendix 7A
arrangement.
niche marketing Process of concentrating resources and efforts on one particular

segment of the market.
Nicotania Genus of tobacco plants. Tobacco duty is payable on the cured leaves
of any plant in this genus, and on any product designed to imitate such
leaves.
NIDAC National Import Duty Adjustment Centre - is based at Custom House,

Salford, M5 2ZZ. This replaced Lytham Sub-Office in 1996 and deals
with Guarantees (both Individual and Accounts) and carries out the
final adjustment for duties paid on deposit.
NIF Note issuance facility.
night For Customs purposes “means the period between 11pm and 5am”
night safe Safe in the outside wall of a bank in which customers may deposit their
takings.
nihil Latin: nothing; no goods.
Nikkei Most widely used Japanese share index as published in its newspaper
Nihon Keizai Shimbun since 7 September 1950. It measures Japanese
share prices of the 225 leading companies.
Nikko Leading Japanese company dealing in securities.
nil band Slice of estate that is excluded from inheritance tax. The amount was
set at £325,000 from 6 April 2010. If the transferor has inherited from a
former spouse or civil partner, the nil band may be increased by up to
100% under the transfer of unused nil-band provisions.
Inheritance Tax Act 1984 s8 requires the nil band to be indexed
unless Parliament decides otherwise, which it has done frequently.
nil cash benefit Term used in Income Tax (Earnings and Pensions) Act 2003 s151 when
an employee is not assessed to income tax on the value of road fuel
provided for a company car because either:
• the car may only be used for business, or
• the employee is required to refund the cost of fuel used for
private journeys.
nil paid shares Shares for which the shareholders have yet to make any payment.
nil-rate band maximum Term used in Inheritance Tax Act 1984 s8A(7) to mean the maximum
amount by which the nil band may be increased under the transfer of
unused nil-band provisions. The maximum is 100% of the band
applicable on the transferor’s death.
nil return Any return which reports an amount of zero for the period.
nine-eleven The term now widely used for the terrorist attack on 11 September 2001
when two aeroplanes were flown into the twin towers of the World
Trade Center in New York.
Coincidentally, nine-eleven is also the emergency telephone number
in USA, the equivalent to 999 in the UK.
ninja loan Colloquialism for a loan given to a person with no income or assets and
who is therefore unlikely ever to repay it. Such loans are made by
companies desperate to increase their lending figures.
NIRU National Import Reliefs Unit.
nisi Latin: unless.
nisi prius Latin: unless before. A term once used in writs for a sheriff to bring an
accused to Westminster on a certain day unless a judge holds unless
before that day, a judge holds an assize in that county.
NL Country prefix code for Netherlands.
NLJ New Law Journal. This is used as a citation for law reports from 1965.
NMT New Means of Transport.
no claims bonus Discount offered on an insurance premium because no claims have

been made on it for years. Such a bonus can be as much as 60%.
no extended tie in Term in a mortgage which means that, at the end of a fixed capped or
discounted rate period, the borrower does not have to pay an early
redemption charge to pay off the mortgage early.
no gain/no loss basis For capital gains tax, a disposal which is regarded as creating neither a
taxable gain nor an allowable loss. The law is Taxation of Chargeable
Gains Act 1992 s56.
NOK Next of kin.
no-limit Gambling term for a game that allows a player to bet all his chips at any
betting round.
no linked loans requirement

Requirement under tax law that an investor must not have a linked loan
with a company in whose shares he wishes to claim EIS relief (Income
Tax Act 2007 s164).
nolle prosequi Acknowledgment of undertaking by the prosecution not to proceed with

a case.
nolumus leges Angliae mutari

Latin: we will not have the laws of England changed.
nominal Description of an amount which is very small.
nominal account Account for recording expenses of a particular type.
nominal asset Another name for a fictitious asset.
nominal interest rate Rate of interest which is quoted and often used in calculations, but
which needs to be converted to an APR or equivalent to make it
comparable.
nominal ledger Where debit and credit balances are recorded from books of prime
entry, and from where the trial balance is extracted.
nominal owner Person who is identified as the owner of an asset, but who may hold it
as a trustee or steward for someone else, known as the beneficial
owner.
nominal scale In statistics, another name for a categorical scale.
nominal share capital Total value of the shares a company is allowed to issue under its
memorandum of association.
nominal trust fund Trust which contains a small amount of funds solely for the purpose of
establishing the trust.
The law does not allow a trust to be created unless it owns property.
The amount is often £10. The trust awaits the receipt of the substantive
trust fund.
Nominal trust funds are often encountered in inheritance tax where
they are created to receive funds on a settlor’s death.
nominal value Amount stated on a share certificate as the value of the share when first
issued.
nominal value The value which must be ascribed to each share of a UK company
nominated asset Asset that can be transferred on death to a beneficiary nominated by the
deceased. Such a transfer takes effect outside the will or intestacy
provisions.
The assets are mainly small savings products, such as National
Savings bank accounts, National Savings certificates and deposits with
friendly societies.
The value of such assets are still part of the deceased’s estate and
may therefore affect the amount of inheritance tax payable.
nominated date For pensions, term used in a money purchase arrangement other than a
cash balance arrangement.
It is such date as the individual or scheme administrator nominates,
or in the case of any other arrangement, such date as the scheme
administrator nominates.
nominated partner Another term for representative partner. It is the member of a

partnership who is responsible for submitting details of the
partnership’s profits and capital gains to the tax authorities.
nominator Person who nominates someone, particularly for a statutory

nomination.
nominee (1) Person who is nominated, particularly someone nominated to

represent a person in financial negotiations.
In this context, the term can refer to the trustee in a bare trust,
where the settlor wishes to hide his or her identity.
The capital gains tax position is given in Taxation of Chargeable
Gains Act 1992 s60.
(2) Name given to insolvency practitioner at the start of the IVA
process.
nominee account Account held in one person’s name but for the benefit of another,
known as the beneficial owner.
nominee shareholder Person who is registered as the holder of shares but who may hold them
for the benefit of another.
Under Taxes Management Act 1970 s26, a shareholder may be
required by HMRC to state whether he is the beneficial owner of the
shares.
nominis umbra Latin: shadow of a name. Term used for a one-man company.
Nomura Leading Japanese company dealing in securities.
non-acceptance (1) Refusal to accept something. Sale of Goods Act 1979 s50 explains
the consequence of non-acceptance of goods.
(2) When a holder of a bill of exchange is not accepted for payment
when presented within the customary time.
The non-acceptance of a bill constitutes its being dishonoured
(Bills of Exchange Act 1882 s43(1)). Such dishonouring creates an
immediate right of recourse to the drawer of the bill (s43(2)).
non-active partner Tax tem for a sleeping partner.

There are restrictions on how much tax loss relief such a partner
may claim in respect of his share of a partnership loss (Income Tax Act
2007 s103B).
member state A country which is part of the European Union (EU).
non-adjusting event Post-balance sheet event that relates to circumstances that did not exist
at the date of the balance sheet (SSAP 17).
non-advanced education Education at a level below the highest level. The term is relevant for
claiming social security benefits. For example, child benefit may be
claimable for a young person in non-advanced education but is not
claimable for a young person in advanced education.
Non-advanced education includes GCSEs, A-levels and AS levels,
NVQ level 3 and below, National Diploma or Ordinary National
Diploma and Scottish equivalents.
non aliter a significatione verborum recedi oportet quam cum manifestum est aliund senisse
testatotum
Latin: there should be no departure from the ordinary meaning of words
except in so far as it appears that the testator meant something different.
This is the legal basis under which wills are interpreted.
non-Annex I goods Products which result from the processing of basic products and which,
although they are not included in the products listed in Annex I to the
Treaty of Rome, are eligible for refund or duty in respect of the basic
products used in their manufacture.
non assumpsit Latin: he did not promise. The defence to an action for assumpsit.
non-attributable Basis for passing information to a journalist. It is similar to the

Chatham House Rules.
A non-attributable conversation allows the journalist to publish
what you say but not to identify the source. This is a halfway house
between on the record and off the record conversations.
non-audit services Term sometimes used to mean services other than auditing provided by
an auditor to a limited company. Such services must be disclosed by the
company under Companies Act 2006 s494.
non-beneficial occupation Occupation of employer-provided accommodation that does not create

a taxable benefit.
non-business activities An activity that is not predominantly concerned with the making of a
supply for a consideration.
non-business day For purposes of bills of exchange, cheques and promissory notes:
“(a) Saturday, Sunday, Good Friday, Christmas Day;
(b) A bank holiday under the Banking and Financial Dealings Act
1971;
(c) A day appointed by a Royal proclamation as a public fast or
thanksgiving day;
(d) A day declared by an order under section 2 of the Banking and
Financial Dealings Act 1971 to be a non-business day”.
(Bills of Exchange Act 1882 s92).
non-business use Personal use or any use other than for the business.
The term is relevant in taxation, as assets acquired for a non-
business use, such as for a director’s home, are not tax-deductible.
non-cancellable Description of a contract, particularly of insurance, which continues in

force provided the premiums are paid.
The insurer cannot make changes to or revoke the insurance during
this time.
non-cash item Item in the accounts which is regarded as an income or expense but
does not represent any cash transaction for that year. An example is
depreciation.
non-cash voucher For the purposes of determining the tax on benefits in kind, means:
“(a) a voucher, stamp or similar document or token which is
capable of being exchanged for money, goods or services,
(b) a childcare voucher,
(c) a transport voucher, or
(d) a cheque voucher.”
When provided for an exempt benefit, the exemption is provided by
ibid s266.
non cepit modo et forma Latin: he did not take in the manner and form [alleged].
non-certificated bailiff Person who can collect money but whose powers to seize goods are
limited.
non-commercial society Term used in Gambling Act 2005 s19 to describe a charity, sports or
arts body or other non-commercial body. This description exempts the
body from some of the requirements of the Act, which allows churches
and charities to run raffles and tombolas, provided there is no private
gain.
non-commercial use Use for non-profit-making scientific research or educational purposes.
non-commissioned officer (NCO)

“Includes a person whose rate is chief petty officer, petty officer or
leading rate” (Armed Forces Act 2006 s374).
non-community Description of goods that are not of European Union (EU) origin nor
imported goods which have not been released into free circulation.
non-community countries (Third Countries)

Countries outside the Customs Territory of the European Union (EU).
Certain areas within the national territory of Member States are deemed
to be outside the Customs Territory of the EU and are therefore non-
member countries.
These are: the German territory of Busingen (bordering
Switzerland) and the Islands of Heligoland; the Italian communes of

Livigno and Campione (bordering Switzerland); the Danish territory of
the Faroe Islands and Greenland; the French overseas territories; the
Spanish Canary Islands and the North African enclaves of Ceuta and
Melilla; and Andorra.
non-community goods Goods which are not of European Union (EU) origin nor imported
goods which have not been released into free circulation.
non compos mentis Latin: not in sound mind.
non-conforming loan American term for a mortgage loan which does not correspond to US
federal government guidelines.
non constat Latin: it does not follow.
non-contributory benefit Social security benefit where entitlement does not depend on how much
national insurance has been paid.
non-controlling interest Another term for minority interest.
non-cooperating country or territory (NCCT)

Country listed by Financial Action Task Force as either unable or
unwilling to co-operate in addressing problems of money laundering or
terrorism funding. In 2000, there were 15 NCCTs. Since November
2009, there are none.
non culpabilis Latin: not guilty.
non-cumulative preference share

Preference share where any interest not paid in one year is lost. The
interest is not added to the amount payable in any future year.
non-current assets Any asset that does not meet the definition of a current asset. Also
described as fixed assets.
non-current liabilities Any liability that does not meet the definition of a current liability.
Also described as long-term liabilities.
non debet, cui plus licet, quod minus et non licere

Latin: it is lawful for a man to do a less thing if he is entitled to do a
greater thing.
non declarable transaction

Transaction where there is no obligation to pay stamp duty or to notify
HMRC. Details are given in Finance Act 2003 Sch 11.
non-delivery Where something is not delivered which should have been. Sale of
Goods Act 1979 s51 allows for damages for non-delivery of sold goods.
non-discrimination notice Notice issued under Sex Discrimination Act 1975 s67 requiring a
person to end a practice of unlawful discrimination.
non-distributed costs Past service pension costs including settlements and curtailments which
are not to be included in total individual service costs.
non-driving conduct Rules which relate to drivers of large goods vehicles and passenger
carrying vehicles but which do not relate to driving conduct.
Non-driving conduct includes all offences which are not spent
under Rehabilitation of Offenders Act 1974. If any conviction is
disclosed, DVLA considers whether a licence may be issued.
non-equity dividend Dividend relating to non-equity shares (FRS 4).
non-equity shares “Shares possessing any of the following characteristics:

(a) any of the rights of the shares to receive payments (whether in
respect of dividends, in respect of redemption or otherwise) are for a
limited amount that is not calculated by reference to the company’s
assets or profits or the dividends on any class of equity share:
(b) any of their rights to participate in a surplus in a winding up are
limited to a specific amount that is not calculated by reference to the
company’s assets or profits and such limitation had a commercial effect
in practice at the time the shares were issued or, if later, at the time the
limitation was introduced;
(c) the shares are redeemable either according to their terms, or
because the holder, or any party other than the issuer, can require their
redemption” (FRS 4 para 12).
The same definition appears in FRS 6 para 2.
non-essential assets In Scotland, “corporeal moveable property of the debtor’s which is kept
in a dwellinghouse” (Debt Arrangement and Attachment (Scotland) Act
2002 Sch 2 para 1).
The Schedule then lists those assets which may not be taken in
satisfaction of a debt.
non-established taxable person (NETP)

Person who is registered to account for VAT in the UK, but who is not
resident in the UK. From 1 January 2002, HMRC has a right to require
an NETP to appoint a representative to act on the NETP’s behalf.
non-established taxable person

VAT term for an individual, firm or company in another country, which
makes taxable supplies in the UK, but has no business establishment in
the UK.
non est factum Latin: it is not his deed. An old common law defence which excused a
person from being bound from a document he signed but was ignorant
of its contents.
non est investus Latin: he has not been found. The return a sheriff makes when he
cannot find a person he is required to arrest.
non-excludability Principle that once goods are provided, it is impossible to stop people
consuming them, even if they have not paid for them.
non-executive director Director of a company but who is not involved in its day-to-day
management.
Cadbury Report of 1992 recommended that all listed companies
should have non-executive directors to provide independent judgment
on strategy, performance and standards of conduct.
non-food additives Term used in VAT notice 701/14 for such products as “bicarbonate of
soda, saltpetre and other single chemicals for use in brining or other
processing of meats or fish”. They are standard-rated.
non-group life policy Policy of insurance under which the only benefits which may become
payable are benefits payable in consequence, or anticipation of: the
death of the individual or the death of one of a group of individuals
which includes the individual (e.g. a policy which covers a number of
individuals but only pays a benefit out on the first death or last
survivor’ death) or the deaths of more than one of a group of
individuals (e.g. a policy which pays a benefit out on the death of each
of the individuals) where the group includes the individual, and the
other members of the group are connected with the individual in
accordance with section 195A(8) FA 2004.
non-historic Description of an amount which has not been calculated on the

historical cost basis.
non-instalment option property

HMRC term for property for which the instalment option has not been
chosen.
non-judgmental Counselling attitude which avoids any suggestions of right or wrong to

allow the problem to be addressed.
non-large company Company that does not have to pay corporation tax in instalments.
non licet Latin: it is not allowed.
non licet fumare Latin: no smoking.
non liquet Latin: it is not clear.
non-mechanical line Assembly line where components do not move on conveyor belt but are
fetched by the assemblers.
non-monetary items Item which is not money but has a value.
non-money earnings Term used in Income Tax (Earnings and Pensions) Act 2003 s19 to
mean benefits in kind and similar reward for employment other than
money earnings.
non-negotiable Description of a financial instrument which cannot be exchanged for

cash, such as a crossed cheque.
non observata forma infertur adnullatio res

Latin: non-observance of the prescribed formalities involves the
invalidity of the proceedings.
non obstante veredicto Latin: notwithstanding the verdict.
non olet pecunia Latin: the money does not stink.

This is a quotation attributed to Emperor Vespasian meaning that
the source of funds does not matter.
non omittas propter libertatem

Latin: do not omit the proper execution.
non omne quod licet honestum est

Latin: all things that are lawful are not honourable.
non-originating Customs description of products which cannot be shown to meet either

condition for originating products.
non-participating funds Term used in Income and Corporation Taxes Act 1988 s432C in
relation to determining the tax liability of life assurance companies.
non-performing loan American term for a loan where there is no expectation that either the
principal or any interest will be paid. The term is particularly used for
loans to poor countries.
non placet Latin: it is not approved.
non possessori incumbut necessitas probandi prssessiones ad se pertinere

Latin: a person in possession is not bound to prove that what he
possesses belongs to him.
non potest rex gratiam facere cum injuria et damno aliorum

Latin: the king cannot confer a favour on one man to the injury and
damage of others.
non-primary purpose trading

When a charity decides “to use trading activities as a way of raising
money” such as selling goods in a shop or through a catalogue (VAT
notice 701/1). Such activities must be conducted through a subsidiary
trading company.
non-priority debt Debt whose non-payment does not have immediate serious
consequences for the debtor.
non-priority order Attachment of earnings order issued under Attachment of Earnings

Act 1971 for sums owed other than unpaid fines and child maintenance.
The employer must deduct a sum stated from each payslip and pay
it to the court which issued the notice. A non-priority order must only
be deducted when all priority orders have been dealt with.
non-profit Description of an organisation which is constituted for a purpose other

than the enrichment of its owners. Examples include charities, trade
unions, educational establishments, government and local authority
bodies, professional bodies and social clubs.
non-profit company In relation to taxation of insurance companies, means “a company

carrying on long-term business where, at the end of the period:
(a) none of the liabilities of that business, or
(b) none but an insignificant proportion of those liabilities”
non-profit-making Description of an organisation that “does not carry on a trade and its
functions do not consist wholly or mainly in the holding of investments
or other property” (Income Tax (Earnings and Pensions) Act 2003
s99(4)).
In relation to the taxation of a director of such a company “means
that —
(a) the company does not carry on a trade, and
(b) its functions do not consist wholly or mainly in the holding
of investments or other property” (Income Tax (Earnings and Pensions)
Act 2003 s223(8)).
For VAT, “we consider, when judging whether an organisation is
non-profit-making, the objects for which an organisation has been
established, as distinct from the financial policy being pursued.
Although the organisation may generate income surpluses from various
activities, we will not refuse recognition as a non-profit-making
organisation simply because these surpluses subsidise other activities. If
a body has a constitution or articles of association that bars it from
distributing surpluses of income over expenditure to its members,
shareholders or any other party, other than in the event of a liquidation
or cessation of activites, we normally accept it as non-profit-making for
the purposes of this exemption. However, the existence of any
provision barring distribution will not necessarily be the sole factor in
determining whether an organisation is non-profit-making” (VAT
notice 701/5).
non-profits fund In relation to taxation of insurance companies, means “a fund that is not
a with-profits fund” (Income and Corporation Taxes Act 1988 s431(2)).
There are many specific tax provisions in the sections that follow.
non pros Abbreviation of non prosequitur.
non prosequitur Latin: he does not follow up. An old ground for striking out a legal
claim.
non quod voluit testator, sed quod dixit, in testamento inscipitur

Latin: not what the testator wished, but what he said, in considered in
construing a will.
non-recurring item Items which appear in a set of accounts but are not expected to appear
again.
non refert an quis assensum suum praefertverbis, an rebus ipsis et factis

Latin: it matters not whether a man gives his assent by his words, or by
his acts and deeds.
non refert quid notum sit judici, si notum non sit in forma judicii
Latin: it matters not what is known to the judge, if it be not known
judicially.
non-refundable Description of a deposit or payment which will not be refunded, such as

if the payer decides not to proceed with a transaction.
non-reliance letter Letter indemnifying an auditor or other professional adviser from any
legal action in connection with information provided by the auditor or
adviser.
The auditor will usually draft the letter and required it to be signed
before releasing the information.
In tax, HMRC has not indicated whether it will accept such a letter
as part of an Independent Business Review when a taxpayer seeks a
Time to Pay arrangement for a sum greater than £1 million.
non-resident Person who does not reside in a particular country.
non-resident group Group of companies none of which are UK resident. If a group contains
resident and at least two non-resident companies, the non-resident
companies comprise a non-resident group (Taxation of Chargeable
Gains Act 1992 s14(4)).
non-resident parent Parent who does not live with the child and who usually makes
payments to the other parent, known as the parent with care.
Before 18 January 2001, a non-resident parent was known as an
absent parent.
non-resident period Period for which a migrating settlement was not UK resident
non-resident qualifying company

Non-resident company that would be a close company if it were UK-
resident (Taxation of Chargeable Gains Act 1992 s96).
non-rivalry Economic term for when consumption by one person does not reduce
the amount available for others.
non sequitur Latin: it does not follow.
non-smoking material (NSM)

Material developed to imitate smoking tobacco but without nicotine and
other harmful materials. It was still subject to tobacco duty. NSM
products were manufactured in June 1977, but the imposition of duty
meant that they did not achieve their purpose. They were withdrawn
from sale a few months later and all stocks incinerated.
non solent quae abundant vitiare scripturas

Latin: surpluses do not vitiate writings.
non-standard accessory In the context of company cars for tax purposes, any accessory which is
not a standard accessory (Income Tax (Earnings and Pensions) Act
2003 s125(4)).
non-statutory accounts In company law, a balance sheet and profit and loss account for a
financial year which is other than as required as part of the statutory
accounts (Companies Act 2006 s435(3)).
non-sterling bank account

Term sometimes used for a foreign currency bank account.
non-tariff barrier (NTB) Any barrier to international trade other than Customs duty or an
outright ban. Examples include excessive documentation, excessive
compliance with health and safety regulations and requirements to pay
in an expensive currency.
non-taxable person For VAT, person who is not registered. Such a person may be an
individual, an unregistered business, a charity or a public body.
Supplies to such a person in another EU member state must bear VAT
as if the person was UK-resident.
non-trade creditor Creditor who is owed money other than as a supplier. Examples include
the tax authorities and holders of preference shares.
non-trading income Interest paid by a company on loans that do not fund the business. Such
interest is not tax-deductible under the loan relationship rules of
Corporation Tax Act 2009 Part 5.
non-trading partnership Partnership formed for a person other than to trade. Examples include
partnerships formed to hold property or make investments.
non-trading receipts Income of a business other than from its trading activities. Such income
can include sale of assets, issue of shares, loans and compensation.
For tax purposes, such receipts are excluded from trading income,
though they may be taxed under other provisions.
non-transferable cheque Cheque which cannot be indorsed to another payee. This is achieved by
writing ‘account payee only’ or ‘a/c payee only’ on the face of the
cheque (Bills of Exchange Act 1882 s81A).
non-UK profits Term used in Corporation Tax Act 2010 s108 in relation to restrictions
on loss relief.
non-UK tax In relation to corporation tax and group relief, “means a tax chargeable
under the law of a territory outside the United Kingdom which —
(a) is charged on income and corresponds to United Kingdom
income tax, or
(b) is charged on income or chargeable gains or both and
corresponds to United Kingdom corporation tax”
non videntur qui errant consentire

Latin: those who are mistaken are not deemed to consent.
non videtur consensum retinuisse si quis ex praescripto minanatis aliquid ammutavit

Latin: he is not deemed to have consented who has altered anything at
the command of anyone using threats.
non-voting share Ordinary share but where the shareholder is not allowed to vote.
no pre-arranged exists requirement

Requirement under Income Tax Act 2007 s177 that EIS relief against
income tax depends on the investor not having pre-arranged an exit, or
for the disposal of his shares at the time of acquiring them.
no prize machine Gaming machine which provides no opportunity to win a prize

normal car For income tax on employment income, the car normally provided to an
employee, as against a replacement car (Income Tax (Earnings and
normal commercial loan For corporation tax, this term is used in relation to the taxation of
distributions. It is defined in Corporation Tax Act 2010 s162. Such a
loan must be for new consideration and must meet four conditions.
normal commercial practice

The usual way a business conducts its trading activities.
Where a taxpayer comes within the scope of an anti-avoidance
provision but can demonstrate that this is because of his normal
commercial practice, the taxpayer may escape the anti-avoidance
provisions. An example relates to generous invoicing provisions in the
anti-forestalling regulations when the rate of VAT was increase.
normal day-to-day activities

Those activities which a person normally does every day in his or her
life. An inability to do them may count as a disability under the
Disability Discrimination Act 2005.

It should be noted that this is a subjective test relating to the
person’s life. A test case was Paterson v Commissioner of Police of the
Metropolis [2007] where a senior dyslexic officer was discriminated
normal employee costs Expenses normally paid to an employee, such as remuneration, sick
pay, holiday pay and redundancy pay.
Such expenses are tax deductible even when paid in circumstances
that would otherwise make them non-deductible, such as on cessation
of business. This matter is discussed in the Inspectors’ Manual at
BIM38315.
normal expenditure out of income

For inheritance tax, such expenditure is excluded when determining tax
liability (Inheritance Tax Act 1984 s21). So if a father provides an
allowance for a child at university, that is not regarded as a taxable gift
should the father die within seven years.
normal home “Where you usually live. For Customs purposes, that is where you
spend at least 185 days in a period of 12 months, because of your work
and personal connections. But if:
• you have no work connections; or
• your work and personal connections are in different countries,
then your normal home s where your personal connections are.
“However, if you are a UK citizen working outside the EC, ‘normal
home’ can mean where you are working, even if your personal
connections are in the UK. You must have live, or have lived there, for
at least 185 days in a 12 month period” (Customs notice 3).
The note adds that normal home is “not necessarily the country in
which you were born or hold citizenship”.
normal loss Loss which one expects to make in an activity, such as material wasted
in manufacture.
normally resident For tax, where at least 185 days has been spent in the last twelve
months for work and personal connections. If there are no work
connections, or work and personal connections are in different
countries, then this is usually considered to be resident in the country
where the personal connections are.
normal minimum pension age

This is age 50 for the period before 6 April 2010 age 55 on or after 6
April 2010.
normal remuneration Amount an employee normally receives for working, including

employers' national insurance and any pension contributions.
normal retirement age (NRA)

The age at which an employee holding a particular position normally
retires from service.
The term is used in VAT notice 701/1 in relation to staff loaned
from one charity to another. Provided the other charity pays no more
than the employee’s normal remuneration, there is no business supply
of staff.
normal retirement date (NRD)

The normal date of retirement applicable to a member of an
occupational pension scheme and specified in the rules of the scheme.
normal rules Term used in VAT leaflets meaning that the usual rules of VAT apply
in one area of a situation where particular rules apply elsewhere. For
example, VAT notice 725 gives the particular rules that apply for
exported and removed goods but notes that the normal rules apply for
reclaiming input tax.
normal selling price In relation to VAT on investment gold coins, the price that may be
commanded for a particular coin (VAT notice 701/12A).
Provided that coins of that kind are sold for no more than 180% of
their gold value, a specific coin may still be regarded as an investment
coin even if sold for more because of a special factor for a particular
coin, such as being from a rare year.
North Atlantic Treaty Organisation (NATO)

Political defence alliance better known by its initials.
Northcote, Stafford English Conservative politician (1818-1887) who was Chancellor of the
Exchequer from 21 February 1874 to 21 April 1880.
Northern Ireland One of the four countries of the United Kingdom. It comprises six
counties on the north of the Ireland. It has been a distinct part of the UK
since 3 May 1921 under Government of Ireland Act 1920.
Various attempts to establish a measure of independent government
failed until the Northern Ireland Executive and Northern Ireland
Assembly were established in 1998.
Northern Ireland is generally governed by its own laws which tend
to mirror the law in England and Wales. Tax rates are the same as for
the UK. Various tax provisions give Northern Ireland tax advantages.
Northern Ireland Assembly

Devolved legislature of Northern Ireland. It was formed in 1998, but
its powers were subsequently suspended several times.
The Assembly appoints the Northern Ireland Executive. It has
108 members known as Members of the Legislative Assembly
(MLAs).
Northern Ireland banknotes

Notes issued by banks in Northern Ireland and which circulate as
currency.
Such notes were subject to stamp duty until 1 January 1992.
Nothern Ireland Contributions and Benefits Act

“Means Social Security Contributions and Benefits (Northern Ireland)
Act 1992” (Social Security Administration Act 1992 s176(5)).
Northern Ireland Executive

The executive part of the Northern Ireland Assembly, established
under Northern Ireland Act 1998. It comprises a First Minister and
other departmental ministers.
Northern Ireland Judicial Appointments Commission

Body corporate established under Justice (Northern Ireland) Act 2002
s3.
Northern Ireland legislation

This comprises:
“(a) Acts of the Parliament of Ireland;
(b) Acts of the Parliament of Northern Ireland;
(c) Orders in Council under section 1(1) of the Northern Ireland
(Temporary Provisions) Act 1972;
(d) Measures of the Northern Ireland Assembly established under
section 1 of the Northern Ireland Assembly Act 1973;
(e) Orders in Council under Schedule 1 to the Northern Ireland Act
1974;
(f) Acts of the Northern Ireland Assembly; and
(g) Orders in Council under section 85 of the Northern Ireland Act
1998”.
(Interpretation Act 1978 s24(5)).
Northern Ireland union “Trade union whose principal office is situated in Northern Ireland”
(Trade Union and Labour Relations (Consolidation) Act 1992 s120).
Northern Rock British bank that failed in 2007, having converted from a building
society in 1997. It led to the first run on a British bank for more than
150 years. It was bailed out by the government. The tax consequences
are set out in SI 2009 No 3227.
noscitur a sociis Latin: the meaning of a word can be gathered from the context.
no smoke without fire Idiom meaning that there must be some truth in any scandal or rumour.
The expression is as untrue metaphorically as it is literally.
no tax avoidance requirement

Requirement that entitlement to a tax relief depends on there being a
genuine commercial reason other than tax avoidance. This requirement
is set out in Income Tax Act 2007 s165 for EIS relief.
notary public Lawyer who has authority to witness documents and spoken statements,
usually for a fee. Most solicitors are notaries public.
note (1) Bank note, or document which conveys information.

(2) Narrative comment which is cross-referenced to a figure in the
accounts.
note issuance facility Credit facility where a company gets a loan underwritten by a bank
against which the company may issue a series a short-term notes to
replace those which have expired. Such notes are usually in euros.
note of hand Document which states that someone promises to repay a sum of money
by a stated date.
notes to the accounts Information in financial statements that gives more detail about items in
the financial statements.
Accounts, particularly balance sheet and profit and loss account,
have numbers against them that cross-reference the figure to more
explanation, sometimes in the form of further accounting information.
Such notes form part of the accounts, and may contain any of the
statutory information required under company law (Companies Act
2006 s472).
not for profit body “A body which, by or by virtue of its constitution or any enactment:
(a) is required (after payment of outgoings) to apply the whole of its
income, and any capital which it expends, for charitable or public
purposes, and
(b) is prohibited from directly or indirectly distributing amongst its
members any part of its assets (otherwise than for charitable or public
purposes)” (Legal Services Act 2007 s207(1)).
nothing to declare Old term for the Customs procedure when someone arrives with no
goods that are prohibited, restricted or subject to duty. The procedure is
now replaced by the green channel for travellers from outside the EU,
and blue channel for travellers from within the EU.
notice of appeal Notice issued by one party stating that he intends to appeal against a
decision by the other party.
In particular, the term is used when a taxpayer contests a tax
assessment or a tax code. The procedure is given in Taxes Management
Act 1970 s31A.
The main conditions of such a notice is that it must be in writing
and sent within 30 days to the HMRC officer who issued the contested
assessment or code.
notice of assessment Original term for a tax assessment. When PAYE was first introduced
in 1943, such a notice was sent after the year-end.
notice of coding Notice which informs a person of a code that has been issued. The term
often applies to the P2 form from HMRC advising an employee of a tax
code.
notice of correction Document sent to an individual or trust when HMRC has corrected
“obvious errors or omissions” in a personal return or trustee’s return.
The procedure is set out in Taxes Management Act 1970 s9ZB.
The notice has the effect of amending the tax return as stated unless
the taxpayer sends a notice of rejection within 30 days.
notice of determination Notice that a matter in dispute has now been determined by an
appropriate authority.
There are various provisions where such a notice may be issued by
HMRC.
notice of enquiry Notice sent by HMRC to a taxpayer saying that it intends to enquire
into an aspect of a tax return. The procedure is set out in Taxes
Management Act 1970 s9A.
A notice of enquiry to a partnership is issued under Taxes
Management Act 1970s12AC.
Generally, HMRC has a time limit for such notices. If the tax return
was submitted on time, the notice of enquiry must be sent within 12
months after the day the return was delivered.
notice of objection to Sunday working

A notice which a worker in a shop or betting office may serve on his or
her employer stating that they will no longer work on a Sunday
(Employment Rights Act 1996 s40).
notice of rejection Notice sent by an individual or trust to HMRC refusing to accept its
notice of correction of an error in a tax return.
The notice of rejection must be sent within 30 days. It has the effect
of cancelling the notice of correction. This provision is set out in Taxes
Management Act 1970 s9ZB(4)-(5).
notice period The length of time an employer or employee must give the other when
intending to end an employment. There are statutory minimum notice
periods.
notice requiring information

Document that must be issued by a public company when it believes
that someone other than a shareholder has an interest in its shares.
The law is given in Companies Act 2006 ss791-802.
notice to quit Notice served by a landlord on a tenant requiring the latter to vacate
land or premises. There are strict rules on when such a notice is valid.
notifiable contribution arrangements

Arrangements designed “to enable... any person to obtain an advantage
in relation to a [national insurance] contribution” (Social Security
Administration Act 1992 s132A(3)).
Such arrangements must be disclosed to HMRC under SI 2007 No
785 as amended.
notifiable contribution proposal

A proposal to make notifiable contribution arrangements. (Social
Security Administration Act 1992 s132A(3)).
noting or protesting a bill Process which may be followed if a bill of exchange is not honoured
(Bills of Exchange Act 1882 s51). A bill may be protested for non-
acceptance and subsequently protested for non-payment. Any protesting
must be done on the day of non-acceptance or the following business
day.
notional Description of something which is probable but not quantifiable.
notional benefit The benefit a person is deemed to enjoy, such as the benefit of an
employee who has a company car.
In tax, the term usually refers to a method to approximate a benefit
that cannot otherwise be readily quantified.
notional earnings cap Amount the pensions earnings cap would have been if the pensions cap
were still law. The pensions cap was abolished as part of the pensions
reform of 2006. Pension schemes were given a five-year transitional
period to change to the new system. The notional cap was produced to
assist in the changeover. The last published figure was £123,600 for
2010/11.
notional income Benefit which can be recognised but not easily expressed as an amount
of money.
For discretionary trusts, notional income can include premiums
treated as rent, profits on sale of certificates of deposit, and gains from
disposals of offshore funds.
notional payment For national insurance, payment that an employee is treated as having
made when earnings exceed the lower earnings limit but where no
national insurance has actually been paid because the earnings threshold
has not been reached (Social Security Contributions and Benefits Act
1992 s6A).
For income tax on earnings, means a sum regarded as pay though
not provided directly by the employer (Income Tax (Earnings and
notional price Term used to determine the value of a company car when there is no
readily available list price. The procedure is broadly to use the list price
of an equivalent car. (Income Tax (Earnings and Pensions) Act 2003
s124(1)).
notional rent Sum which an organisation may set aside in its internal accounting
when it occupies premises it owns to represent the “rent” it pays itself.
notional replacement cost Method of stock valuation that is generally not accepted for tax
purposes (BSC Footwear Ltd v Ridgeway [1971] 47TC495). The matter
not negotiable Description of a bill of exchange or other financial instrument which

may be transferred to another person but only on the basis that the
recipient has no greater title than the signatory (Bills of Exchange Act
1882 s8).
nova constitutio futuris forman impersonere debet, non praeteritis

Latin: a new laws should regulate what is to follow, not the past.
novation Agreement by which the two parties to a contract agree that one of them
shall be replaced by a new party. So a novation would allow A and B
both to agree that a contract between them may become a contract
between A and C.
novelist An artist, sculptor, novelist, author, composer or other creator of art

may average profits over three years under certain conditions (Income
Tax (Trading and Other Income) Act 2005 s221).
novice Person who is new to an activity, particularly where the person intends
to make a career from that activity.
A company may sponsor a novice sportsman or performer. The
extent to which this is tax-deductible is discussed in the Inspectors’
Manual at BIM 42565. In particular, the fact that the sponsored person
is a novice does not itself disallow a tax deduction.
novus actus interveniens Latin: a new act intervening.

This describes the general legal rule that a chain of causation from
A to B is broken at the point that C does something.
NOW account American term for an interest-bearing account with a bank where the
customer may issue cheque-like documents known as negotiable
orders of withdrawal.
NP Nisi prius.
NPG Natural Petroleum Gas
NPR Number of pieces received.
NPV Net present value.
NPX Number of pieces expected.
NRA Normal retirement age.
NRB Nil rate band of inheritance tax.
NRB trust Any trust established not to waste a person’s nil rate band for
inheritance tax. Since October 2007, the need has reduced because of
the right to transfer allowances between spouses.
NRD Normal retirement date.
NRE Net relevant earnings.
NRT Net register tonnage, of ships.
NRV (1) Net realisable value

(2) Net residual value
NSB National Savings Bank
NSC National Savings certificate
NS&I National Savings and Investments.
NSM Non-smoking material.
NSWLR New South Wales Law Reports, published from 1880 to 1900, and from
1971.
NSWR New South Wales Reports, Australian law reports published from 1960
to 1970.
NT Tax code used in the PAYE system for taxing employees. The letters
stand for No Tax, which means that no tax is deducted.
This code usually applies when the person is exempt from tax, such
as having diplomatic immunity, or when another arrangement is in
place to collect the tax.
NTBs Non-tariff barriers
NTC National Tax Credits
NTI Net taxable income
NTO National Training Organisation
NTSI Net taxable specific income
nude contract A contract where there is no consideration.

Unless the contract was made under seal, a nude contract cannot be
enforced.
nudum pactum Latin: nude contract.
nuisance An inconvenience caused by one person that materially intereferes with

ordinary living of others.
Private nuisance is a tort that may be actioned in the civil courts.
Public nuisance may be prosecuted in the criminal courts.
nulla bona Latin: no goods. This is the return made by a sheriff to seize goods
when he cannot find any.
nulla pactione effici potest ut dolus praestetur

Latin: by no contract can it be arranged that a man shall be indemnified
against responsibility for his own fraud.
nulla peona sine lego Latin: no punishment except in accordance with the law.
nullity Something that is invalid.

For marriage, it means one which is void or voidable at the time of
marriage, such as when one of the parties were under 16, or they were
closely related.
nullius filius Latin: no-one’s child. An illegitimate child.
nullum crimen nulla poena sine lege

Latin: there is no crime nor punishment except in accordance with law.
nullum simile est idem Latin: a thing which is similar to another thing is not the same as the
other thing.
nullum tempus aut locus occurrit regi

Latin: time never runs against the Crown.
This principle has been modified by Crown Proceedings Act
1947.
nullus videtur dolo facere qui suo jure utitur

Latin: a malicious or improper motive cannot make wrongful in law an
act which would be right apart from such motive.
nul tiel record Latin: no such record.
number Representing of a quantity or amount, or the order in which items rank.
number of employees requirement

Condition which must be satisfied by a company for investment in it to
qualify for EIS relief. The requirement is basically that the company
must not have more than 50 employees (Income Tax Act 2007 s186A).
The same provision applies to VCT relief (Income Tax Act 2007
s297A).
number plate Combination of letters and numbers which indicate a specific vehicle.
The legal term is registration mark. The number plate must meet
certain conditions regarding size and colour.
numbercard Plastic card the size of a credit card which notifies a person of a
number, particularly the national insurance number which is notified
on such a card to individuals when they are 15 years and 9 months old.
numbered account Bank account which is identified only by a number, the identity of the
customer is withheld. Such accounts are common in Switzerland.
nunc pro tunc Latin: now for then.
nuncupative will Will made without writing. Such a will is valid if made by a serving
member of the armed forces.
nuptias non concubitis sed consensus facit

Latin: it is consent, not cohabitation, which makes a marriage.
nursing home This activity is excluded from the tax relief for venture capital trusts by
Income Tax Act 2007 s309. For this purpose s309(2) defines a nursing
home as “any establishment which exists wholly or mainly for the
provision of nursing care:
(a) for person suffering from sickness, injury or infirmity, or
(b) for women who are pregnant or have given birth”.
Expenses incurred in nursing a taxpayer back to health are
generally not tax deductible, according to Inspectors’ Manual at
BIM37950.
nursing homes and residential care

nuts These are zero-rated as food “if raw and unprocessed for human
consumption” or if “roasted or salted nuts in their shells, however
supplied bulk or retail” (VAT notice 701/14).
Nuts are standard-rated if shelled and either roasted or salted.
NVQ National Vocational Qualification.
NW North Western Reporter, US series of law reports.
NWTSG National Working Together Steering Group. This is a national body,

replicated at local level, to allow joint working between HMRC and
agents of taxpayers in dealing with tax issues.
NWTT National Working Together Team.
NYD Not yet diagnosed. Common abbreviation for sick notes (HMRC leaflet
E14).
NYSE New York Stock Exchange.
NZBLC New Zealand Business Law Cases, law reports published from 1984.
NZCLC New Zealand Company Law Cases, law reports published from 1981.
NZLR New Zealand Law Reports, first published in 1883.
O
O (1) Tax code used before unified income tax was introduced in 1973. It
indicated that tax is in arrear and so must be deducted at the standard
rate less earned income relief.
(2) Order, as used in legal judgments.
OA Osteoarthritis. Common abbreviation for sick notes (HMRC leaflet

E14).
OAP Old age pensioner.
oath Declaration in court to tell the truth. It “include[s] affirmation and

declaration” (Interpretation Act 1978 Sch 1).
OB Omzetbelasting, Dutch: value added tax.
obiter Obiter dictum.
obiter dictum Latin: saying by the way.

Observation by a judge on a legal question suggested by a case
before him, but not in a manner which requires a decision. Obiter does
not therefore set a precedent, but is a guide which may be considered in
any future case.
objectivity One of the requirements for an auditor.

“Objectivity is a state of mind that excludes bias, prejudice and
compromise and that gives fair and impartial consideration to all
matters that are relevant to the task in hand, disregarding those that are
not. Objectivity requires that the auditor’s judgment is not affected by
conflicts of interest. Like integrity, objectivity is a fundamental ethical
principle” (APB ES 1 para 9).
objects clause Clause in a company’s memorandum of association that states the

purpose for which the company is formed.
Historically, this restricted what a company was allowed to do.
Modern practice is to make the objects clause so wide that the company
has complete freedom of action.
obligating event Event that creates a legal or constructive obligation that results in a
person or organisation having no realistic alternative but to settle that
obligation (FRS 12).
obligation In accounting, a condition for regarding an item as a liability.

It is not necessary for the obligation to be legally enforceable.
However, an obligation usually requires more than a mere decision to
accept responsibility, as a decision may be reversed. It is usually
necessary for the decision to have become irrevocable such as by
notification to affected parties.
obligee Person to whom a bond is made.
obligor Person who binds himself or herself with a bond.
OBR Office of Budget Responsibility.
obscene material Material that is likely to corrupt those who read or watch it. Such
material must be more than just offensive or indecent.
Customs may seize any obscene or indecent material that a
traveller attempts to bring into the UK.
obscuration The extent to which a hydrometer reading of the strength of alcoholic

liquor known as spirits is reduced by the presence of sweetening,
colouring, or other matter.
obscurum per obscurius Latin: explaining the obscure by the more obscure.
obsolescence Process by which stock loses value for reasons other than deterioration
in condition.
Reasons for obsolescence include changed fashion, discontinuance
of related products, alternative products and newly available cheaper
alternatives.
As stock is valued at the lower of cost and net realisable value,
obsolescent stock is usually written down to nil or to scrap value in the
balance sheet.
obsolete Sometimes a distinction is made between obsolete and obsolescent in

that the latter denotes a continuing process of value loss, whereas the
former denotes stock that has already lost value.
obtaining services dishonestly

Crime of fraud committed by a person who dishonestly obtains services
for himself or another. This applies when services attract a charge, the
person knew that or knew that may be so, and deliberately fails to make
payment (Fraud Act 2006 s11).
occupancy Taking possession of an ownerless thing.
occupation In relation to property for inheritance tax, occupation is not restricted to

living in a property. It may be occupied if a person uses it for storage or
lets it to someone else.
Occupation can be relevant in determining whether a gift of the
property is a gift with reservation.
occupational disease Impairment of health caused by continued exposure to conditions

inherent in a person's occupation or a disease resulting from the nature
of an occupation.
occupational immobility Economic term for when resources do not freely move from one
purpose to another. It is particularly a problem with labour as people
often find it difficult to switch rapidly from one job to another. This is
usually because their skills are very specific and they will need
retraining to be able to switch to a different job. It may therefore be a
cause of unemployment.
occupational maternity pay (OMP)

Maternity pay provided by an employer in addition to statutory
maternity pay. Entitlement to OMP may arise under a contract of
employment or by subsequent agreement.
occupational pension Pension which is funded by employees from either deductions from
their wages or contributions from the employer or both.
occupational pension scheme (OPS)

A pension scheme set up by an employer for employees. It is run by
Trustees and usually provides life insurance as well as pension benefits.
The pension earned by the employees is usually based on a percentage
of final salary or on the amount paid in (money purchase basis). An
occupational pension can either be contributory (where members
contribute to the fund) or non-contributory, which is entirely paid for by
the employer.
A statutory definition is “a pension scheme —
(a) that —
(i) for the purpose of providing benefits to, or in respect of,
people with service in employments of a description, or
(ii) for that purpose and also for the purpose of providing
benefits to, or in respect of, other people,
is established by, or by persons who include, a person to whom
subsection (2) applies when the scheme is established or (as the case
may be) to whom that subsection would have applied when the scheme
was established had that subsection then been in force”
(Pension Schemes Act 1973 s1(1)).
HMRC defines it as “a pension scheme set up by an employer
(known as a sponsoring employer) to provide benefits for, or in respect
of
• any or all of his own employees
• any or all of the employees of any other employer”
(Inspectors’ Manual at RPSM02200040).
occupational sick pay (OSP)

Sick pay paid to an employee under a contract of employment or at the
discretion of the employer.
An employer may opt out of paying statutory sick pay if OSP is at
least as generous. Otherwise OSP is an additional payment. OSP is
subject to income tax (under PAYE) and national insurance on the same
basis as normal pay.
occupational split Factor considered in a group insurance policy.

It analyses the workforce into general categories, such as 70%
manual workers and 30% clerical workers. This is used to calculate the
premium payable.
occupier A person who occupies a building but who may not own it. So a tenant
is an occupier.
For Customs purposes, the term is used more restrictively to mean a

manufacturer who occupies a registered factory or store.
For bonded premises, the term “includes any person who has given
security to the Crown in respect of those premises” (Customs and
occupier’s liability Liability an occupier has for those who suffer injury while on the
premises. The liability arises from various laws including Occupiers’
Liability Acts of 1957 and 1984.
OCD Officers’ Career Development (in armed forces).
OCT Overseas countries and territories
OD Overdrawn or overdraft. The abbreviation is sometimes shown as

O/D.
ODPM Office of the Deputy Prime Minister - a UK Government department,

now abolished, formerly part of the Department for Transport Local
Government and the Regions (DTLR).
OECD Organisation for Economic Co-operation and Development, founded in

1961. It succeeded the Organisatoon for European Economic Co-
operation (OEEC) established in 1948 to avoid the mistakes that led to
war. Since 9 December 2010 it has 34 member states. The UK is a
founder member.
According to its website, “the mission of the Organisation for
Economic Co-operation and Development (OECD) is to promote
policies that will improve the economic and social well-being of people
around the world.
“The OECD provides a forum in which governments can work
together to share experiences and seek solutions to common problems.
We work with governments to understand what drives economic, social
and environmental change. We measure productivity and global flows
of trade and investment. We analyse and compare data to predict future
trends. We set international standards on all sorts of things, from the
safety of chemicals and nuclear power plants to the quality of
cucumbers.
“We look, too, at issues that directly affect the lives of ordinary
people, like how much they pay in taxes and social security, and how
much leisure time they can take. We compare how different countries’
school systems are readying their young people for modern life, and
how different countries’ pension systems will look after their citizens in
old age.”
OEEC Organisation of European Economic Co-operation.

This body was formed in 1948. It changed its name to OECD in
1961 when non-European countries were admitted.
OEIC Pronounced as "oiks", this stands for Open-Ended Investment

Companies.
Although not dissimilar to unit trusts and investment trusts, an

OEIC is basically a company which can be self-contained or it can form
an "umbrella" over a range of individual funds (sometimes referred to
as sub-funds). Instead of units, an OEIC issues shares and these can be
of different classes - for example, for income accumulation, for income
distribution, or classes where income is paid gross or net of lower-rate
income tax.
OFCOM Office of Communications.
of course In law, means a step where the court has no discretion but to grant what
is applied for.
offal For VAT, offal sold for human consumption or for use in animal feeds
is zero-rated. Most other offal is standard-rated. Full details are given in
VAT notice 701/15.
off-balance sheet Accounting transactions which are kept outside the published accounts.
off-balance-sheet finance An arrangement to keep matching assets and liabilities away from the
entity's balance sheet.
offer Preliminary step in the process of making a contract.

The contract is made when there is acceptance of the offer. A price
ticket or advertisement is an invitation to treat, and does not comprise
an offer.
offer document Formal document in which a company offers to buy shares held by
another, usually as part of a takeover bid.
offer for sale A company makes a general offer of its shares to the public.
offer period Period in which an offer applies, particularly to buy shares at a price
above market value to secure a takeover.
offer price Price at which a broker is prepared to sell shares. It is above his bride
price at which he will buy.
offering Statement that a person is willing to sell something, usually for a stated
price.
offering circular Document which provides information about a company whose shares
are being offered for sale for the first time.
offeror Person who makes an offer.
offertory Collection of money in a church.
offer to the public An offer of shares or other securities for purchase by members of the
public (Companies Act 2006 s756).
This is subject to many legal restrictions. In general, such an offer
must be by a public company and in accordance with a prospectus.
office (1) Position held by someone, such as auditor or councillor.

(2) Place where paperwork is done.
Office Widely used suite of business programs provided by Microsoft.
office attire Part of the dress code which is concerned with how people appear in
the office.
office copy Copy made by an officer appointed for such a person. The copy is
sealed or signed by that officer and is admissible as evidence.
Office for Budget Responsibility (OBR)

Body established by Budget Responsibility and National Audit Act s3
and Sch 1. Its duty is “to examine and report on the sustainability of the
public finances” (ibid s4).
Office for Legal Complaints (OLC)

Body corporate established by Legal Services Act 2007 s114.
Office for National Statistics (ONS)

Government agency which produced statistics until replaced by the
Statistics Board.
office hours Hours when an office is either open to the public or may be contacted
by telephone.
office job Employment in an office, or similar clerical work.
Office of Budget Responsibility (OBR)

Organisation established in 2010 to provide independent advice on tax
policy. Its first statement was published on 14 June 2010, eight days
before its first Budget.
Office of Communications (OFCOM)

Body established by Communications Act 2003 s1 to further the
interests of consumers in regard to communications matters, such as
radio, television and telephone services.
Office Of Exit Normally the last customs office before the goods leave the customs
territory of the European Union.
Office Of Export The customs office where the export declaration is lodged.
Office of Fair Trading (OFT)

Government department which protects customers from unfair or illegal
business practices.
Office of Management and Budget (OMB)

In USA, a government department which prepares the Federal budget.
Office of Thrift Supervision (OTS)

In USA, a government department which regulates the Savings and
Loan Association.
officer (1) Person who works for an organisation, such as an ordinary

employee. The term is widely used in government and local authorities.
(2) A member of the armed forces or police. For the former, the term
“includes a midshipman” (Armed Forces Act 2006 s374).
Offices En Route Frontier offices through which a Transports Internationaux Routiers

movement passes on the journey to its destination. At each of these
offices the container or vehicle and TIR Carnet must be presented to
Customs.
Offices Of Departure/Destination
Approved Customs offices where a Transports Internationaux
Routiers movement officially begins or ends. This may be at an Inland
Clearance Depot, port or airport.
office spouse Colloquialism for a colleague with whom one has a close relationship,
though usually a non-romantic one.
official Confirmed or approved by a government body, or other organisation

which has similar standing.
official agent “Means a person who is not a consul... but is employed on the staff of
—
(a) a consulate, or
(b) an official department or agency of a foreign state”
official books of account Records of an organisation which it must legally keep.
official exchange rate When a country dictates the rate at which its currency may be
exchanged.
Typically this is used for a blocked currency where the official
exchange rate is higher than is otherwise justified. In effect, the
government is imposing a penalty on outsiders who wish to trade with
it.
official industrial action Action which is taken after the statutory requirements of Trade Union
and Labour Relations (Consolidation) Act 1992 have been followed.
official liquidator Liquidator appointed by a government department when no such

appointment is made by the members or creditors (Insolvency Act 1986
s136).
Official List Daily publication of the London Stock Exchange recording the highest
and lowest prices recorded that day for each share and other security.
Official Property Holder Person appointed under Audit, Investigations and Community
Enterprise) Act 2004 s29 to hold property belonging to a community
interest company under the terms of Sch 5 of the Act. The office is a
corporation sole.
official rate of interest Rate periodically announced by the Treasury and used to determine the
value of employment-related loans and accommodation provided to
employees to the extent that they comprise a taxable benefit in kind.
The relevant law is Income Tax (Earnings and Pensions) Act 2003
s181.
Official Receiver Government officer who deals with a person who has become bankrupt
(Insolvency Act 1986 ss399-401).
official return Report that a person or business submits to a government body or other
authority.
official secrets Material that the government has declared as confidential, and for
which disclosure is a criminal offence.
Official Solicitor Person who is appointed to act as solicitor before the courts under
various enactments, particularly Supreme Court Act 1981 s90.
official statistics Statistics produced by the Statistics Board or by another government

or government-appointed body (Statistics and Registration Service Act
2007 s6).
off-line For Customs purposes, the onward carriage of a through inter-airport

removal or a through transit, by a carrier who is not the inward carrier
of the goods.
off-market purchase In company law, term used for when a company buys shares in itself
other than from a recognised stock market.
Generally this is prohibited under Companies Act 2006 s694.
offset When an asset and liability are netted off to show a single figure as an
asset or liability.
FRS 5 para 29 states that two items should not be offset where they
represent separate transactions. For example if A both sells £10,000 of
goods to B and buys £4,000 of goods from B, these transactions should
be respectively included in debtors and creditors for these amounts, and
not just as one debtor for £6,000.
An exception may be made when the reality is that the items will be
netted off. This requires three conditions to be met:
(a) the amounts are quantified, and either in the same currency
or in freely convertible currencies;
(b) the reporting entity has the right to insist on a net
settlement; and
(c) the right to insist on a net settlement is beyond doubt.
offset method Method set out in accounting standard SSAP20 regarding foreign
exchange. The tax implications are discussed in the Inspectors’ Manual
at BIM39522.
offshore Based in another country, particularly referred to locations which have

a more lax tax regime.
offshore declaration of trust

Old scheme that sought to avoid stamp duty by executing a deed
overseas and then transferring title in the UK for a nominal sum. The
scheme failed in Parinv (Hatfield) Ltd v IRC [1996].
offshore finance subsidiary

Subsidiary created in another country to handle its finances under a
benign regime, usually with less regulation and lower taxes.
offshore financial centre

Country or region which has laws designed to attract financial business.
offshore funds Collective investment funds that are based overseas, often in 'tax
havens' or other locations with particular tax advantages.
Offshore Funds (Tax) Regulations

Name of SI 2009 No 3001.
offshore installation Oilrig or similar. A full definition is in Income Tax Act 2007 s1001.
Travel expenses from the UK mainland to such an installation is
s305.
For an employee to claim the seafarer’s earnings deduction (SED),
it is necessary that the seafarer does not work on an offshore
installation.
off-shoring Practice of relocating a business function overseas, usually to avoid

having to comply with UK laws and regulations.
off the cuff Description of action or speech which is unprepared.
off-the-job training Training provided to employees other than at their place of work.
off the record Agreement between a journalist or other person that comments made
may not be quoted by the journalist nor may the source may be
identified. It is the opposite of an on the record conversation. There is
also a halfway house of non-attributable conversation or Chatham
House Rules that allows the information to be published, but the source
not identified.
OFMDFM Office of the First Minister and deputy First Minister, in Northern
Ireland Assembly.
OFSTED Office for Standards in Education
OFT Office of Fair Trading.
OG Original gravity, of beer. Customs notice 226 explains how this may
be used to calculate the alcoholic strength for beer duty.
Ohlin Report Report published in 1956 by Bertil Ohlin for the International Labour
Organization regarding labour policy in what became the European
Union. His theory was that high wage countries need no protection
from low wage countries as the different between wage rates is
reflected in productivity which in turn is reflected in exchange rates.
oil Term applied to particular liquids according to different criteria.

For purposes of excise duty, oils are hydrocarbons which are
subject to excise duty on hydrocarbon oil.
For VAT, oil that is used as road fuel, lubricant, massage, treating
wood and similar purposes is standard-rated. Most vegetable oils and
cooking oil is zero-rated as food, as explained in VAT notice 701/14.
Waste cooking oil for recycling is standard-rated.
Oil that is supplied as road fuel is always standard-rated.
Oil for residential heating is generally reduced-rated under Value
Added Tax Act 1994 Sch 7A Group 1, but otherwise standard-rated.
Details are given in VAT notice 701/19. HMRC accepts that a supply of
up to 2,300 litres is for domestic use.
oilrig Transport of workers from the UK mainland to an oilrig is exempt from

tax under Income Tax (Earnings and Pensions) Act 2003 s305.
oil residues “Any waste consisting of, or arising from, oil or a mixture containing
oil” (Prevention of Pollution Act 1971 s29(1)).
OJEC Official Journal of the European Communities.

This is the gazette of record of the European Union (EU). The
definitive text of all EU legislation is published in the OJEC.
OLC Office for Legal Complaints.
old accessory In the context of taxing company cars, an existing part of a car which is
replaced by a new accessory.
old age pension Common name for state retirement pension.
old age pensioner (OAP) Person in receipt of a state retirement pension.
old annuity contract In relation to taxation of annuity business, “means a general annuity
contract made by an insurance company in an accounting period
beginning before 1st January 1992 (including one forming part of the
business transferred to another insurance company by an insurance

business transfer scheme)” (Finance Act 1001 Sch 7 para 16(7)).
old arrangements Term used in SI 2010 No 429 in relation to a transfer of tax-advantaged

pension benefits.
old bond Another name for a busted bond.
Old Cases payments For social security and national insurance, means “payments under Part
I or Part 11 of Schedule 8 to this Act” (Social Security Contributions
and Benefits Act 1992 s122(1)). These relate to employment before 5
July 1948.
Oldco Term often used in tax cases to describe an old company that has a
similar name to a new company (called newco) such as in a case
concerning a takeover or restructuring.
old code scheme Superannuation fund approved before 1970 which has not been re-
approved under later pension scheme legislation. Such schemes retain
their tax advantages, provided no further contributions have been made
since 5 April 1980.
The matter is discussed in the Inspectors’ Manual at
RPSM02100020.
old NAO Term used in Budget Responsibility and National Audit Act 2011 Sch 4
to refer to the National Audit Office established under National Audit
Act 1983 before the 2011 Act came into force.
old pence Term used to describe pence before the adoption of decimal currency
in 1971. There were 12 old pence to the shilling, and 20 shillings to the
pound, so there were 240 old pence to the pound. Under decimal
currency there are 100 new pence to the pound, so 1 new penny equals
2.4 old pennies.
The term “new pence” was officially dropped from coins in 1982.
old Scottish term days Before 13 June 1991, the four term days that correspond to English
quarter days. They were Candlemas (2 February), Whitsunday (15
May), Lammas (1 August), and Martinmas (11 November).
old shares Term used in tax law and elsewhere in the connection of a company
reconstruction. It means the shares which are replaced by new shares.
oligopoly Control similar to monopoly but exercised by a family or a small group

of people.
oligopsony When a small number of people control the demand or market for a
product or service.
Olympic Delivery Authority

Body corporate established under London Olympic Games and
Paralympic Games Act 2006 s3 to provide infrastructure and other
facilities for the London Olympics of 2012.
Olympic Lottery Lottery which raises funds for the Olympic Games in London in 2012
(Horserace Betting and Olympic Lottery Act 2004 s21).
Olympic Lottery Distribution Fund

Government controlled fund established by Horserace Betting and
Olympic Lottery Act 2004 s23.
Olympic Lottery Distributor

Body corporate established under Horserace Betting and Olympic
Lottery Act 2004 s29.
Olympic swimming pool Unofficial measure of volume. An Olympic pool is 50 metres (164 feet)
long, 25 metres (82 feet) wide, with a minimum depth of 2 metres (6 ft
7 in) and a capacity of 2,500 cubic metres (88,000 cubic feet).
O&M Organisation and management.
OMB Office of Management and Board, US government department.
ombudsman An independent official to whom grievances can be aired, free of

charge. Ombudsman is a Swedish word meaning citizen's
representative. The Insurance Ombudsman Bureau aims to increase
confidence in Insurance by offering an independent resource for
resolving disputes between insurance companies and their customers.
Ombudsman for the Board of the Pension Protection Fund

Commissioner appointed under Pensions Act 2004 s209 to perform the
task of the job title.
ombudsman scheme Scheme which the Office for Legal Complaints must operate (Legal
Services Act 2007 s115).
omission Leaving out something or failing to do something which should be

done. In law the word action usually includes an omission in failing to
act.
omission to exercise a right

When there is a diminution in value of an estate because of something
a person did not do, such as exercising an option. This is regarded as a
disposition for inheritance tax purposes, and could lead to tax
becoming payable if another person’s estate is increased in value.
This is a rare example of when an increase in someone else’s estate
determines whether inheritance tax is payable. The increase of the other
estate does not have to be for the same amount as the loss in the first
estate.
Other examples of such an omission may include failure to collect a
debt, not voting at a company meeting, not exercising certain rights as a
landlord, not to pursue other rights and not taking up a rights issue or
bonus issue of shares.
omne quod inaedificatur solo cedit

Latin: everything which is built into the soil is merged therein.
omnes licentiam habent his, quae pro se indulta sunt, renunciare

Latin: everyone has liberty to renounce those things which are granted
for his benefit.
omne testamentum morte consummatum est

Latin: every will is completed by death.
This notes the ambulatory nature of a will which may be changed
at any time until the testator’s death.
omnia prasesumuntur contra spoliatorem

Latin: all things are presumed against a wrongdoer.
omnia praseumuntur legitime facta donec probetur in contrarium

Latin: all things are presumed to have been legitimately done, until the
contrary is proved.
omnia praesumuntur rite et solemniter esse acta

Latin: all acts are presumed to have been done rightly and regularly.
OMRLP Official Monster Raving Loony Party.
OMS Other Member State - of the European Union (EU).
Omsaetningafgift Danish: value added tax.
Omzetbelasting (OB) Dutch: value added tax.
on all fours Legal expression referring to a situation which is strictly analogous to

another. It has been used by HMRC such as in describing the extent to
which a previous decision binds them in the future.
on approval Goods delivered to a potential customer who may examine them and
either buy them or return them.
on call Description of situation where an employee is required to be available

for work should a need arise. This is common in the emergency services
and caring industries.
on call commuting When an employee has an emergency vehicle which is used for
commuting from home to a place of work solely so that the employee
and vehicle can be available to deal with a sudden emergency. This is
one of the two conditions which allows such a vehicle not to be
regarded as a taxable company car of the employee. The alternative
condition is that the employee was on call when using the vehicle
(HMRC leaflet 480).
on consignment Goods imported for post importation sale in the European Union (EU)
where the value of the sale is not known at the time of importation.
on demand Description of funds which can be provided immediately on request,

such as in a current account at a bank.
on-call Arrangement when a worker is available to work if needed. This

usually attracts a fee in addition to payment for any work actually done.
on-costs Additional costs of producing an item, particularly fixed costs of

production.
one-fortieth tax Tax imposed from around 1200 to 1204 by King John of one fortieth of
rents to fund the defence of the Holy Land.
one-off expenses Unique expenses. These are usually allowed for in a budget by a
contingency.
onerous contract Contract in which the unavoidable costs of meeting its obligations
exceed the economic benefits to be received from the contract (FRS
12).
onerous property Property of an insolvent person subject to such restrictions that the
trustee in insolvency may disclaim them rather than realise them.
one-stop shop Any government facility which aims to provide a service telling
someone from a single source all they need to know.
one-year money Investment where money is invested for one year.
ongoing actuarial valuation

Valuation of a pension scheme that assumes that:
• the scheme will continue in existence;
• new members will be admitted, and
• earnings will increase
(SSAP 24).
on-line (1) For Customs, the onward carriage of a through inter-airport removal
or a through transit by the inward carrier of the goods.
(2) In computing, Under the control of the computer or connected to
another computer.
on-line accounting Service whereby businesses can enter data on a website that produces
accounts for them automatically.
online Services HM Revenue & Customs provide a range of electronic services for
traders and other users who need to interact with the department, or the
processes that the department manage. These can be accessed via a
variety of routes, or 'Channels'.
on the cross Colloquialism for something obtained dishonestly.
on the finger American colloquialism for money given on credit.
on-the-job training When an employee is provided with training at the workplace.
on the market In terms of Scottish property a property is so described “when the fact
that is or may become available for sale is, with a view to marketing the
house, made public in Scotland by or on behalf of the seller” (Housing
(Scotland) Act 2006 s119(2)).
on the square Colloquialism for something obtained honestly.

[The term is also used to mean being a freemason.]
onus probandi Latin: the onus of proof.
opaque Term used by HMRC to describe transactions whose real nature is

concealed from it. The term is widely used in connection with offshore
funds and tax avoidance schemes.
opaquing liquid Liquid which is used to cover text on a document. Opaquing liquids
should not be used on accounting records which must always indicate
what has been written and when any mistakes were corrected.
op cit The book previously cited.
open account Customer account where the supplier allows credit without taking
security.
open cheque Cheque which has no crossing and which may therefore be cashed by
the holder. Open cheques are now very rare as they have little more
security than cash.
open cheque Term used for a cheque which has never had a crossing.
open credit Credit provided to customers without asking them for security.
open contract Contract for property that specifies only the names of the parties, the
identity of the property and the price. Certain obligations are then
placed on the purchaser and seller to complete the transaction.
open door policy Any policy which means that access is easily obtained. In human
resources, the term applies to managers who are readily available to
their staff.
open ended credit Arrangement whereby someone may borrow money or acquire goods or
services so that the total outstanding does not exceed a pre-agreed limit.
open ended investment company (OEIC)

Collective investment scheme with wider scope than a unit trust.
The investment portfolio belongs to the company that manages it.
The idea is to give small investors the benefit of diversified investment

and funds management. The investors hold shares in the company.
OEICs are created under Financial Services Act 1986 s75(8).
open ended management company

Company that sells unit trusts and similar.
open ended questions Questions which encourage the respondent to provide their own
answers and not select an answer from a selection. Such questions may
be used in market research.
open field Method of farming common at the start of the 18th century. The fields
were unenclosed and divided into strips farmed by families who have
several strips in different places. The system was inefficient and slowly
replaced by enclosures.
open item statements Statement sent to customers listing only the invoices that remain
unpaid.
This contrasts with statements that are simply a copy of the sales
ledger that lists all invoices issued and payments received.
The term has largely fallen into disuse as modern practice is always
to send open item statements, something that is easily achieved with
modern accounting software.
open market Market where anyone may buy and sell without restriction.
open market operations Buying and selling of government securities on the financial markets. If
the government sells large amounts of gilt-edged securities, this will
mean a transfer of funds from the private sector to the government. This
will happen as people buy securities and so have to write cheques or
transfer money to the Bank of England who sold them. This means that
the banks have less in the way of liquid funds available, and so they are
unable to expand their loans as quickly. Selling gilt-edged securities is
therefore considered to be a contractionary monetary policy.
open market option The rule which requires a pension provider to allow a person to obtain a
pension from any company, and is not restricted to taking a pension
from the company where the funds were accrued.
The Financial Services Authority has found that companies can
vary in their pension rates by as much as 25%, particularly for the less
usual forms of annuity.
open-ended investment company (OEIC)

A collective investment vehicle similar to a unit trust but less restricted
in where its funds may be invested.
From 25 February 1997, OEICs are subject to these special tax
advantages:
● corporation tax is charged at 20% regardless of size; and
● investors’ gains are exempt from capital gains tax.
opening accounts Accounts at the start of an accounting period. The figures must be the
same as the closing accounts of the previous period.
Accounts for profit and loss account items, such as sales and
expenses, are all opened at zero.
opening balance sheet Balance sheet as at the start of the accounting period. It is the same as at
the end of the previous accounting period.
opening balance Balance on an account at the start of an accounting period. It is the

same balance as at the end of the previous accounting period.
opening entry First entry made to an account.
opening price Price of a share or similar security at the start of a day’s trading.
opening stock Value of stock held by a business at the start of an accounting period.
This figure should already be recorded in the nominal ledger.
The business calculates its cost of goods sold as:
cost of goods sold = opening stock + purchases – closing stock.
The cost of goods sold is subtracted from turnover to give gross
profit.
operating activities The principal revenue-producing activities of the entity and other
activities that are not investing or financing activities.
operating and financial review (OFR)
operating and financial review Section of the annual report of many companies which explains
the main features of the financial statements.
operating budget Budget for income, costs and gross profit.
operating costing Costing which is based on the costs of providing the services.
operating cycle Time it takes from purchase of raw material to sale of the finished
product.
operating gearing The ratio of fixed operating costs to variable operating costs.
operating lease A specific type of lease under which ownership of the goods and any
profits or losses remain with the company (the lessor) leasing the goods
to us.
operating leverage Ratio of a business’s fixed costs to its total costs.

Fixed costs must be paid regardless of output, so fixed costs are
relatively a greater burden when output is low.
operating manual Book which shows how to use an appliance or how to do a job.
operating margin Operating profit as a percentage of sales.
operating profit Profit from the trading activities, before income from non-trading
activities is added and overheads are subtracted.
operating risk Exists where there are factors, such as a high level of fixed operating
costs, which would cause profits to fluctuate through changes in
operating conditions.
operating statement Financial statement which shows a business’s income and expenditure.
operating support Contributions toward an organisation's day-to-day, on-going expenses,

such as salaries or wages, utilities, office supplies, etc.
operating system The program that manages a computer's resources and performs basic
tasks, e.g. recognising keyboard input, sending output to the display
screen or printer, managing files and directories, controlling peripheral
devices, and allocating system resources to other software programs
running on the computer.
operation Activity or piece of work.
operational allowance Additional payment to members of the armed forces involved in

certain theatres of military action.
Such a payment is exempt from tax under Income Tax (Earnings
and Pensions) Act 2003 s297A.
Operation Bernhard Attempt by Nazi Germany in 1943 to destabilise the British economy
by producing forged bank notes from £5 to £50. The attempt largely
failed.
operation time Period for an operation to complete its cycle.
operational budget Budget for the operating activities of a business.
operational costs Costs of running the trading activities of a business.
operational gearing Situation where a business has high fixed costs, particularly when they
are funded by borrowing.
operational planning Planning how a business is to be run.
operational planning system (OPS)

Customs system which enables the capture of visit and risk data to
inform risk analysis across all taxes and regimes.
operational research Study of how a business works to see where any efficiencies can be
made.
Operation Maypole Customs operation against carousel fraud.
operation of law Where a legal right, duty or liability comes into being by a legal
provision rather than by one of the parties exercising a right, such as
under a contract.
operations review Review of how a business works to see if it can be made more efficient.
operative part Part of an instrument that caries out the main object.
operator Person who operates a piece of equipment, particularly a machine or

telephone switchboard.
opinion status enquiry A reference given by a bank or building society to confirm a customer
has run their account responsibly.
OPLR Occupational Pensions Law Reports, a series of law reports first

published in 1992.
opportunity cost of capital

The cost of capital for the best foregone investment option. So if a
person or a business has an opportunity to invest money and receive a
7% return but instead invests in a new business or project, the
opportunity cost of capital is 7%.
opportunity cost The cost of not pursuing the next best alternative.
This method of costing is used when there is a constraint which
prevents a business pursuing all alternatives. For example, if it has only
sufficient manpower to do A or B, the opportunity cost of A is the profit
that would have been earned by doing B, and vice versa.
OPR Outward Processing Relief
OPS (1) Occupational pension scheme

(2) Operational Planning System
OPT Outward Processing Trade
opted-out shop worker Worker in a shop or betting office who has served a notice of objection
to Sunday working (Employment Rights Act 1996 s41).
optical character recognition

System of stylised numbers printed in a special magnetic ink which can
be read directly into a computer. Such numbers appears on cheques.
optima est lux quae minimum relinquit arbitrio judicis; optimus judex qui minimum sibi
Latin: that system of law is best which confides as little as possible to
the discretion of the judge; that judge the best who trusts as little as
possible to himself.
optima legum interpres est consuetudo

Latin: custom is the best interpreter of law.
optimise Process which yields the best possible results, such as by the most
effective application of resources.
optimum selling price The price at which profit or revenue will be the greatest. This is one of
the few financial uses of calculus.
The law of diminishing returns states that the higher the price
charged, the fewer items will be sold. The optimum selling price aims
to find the price at which either profit or (occasionally) revenue will be
maximised.
optimus interpres rerum usus

Latin: the best interpreter of all things is usage.
opting out The decision by an employee to leave or not join an occupational

pension scheme provided by his/her employer.
option An agreement to buy or sell at a specific price at a specific date in the

future.
There are basically two kinds of option: a call option gives its
buyer the right to buy a specified number of shares at a particular price
before a specified date. The opposite of a call option is a put option,
which gives the buyer the right to sell a specific number of shares at a
particular price within a specified time period.
In practice, call and put options are often not exercised; instead,
investors buy and sell options before their expiration, trading on the rise
and fall of premium prices.
option arrangements For corporation tax, arrangements that can affect the treatment of
distributions. The term is defined and discussed in Corporation Tax Act
2010 s173.
option consideration Cost of acquiring an option for its grantor to sell.

The term used in Taxation of Chargeable Gains Act 1992 s145 in
relation to indexation allowance in determining gain on options.
option contract Right to buy shares or other security at a fixed price in the future.
option dealing Buying and selling share options.
option mortgage Mortgages provided before 1 April 1983 for those who did not qualify
for tax relief under the rules which then applied for mortgages. The loan
repayments received a subsidy from the government to reflect the tax
relief that would otherwise have been available.
option price Imprecise term which usually means the reference price for an option,
rather than the amount paid for the option.
option to pay Principle of taxation which states that people should be able to choose
whether to pay tax according to what transactions they choose to make.
This principle applied to the many 19th century excise duties and 20th
century purchase tax, where the rates were much higher on those items
considered luxuries.
This principle has now generally been replaced by the principle of

ability to pay, though vestiges of option to pay can be found in current
provisions for excise duty and VAT.
option to tax Charge of VAT on a supply that would normally be exempt.

It applies to certain supplies of land and buildings. If a decision to
charge VAT is made, the value of the supplies when calculating the
taxable turnover must be included. Option to tax is also referred to as
the Election to Waive Exemption.
option trading Buying and selling share options.
OR Ordinary residence or ordinarily resident.
order In trade, a request for goods or services to be supplied. An order has the
nature of an offer to contract.
order book Literally, a book or register which records all orders received for
supplying goods or services.
Colloquially, the term means the value of orders awaiting supply.
Sometimes it is expressed as the time it will take to complete the orders.
order book Record of orders received. Once they have been completed, they may
also be recorded in the sales book.
order for sale Court order requiring property to be sold to pay a debt.
order for sale of shares Order made by a court requiring that shares in a public company must
be sold because of unlawful restrictions imposed on them (Companies
Act 2006 s801).
order of discharge In insolvency, an order that a bankrupt may obtain from the court. This
releases the bankrupt from all debts other than those that arose from
fraud and from certain other debts (Insolvency Act 1986 ss280-281).
ordinarily resident (OR) Tax term to describe someone who normally lives in a particular
country. It requires more than just being resident, but less commitment
than domicile. The matter is explained under ordinary residence.
ordinary activities “Any activities which are undertaken by a reporting entity as part of its
business and such related activities in which the reporting entity
engages in furtherance of, incidental to, or arising from, these activities.
Ordinary activities include the effects on the reporting entity of any
event in the various environments in which it operates, including the
political, regulatory, economic and geographical environments,
irrespective of the frequency or unusual nature of the events” (FRS 3
para 2).
ordinary adoption leave (OAL)

Period that an employee may take off work in respect of adopting a
child (Social Security Contributions and Benefits Act 1992 s171ZK).
The period and pay are the equivalent to ordinary maternity leave.
Where a couple adopts a child, the partner (male or female) may claim
paternity leave and statutory paternity pay.
ordinary benefits Benefits provided by an community amateur sports club which do

not trigger a tax liability. The matter is discussed in the Inspectors’
Manual at BIM24340.
ordinary commuting “Means travel between —

(a) the employee’s home and permanent workplace, or
(b) a place that is not a workplace and a permanent workplace”
Ordinary commuting is not a deductible expense from employment
income.
ordinary contribution The normal rate of class 2 national insurance (Social Security
Contributions and Benefits Act 1992 s11), as against higher-rate
contributions.
ordinary interest Term sometimes used to describe interest calculated on the basis that
there are 360 days in a year, as against exact interest which calculates
interest on the basis of 365 days.
ordinary maternity leave A period of (from 1 April 2007) 39 weeks for which a female employee
is entitled to be absent from work. If she meets the relevant conditions,
she will receive statutory maternity pay during this period. This is
provided by Employment Rights Act 1996 s71.
ordinary residence (OR) Residence as seen in terms beyond mere physical presence in the UK.
The term is not defined in tax statutes.
It is habitual residence from year to year. A simple rule is that
someone is ordinarily resident if present in the UK for 91 days a year
over a four-year period. This is known as the substantial and habitual
visits rule or the 91-day rule. It is derived from the case Lysart v CIR
[1928] 13TC511. Guidance is also provided in the leaflet HMRC 6.
Guidance is provided in the Inspectors’ Manual at CBTM10020.
Part of it reads: “The term “ordinarily resident” is not defined, but its
established meaning is that a person is ordinarily resident if they are
normally residing in the United Kingdom (apart from temporary or
occasional absences), and their residence here has been adopted
voluntarily and for settled purposes as part of the regular order of their
life for the time being. In considering whether a person is ordinarily
resident, all the circumstances of the particular case will need to be
considered.”
The consequence is that a person who is non-resident may be
treated as such for income tax purpose if they are ordinarily resident. It
is also relevant in areas such as social security and housing.
ordinary resolution In company law, a decision of shareholders passed by a simple

majority, that is more than half of those who voted (Companies Act
2006 s282(1)).
An ordinary resolution may be taken by a show of hands unless a
ballot is required.
An ordinary resolution deals with all issues except those for which a
special resolution or unanimous resolution is required.
ordinary shares Shares whose holders own the company.

In company law, the term “means shares other than shares that as
respects dividends and capital carry a right to participate only up to a
specified amount in a distribution” (Companies Act 2006 s560(1)).
In the context of distributions, tax law defines them as “shares other
than preference shares” (Corporation Tax Act 2010 s160(1)).
ordinary statutory paternity pay (OSPP)

Paternity pay for one or two weeks that may be claimed by a father or
other partner of person who gives birth to or adopts a child. The
entitlement is set out in Social Security Contributions and Benefits Act
1992 s171ZA.
From 6 April 2011, this term replaces statutory paternity pay in
recognition that additional statutory paternity pay may be claimed
from that date.
ordinary watercourse “A watercourse that does not form part of a main river” (Flood and
Water Management Act 2010 s6(3)).
organic growth Expansion of a business simply by increasing the scale of its activities,
as against acquisitive growth where other businesses are acquired.
organic growth When a business grows from re-investing its profits rather than by
acquiring other businesses.
organisation General term for a business, charity or other commercial or non-

commercial body.
The term is used for some tax administration purposes. In particular,
where an organisation is registered for a tax provision, it may only use
that provision for activities which relate to the organisation.
organisation and methods (O & M)

Process of examining how functions operate with a view to seeing how
they may be made more efficient.
Organisation for Economic Co-operation and Development (OECD)

Body established in 1960 to assist member countries who get into
financial difficulties.
organogram Chart explaining how an organisation is run.
original gravity (OG) In relation to beer duty means the gravity of the liquid before
fermentation (Alcoholic Liquor Duties Act 1979 s3(1)(c)).
Customs notice 226 explains how this may be used to calculate the
alcoholic strength for beer duty.
original right For national insurance on share options, term used in Social Security
Contributions (Share Options) Act 2001 s3.
original seen Words attached to a copied document and signed by a person of repute
who has seen the original document and confirms that the copy is
accurate.
original shares Term used in Taxation of Chargeable Gains Act 1992 s116 in relation
to capital gains tax when there has been a reorganisation of a company
or its shareholding.
originating application Process by which legal proceedings are started.

For tax tribunal hearings, the process is set out in The Tribunal
rule 21.
originating products Products which have been 'wholly produced' in the European Union
(EU); or products which incorporate material not wholly produced in
the EU, but which has been sufficiently transformed in the EU.
origin of turnover In accounting, geographical segment from which products or services

are supplied (SSAP 25).
ornamental fish Term used in VAT notice 701/14 for tropical fish and similar. Such fish
are standard-rated. They are not zero-rated as food, even when such fish
are edible.
ornamental vegetable Term used in VAT notice 701/14 to describe such products as
ornamental cabbage. Such products are standard-rated if they are sold
for their appearance, even if the product is edible.
ORR Office of Rail Regulation
Osborne, George English Conservative politician (1971- ) who has been Chancellor of
the Exchequer since 12 May 2010 under the coalition government led
by David Cameron.
Osborne case Court case of 1908. Railwayman W V Osborne challenged the right of
his trade union to pass part of his subscription to the Labour party. The
House of Lords ruled that this was an illegal political levy. This ruling
was reversed by Trade Union Act 1913.
OSP Occupational sick pay.
OSPP Ordinary statutory paternity pay.
OSPRE Objective Structured Performance Related Examination.
ostensible authority Authority a person appears to have, such as when someone places
goods on behalf of an organisation. Problems can arise if that person
transpires not to have such authority.
ostensible partner Person who allows his or her credit to be pledged as a partner even
though he or she is not a partner. In effect, this is the same as a shadow
partner.
Broadly the ostensible partner has all the duties but none of the
rights of a real partner.
ostmark Currency of East Germany until reunification with West Germany in

1990.
ostrich For VAT purposes, ostriches and their eggs are zero-rated as food from
1 April 1995. Previously they were standard rated as non-edible
animals.
OTC (1) Operations Tariff Classification.

(2) Over the counter.
other capital Any form of capital employed by a business which does not come
within the scope of separately listed forms of capital.
other financial information

Term used in Statement of Principles for Financial Reporting to
include reports about an entity which have not been prepared by the
entity. Example include news reports and analysts’ reports.
other long-term capital Any form of long-term capital used in a business which does not come
within the scope of a separately listed form of long-term capital.
other money purchase arrangement

A money purchase arrangement other than a cash balance arrangement
An arrangement is an other money purchase arrangement where the
member will be provided with money purchase benefits, and the
amount that will be available to provide those benefits is calculated
purely by reference to payments made under the arrangement by or on
behalf of the member. This means that in an other money purchase
arrangement the capital amount available to provide benefits (the
member’s “pot”) will derive wholly from actual contributions (or
credits or transfers) made year on year.
The scheme administrator or trustees may use the payments made
under the arrangement to make investments of any kind on behalf of the
member (for example, cash on deposit, shares, other investment assets,
a life assurance policy on the member’s death). As long as the pot
ultimately used to provide benefits is wholly derived from the original
payments, the arrangement is an other money purchase arrangement.
The subsequent investment income and any capital gains are derived
from payments made under the arrangement, and they themselves
become part of the member’s pot.
It is a feature of other money purchase arrangements that the
member bears all the investment and mortality risk. The scheme simply
pays out whatever benefits the amount in the pot, including the
proceeds of all the investments that have been made using the payments
into the scheme, will support.
other short-term capital

Any form of short-term capital used in a business which does not come
within the scope of a separately listed form of short-term capital.
other types of general purpose financial report

Term used in Statement of Principles for Financial Reporting to
include such documents as the directors’ report, chairman’s
statement, operating and financial review, historical summaries and
trend information.
otiose No longer relevant; superfluous.
OTS Office of Thrift Supervision, US government department.
ouguiya Currency of Mauritania.
ounce Imperial unit of weight equal to 28.349523 grams. There are 16

ounces to a pound.
OUS Company’s unappropriated surplus at the end of a previous accounting

period. The abbreviation is used in Income and Corporation Taxes Act
1988 s444AK in relation to the tax implications of mutual life assurance
business.
outdoor relief Term used in the 19th century to distinguish help given to the needy
while they stayed in their own homes, as against help given in the form
of the workhouse.
outdoor relief Assistance provided to the poor under the Poor Law Act 1601. The
assistance took the form of money, food, clothing and other essentials.
This relief was supposedly abolished in 1834, though in practice it
continued.
Outer House Part of the Court of Session in Scotland. It comprises all but eight of its
judges.
outflow Cashflow of money going out of a business or other entity.
outgoing auditor Auditor who the company wishes to replace (Companies Act 2006
s514(1)). If the auditor does not agree to the replacement, he has the
right to make representations to members of the company.
outgoing partner Person who is leaving or has left a partnership. Such a person is not
liable for any debts of the partnership which arose after he left
(Partnership Act 1890 s17).
outgoing resources Figure in SOFA for all forms of expenditure and liability.
outgoings All expenses viewed collectively, particularly in relation to land.
outing Term used when some personal detail is disclosed which the person
does not want disclosed. Most commonly this relates to disclosure that
the person is homosexual.
outlay Money spent at the start of a business or project.
outlook View of what a person or business expects to happen.
out of bounds Area which a person may not visit. The term is also used for a subject
which may not be discussed.
out of date Description of something which has lost of its validity because a date or
period has passed. It can apply to a fashion, idea, document, product or
cheque (though the term stale is more common for a cheque).
out of order (1) Not in the correct sequence.
(2) Not working, as applied to a machine.
out of pocket Description of someone who has not been fully compensated for
expenses he has incurred.
out of pocket expenses Incidental expenses incurred, such as odd items of travel or
refreshment.
out-of-work support Term for social security such as jobseeker's allowance and income
support for the unemployed.
output The work which is done by a business in producing its goods or

services.
output per hour Amount of work achieved in one hour.
output tax The VAT that is due on taxable supplies.
output work One of the four bases for determining whether national minimum
wage (NMW) regulations have been followed.
Output work is when a worker is paid according to how has been
produced rather than how many hours have been worked. Such
arrangements are common in areas such as assembling items at home,
cutting cloth for clothing, putting literature into envelopes, delivering
newspapers and picking fruit.
Compliance with the NMW requires either a record of hours
worked and payment at the NMW for those hours, or a system of rated
output work. Rated output work applies from 1 October 2004 when it
replaced the previous fair estimate agreement.
Rated output work requires (from 1 October 2005) the worker to be
paid 120% of the NMW for the amount of work which can reasonably
be done within one hour. For example, if the NMW were £6 an hour
and a worker could be expected to assemble ten items in an hour, a
worker must be paid at least 72p per item assembled, on the basis of £6
x 120% ÷ 10.
Between 1 October 2004 and 30 September 2005, rated output work
was calculated as 100% of NMW. Previously it was calculated as 80%.
The hourly output may be determined by either conducting a test or
estimating. A test must involve either all workers involved or a
representative sample. The test must be conducted in conditions similar
to those the worker will enjoy. The number of units produced in an hour
is known as the mean hourly output rate.
outright gift Gift where all rights of ownership have been given away, as against (for
example) a gift with reservation.
outside the scope For VAT, activities “that are not covered by VAT law” (VAT notice
701/1).
These include supplies made by someone who is not a taxable
person; those made outside the UK (other than certain international
services); or those not made in the course or furtherance of business.
Such supplies do not bear VAT but are not regarded as exempt or zero-
rated.
outsourcing Commercial arrangement for a function to be transferred from the

organisation to someone outside.
outstanding capital In the context of controlled foreign companies, the term “means the
total value of all the capital interests in the company, less the value, as
shown in the company’s accounts, of any advances made by the
company to persons resident outside the United Kingdom and falling
within paragraph (i) or paragraph (ii) of sub-paragraph (3)(b) above”.
(Income and Corporation Taxes Act 1988 Sch 25 para 11(4)(c).
outstanding cheques Cheques which have been issued but do not yet appear on a bank
statement. This item is the total value of such cheques and is used in a
bank reconciliation.
outward processing relief (OPR)

System of duty relief that gives full or partial relief from import duty
when European Union (EU) goods are exported outside the EU for
process or repair and are subsequently re-imported.
outward processing trade Part of a Customs procedure concerned with the temporary export of
textiles to certain Eastern European countries for processing and
reimport into the European Union (EU).
Before exporting the goods, the exporter must obtain an Outward
Processing Trade (OPT) authorisation from the relevant government
department.
outward processing A process which provides relief from Customs duty when goods are
imported which were exported purely for a process such as repair or
assembly.
ovem lupo committere Latin: to entrust the sheep to the wolf.
over (1) In conveyancing, a “gift over” or a “limitation over” is a gift or

limitation that comes into effect on the determination of an estate, such
as on the marriage of a beneficiary.
(2) In accounting, means “more than”.
over absorbed overhead Absorbed overhead where the budgeted figure proves to be greater than
the actual figure.
over absorption Situation where the amount of indirect costs allocated to direct costs is
greater than the actual outcome justifies.
overall balance of payments

Balance of payments of a country considering all elements together.
This includes looking at visible and invisible trade, and long-term and
short-term trade.
overall return Amount received from an investment from all sources less any related
losses. For a share, the overall return will include both dividends
received and capital gain. From this will be subtracted any dealing costs
and stamp duty. The figure for overall return may be before or after tax,
depending on the purpose for which it is determined.
overall Description of something which applies to the whole, such as a report

on an “overall increase in profits” means that the profits of the
organisation as a whole rose though there may have been declines in
particular areas.
overborrowed Description of a person or business who has borrowed very large

amounts of money relative to their assets.
overcapitalised Description of a business which has more capital than it needs.
overcharge Charge more than one should.
overcrowding notice Notice which a local authority may serve under Housing Act 2004 s139
when it believes that a house in multiple occupation is overcrowded.
over-dependence Risk that a business is too dependent on one customer or supplier.
overdraft The situation when a person has withdrawn more money from his or her
bank account than is in there.
An overdraft is either an:
● authorised overdraft; or
● unauthorised overdraft.
An authorised overdraft is one agreed in advance with the bank,
whereas an unauthorised overdraft is not agreed but which the bank is

prepared to tolerate. A bank has no obligation to allow an unauthorised
overdraft and may dishonour payment rather than allow an account to
become overdrawn.
Overdrafts usually attract bank charges in addition to interest. The
rates for unauthorised overdrafts are often much higher, with interest
rates above 20% quite common.
overdue Description of a debt which remains unpaid even though the date by
which it should have been paid has past.
overestimate An estimate which provides a figure greater than the actual figure.
overfill tolerance In beer duty, the maximum amount that a quantity of a large pack
(usually keg or cask) may depart from the stated quantity. These
tolerance are set out in Customs notice 226. They are around 1%.
overgeared Description of a company which has high levels of borrowings relative

to its assets or equity capital.
overhang Large number of shares or amounts of a commodity which remain

unsold. This has the effect of depressing the price.
overhead absorption rate Rate at which overhead costs are added in to the direct costs.
overhead budget Budget for the general overheads of a business, as against for direct
production costs.
overhead costs Expenses; costs which relate to being in business rather than to
producing the goods or services.
These are usually allowable against taxable profits. The main
exceptions are depreciation (for which capital allowances may be
claimed instead), personal expenditure, entertaining customers and
fines.
overheads Another term for overhead costs.
over-hedged Description of a financial risk for which the hedging is excessive.

Where this is part of a risk transfer scheme, it may be caught by anti-
avoidance provisions of Finance Act 2010 s46 and Sch 16.
over-insurance When property is insured for more than its value.

The general rule is that payment may only be made up to the value.
This is specifically stated in Marine Insurance Act 1906 s32(2).
overlapping period For group relief, the period which is common to the claim period and
surrender period (Corporation Tax Act 2010 s142(1)).
overlapping tax Term used in 1944/45 when PAYE was introduced. A worker could be
liable to pay tax on his current earnings under PAYE and on the
previous year’s tax under the old system. The overlapping tax was
cancelled.
overlap profit Profit for a period which is covered by two basis periods for income
tax.
The profits for one of these periods qualifies for overlap relief
when the business ceases.
overlap relief The part of a business’s first year of trading which is taxed twice. This
amount may be deducted from taxable profits in the final year of
trading.
In the first year that a business trades, it is taxed on the profits
actually earned in the tax year. In the second and subsequent tax year, it
is taxed on the profits earned up to the accounting date in the tax year.
There is usually a short period at the start of the business whose profits
are taxed in each year and are therefore taxed twice. The amount of
double taxation which thus arises is known as overlap relief as the two
basis periods have overlapped.
The amount of overlap relief is deducted from taxable profits in the
final tax year when the business ceases. As overlap relief is not indexed
or uplifted in any way, the amount may be relatively small.
overpayments Overpayments from a customer kept by a trader are trading income

(Pertemps Recruitment Partnershop Ltd v HMRC [2011] UKUT B8).
overrider Commission which is paid in addition to all other commission.
overseas Appertaining to a foreign country. The word “oversea” is sometimes

used as an adjective with the same meaning.
Overseas arrangement active membership period

This is the period beginning with the date on which the benefits first
began to accrue to, or in respect of, the individual under the recognised
overseas scheme arrangement or, if later, 6 April 2006 and ending
immediately before the recognised overseas scheme transfer. If benefits
ceased to accrue under the recognised overseas scheme arrangement
before the transfer then it is this date on which the overseas
arrangement active membership period is treated as ending.
overseas branch register

A register of shareholders or other members of a limited company’s
overseas branch. The register may be kept in the overseas territory
The territories are basically former British territories. The overseas
branch register is regarded as part of the company’s main register
which is the register of members.
overseas conference The ability to deduct such expenses from taxable profits follow the
normal wholly and exclusively rule. How they apply to this item is
Overseas Countries and Territories (OCT)

For customs duties, collective term for a large number of states which
are treated similarly for the purposes of trade preferences.
The OCT group consists of states which are not part of the single
market, but which have historical links with various European Union
member states. A complete list of the states included in the OCT group
can be found in Volume 1 of the Tariff.
overseas division Section of an organisation which deals with other countries.
overseas freezing order “An order:

(a) for protecting, pending its transfer to the participating country,
evidence which is in the United Kingdom and may be used in any
proceedings or investigation in the participating country, and
(b) in respect of which the following requirements of this section
are met” (Crime (International Co-operation) Act 2003 s20(2)).
The conditions are broadly that it the order is issued by a court
under its criminal law in a country which participates in these
arrangements.
overseas funds Investment funds in other countries.
overseas life insurance company

In relation to taxation of insurance companies, means “an insurance
company not resident in the United Kingdom but carrying on life
assurance business through a branch or agency in the United Kingdom”
overseas markets Markets in foreign countries.
overseas medical treatment

For an employee, this may be exempt from tax under Income Tax
overseas pension Pension paid in a foreign country. Such payments are generally
excluded from the personal estate subject to inheritance tax (Inheritance
Tax Act 1984 s153).
Overseas pension scheme A pension scheme is an overseas pension scheme if it is not a registered
pension scheme but it is established in a country or territory outside the
UK and satisfies the requirements in the Pension Schemes (Categories
of Country and Requirements for Recognised Overseas Schemes)
Regulations 2004. (Regulations not finalised yet).
overseas relationship In terms of civil partnerships, means an equivalent relationship which is

registered outside the UK in the law of the overseas country.
overseas taxation Taxation in another country. Where tax falls to be paid in two countries,
it may qualify for double taxation relief.
overseas visitor For tax purposes, a description of someone who buys a boat.
He normally lives outside the European Union (EU), has not been in
the EU for more than 365 days in the two years before the date they buy
the boat and intends to leave the EU, within six months of the date of
delivery of the boat.
overspend Spending too much, particularly when the actual figure is greater than
the budgeted figure.
overstate Putting an amount in the accounts which is greater than it should be.
overstock Hold too much stock for the requirements of a business.
over the counter Description of lawful trading, as against under the counter.
over the counter market (OTC market)

Secondary market in shares which are not listed on a stock exchange.
overtime Payment for additional working by an employee.

An employee is not entitled to payment for overtime unless the
contract allows for this. If it is paid, it is sometimes paid at a premium
known as time and a third, time and a half, double time etc.
The additional payment is known as the overtime premium. This is
excluded from costing in management accounting.
The overtime premium is also ignored when determining whether a
worker has been paid the national minimum wage.
overtime pay Addition to an employee’s normal gross pay in respect of additional

hours works.
overtime premium Amount by which payment for overtime exceeds the normal rate of
pay.
overtrading Situation where a company increases its sales too quickly, with adverse
consequences, particularly running out of cash.
overvalue Ascribe a greater value than is justified.
owe Be in a position where you must pay money to another person or

business.
Owl Portable device which states how much electricity is being used in a
building.
owner Person who has legal title to land or goods though he may not have
occupation or possession of them.
For Customs purpose, owner “in relation to an aircraft, includes the
operator of the aircraft” (Customs and Excise Management Act 1979
s1(1)), and owner “in relation to a pipe-line, means (except in the case
of a pipe-line vested in the Crown which in pursuance of arrangements
in that behalf is operated by another) the person in whom the line is
vested and, in the said excepted case, means the person operating the
line” (Customs and Excise Management Act 1979 s1(1)).
owner-occupier Person who owns the residence in which he or she lives. Someone is an
owner-occupier even if they have a mortgage or other outstanding
secured loan.
owners’ equity Value of a company which is owned by the shareholders.
ownership Having legal title to goods rather than just physical custody. The latter
is usually called possession. Ownership is a package of legal rights.
In trusts, ownership is distinguished between legal and beneficial
(or equitable). In a trust, the trustees are the legal owners, while the
beneficiaries are the beneficial owners.
ownership interest The residual amount found by deducting all of the entity's liabilities
from all of the entity's assets. (Also called equity interest.) This
definition is given in Statement of Principles para 4.37.
P
P (1) Series of forms used by HMRC to administer the PAYE scheme.
The more common forms include:
P1 tax return
P7X general instruction to update employee tax codes
P11 record of employee’s pay and tax
P11D annual return of employee benefits
P38(S) student’s declaration
P 45 employee leaving
P 46 employee starting (without a P45)
(2) Suffix for tax code used until 2009/10. It indicates that the taxpayer
is entitled to the age allowance by being born before 6 April 1935. Such
taxpayers now have the V suffix.
(3) Abbreviation sometimes used in an Act of Parliament to identity a
person, eg Identity Documents Act 2010 ss4-6.
(4) Probate, Divorce and Admiralty Division Law Reports, published
from 1891 to 1971.
P9D Rare form used in the PAYE system to disclose expenses paid to
employees who are not P11D employees.
P11D real definition is “employees earning £8,500 or more and directors”

(Income and Corporation Taxes Act 1988 Chapter II).
P11D employee Widely used but unofficial term for an employee who comes within the
scope of the P11D tax return.
Such an employee is one whose earnings are at least £8,500 a year
(including taxable expenses) or who is a director (with a few
exceptions).
P45 Three-part form produced when an employee leaves for any reason.
P46 Form that is completed by a new employee who does not provide the
employer with a P45 certificate.
P46(car) Form that an employer completes to tell HMRC about changes in a

company car provided to an employee. This allows adjustments to be
made to the employee’s tax code. The form was discontinued from 6
April 2010, but being reintroduced in electronic form from 6 April
2011.
P326 Form provided by the Post Office for use when a single packet is sent
by a VAT-registered business to a business customer in another EU
member state. This form is part of the documentary evidence needed to
justify zero-rating such a supply. The matter is explained in VAT notice
725.
PA (1) personal assistant

(2) per annum
(3) public accountant.
pace Latin: by permission of.
PACE Police and Criminal Evidence Act 1984.
PACE code of practice One of several codes of practice issued under Police and Criminal
Evidence Act 1984.
There are eight such codes:
• A: searching a person who has not been arrested
• B: searching premises and seizing property found
• C: detention, treatment and questioning of suspects
• D: identification of suspects
• E: sound recording of interviews of suspects
• F: visual recording of interviews of suspects
• G: statutory powers of arrest
• H: detention of terrorism suspects.
pace tua Latin: by your leave.
Pacioli, Luca A Venetian monk (c1446-1517) who first codified what became known
as double entry bookkeeping in 1494.
package (1) Goods wrapped so that they may be sent by post or courier.
(2) A collection of assets, attributes, rights or similar which are offered
as one item.
(3) “In relation to beer, means to put beer into tanks, casks, kegs, cans,
bottles or any other receptacles of a kind in which beer is distributed to
wholesalers or retailers” (Alcoholic Liquor Duties Act 1979 s4(1)).
package deal Agreement which deals with more than one issue.
package test VAT term for a test which may allow a printer to zero-rate an entire
consignment of material for a charity even though some of it would not
be zero-rated if supplied separately.
The term is used in VAT leaflet 701/1 and is explained in leaflet
701/10.
packaged bank accounts Bank accounts that come with benefits and are usually subject to a
charge.
packaging tape Adhesive tape used for sealing cartons for delivery. The tape is often
brown and 66mm wide.
packed lunch Food prepared for eating later, often supplied by hotels.
From 1 July 1991 they are specifically standard-rated for VAT as a
supply of catering.
pacta dant legem contractui

Latin: agreements constitute the law of contract.
pacta quae contra leges constitutionesque vel contra bonos mores fiunt, nullam vim habere,
indubiati juris est
Latin: it is undoubted law that agreements which are contrary to the
laws and constitution, or contrary to good morals, have no force.
PAH Polycyclic aromatic hydrocarbon, a pollutant.
paid basis Tax term for provisions which take effect when an actual payment is
made rather than where an accounting entry is made which does not
transfer funds between parties. The term is used in connection with
such matters as interest on late payment of corporation tax by connected
companies.
paid or incurred basis Arrangement reached by some tax inspectors before 1999 that allowed
expenses to be claimed in the period for which the expense was paid or
incurred, regardless of the accounting treatment.
Such arrangements were informal but binding on the tax authorities.
These arrangements have now generally been ended. The matter is
paid or put at disposal by reason of the employment

Expression used in Income Tax (Earnings and Pensions) Act 2003 s71
for determining when a director or employee has received a payment
which triggers a liability to tax.
paid up insurance Insurance policy on which all required premiums have been paid.
paid up scheme A pension scheme where no contributions are being paid, but which has
assets that are held which may be used to provide benefits for the
relevant scheme member.
paid up share Share where the shareholder has provided all the sum required. There
are no outstanding calls on the share.
paisa One hundredth of a rupee, currency of India.
pandemic Outbreak of illness that affects a large number of people. Rules

regarding statutory sick pay may be relaxed during a pandemic.
panty liner For VAT, this is generally reduced rated for sanitary protection but
standard-rated for incontinence. Details are given in VAT notice
701/18.
PAP Production Account Point.

For tobacco duty, the precise, clearly defined point through which
all tobacco products are channelled and where the production account is
raised.
paper In finance, the term is also used for documents which exist on paper,
such as share certificates or bills of exchange.
paper for paper relief In capital gains tax, a relief given in Taxation of Capital Gains Act
1992 s169N(4) where a security is disposed of for another security.
paper gold Colloquial name for special drawing rights (SDR).

SDR were developed as an alternative to gold for large international
transactions. This was traditionally done in gold, but as the world stock
of gold was finite, some additional form of international currency was
required.
paper loss Loss made according to accounting adjustments but which is not
reflected by any loss in cash. A common example is when an asset falls
in value.
paper millionaire Person who owns shares and other securities worth at least one million
pounds (or one million of any other currency).
paper money Cash in the form of banknotes, as against coins.
paper offer Takeover bid where a company offers its own shares as a replacement
for shares in the acquiree company.
paper profit Profit which arises from accounting adjustments but which is not
reflected by any additional cash. A common example is when an asset
increases in value.
par At the same value or price. The term is commonly used for shares.
par avion French: by airmail.
par value The nominal value of a share.
parage Latin: equality of blood, name or dignity.
paragium Latin: equality of blood, name or dignity.
parallel running Operating two systems together as part of the process of moving from
one system to the other, such as computerisation. It is also known as
dual running.
parallel trade goods “Goods manufactured with the consent of the right-holder, but
marketed without such consent” (Customs notice 34). Customs may
seize such goods.
parcel of shares Fixed number of shares considered as a single entity.
parent Mother or father. For most legal and financial purposes, this includes
someone who has adopted a child, or a guardian.
There are several tax provisions relating to parenthood. These are
explained in the entry for child.
parental leave Right given to parents to take unpaid parental leave from work in
certain closely defined circumstances. The right is given from 15
December 1999 in Employment Rights Act 1996 ss76-79. This right is
in addition to maternity leave, paternity leave and time off for
dependants. There is also a right to request flexible working.
The main conditions of parental leave are:
● the employee must have worked for at least one year;
● the leave must be to care for a child;
● the parent must have parental responsibility for the child;
● the child must be either disabled or under five years old;
● the parent must give 28 days’ notice (with some exceptions).
Caring for a child includes spending time with very young children,
accompanying a child to hospital, checking out a new school, settling a
child into new care arrangements, and taking a child to stay with
grandparents.
The parent is entitled to up to 13 weeks’ unpaid leave, 18 weeks if
the child is disabled. Although the parent is not paid, other contractual
rights continue. The employee is entitled to return to the same job or an
equivalent job, and not to suffer any detriment in employment.
An employer may make a parental leave agreement.
The employer may require the parent to produce evidence to justify
parental leave. In some cases, the employer may have the power to
postpone the leave.
The amount of leave is per child; it is not an annual limit. So an
employee who has taken eight weeks’ parental leave in the child’s first
year, only has five weeks’ remaining leave even if the parent changes
job. There is no mechanism for ensuring compliance.
Parental leave may only be taken in whole weeks. Any leave taken
in a week counts as one week, even if for just one day.
These provisions only apply to the statutory right. An employer and
employee may agree additional contractual or discretionary

arrangements on whatever terms they wish. Such leave is usually
known as compassionate leave.
parental leave agreement An arrangement made between an employer and employees regarding
parental leave.
There are four types of agreement which may be made. The
employer and employees may agree to:
● an individual agreement;
● a collective agreement; or
● a workforce agreement.
If no agreement is reached, a statutory arrangement applies.
An individual agreement is made between an employer and one
employee and becomes part of that employee’s contract of employment.
A collective agreement is made between the employer and a
recognised trade union. A workforce agreement is similar to a collective
agreement when there is no recognised trade union.
parental responsibility The responsibility a parent has for a child under 18 years old. This must
be established for a parent to be able to claim parental leave.
Under parental leave, the mother always has parental responsibility.
A father has parental responsibility if:
● he was married to the mother when the child was born;
● a court has made an order of parental responsibility;
● he has a formal agreement with the mother.
A person does not have to live with the child or the mother to have
parental responsibility.
A person who adopts a child assumes parental responsibility.
parent body Body to which another body is accountable.
parent company Company which controls one or more subsidiaries in a group. It usually
has the same meaning as parent undertaking.
parent or remoter forebear

Term used in some Acts of Parliament to mean ancestor. The word
means, parent, grandparent, great-grandparent, great-great-grandparent
etc.
parent undertaking “An undertaking is the parent undertaking of another undertaking (the
subsidiary undertaking) if any of the following apply:
(a) it holds a majority of the voting rights in the undertaking;
(b) it is a member of the undertaking and has the right to appoint or
remove directors at meetings of the board on all, or substantially all,
matters;
(c) it has the right to exercise a dominant influence over the
undertaking:
(i) by virtue of provisions contained in the undertaking’s
memorandum or articles; or
(ii) by virtue of a control contract. The control contract must
be in writing and be of a kind authorised by the memorandum or
articles of the controlled undertaking. It must also be permitted by the

law under which that undertaking is established;
(d) it is a member of the undertaking and controls alone, pursuant to
an agreement with other shareholders or members, a majority of the
voting rights in the undertaking:
(e) it has a participating interest in the undertaking and:
(i) it actually exercises a dominant influence over the
undertaking; or
(ii) it and the undertaking are managed on a unified basis;
(f) a parent undertaking is also treated as the parent undertaking of
the subsidiary undertakings of its subsidiary undertakings” (FRS 2 para
14, which continues which an explanation of member of another
undertaking).”
parent with care Parent who looks after a child and who usually receives payments from
the other parent, known as the non-resident parent.
Note that the correct term is “parent with care”, not caring parent.
Pareto principle Observable phenomenon that in many situations, 80% of the effects
come from 20% of the causes. An example is a company that earns
80% of its profits from 20% of its product. It is a widely used rule of
thumb in business management.
The term comes from the Italian economist (1848-1923) who first
postulated the principle in 1906.
pari passu Latin: “with equal step”. Applies to the principle that creditors in the
same rank are paid at the same rate from distributions in an insolvency.
parish clerk Person who takes the minutes and deals with administrative matters of a
parish council. From 6 April 2011, such a person must be taxed as an
employee.
parish tax An experimental tax of 1371 which led to the poll tax.
parity Equality, such as when shares are trading at their nominal value.
parking fine Fine for illegal parking of a vehicle, such as not paying, exceeding the
time limit, not parking in a proper space, and similar.
Where an employer pays a parking fine incurred by an employee,
HMRC says this is a taxable benefit to the employee if the fine was
handed to the employee at the time or if the car belongs to the
employee. It is not a taxable benefit if the fine was paid by the
employer as registered owner (Inspectors’ Manual at BIM42520).
Parliamentary pension funds

Funds set up under House of Commons Members’ Fund Act 1939. Its
tax treatment is set out in Income and Corporation Taxes Act 1988
s613.
part delivery (or part release)

Delivery by a Transit Shed Operator of part of a Customs released
consignment.
part disposal For inheritance tax provisions, the term “means a disposal of property
which does not consist of or include the whole of each property which
is one of associated properties and of which there has been a
conditionally exempt transfer” (Inheritance Tax Act 1984 s32A(6)).
For capital gains tax, “there is a part disposal of an asset where an
interest or right in or over the asset is created by the disposal, as well as
where it subsists before the disposal, and generally, there is a part
disposal of an asset where, on a person making a disposal, any
description of property derived from the asset remains undisposed of”
(Taxation of Chargeable Gains Act 1992 s21(2)(b)).
Provisions for part disposals of long-funded plant and machinery
are given in Taxation of Chargeable Gains Act 1992 s42.
part exchange Sales method which involves taking in an old item as part payment for a
new item. This method is particularly common for selling cars, where
the old car may be accepted as part payment of a new car. The old car is
often accepted at a value above its second-hand price as a means of
clinching the sale.
For the purposes of income tax or corporation tax, the car must be
valued as part of the purchase price. From August 1994 this may be at
the car’s trade value and need not be at a higher price allowed to clinch
the sale.
part shipment The description for each of the two or more parts of a split export
consignment.
partial disability A disability which is less than total (according to the particular
definition relating to the contract in question) but still sufficient to
hamper the individual in his or her occupation.
partial exemption (PE) In VAT, the procedure which may be required when a VAT-registered
trader makes both taxable and exempt supplies. (Taxable supplies
include zero-rated supplies.) Partial exemption seeks to restrict the
amount of input tax which the trader may claim on the VAT return,
either as a deduction from the output tax payable or as a repayment
from, HMRC. Banks and other financial institutions are always partially
exempt.
The principle is simple. Suppose a trader has taxable supplies of
£200,000 and exempt supplies £100,000 and incurs input tax of
£60,000. Two-thirds of the output is taxable, so only two-thirds of the
input tax may be claimed. In this example, £40,000. The other £20,000
is an additional cost to the trader.
While the principle is simple, the operation is notoriously complex.
Some small traders may be excused partial exemption if:
● their average monthly input tax does not exceed £625
(unchanged from 1994); and
● the exempt input tax does not exceed 50% of VAT on all
purchases (introduced to counter the toothbrush scheme).

Such traders may claim back all their input tax and need not be
concerned about partial exemption.
For other traders, the standard method is normally used unless a
special method can be justified.
Supplies and their related purchases are excluded if they can be
exactly matched, such as if a bank sells money boxes. Some other
supplies are also excluded (such as leases). From this a percentage is
calculated according to a detailed procedure based on previous figures.
The percentage determines how much input tax may be claimed back.
This is subject to an annual adjustment which amends the input tax
claimed in the light of figures for the current year.
Where the standard method is not appropriate, a special method
may be agreed with HMRC. From 17 April 2002, HMRC may use the
standard method override where, exceptionally, the trader is using the
standard method and it does not give a fair apportionment of tax.
Partial exemption has been part of the VAT system since the tax
was introduced in 1973. The present system was introduced on 1 May
1992. There was another revision in 1987. In particular, it should be
noted that what is now called the standard method was known as the
special method between 1987 and 1992.
partial exemption method A method used to apportion residual input tax under partial
exemption.
partial intestacy When not all a person’s property can pass on their death under the
terms of a will. This is usually because property has been overlooked
(such as when there is no residuary legatee), or when a provision fails
for any reason.
The property which does not pass in accordance with the will passes
under the provisions of the Administration of Estates Act 1925 and
subsequent legislation.
partial rejection Where a buyer of goods has the right to reject some of the goods.
Sale of Goods Act 1979 s35A states that in such circumstances, the
buyer does not lose the right to reject the rest of the goods. In the
absence of a specific provision, the buyer must either accept or reject all
the goods.
particeps criminis Latin: partner in crime. Person who shares in a crime; accessory.
participating dividend “A dividend (or part of a dividend) on a non-equity share that, in

accordance with a company’s memorandum and articles of association,
is always equivalent to a fixed multiple of the dividend payable on an
equity share” (FRS 4 para 13).
participating equity holders

In relation to distribution rights of a company being wound up, means
“the equity holders of company B [being wound up] —
(a) to whom the profit distribution would be made, or
(b) who would be entitled to participate in the notional winding up”
participating interest “An interest held by an undertaking in the shares of another undertaking
which it holds on a long-term basis for the purpose of securing a
contribution to its activities by the exercise of control or influence
arising from or related to that interest.
(a) A holding of 20% or more of the shares of an undertaking shall
be presumed to be a participating interest unless the contrary is shown.
(b) An interest in shares includes an interest which is convertible
into shares, and includes an option to acquire shares or any interest
which is convertible into shares.
(c) An interest held on behalf of an undertaking shall be treated as
held by that undertaking” (FRS 2 para 15).
The company in which a participating interest is sometimes known
as an associated company.
participating interest “An interest held in the shares of another entity on a long-term basis for
the purpose of securing a contribution to the investor’s activities by the
exercise of control or influence arising from or related to that interest.
The investor’s interest must, therefore be a beneficial one and the
benefits expected to arise must be linked to the exercise of its
significant influence over the investee’s operating and financial
policies. An interest in the shares of another includes an interest
convertible into an interest in shares or an option to acquire shares.
“Companies legislation provides that a holding of 20 per cent or
more of the shares of an entity is to be presumed to be a participating
interest unless the contrary is shown. The presumption is rebutted if the
interest is either not long-term or not beneficial.”
(FRS 9 para 4).
participation charge or fee

A payment which allows players to take part in a game. It is separate
from and additional to the payment for cards. The maximum charges
are laid down by the Gaming Act 1968 and the Betting, Gaming,
Lotteries and Amusements (Northern Ireland) Order 1985.
participation quiz Another name for a television quiz.
participative budgeting Budget process which involves consultation with those affected.
participator For companies, “a person having a share or interest in the capital or

income of the company, and, without prejudice to the generality of the
preceding words, includes:
(a) any person who possesses, or is entitled to acquire, share capital
or voting rights in the company;
(b) any loan creditor of the company;
(c) any person who possesses, or is entitled to acquire, a right to
receive or participate in distributions of the company... to loan creditors
by way of premium on redemption;
(d) any person who is entitled to secure that income or assets
(whether present or future) of the company will be applied directly or
indirectly for his benefit.” (Income and Corporation Taxes Act 1988
s417(1)).
The definition includes an associate of the participator.
[Note that the word “participant” is used in other contexts for someone
who participates in something.]
particular criminal conduct

Conduct which relates to offences for which a person has been
convicted, of which a person was convicted at the same time as other
offences, or which a court took into consideration when passing
sentence (Proceeds of Crime Act 2002 s76(3)).
participatory budgeting Alternative form of participative budgeting, particularly when

undertaken by a public body.
particulars delivered stamp

Fixed rate stamp duty to confirm that particulars have been provided to
HMRC of a transfer of land where no ad valorem duty is payable.
particulars of claim Details which support a legal action.
particulate matter (PM) Fine particles of soot as produced in the exhaust of older vehicles. PM
may be reduced by fitting a filter.
The amount of PM can determine whether a vehicle must pay to
enter the Low Emission Zone.
partition (1) In building, a form of sliding screen used to divide up larger rooms
for separate uses. These may qualify for a capital allowance as plant
and machinery.
(2) In politics, the division of a territory into areas for separate
administration, as happened in Ireland.
partner Person with whom one is associated in some way. This may by family,
as in a husband or wife; or in business as in a business partnership.
Generally a partner, in either sense, is a connected person for tax
purposes.
partnership “The relationship which subsists between persons carrying on a

business in common with a view to making a profit” (Partnership Act
1890 s1(1)).
For capital gains tax, partners are assessed separately (Taxation of
Chargeable Gains Act 1992 s59).
partnership at will Partnership that has no fixed term for its duration. Any partner may
end the partnership simply by giving notice to the other partners
(Partnership Act 1890 s26(1)).
partnership deed Document setting out the agreement of the partners on how the
partnership is to be conducted (including the arrangements for sharing
profits and losses).
partnership law Legislation which governs the conduct of a partnership and which
should be used where no partnership deed has been written. The main
law is Partnership Act 1890.
partnership property All property, rights and similar interests of a partnership. This includes
profits earned by the partnership (Partnership Act 1890 s20(1)).
partnership return Tax return which must be submitted by a partnership under Taxes
Management Act 1970 s12AA.
partnership statement Document stating amounts of taxable income received by a partnership.

Taxes Management Act 1970 s12AB requires such a statement to be
sent to HMRC with the partnership return.
part of a business Trading entity carved out of a business, such as a division or

department of a company.
The part must itself be capable of trading. In other words, a
distinction must be made between part of a business and assets of a
business. The term was particularly relevant in claiming retirement
relief (no longer available) for capital gains tax.
part-timer Someone working less than a full working week. The law requires part-
timers to be treated as well as full-timers.
part-unit Part of a commonhold unit. This is generally not legally possible under
Commonhold and Leasehold Reform Act 2002 s21.
part work Series of publications that builds up into a book. By concession, such
works are zero-rated for VAT under Value Added Tax Act 1994 Sch 8
Group 3, as explained in VAT notice 701/10. Amendments to part
works are also zero-rated.
Where the part work comprises a magazine, it may be separately
zero-rated as such.
party (1) Person who is involved in a legal arrangement.

(2) Social gathering. There are income tax implications.
PAS Pipeline Adjustment Statement.
passenger carrying vehicle (PCV)

Vehicle with nine or more passenger seats, such as minibus or bus.
Generally such a vehicle may only be driven by someone with a
category D or D1 driving licence, though there are some exceptions.
passenger-mile One mile travelled by one passenger. It is a measure of transport usage.

So one passenger travelling six miles, and five other passengers each
travelling two miles gives a total of 16 passenger-miles.
passenger payments Addition to mileage allowance which may be paid tax-free to an

employee who carries a fellow employee in the car or van (Income Tax
Such an addition is tax-free to a limit that has been 5p since its

introduction in 2002. Unlike the mileage allowance, an employee
cannot claim tax relief for any non-payment or underpayment by the
employer.
passenger transport Transport in a vehicle available to the public. In general, if the vehicle
can carry at least 10 passengers, the transport cost is zero-rated under
Value Added Tax Act 1994 Sch 8. This generally means that bus and
train fares are exempt but taxi fares are not.
The transport must be for the purpose of going somewhere, so
fairground rides and ski lifts are not zero-rated. However conducted
tours are zero-rated.
passenger transport undertaking

“An undertaking whose business consists wholly or mainly in the
carriage of passengers or a subsidiary of such an undertaking” (Income
passenger vessel “Vessel which is carrying or expected to carry at least one passenger”
passe-partout French: pass over all. A master key or similar device which allows a
person access anywhere.
passim Latin: in various places. The term is used to indicate that further
material on the subject is found throughout the book.
passing In contract law, the stage when the ownership of the goods is
transferred from the seller to the buyer.
The general rule is that the property passes when the parties
intended it to pass (Sale of Goods Act 1979 s17).
passive investor Person who owns shares or equivalent interest in a business but who
plays no part in its management. Such a person is sometimes called a
sleeping partner.
password Secret combination of numbers and letters giving its holder access to a
computer file or similar.
past consideration Benefit which has already been provided to someone. This cannot be
the basis of consideration in a new contract.
past service costs Additional pension liability incurred by a pension provider in respect of
a particular employee.
past trustees There is a specific capital gains tax provision in Taxation of Chargeable
Gains Act 1992 s82.
pataca Currency of Macao.
patent Form of intellectual property relating to the right to market an

invention. The inventor deposits details of the invention at the Patents
Office, where it is publicly accessible. In return, the inventor has a
period of 20 years in which the invention may only be marketed by
himself or someone he has licensed.
Customs may seize any imported goods that infringe a patent.
There is a special capital allowance for patents.
patentable invention Invention for which a patent may be granted (Patents Act 1977
s130(1)).
Such an invention must be:
• new,
• involve an inventive step (ie not be obvious), and
• be capable of industrial application.
patent ambiguity Word or expression which can clearly be seen on the face of a
document to have more than one meaning, as against a latent
ambiguity.
Patent Co-operation Treaty

Treaty signed in Washington on 19 June 1970, where all signatory
countries agree to protect the patents granted in any other signatory
country. In the UK, this is given effect by Patents Act 1977 s130(1).
patentee Person to whom a patent is granted.
patent infringing goods “Any goods that will infringe a patent under UK law or a
supplementary protection certificate (SPC) under EC law” (Customs
notice 34).
Customs may seize such goods.
Patent Office Official depository of patents. It was established in 1853.
pater est quem nuptiae demonstrant

Latin: he is the father whom marriage indicates.
paternal Pertaining to fatherhood.
paternity In law, acknowledgement of being a father. This gives the father

various rights and duties.
The father is assumed to be the husband of the mother unless
otherwise stated, this is known as the presumption of legitimacy. A
man is also regarded as the father if he has agreed for his name to
appear on the birth certificate.
If paternity is disputed, a DNA test may be carried out. This can be
100% conclusive in establishing that a man is not the father, and 99.9%
conclusive in establishing that a man is. This rises to 100% if the
mother co-operates. A court may order a DNA test. This requires a
swab from the child under Human Tissue Act 2004. This requires either
the assent of the person having care and control of a child under 16, an
order of the court, or the agreement of the child when 16 or over.
The court’s usual attitude is summarised by Lord Justice Ward in

the Court of Appeal in Re G (Parentage: Blood Sample) [1997]: “It is
essential for the ultimate well-being of this child, both that she knows
the truth about who her father is, and that she knows it sooner rather
than later.”
A paternity test may be requested under Family Law Reform Act
1969 ss20-23.
Paternity rights include:
• paternity leave from work
• paternity pay during paternity leave
• parental leave
paternity leave Absence from work because of fatherhood.
paternity pay Payment while an employee is on paternity leave.
pater patriae Latin: father of his country.
patient Person who is staying in a hospital or similar establishment for

treatment, investigation or convalescence.
The term is also now used for a person who lacks mental capacity.
patrial Pertaining to one’s native land.
patriotic For VAT and such bodies, the aim is “to do good work for the benefit
of a nation state or for those who have served their country and their
dependants” (VAT notice 701/5).
patronymic In Iceland and Slavic countries, a middle name based on the father’s
first name. So if Ivan Vaslov has a son Edvard and a daughter Raisa,
their names will be Edvard Ivanovich Vaslov and Raisa Ivanova
Vaslov.
Pay and File System for reporting corporation tax used for accounting periods that
ended between 1 October 1993 and 30 June 1999, when it was replaced
by self-assessment.
payee Person to whom a payment is made.
Pay As You Earn (PAYE) System of collecting income tax from employees, administered by the
employer. It was introduced in 1944. It is compulsory. An employer
who fails to operate the PAYE system when required can be heavily
fined and can be obliged to pay the tax lost to HMRC.
The PAYE procedure is also used to collect national insurance and
student loan repayments, and to administer the statutory payments
such as statutory sick pay.
PAYE is designed to collect the exact amount of tax due, unlike the
Construction Industry Scheme which collects an approximation.
Each employee (which includes office-holders) is allocated a tax
code. Most tax codes comprise a number followed by a letter. The
number is one tenth of the amount in pounds which an employee is
allowed to earn in the tax year before paying income tax. The letter is
not used in calculating the tax; its purpose is to allow the employer to
adjust the tax code when the personal allowances change. So an
employee with a tax code of 520L is allowed to earn £5,200 per year
before paying income tax. If the government announces that all L codes
are to be increased by 10 points, the tax code becomes 530L and the
employee is allowed to earn £5,300 before paying tax.
The amount of income tax is calculated by deducting a figure from
gross pay now known as the pay adjustment. Before K codes were
introduced, it was known as free pay. This figure is either taken from a
book of tables known as Table A provided by HMRC or is calculated
automatically by the payroll software. The pay adjustment usually
allocates a pro rate amount of the annual tax-free limit, so a weekly
paid person with a tax code of 520L pays no tax on the first £100 a
week. Tax is calculated on the amount by which the pay exceeds the
pay adjustment figure.
There are other types of tax code such as BR, NT, K codes and D
codes for which there are special procedures.
PAYE income Term defined in Income Tax (Earnings and Pensions) Act 2003 s683(1)
to mean income subject to income tax under the Pay As You Earn
scheme.
PAYE income has three elements:
• employment income;
• pension income;
• social security income.
PAYE regulations Income Tax (Pay As You Earn) Regulations SI 2003 No 2682. These
are the main regulations for the PAYE scheme.
pay interval Term sometimes used to mean pay period, with reference to the
frequency with which an employee is paid.
payment on account Payment towards a liability.

In tax, self-assessment requires two payments on account for the
current year. This is usually using the same figures as the previous year.
The first is made on the 31 January in the year; the second is made by
31 July immediately after the tax year. If the two payments on account
do not clear the tax liability, there is a third payment of the balance on
the next 31 January (when the first payment of the following year is
also due).
For example, a sole trader prepares accounts to 31 March 2011. He
must pay half his estimated tax by 31 January 2011 and the other half
by 31 July 2011. The trader will probably not know his tax liability by
31 January 2011 and may not know it by 31 July 2011. So the tax is
paid using the figures for the period to 31 March 2010. If the trader
knows that this is significantly higher than for the current year, he may
apply for these payments on account to be reduced.
If the figures to March 2011 are higher, there is a third payment of
the balance paid on 31 January 2012 (when the first payment for the
next year is due). If the figures are lower, the trader receives a tax
rebate.
Payments on account are not required if the tax is less than £1,000
and at least 80% of the tax due has already been paid (such as from
dividends or under PAYE). There are also special provisions for the
first and last years of trading.
payment year For class 3 national insurance, “means the year in which a contribution
is paid” (Social Security Contributions and Benefits Act 1992 s13(5)).
pay period Period for which an employee is normally paid. Typically this is a week
or a month, but it can be other periods. The pay period is particularly
important for calculating class 1 national insurance.
pay reference period Period for which a worker must be paid the national minimum wage
(NMW).
The NMW does not have to be paid for every hour worked. It is
sufficient that the total pay for the hours worked in a pay reference
period is at least the NMW multiplied by the total number of hours.
This means that some hours may be worked for less than the NMW,
provided that sufficient other hours are worked for more than the
NMW.
The pay reference period is usually the period covered by the
payslip. If pay is earned in one period but paid in another (as sometimes
happens with commission), the employer may choose the pay reference
period to which it applies, but it may only be credited to one period.
If an annual bonus is paid, this is treated as income for the period in
which it is received, except that a pro rata element may be treated as
received in the one previous pay period.
pay token Metal token issued to workers, particularly manual workers, in 19th
century which could then be redeemed for their wages on pay day.
payable at call Another way of saying payable on demand.
payback period The time, usually in years, in which the original investment in a
business is recouped.
PAYE Pay As You Earn.
payee A person to whom a cheque or other means of payment is payable.
paying agent A trader known to HMRC and formally set up on the Customs
Handling of Import and Export Freight (CHIEF) system who transmits
import or customs warehouse removal declarations to the CHIEF
system.
payment card Any form of plastic card which may be used in a financial transaction.
Main types are cash card, credit card, charge card and debit card.
payment for group relief Payment made between companies in a group in respect of loss relief
surrendered by one company to the other. Such payment is ignored for
tax purposes of both companies under Income and Corporation Taxes

Act 1988 s402(6).
payment for loss of office Payment to a person who gives up an office, such as director,
voluntarily or otherwise.
The term is widely construed to include compensation payments of
all sorts, including of associated companies and payments on
retirement, other than pensions.
Under Companies Act 2006, such a payment may require the
approval of members under Companies Act 2006 s217.
For tax, the first £30,000 may be tax-free.
payment holiday A feature offered by some mortgages that allow the mortgagor to miss
payments.
payment in due course “Payment made at or after the maturity of the bill [of exchange] to the
holder thereof in good faith and without notice that his title to the bill is
defective” (Bills of Exchange Act 1882 s59(1)).
payment in kind Settling a debt by providing goods or services rather than cash.
payment mechanism Means by which a payment is arranged. Choices include cash, cheques,
credit cards, bank transfers etc.
Payment on Account Scheme

VAT scheme. The largest VAT payers are required to be in the
Payments on Account Scheme.
The scheme requires quarterly returns and full payment of the
balance owed. In the other two months of each quarter a sum equal to
1/24 of the annual VAT is payable.
payment or benefit For the purposes of IR 35 provisions, “anything that, if received by an

employee for performing the duties of the employment, would be
earnings from the employment” (Income Tax (Earnings and Pensions)
Act 2003 s55(2) or 61F(2)).
payments by way of occupational or personal pension

For social security and national insurance, the term is defined in Social
Security Contributions and Benefits Act 1992 s122(1).
payments distributor Person who makes payments to creditors in a debt arrangement

scheme.
payments to employer Payment which an employer requires to be made by an employee. This

is generally unlawful under Employment Rights Act 1996 s14.
This section seeks to counter any avoidance of the provisions
against unauthorised deductions in s13 by the employer paying
money and then demanding it back.
payout requirement American term for the legal condition that a private foundation must
pay out at least 5% of the fair market value of their assets each year in
grants and administrative expenses.
payroll The function of paying staff, with related duties, such as paying tax and
calculating statutory sick pay.
payroll error Mistake in calculating the amount an employee should receive in his
payslip.
If the mistake is an underpayment, this should be corrected
promptly. An employee may be willing to wait to the next pay period
for a small underpayment to be corrected, but does not have to. Any
underpayment comprises an unlawful deduction from wages. It is
usually sufficient to make an advance equal to the underpayment, and
to reclaim this on the corrected next payslip.
If the mistake is an overpayment, the law does not always allow it
to be recovered.
If the mistake relates to tax or national insurance, the mistake must
be corrected in accordance with those regulations. In general, the
mistake must be corrected on the next payslip. The PAYE system
usually sorts out any miscalculations of income tax. For an under-
deduction of national insurance, the sum may be recovered in the
current tax year or the following tax year, but not later. If the mistake
cannot be corrected, HMRC must be so advised.
payroll giving Method of giving tax relief on donations made from payroll.
payrolling Practice of accounting for tax on benefits through the payroll. The value
of the benefit is added to gross pay and the same value is subtracted
from net pay. This allows the benefit to have tax deducted at the correct
rate. It should be noted that most benefits are not subject to class 1
national insurance, and so this adjustment is not made to calculate NI.
Payrolling is not part of the PAYE system though it is known that
there are some arrangements agreed with HMRC that allows it to
happen. Suggestions for using payrolling as an alternative to the current
P11D system have been made frequently.
Where a benefit is payrolled, it must still be included in form P11D
(HMRC News 6 April 2011).
payroll package Pay and benefits in kind to which an employee is entitled.
payroll vote Members of a ruling political group who receive additional allowances
for holding ministerial or other positions. Such members are expected
to vote with the government or other body, or lose their positions and
allowances.
payslip Document detailing the breakdown of an employee’s pay. In law, it is

known as an itemised pay statement. A copy must be given to the
employee every time a payment is made.
PBR (1) Pre-Budget Review

(2) Plant Breeders’ Rights
PC (1) Personal Computer.

(2) Privy Council, including the citation for Law Reports from 1865
to 1874.
(3) Pension Credit.
[This abbreviation has many other meanings.]
P11 calculator Calculator provided free by HMRC on the employer CD-ROM or

website to calculate the value of benefits provided.
PCC Processing under Custom Control for free circulation.

This is a system of import duty relief for goods imported or
transferred from another customs regime.
PCO Primary Care Organisation, in the National Health Service.
P&CR Property and Compensation Reports, law reports published from 1950.
PCSO Police Community Support Officer
PCT Primary Care Trust, in the National Health Service.
PD (1) Personnel development.

(2) Probate Division law reports published from 1875 to 1890.
(3) Prospectus Directive.
P&D Probate and Family, a series of law reports published from 1850.
PDA Personal Digital Assistant.

A small, portable, battery-powered computer. Most have a pen
interface and come with a detachable stylus rather than a mouse.
PDP Professional Development Portfolio
PDR (1) Personal Development Review

(2) Personnel development record (in armed forces).
PE (1) Permanent establishment

(2) Partial exemption, for VAT.
P/E Price/Earnings Ratio. It is calculated by dividing the market price of a

company's ordinary shares by its earnings per share figure.
The ratio reflects the market's expectation of the future earnings of a
company in relation to its current earnings; in other words, its
performance potential.
PEACE Investigative interviewing training.

It stands for Prepare and Plan, Engage, Account, Challenge,
Explain.
peaceful picketing The lawful act of protesting at or near a person’s place of work. It is
regulated by Trade Union and Labour Relations (Consolidation) Act
1992 s220.
peak oil Term used in the Hirsch Report to describe the point when the
maximum extraction rate of petroleum has been reached, after which
production can only decline.
The report was based on Hubbert peak theory first developed in
1956. Hirsch concluded that peak oil will happen in 2020. This will
trigger a crisis in the late 21st century unless alternative fuels are
developed.
peat For VAT, peat may be reduced rated under Value Added Tax Act 1994
Sch 7A Group 1 when supplied for domestic use. Further details are
given in VAT notice 701/19.
pecuniary legacy Legacy of cash, as opposed to a particular item.
pecuniary liability principle

Tax principle that creates a taxable benefit in kind when an employer
pays a personal bill for the employee, such as paying an electricity bill
or credit card balance.
The employee has a pecuniary liability to pay the bill which the
employer has discharged. This brings it within the scope of money’s
worth as set out in Income Tax (Earnings and Pensions) Act 2003
s62(3)(a). The principle is further explained in the inspectors’ manual at
EIM 00580-5.
Peel, Robert English Conservative politician (1788-1850) who was Chancellor of the
Exchequer from 2 December 1834 to 8 April 1835, and was prime
minister for two periods between 1834 and 1846. As home secretary
(1822-1827), he created the police force which was briefly known as
“peelers”.
Pemsel guidelines Guidelines on charitable purpose, as set out in the case

Commissioners of Income Tax v Pemsel [1891]. From 2008, these
guidelines have been replaced by statutory requirements of Charities
Act 2006.
penalty Charge incurred as a consequence of doing something wrong.

For tax allowability, a penalty intended as a punishment is not tax-
deductible. A penalty that has the nature of compensation is generally
allowable. This general principle was established in McKnight v
Sheppard [1999] 71TC419 and is discussed in the Inspectors’ Manual
at BIM38500.
penalty charges Charges imposed by HMRC or similar body in respect of non-

compliance with a law. Such penalties are not themselves tax-
deductible.
penalty determination Amount HMRC calculates a taxpayer owes by way of penalty for non-
compliance with tax law.
penalty points Points with which a driving licence may be endorsed. If a person
collects 12 points within a three-year period, they are banned from
driving under the totting-up procedure.
penalty proceedings Legal proceedings brought by HMRC against a taxpayer against whom
it wishes to impose a penalty. See Taxes Management Act 1970
ss100C-100D.
pence Plural of penny when referring to the amount rather than the coin.
pendente lite Latin: when litigation is pending. This refers to the period when a legal
action has started but the matter has not been concluded.
penetration pricing Marketing technique of setting a low price to gain market share. It is
similar to lowballing.
PENNOT Common name for tax form notifying HMRC that an employee is now
receiving a pension. From 6 April 2009, it is replaced by form
P46(pen).
penny Unit of currency in Britain from around 775 AD. The plural of the unit
of currency is “pence”; the plural of the coin is “pennies”.
Until decimal currency was introduced in 1971, there were 12
pence to a shilling, and 20 shillings to the pound, so there were 240
pence to a pound. These pence are now called “old pence”. The penny
was divided into the halfpenny and a farthing (quarter of a penny),
with further divisions of the farthing.
A new penny is worth 2.4p old pennies. An old penny was worth
0.4167 or 5/12 of a new penny.
Under decimal currency, there are 100 “new pence” to the pound.
The word “new” was dropped in 1982.
pennyweight Imperial measure of weight still sometimes used for jewels and
precious metals. There are 20 pennyweight to a troy ounce. There are
24 grains in a pennyweight.
A pennyweight is about 1.5552 grams.
pension Regular payment in retirement, usually funded by contributions during

a person’s working life.
There are broadly three ways to arrange a pension:
● government schemes which provide the state retirement
pension and may provide additional pension, paid by national
insurance;
● occupational pension schemes arranged by the person’s
employer. This will be either a defined benefit scheme or defined
contribution scheme; or
● private pension which a person arranges directly with a
pension provider.
A person may receive pensions from different sources. From 6
April 2006, there are no restrictions on how many pensions a person
may have or of what type. Although the pension is triggered on
“retirement”, the person does not have to stop working to receive a

pension. So a person can receive a pension and a salary at the same
time. A person can also choose different “retirement” ages for different
private pensions.
Contributions to a pension scheme usually attract relief for income
tax (Income Tax (Earnings and Pensions) Act 2003 from s307), but not
for national insurance. So if an employee earns £2,000 a month and
pays £100 into an occupational pension scheme, the employee will pay
income tax on £1,900 but class 1 national insurance on £2,000.
Payments of pension are subject to income tax but not national
insurance, even if the person is still young enough to be liable for
national insurance. A pension lump sum is tax-free.
The first known pensions were provided in the Royal Navy in 1670.
The first known occupational pension scheme was introduced by
Charles III of Spain.
In the UK, state retirement pensions were first paid on 1 January
1909 at a rate between two and five shillings to anyone aged 70 or over.
These were means-tested. Universal state retirement pension was
introduced in 1946.
Tax relief for occupational pension schemes was introduced in
Finance Act 1921. Upper limits were imposed in Finance Act 1947.
[Pension is also the French word for board and lodging.]
pensionable age The age at which a person becomes entitled to receive the state
retirement pension and also ceases to be liable to pay national
insurance. The legal definition is set out in Pension Schemes Act 1993
s181.
pensionable earnings The earnings on which benefits and contributions for a pension scheme
are calculated.
For public pensions, the term is defined in Superannuation Act 2010
s3(7).
pensionable service Period of service with an employer that is used in calculating pension
benefits from an occupational pension scheme.
pension business In relation to taxation of life assurance business, “means so much of a

company’s life assurance as is referable to contracts entered into for the
purposes of a registered pension scheme or is the reassurance of such
business” (Income and Corporation Taxes Act 1988 s431B(1)).
pension commencement lump sum

A lump sum from one pension fund which is paid into another.
This is possible for a person aged between 55 and 75. If the lump
sum is large, tax relief may be restricted on the second pension fund as
explained in recycled pension.
Pension commencement lump sum

A lump sum benefit paid to a member of a registered pension scheme
(who is aged under 75) in connection with an arising entitlement to a
pension benefit (other than a short-term annuity contract), and which
meets the conditions detailed in paragraphs 1 to 3 of Schedule 29 to the

Finance Act 2004.
pension credit member Member of an occupational pension scheme who has benefits arising
from pension credits but who is not an active member, such as when
an entitlement has been transferred from another scheme.
pension credit (1) Common abbreviation of state pension credit, a means-tested

social security benefit for pensioners on low income.
(2) Term introduced by Welfare Reform and Pensions Act 1999.
(WRPA) in relation to pension-splitting on divorce.
The pension credit is the amount by which the ex-spouse’s or
former civil partner's pension rights are increased. Section 29 WRPA
determines the value of the pension credit to be transferred to the ex-
spouse or former civil partner.
pension credit member An individual who has rights in a pension scheme which are directly or
indirectly attributable to pension credits.
pension debit Amount by which a person’s pension entitlement is reduced by

pension-splitting on divorce under Welfare Reform and Pensions Act
1999 (WRPA) s29.
pensioner member Member of an occupational pension scheme who is receiving a

pension from the scheme.
pensioner Person in receipt of a pension.
pensioner’s Christmas bonus

Benefit payable to someone receiving a state retirement pension in the
week beginning on the first Monday in December. It is payable under
Social Security Contributions and Benefits Act 1992 s148. The amout
has been £10 since its introduction in 1971.
pension guarantee Period for which it is guaranteed that a pension will be paid.
All pension schemes work on the basis that those who die young
subsidise those who die old. Schemes may assume that all men who
retire at 65 will live for about another 20 years. If one man dies at 75,
he will only have received his pension for 10 years so the pension
provider makes a saving. This is used to help pay for the pension of
another man who dies at 95 and who therefore receives his pension for
30 years, ten more than expected.
As people die at every age, it is possible for a person to die soon
after retirement and thus receive very little benefit for a considerable
investment. To deal with this, someone at retirement may choose to
have a pension guarantee which means that the pension will be paid for
a minimum period even if the person dies during that period. This
payment is made to the member’s dependants.
The pension guarantee is usually for five years, though it can be for
ten. Choosing a pension guarantee reduces the amount of pension

payable but usually by a very small amount. For example, using recent
annuity rates, a 65-year old man retiring with a pension fund of
£100,000 would receive a monthly level pension of £615 without a
pension guarantee, £611 with a five-year guarantee or £565 with a ten-
year guarantee.
pension input amount Amounts as arrived in accordance with sections 230 to 237 of Finance
Act 2004.
pension input period Period in relation to contributions to a pension.

The period begins with the relevant commencement date and ends
with the earlier of a nominated date and the anniversary of the relevant
commencement date. Each subsequent period begins immediately after
the end of a period which is a pension input period (under either this or
the earlier paragraph) and ends with the appropriate date.
pension liberation Taking money out of a pension fund to convert the whole amount into
ready cash.
There is no lawful way of doing this in the UK, despite some
companies claiming to have found a “loophole”. The system typically
involves the company paying about 75% of the fund, leaving no funds
for any pension in retirement. The whole of this is subject to income
tax.
There are provisions about pension liberation in Pensions Act 2004
s18.
pension lump sum A single payment which a person may receive from their private
pension or occupational pension at retirement.
The legal maximum is one quarter of the fund. This is tax-free.
Drawing a lump sum reduces the pension payable by the same ratio. For
example, a man retiring at 65 with a pension fund of £100,000 may, at
recent annuity rates, receive a level pension of £616 a month. If he took
£25,000 as a pension lump sum at 65, the remaining £75,000 would
provide a monthly annuity of 75% of £616, which is £462.
If a pension is small, it may be possible to take the whole pension
fund as a lump sum. From 6 April 2006, if all pension funds held by an
individual do not exceed £15,000, they may be paid as a lump sum
without any need to buy an annuity at all. In such a case 25% of the
lump sum is tax-free and the balance is subject to income tax. The
person must be aged between 60 and 75, and all pension funds must be
taken as a lump sum within a 12-month period. Previously the whole of
a pension fund could only be taken as a lump sum if it was a trivial
pension which usually meant that the value of the fund was less than
£250.
It is usually cost-effective to draw the pension lump sum even if just
to re-invest. In the example above, re-investing the lump sum would be
cost-effective provided the rate was at least 6.16%. In practice most
decisions about whether to take the lump sum depend on the
pensioner’s personal circumstances such as whether they want the
money to pay off their mortgage or have a retirement holiday.
A lump sum may be used to start a new pension plan if the member
is between the ages of 55 and 75. This is known as a recycled pension.
Tax relief may be restricted in such circumstances.
There is also a short-service refund lump sum when someone
leaves an occupational pension scheme after a short employment.
Pension Protection Fund (PPF)

Body corporate which operates a compensation scheme for members of
occupational pension schemes. It is constituted under Pensions Act
2004 s107.
pension protection levy Pensions Act 2004 s175. It is of two types: a risk-based pension
protection levy and scheme-based pension protection levy.
pension protection lump sum death benefit

A lump sum benefit paid following the death of a scheme member of a
registered pension scheme, who died before age 75 and was in receipt
of a scheme pension under a defined benefits arrangement and which
does not exceed the limits imposed through paragraph 14 of Schedule
29 to the Finance Act 2004.
pension provider Person who pays a pension. Under the option market option (OMO)
this need not be the same company under which the pension fund was
built up.
pension scheme A means by which an individual can make pension provision. This may
be either collective or individual and with or without the involvement
(by means of contributions or otherwise) from the individual's
employer.
HMRC defines a pension scheme as a scheme “set up to provide
benefits for/in respect of any of the following circumstances
• retirement,
• death,
• attaining a particular age,
• serious ill-health or incapacity, or
• in similar circumstances.”
(Inspectors’ Manual at RPSM02200020).
Such a scheme may be registered or unregistered. A registered
pension scheme attracts particular tax advantages.
pension scheme indemnity provision

Provision which indemnifies trustees of an occupational pension
scheme from certain types of legal action.
Under Companies Act 2006 s235, such an indemnity for a company
director is one of the exceptions to the general rule that a company
cannot indemnify its directors for their misconduct.
The existence of such a provision must be disclosed in the directors’
report (ibid s236), and a copy must be made available for inspection
(ibid s237).
pension scheme member Someone who has rights under a pension scheme, particularly an
occupational pension scheme.
There are four types of member:
● active member: someone who is accruing benefits under the
scheme (usually a current employee);
● deferred member: someone who is no longer accruing
benefits (usually a former employee) though benefits already accrued
may continue to grow by being indexed;
● pension credit member: someone who has rights under the
scheme from pension credits (usually someone who has transferred
from another pension scheme but who is not an active member); and
● pensioner member: someone who is receiving a regular
pension (usually a retired employee).
Only an active member is entitled to tax relief on contributions to
the pension fund, though this point is largely academic as only active
members would be contributing anyway.
pension scheme nomination

When a member of a pension scheme states to whom he wishes any
benefit from the scheme to pass on his death.
Such a nomination is not usually governed by the person’s will as
the right to the pension scheme are vested in its trustees and do not
belong to the member. The exact legal position depends on how the
pension scheme rules are drafted.
Pension Schemes Office (PSO)

A division of the HMRC which oversees the approval of pension
schemes for tax relief purposes.
pension sharing Arrangement whereby a person’s pension entitlement may be part-

apportioned to a former partner in a dissolution of marriage or civil
partnership. It is also known as pension splitting
pension sharing order An order or provision made as listed in section 28(1) of the Welfare
Reform and Pensions Act 1999 (or the Welfare Reform and Pensions
(Northern Ireland) Order 1999 (SI 1999/3147)) following a divorce or
the dissolution of a civil partnership.
Pensions Compensation Board

Dissolved by Pensions Act 2004 s302 and replaced by the Pension
Protection Fund.
Pensions (Increase) Acts “The Pensions (Increase) Act 1971 and any Act passed after that date
for the purposes corresponding to the purposes of that Act” (Income
and Corporation Taxes Act 1988 s615(7)).
pensions interest cost and expected return on assets

The net interest cost is the increase in the value of the pension scheme
liabilities that arise because those liabilities are one year closer to being
paid. The expected return on assets is the forecast of accrued benefit
from investments of the pension fund in the long-term.
Pensions Regulator Body corporate established under Pensions Act 2004 s1 with effect
from 6 April 2005.
Pensions Regulator Tribunal

Tribunal established under Pensions Act 2004 s102 to deal with
disputes between pension funds and the Pensions Regulator.
pension scheme managers The term “managers” in relation to pension schemes is defined as “the
persons responsible for the management of the scheme” (Pensions Act
2004 s318).
pension splitting Arrangement whereby a person’s pension entitlement may be split on

divorce under Welfare Reform and Pensions Act 1999.
pension surplus Amount by which a pension fund has more funds than it needs to meet
its liabilities as calculated by an actuary.
pension tax relief Tax relief provided on contributions to pension funds.

HM Treasury glossary explains “the Government provides tax
relief on individual and employer contributions to registered pension
schemes, up to specified limits. Investment growth within registered
pension schemes is exempt from income and capital gains tax”.
It should be noted that there is no relief for any class of national
insurance. So an employee earning £2000 a month and paying £100
into an occupational pension scheme pays income tax on £1900 but
class 1 national insurance on £2000.
Pension Tracing Service Government scheme to help people find details of old pension schemes.
pension unlocking Term sometimes used to mean the lump sum which a person aged
between 55 and 75 can obtain from their pension fund. This is
sometimes advertised as a special procedure, when the member can
easily arrange it for himself.
pension year The period the maximum unsecured pension and alternatively secured
pension limits apply to (and the dependant equivalents). In the
legislation these are referred to as 'unsecured pension years' and
'alternatively secured pension years'. These periods run in consecutive
12-month periods from the point initial entitlement to such pensions
actual arise under a money purchase arrangement. These periods are set
at the point that initial entitlement arise, and cannot be changed from
that point onwards (although the pension year the member or dependant
dies or reaches age 75 will be deemed to end immediately before such
an occurrence - these truncated 12-month periods are treated as a whole
12-month period for limit purposes).
People’s Budget Controversial Budget delivered by Lloyd George in 1909 which led to a
constitutional crisis.
He sought to raise income tax (to 5% on higher incomes), introduce
surtax, new property taxes and introduce national insurance and an

early form of inheritance tax.
The Budget was rejected by the House of Lords, leading to Lloyd
George threatening to flood the House with peers who would vote for
their own abolition. The king intervened and required a general election
first. This led to Parliament Act 1911 which restricted the power of the
House of Lords.
PEP Personal Equity Plan.

This was a popular tax-advantaged investment scheme introduced in
1987. It was replaced by the individual savings account (ISA) in April
1999.
peppercorn In law, an amount that is trivial but which is still adequate as

consideration in making a contract. A peppercorn is the tiny husk
from which black pepper is ground in a mill. The price is a small
fraction of a penny.
The term originated in leases which were said to be for one
peppercorn a year, to make them legally binding. The peppercorn is
rarely provided though it could be demanded. In reality it means that
something is provided free but as if provided under a contract.
Pepper v Hart Leading tax case which was finally settled by the House of Lords in
1992. It established an important legal principle, and clarified an area of
tax law.
The legal principle established is that the courts may look to
Hansard, the record of Parliamentary proceedings to see what the
purpose of an Act was in deciding how to interpret it. This is a modern
form of what is known as the mischief rule.
The case clarified the tax law on what constitutes the cost of an
employee benefit. A teacher of a private school was allowed to have his
son educated there for a much reduced fee. It was accepted that this was
a taxable benefit in kind to the extent that the cost of the education
exceeded the sum paid by the teacher. The dispute was whether the cost
was the marginal cost of educating one extra pupil (basically food,
stationery, laundry etc for one pupil) or was the direct cost which
includes all the school’s overheads divided by the number of pupils.
All the courts up to the Lords held that the Act was written so that
the direct cost had to be used, which resulted in a much larger figure.
The Lords held they could look to the Parliamentary debate and held it
was the marginal cost.
per Latin: by, as stated by.
per alium Latin: by means of another.
per annum Latin: per year.
p/e ratio (price per earnings)

The P/E ratio is an important indicator as to how the investing market
views the health, performance, prospects and investment risk of a
public company listed on a stock exchange (a listed company).

The P/E ratio is also a highly complex concept - it's a guide to use
alongside other indicators, not an absolute measure to rely on by itself.
The P/E ratio is arrived at by dividing the stock or share price by the
earnings per share (profit after tax and interest divided by the number of
ordinary shares in issue). As earnings per share are a yearly total, the
P/E ratio is also an expression of how many years it will take for
earnings to cover the stock price investment. P/E ratios are best viewed
over time so that they can be seen as a trend.
A steadily increasing P/E ratio is seen by the investors as
increasingly speculative (high risk) because it takes longer for earnings
to cover the stock price. Obviously whenever the stock price changes,
so does the P/E ratio. More meaningful P/E analysis is conducted by
looking at earnings over a period of several years. P/E ratios should also
be compared over time, with other company's P/E ratios in the same
market sector, and with the market as a whole. Step by step, to calculate
the P/E ratio: Establish total profit after tax and interest for the past
year. Divide this by the number of shares issued. This gives you the
earnings per share. Divide the price of the stock or share by the
earnings per share. This gives the Price/Earnings or P/E ratio.
per autre vie Latin: for the life of another. The term is often used in respect of
tenancy agreements.
per capita Per person, by or for each individual
perceived value Where the value of an item appears to be greater than its real cost.
Perceived value is more of a marketing term, as it is a way of conferring
benefit in a cost-effective manner. Perceived value may apply to
tangible items, common examples of which include mugs, pens, books
and calculators. All these items cost little to acquire in bulk but seem to
be worth significantly more, which is why they are widely used as
promotional gifts. Perceived value may also apply to financial
arrangements, such as loyalty schemes, employees’ assistance
programmes, legal insurance and payment protection insurance.
percentage Expressing a fraction as number where the denominator is 100. So

three-quarters is 75%.
Mathematically a percentage is simply a fraction converted to a
decimal and multiplied by 100.
percentage point The number of a percentage.

The term is commonly used to avoid ambiguity when percentages
change. The statement that an interest rate of 10% has increased by 5%
could be regarded as meaning that the new interest rate is either 15% or
10.5%. Ambiguity is avoided by saying that it has moved by five
percentage points or half a percentage point, as appropriate.
One hundredth of a percentage point is a basis point.
percentage threshold scheme (PTS)

Scheme under which an employer may be able to recover the amount of
statutory sick pay paid in a period to the extent that it exceeds 13% of
his total national insurance payable.
perceptual map In marketing, the process of mapping a product or organisation against

competitors in the hope of finding a positioning gap in the market.
per cur Abbreviation of per curiam, Latin for by the court.
per curiam Latin: by the court.
per diem Latin: daily.

In business, the term is sometimes used to mean a daily allowance,
such as an addition to pay when an employee is working overseas.
perfect entry “Entry made in accordance with regulation 5 of the Customs Controls
on Importation of Goods Regulations 1991 or warehousing regulations,
as the case may require” (Customs and Excise Management Act 1979
s1(1)).
perforation Series of holes in a straight line which makes it easier to tear the
document in the right place. Cheques and postage stamps are often
perforated.
performance indicator Measure of the improvements or otherwise of throughputs, outputs and

outcomes.
PERG Perimeter Guidance manual published by the Financial Services

Authority.
peril Defined risk against which you take out insurance.
per incuriam Latin: through want of care.
per infortunium Latin: by mischance.
Period A Term used in connection with EIS relief to mean the period from when
the investee company was incorporated or (if later) two years before the
shares were issued, and ending before the termination date relating to
the shares (Income Tax Act 2007 s159(2)).
Period B Term used in connection with EIS relief to mean the period from when
the shares were issued and ending immediately before the termination
date relating to the shares (Income Tax Act 2007 s159(3)).
Period C Term used in connection with EIS relief to mean the period starting 12
months before the issue of the shares and ending immediately before
the termination date relating to them (Income Tax Act 2007 s159(4)).
period entry For Customs purposes, the period within which the quantity of goods
specified by a licence must be imported or exported.
period for appointing auditors

This is defined in Companies Act 2006 s485. Generally the auditors
must be appointed for a financial year no later than 28 days after the
last permitted date for sending out the accounts to members.
period for filing In company law, the period allowed for the filing of company accounts
periodical A publication circulated at regular intervals, such as a weekly or

monthly magazine. It is generally zero-rated under Value Added Tax
Act 1994 Sch 8 Group 3. Details are given in VAT notice 701/10.
periodic charge Another name for the ten-yearly charge of inheritance tax applied to
many types of trust.
periodic payment For stamp duty, periodic payments may generally be regarded as part of
the transaction value for a period of up to 20 years.
period of account Period for which a set of accounts are made up. In effect, it is the same
as an accounting period.
period of default “In relation to any tax which remained unpaid after the due date, means
the period beginning with that date and ending with the day before that
on which the tax was paid” (Taxes Management Act 1970 s59C(12)).
period of incapacity for work (PIW)

Period when an employee is absent because of sickness. The employee
is entitled to statutory sick pay if other conditions are met.
A PIW must be for at least four days. If a person returns to work
and starts a new PIW within eight weeks, the PIWs are said to be
linked.
period of interruption In social security, old term for a break in employment such as for
sickness, maternity or unemployment. Such a period may trigger an
entitlement to a social security benefit.
period of retention Period for which shares are held under a profit-sharing arrangement
(Income and Corporation Taxes Act 1988 Sch 10 para 2).
period of validity For Customs purposes, the period within which the quantity of goods
specified by a licence must be imported or exported.
perk Abbreviation of perquisite, incidental benefit from work.
permanent difference Difference between a business’s taxable profits and the profits as stated
in the accounts. Such differences arise when accounting and taxation
treatments differ, such as for depreciation, entertainment and personal
expenditure.
Such differences are reflected immediately in the figure for tax.
They are not posted to deferred tax.
permanent endowment Another name for a capital endowment fund.
permanent establishment (PE)

Territory in which a business maintains a trading presence. The term is
found in article 5 of the OECD model tax treaty, and is incorporated
into various parts of UK tax law.
permanent health insurance

Insurance policy which provides an income if the policy holder
becomes too ill to work.
permanent home “The country where a person intends to live for the remainder of their
life. It is the country whose laws decide, for example, whether a will is
valid, or how the estate of a person who has not made a will is dealt
with when they die” (HMRC inheritance tax glossary).
permanent interest bearing share (PIBS)

Such shares are often issued by building societies.
For capital gains tax, a definition appears in Taxation of Chargeable
Gains Act 1992 s117(8A).
permanent total disability

Term used in insurance contracts to mean a disability from which the
individual is not expected to recover.
Some insurance contracts specify that “permanent” means until the
person’s normal retirement date.
permanent workplace In relation to travel in employment, means “a place which —

(a) the employee regularly attends in the performance of the duties
of the employment, and
(b) is not a temporary workplace”
per mille Per Thousand. The premium rate for some types of group insurance is
quoted per £1000 of benefit.
permissible capital payment

Payment that a company may make from its capital to purchase its own
shares in accordance with Companies Act 2006 s710.
permitted disclosure Disclosure which is permitted under a specific law or rule.

In terms of company law, there are special provisions about
permitted disclosure of information obtained under compulsory powers
In relation to money laundering, provisions are given in Proceeds of
Crime Act 2002 from s333A.
per my et per tout Latin: by the half and by the whole. The term is used in respect of joint
tenancy.
perpetual debenture Debenture that cannot be redeemed, or where redemption is after a

long time or on the happening of an unlikely contingency.
Such debentures are generally legal under Companies Act 2006
s739.
perpetua lex est, nullam legem humanam ac positivam perpetuam esse, et clausia quae
abrogationem excludit, ab inition non valet
Latin: it is an everlasting law, that no positive and human law shall be
perpetual, and a clause which excludes abrogation is invalid from its
commencement.
perpetual succession Attribute of a company as against an individual, namely that the

company lives on even when the individual dies.
perpetuities Term for attempts to dictate how property is held a long time into the
future. It is regarded as contrary to public policy for someone to be able
to tie up property for centuries into the future.
The present law is contained in Perpetuities and Accumulations Act
2009 which came into force on 6 April 2010. It creates a maximum
perpetuity period of 125 years. A will or trust deed may specify a
shorter period, but not a longer one. All pension schemes are exempted
from this limit (as previously a few pension schemes were caught).
The 2009 Act only applies to newly created trusts and estates.
Existing trusts and estates remain governed by Perpetuities and
Accumulations Act 1964, though trustees may opt into the 2009
provisions but with a 100-year accumulation period. The 1964 Act
generally imposes a limit of 80 years.
Trusts and estates created before 16 July 1964 are governed by
common law provisions against perpetuities. These provisions were
developed from the end of the 17th century. They generally restrict the
perpetuity period to the life of the settlor plus 21 years.
perpetuity (1) In investments, British government securities which the government

is not obliged ever to repay but just offers a fixed rate of interest each
year.
(2) Legal rule which restricts how far an inheritance can be tied up by a
testator.
per pro Abbreviation of per procurationem, Latin: on behalf of another.
per procurationem Latin: as an agent. The term means on behalf of another.
perquisite Incidental benefit from work, more usually referred to in the

abbreviated form perk. They are usually taxed as benefits in kind.
per quod Latin: whereby.
per quod consortium et servitum amisit

Latin: whereby he lost her society and services.
An action which could once be brought against someone who had
seduced a man’s wife. The right is abolished by Law Reform
(Miscellaneous Provisions) Act 1970 s5.
perry Drink made from the fermentation of pear juice. It is subject to

alcoholic liquor duty on the same basis and scale as cider.
per se Latin: by itself, taken alone.
persistency In insurance, the length of time a policy remains continuously in force

with a company.
persistent discrimination Committing a further act of sex discrimination within five years of
being found to have committed a previous one. This can lead to an
injunction being issued under Sex Discrimination Act 1975 s71.
person Someone who has is recognised by law. This is either a natural

person, a living human being, or a legal person such as a limited
company. Person “includes a body of persons corporate or
unincorporate” (Interpretation Act 1978 Sch 1).
persona designata Latin: designated person.
persona ficta Latin: artificial person. This means a legal person such as a limited
company, local authority or corporation.
personal accident insurance

Insurance cover for people on property. The term is defined in Income
and Corporation Taxes Act 1988 Sch 15 para 11 in relation to friendly
societies.
personal account Account which records transactions with other parties, such as
customers, suppliers and staff, as against impersonal account which
records transactions not involving other parties.
personal accounting Recording the income and expenditure of a person.
Personal Accounts Delivery Authority

Corporate body established by Pensions Act 2007 s20 to oversee
personal accounts.
personal allowance Amount an individual is allowed to earn in a tax year before becoming
liable to income tax. The rate is usually revised for each tax year,
though it has not kept up with inflation.
From 6 April 1990, there is a single rate which applies to all people,
male and female, married and unmarried. For older taxpayers, there is
an additional age allowance.
personal allowance Amount which almost all taxpayers may claim as a tax-free slice
against their income tax (Income and Corporation Taxes Act 1988
s257).
person already connected with the company

Term used in Companies Act 2006 s756(5). Such a person is not
regarded as a member of the public for the purposes of an offer to
acquire shares or other securities in a private company.
personal applicant “A person who is applying for a grant of representation without the
help of a solicitor or other agent” (HMRC inheritance tax glossary).
personal assets Moveable assets which belong to a person.
personal capacity Legal ability which it is assumed all adults have to manage their affairs
until the contrary is demonstrated.
personal chattels Movable items; same as chattels.

“Shall mean goods, furniture, and other articles capable of complete
transfer by delivery, and (when separately assigned or charged) fixtures
and growing crops, but shall not include chattel interests in real estate,
nor fixtures (except trade machinery as herein-after defined), when
assigned together with a freehold or leasehold interest in any land or
building to which they are affixed, nor growing crops when assigned
together with any interest in the land on which they grow, nor shares or
interests in the stock, funds, or securities of any government, or in the
capital or property or incorporated or joint stock companies, nor choses
in action, nor any stock or produce upon any farm or lands which by
virtue of any covenant or agreement or of the custom of the country
ought not to be removed from any farm where the same are at the time
of making or giving of such bill of sale” (Bills of Sale Act 1878 s4).
personal company For capital gains tax on gifts of business assets, a company where at
least 5% of the voting rights are vested in the individual (Taxation of
personal computer (PC) Computer intended for everyday use in the home. Such a computer
typically uses the Microsoft Windows operating system.
personal contract purchase

Means of acquiring personal goods, such as a car. It is a cross between
hire purchase and leasing.
When the item is acquired, the seller states the price at which he is
prepared to buy back the item after a stated number of years. This price
is known as the minimum guaranteed future value (MGFV). Until
then the car is leased. When the time arrives, and assuming the goods
are still in fair condition, either the seller pays the MGFV and the lease
ends, or the possessor pays the dealer and the MGFV and acquires the
vehicle outright.
personal credit agreement

Agreement between an individual (debtor) and another person (creditor)
by which the creditor provides the debtor with credit of any amount
(Consumer Credit Act 1974 s8(1)).
personal debt Debt owed by individuals rather than businesses
personal development Process by which a person develops to maturity. The four main
elements are:
● physical development, such as growing taller;
● perceptual development, such as seeing and hearing better;
● cognitive development, changes in thought processes,
memory and language abilities; and
● personality and social development, which deals mainly with
interpersonal skills.
In the workplace, personal development tend to relate to the last two
in relation to the work to be done. The first two largely happen in
childhood.
personal digital assistant (PDA)

A small portable battery-powered computer, which uses a detachable
stylus rather than a mouse.
personal effects For Customs purposes, items that a person reasonably requires for a
journey. This includes “clothing, toiletries, personal jewellery and other
articles of a personal nature including pets” (Customs notice 3). Further
details are given in Customs notice 200. Relief from duty is available
for such goods, but they must usually be notified to Customs.
personal equity plan (PEP)

A now discontinued tax-advantaged savings vehicle. It allowed
individuals to enjoy the profits from stock market-related investment
free of income tax and capital gains tax. PEPs were introduced in 1987
but from 6 April 1999, new investment in PEPs is no longer possible.
However, existing PEPs could continue in existence for up to five
years.
personal export (new motor vehicles)

Scheme which allows overseas visitors and other people who intend to
leave the EU for at least six months, to buy a vehicle free of VAT and
use it in the EU for a limited period before export.
personal financial planning

Planning an individual’s finances for the short-term and long-term.
personal gain Something to the financial benefit of an individual.

One of the conditions must be satisfied for an employee’s disclosure
to be a protected disclosure is that the employee did not make the
disclosure for personal gain. Employment Rights Act 1996 s43L(2)
states that any reward paid does not constitute personal gain.
personal identification number (PIN)

Code, typically of four digits, which allows the holder of a card to
access the funds to which the card relates. The number is commonly
referred to as a PIN number (even though the N of PIN stands for
number).
personal import allowances

Amount an individual is legally allowed to bring in with him or her
when coming from a non-EU country without having to pay Customs
duty or VAT. It is colloquially known as the duty-free.
personal income Income received by an individual from all sources before tax and other
liabilities are paid.
personal independence payment

Proposed payment in Welfare Reform Act 2011 to replace disability
living allowance.
personal information For purposes of a identity documents, personal information about A

means —
“(a) A’s full name,
(b) other names by which A is or has previously been known,
(c) A’s gender,
(d) A’s date and place of birth
(e) external characteristics of A that are capable of being used for
identifying A,
(f) the address of A’s principal place of residence in the United
Kingdom,
(g) the address of every other place in the United Kingdom where A
has a place of residence,
(h) where in the United Kingdom and elsewhere A has previously
been resident,
(i) the times at which A was resident at different places in the
United Kingdom or elsewhere,
(j) A’s current residential status,
(k) residential statuses previously held by A, and
(l) information about numbers allocated to A for identification
purposes and about the documents (including stamps or labels) to which
they relate.
Personal Investment Authority (PIA)

A Self-Regulating Organisation (SRO) set up under the Securities and
Investment Board (SIB) with responsibility for regulating retail
financial services.
personal liability notice For national insurance, a notice that may be served on culpable officers
of a company, requiring them to meet any shortfall of the company’s
contributions (Social Security Administration Act 1992 from s121C).
personal licence “A licence which:

(a) is granted by a licensing authority to an individual, and
(b) authorises that individual to supply alcohol, or authorise the
supply of alcohol, in accordance with a premises licence”
(Licensing Act 2003 s111(1)).
personal licence Licence which authorises an individual to perform functions in

connection with gambling facilities (Gambling Act 2005 s127).
personal lines Insurance designed for individuals rather than businesses or

organisations.
personal loan Money lent to an individual
personal organiser Personal file in which pages may be inserted as desired. Such a file is
generally used as a diary, address book and for storing basic reference
material of particular interest to the user. The leading example is the
Filofax, which is sometimes used as a generic name but is a trade name.
personal pension A pension plan which produces income and possibly a tax-free lump
sum on retirement or death. Personal pensions commenced in July 1988
and are designed to allow anyone who is either employed but not a
member of an occupational pension scheme or self-employed to make
provision for a pension in retirement. Personal pensions can be used to
'contract out' of the State Earnings Related Pension Scheme. Employers
can normally contribute to the personal pension of an employee.
Employees who are members of an occupational scheme cannot
contribute to their own personal pension plan. 2. Personal pensions are
a way of making your own pension provision if you are not a member
of an employer's scheme. The return from a personal pension or part of
it can be used to pay off the capital sum of a mortgage at the end of the
mortgage term usually 25 years or, sometimes, earlier. They have the
benefit of being tax efficient but to find out if they are suitable you
should discuss with your financial adviser.
personal pension scheme A pension scheme previously approved by the Board of Inland Revenue
Such a pension scheme must be established in accordance with
Finance Act 2004 s154(1). A personal pension scheme is one so
established which is not an occupational pension scheme (Pension
Schmes Act 1993 s1(1)).
personal property Property other than land and buildings, also known as personalty. Land
and buildings are real property.
personal representative (PR)

A person who deals with the property of someone who has died.
If the person left a will (testate), the PR is an executor acting under
probate.
If the person left no will (intestate), the PR is an administrator
acting under letters of administration.
personal return Declaration an individual is required to make to HMRC to allow his

liability for income tax and capital gains tax to be calculated. The
general requirement is contained is Taxes Management Act 1970 s8.
personal security Expenditure that relates to protecting people, rather than property.
From 6 April 1989, tax relief may be claimable for such
expenditure.
personal service company (PSC)

A company that supplies the services of one employee to another
company to avoid the employee being regarded as the employee of the
second company. This can require the PSC to make a special tax
payment under the IR35 regulations.
personalty Property other than land and buildings, also known as personal
property.
personal use The same as private use.
personal welfare LPA A form of lasting power of attorney (LPA) that may be made from 1
October 2007 under Mental Capacity Act 2005.
An individual who is at least 18 and has mental capacity may make
such an LPA. It appoints a person (the attorney) to make decisions
about the individual if he or she loses mental capacity. Under this LPA,
the attorney may make decisions about the individual’s general welfare,
including consent for medical treatment.
person established in the EU

In the case of an individual, any person who is normally resident in the
European Union (EU). In the case of a legal person or an association of
persons (such as a company or corporation) that has a registered office,
central headquarters or a permanent business establishment, in the EU.
person established outside the EU

In the case of an individual, any person who is not normally resident in
the EU. In the case of a legal person or an association of persons (such
as a company or corporation) that has a registered office, central
headquarters or a permanent business establishment outside the EU.
person in default For tax, the person who is responsible for the non-payment of tax and
against whom proceedings may be commenced under Taxes
Management Act 1970 ss61-70A.
person in default Person who may be liable under provisions relating to fraudulent or
negligent conduct under Taxes Management Act 1970 s36.
person involved in providing the accommodation

Term used in Income Tax (Earnings and Pensions) Act 2003 s112 to
determine whether an employee is liable to pay income tax on the
benefit of being provided with accommodation.
persons acting in concert “Persons, who pursuant to an agreement or understanding (whether

formal or informal), actively co-operate, whether by the ownership by
any of them of shares in an undertaking or otherwise, to exercise
control or influence over that undertaking” (FRS 8 para 2.4).
person’s estate The amount left by a person on death on which inheritance tax may be
charged. Inheritance Tax Act 1984 s5(1) defines this as “the aggregate
of all the property to which he is beneficially entitled” except for
interest in possession trusts, excluded property, and foreign works of
art being exhibited in the UK.
persons providing benefit In relation to taxation of assets provided to an employee “are the person
or persons at whose cost the benefit is provided” (Income Tax
per stirpes Latin: by stock or branches. The term relates to how property is divided
between descendants.
A common example is when property is divided between children
of the deceased. If one child has already died, that child’s share is
divided between the children of that child.
persuade Bring someone to the point where they agree to act, rather than to
convince which merely brings them to the point of belief. You may
convince someone they owe tax, and then persuade them to pay it.
persuasive precedent Decision of a court case which influences future decisions of courts
where the facts are similar, but where the decision falls short of a
binding precedent.
Persuasive precedents often arise from obiter dicta, or from
decisions of courts in other jurisdictions but which have a similar
system of law.
per totam curiam Latin: by the whole court.
per-unit tax A per-unit tax is a tax that is charged as a fixed amount on each unit of
the good. Most excise duties are per-unit taxes.
persuade Strictly speaking, you convince someone of another view, and persuade
them to do something. However this distinction is not always observed.
PES Personal Export Scheme.

This is a scheme under which a VAT-registered supplier may
supply a motor vehicle to certain customers in the United Kingdom free
of VAT, on condition that the vehicle is exported to a destination
outside the European Union within a fixed time. Subject to some
restrictions, the vehicle may be used in the EU prior to its final export.
pesewa One hundredth of a cedi, currency of Ghana.
peso Currencies of Argentina and Chile.
pesticides tax A proposed tax suggested in 1999 to deal with environmental concerns.
In the event, those concerns were addressed without the need to
introduce this tax.
pet Animal kept for companionship and affection rather than for work.
Such status of an animal can determine whether its food is subject
to VAT, and how the animal may be imported through Customs.
PET Potentially exempt transfer, for inheritance tax purposes.
Peterhead principle Principle which establishes when a mutual trading organisation is

engaged in taxable trading, as is discussed in the Inspectors’ Manual at
BIM24475. The name comes from the case British Legion Branch,
Remembrance and Welcome Home Fund v CIR [1953] 35TC509.
Peter principle Principle established by Lawrence J Peter, a psychologist, in 1969. It

states that everyone rises to their level of incompetence. Although
originally written as a joke, it is now accepted as a management
principle.
pet food Food specifically prepared for pets. Such food is standard-rated for
VAT. However food for humans or for working animals is generally
zero-rated, even if sold for pets. The full scope is set out in VAT notice
701/15.
petitioning creditor Creditor who presents a petition for a debtor to be declared insolvent.
Petition of Right Constitutional document produced by Parliament in 1628 and served on

Charles I. One of its main provision was its re-assertion that taxes may
only be imposed by Parliament.
petitio principia Latin: inclining towards the beginning. In logic and advocacy, a false
argument that assumes what it is trying to prove or demonstrate. In
other words, it begs the question.
petroleum revenue tax A tax on the production of petroleum, introduced in 1974.
petty cash book One of the prime books of account, which relates to petty cash.
Typically, the left-hand side records cash paid in. This is usually a
memorandum account outside the bookkeeping as these amounts are
entered into the nominal ledge from the bank account book from which
the cash is drawn. If cash is received from another source, such as a
cash sale, provision must be made to ensure that this is properly
recorded in the financial accounts, possibly by a journal entry.
The right-hand side of the book records payments from petty cash.
These are analysed under categories of expenditure for eventual posting
to the profit and loss account via the nominal ledger.
petty cash Ready cash kept on the premises for small items of expenditure.
petty cash box Box which keeps petty cash.

Typically it is a metal box with a key, though the lock is not very
secure. There is a coin tray, typically divided into six compartments.
Underneath the coin tray, bank notes are kept.
As there are more than six different coins in circulation, a sensible

division of denominations per compartment is:
● £2 and 50p coins
● £1 coins
● 20p coins
● 10p coins
● 5p coins
● 1p and 2p coins
The box usually also contains either a small cash book, or the
vouchers which have yet to be written up in the petty cash book and
filed.
petty cash voucher Document which authorises payment from petty cash.
petty custom A tax charged between 1303 and 1322.
petty expenses Small amounts of expenses.
PEX Committee Public Expenditure Committee.
PFI Private Finance Initiative.
PG (1) Professional Group. Representative body which discusses tax

matters with HMRC.
(2) Present gravity. Customs notice 226 explains how this may be used
to calculate alcoholic strength for determining beer duty.
phantom Share against whose price a cash price is based even though there is no
direct or indirect ownership of that share.
The term was coined in HMRC guidance on employee share plans.
Such a provision is not illegal, but special provisions apply when used
in an employee share scheme. This is only likely to happen in an
avoidance scheme.
phantom stock plan Benefit plan for employees that is equivalent to the employees holding
shares but without actually doing so.
phased retirement “When the deceased has divided their pension entitlement into a series
of segments and has agreed a plan of retirement with their pension
provider to take so many segments each year” (HMRC inheritance tax
glossary).
PHI business In relation to taxation of insurance companies, means “long-term

business other than life assurance business (including the reassurance of
such long-term business)” (Income and Corporation Taxes Act 1988
s431(2)).
philanthropic For VAT and such bodies, the term refers to “good work for the direct
benefit of the general community or to a particular section of the
community or designed to promote the well being of mankind” (VAT
notice 701/5).
philanthropic advisor American term for an individual or firm that provides counselling and
evaluative services to donors before and after grant making decisions.
philosophical For VAT and such bodies, “the advancement of a particular way of
thinking but which are not of a political or religious nature” (VAT
leaflet 701/5).
phishing Form of Internet-based fraud which involves identity theft.

It involves pretending to be a bank, auction site or other website and
sending an e-mail to as many people as possible to seek personal
details. The e-mail usually says that there is a problem on the account
and asks the person to enter their details, including passwords and
similar confidential data, to allow the supposed problem to be resolved.
The passwords and similar data are used for identity theft.
HMRC has repeatedly warned against phishing, such as when e-
mails are sent out in mass advising people that they have a tax rebate
and asking them to enter details. These details can then be used for
identity theft or to empty a bank account.
phoenix company Company which “rises from the ashes” of another company. A common
example is when a company goes into liquidation with unpaid debts,
only for another company run by the same people in the same business
activity, and often with a similar name, to appear.
The term comes from the bird Phoenix of Egyptian mythology. It
died by burning in a fire from whose ashes another Phoenix would
arise.
phoenixism Practice of allowing a business to become insolvent with unpaid debts,

only for another business, the phoenix company, to appear in the same
business activity. There are provisions in insolvency law which are
intended to counter this practice.
phone booth Another name for a telephone kiosk.
phoney war Term used in 1940 when there was no obvious sign of war from
Germany in England.
photocard A card which has a photograph of the holder to help identify the person.
Modern driving licences and most security passes are photocards.
photocopies The supply of a photocopy is generally not zero-rated, according to

VAT notice 701/10, even if the copied document is zero-rated if
supplied separately.
If the photocopy is itself a leaflet or book, it may be zero-rated
under Value Added Tax Act 1994 Sch 8 Group 3.
physical asset Asset which has a physical form, as against an intangible asset.
physical inventory Counting actual stock.
physical market Commodity market where purchasers actually buy the products, as
against a futures market.
physical price Current cash price of a commodity for immediate delivery.
physical stock Actual items of inventory held on the premises.
physicals Actual commodities which are sold on the current market.
PI Proprietor’s interest.
PIA Personal Investment Authority.
piano rolls Rolls of perforated paper which operate a pianola or other type of
player piano.
It is standard-rated according to VAT notice 701/10, and does not
benefit from the zero-rating for printed music under Value Added Tax
Act 1994 Sch 8 Group 3.
piaster One hundredth of a Lebanese pound or Egyptian pound.
PIBS Permanent interest bearing shares.
PID Prolapsed intervertebral disc. Common abbreviation for sick notes

(HMRC leaflet E14).
pie chart Graphic representation where elements of the whole are shown as
sectors of a circle, like slices of a pie.
piece rate Method of paying employees or other workers according to what has
been produced, such as £2 for each item assembled.
piece worker A person who is paid according to units of production rather than time.
A piece worker must be paid the national minimum wage on the time
work basis.
piecework Payment for work by output, such as items assembled or baskets

harvested.
pierce the veil of incorporation

US term for lifting the veil of incorporation
Pievienotãs vértîbas nodoklis

Latvian: valued added tax.
pig ark Piece of curved material to make a simple kennel-like protection for
outdoor pigs. This qualifies as plant and machinery (at the higher rate)
in the pig industry (HMRC Brief 03/2010 issued on 23 February 2010).
pig tent Form of protection for outdoor pigs. This qualifies as plant and
machinery (at the higher rate) in the pig industry (HMRC Brief 03/2010
issued on 23 February 2010).
Pigovian tax Tax that is imposed partly or wholly to dampen down a demand for
social purposes. Examples include taxes on alcohol, tobacco and petrol
to reduce their consumption. The name comes from the economist
Arthur Pigou (1877-1959, England) who developed such economic
theories.
Pilcher The case that determined the tax treatment for crops on land. The full
name of the case is CIR v Pilcher [1949] 31TC314. It is discussed in
pilotage Pilotage is generally zero-rated under Value Added Tax Act 1994 Sch 8
Group 8.
pilot scheme Scheme tried out on an experimental basis.

Many social security ideas are tried out in pilot schemes in selected
areas.
pinball machine For VAT purposes, this is regarded as an amusement machine (VAT
notice 701/13).
PIN number Personal Identification Number.

This is usually a four-digit number which authorises a transaction
on a credit card, debit card, cash card or similar. It is an alternative to
signing.
The term “PIN number” is widely used, even though the N of PIN
stands for “number”.
pint Imperial unit of liquid capacity. It is equal to 34.677 cubic inches or

568.26 millilitres. There are 8 pints in a gallon. Milk and certain
alcoholic drinks are still sold by the pint.
pipeline Means of transferring liquids or gases long distances, including across

national borders.
There is a specific provision in Customs and Excise Management
Act 1979 s3 dealing with customs duties on oil, gas and other items
imported by pipeline.
Pipeline Adjustment Statement

Document issued by a pipeline operator to the shippers.
pipe tax Tax charged between 1696 and 1699 as an addition to tobacco duty on
all pipes used for smoking. It was abandoned because it was difficult to
collect.
pirated goods Goods produced in contravention of laws on intellectual property,

such as bootlegged films or music. Customs may seize any such goods
that a person attempts to bring into the country.
PIS Unfortunate abbreviation for perpetual inventory system.
PISA Programme for International Student Assessment, a programme run by

OECD in 2000 and in every third year thereafter. It measures the
scholastic performance of 15-year old students in member states.
PIW Period of incapacity for work, for payment of statutory sick pay.
PL Country prefix code for Poland.
place of belonging Country where a supplier or customer belongs. It can determine where
services are made and who accounts for any VAT due.
place of business For tax, “(a) the place where the trade, profession, vocation or business
with which the proceedings are concerned is carried on, or (b) if the
trade, profession, vocation or business is carried on in more than one
place, the head office or place where it is mainly carried on” (Taxes
Management Act 1970 Sch 3 para 2(5)).
place of effective management (POEM)

Term used to determine the residence of a business for tax purposes.
place of residence For tax, a person’s usual place of residence or, if that is unknown, the
person’s last known place of residence (Taxes Management Act 1970
Sch 3 para 2(4)).
place of supply For VAT purposes this is where a supply is treated as being supplied, or
made and is the place where it is liable to pay any VAT.
place of trade Place from which a person conducts a trade.
placement (1) Finding a permanent job for someone.

(2) American term for finding buyers for a new issue of shares. In the
UK, this is called a placing.
placing Finding buyers for a new issue of shares.
placita Latin: pleas.
plain old telephone service (POTS)

Traditional landline telephone service which is used solely for
transmitting speech.
plain vanilla swap Interest rate swap where a company with fixed interest borrowings may
exchange them for variable rate borrowings.
Plan d’Épargne Populaire

French: popular saving plan.
Tax scheme introduced in France in 1989 based on the UK
personal equity plan.
planned economy System where the government plans the economy, as in a Communist
system. Except in emergencies such as war, no planned economy has
worked.
planning blight Loss of land’s value because of proposed plans to develop nearby land,
such as house prices which are depressed because of plans to build or
develop a nearby airport.
planning contribution Scheme of allowing planning authorities to collect a sum from

developers in their area as an additional source of revenue (Planning
and Compulsory Purchase Act 2004 s46).
planning gain supplement Proposal announced in 2005 to allow local authorities to impose a
charge on planning permissions to help fund infrastructure. The plan
was dropped in 2007.
This was the fifth attempt to introduce such a charge. The first was
a betterment charge made under Housing, Town Planning etc Act 1909
which operated before the war. The second was a development charge
from 1947 to 1953. The third was a betterment levy under Land
Commission Act 1967 which lasted until 1970. The fourth was
development land tax which operated from 1976 to 1985.
This proposal has been abandoned, though some preparatory work
was undertaken under the Planning-gain Supplement (Preparations) Act
2007.
plant and machinery Fixed assets used for the production of a business’s goods. It includes
tools, machinery, furniture, vehicles, computers and similar.
Plant and machinery attracts a capital allowance for income tax or
corporation tax. A distinction is made between equipment with which
the business operates (which qualifies as plant and machinery), and
equipment in which a business operates (which is an industrial
building).
For capital gains tax, plant and machinery is always regarded as a
wasting asset (Taxation of Chargeable Gains Act 1992 s44(1)(c)).
plant breeders’ rights (PBR)

Another term for plant variety rights.
plants For VAT purposes, plants are zero-rated if used for human or animal
consumption. Other plants, such as those for ornamentation, are
standard-rated.
plant variety rights (PVR)

Form of intellectual property given to breeders of new flowers or
plants. These are governed by the International Convention for the
Protection of New Varieties of Plants (UPOV Convention) originally
signed in Geneva in 1961 and enacted in UK law in 1964. The current
Convention was revised in 1991 and enacted in UK as Plant Varieties
and Seeds Act 1997.
This term is used in Customs notice 34, but for other purposes the
term plant breeders’ rights (PBR) is usually preferred.
Customs may seize goods that breach these rights.
plastic money Collective term for credit cards, charge cards, debit cards and other
means of payment by a plastic card.
platinum Naturally occurring element which is regarded as a precious metal. It

has a white lustre.
As an element it has the atomic symbol Pt and the atomic number of
78. It is widely used in jewellery and as a store of value. Platinum
bullion has the ISO currency code of XPT.
Platinum also has some industrial uses such as for electrical
contacts and in emission controllers on car exhausts.
playing cards duty Excise duty charged between 1463 and 1960 on packs of 52 playing
cards.
plc Public limited company. Such a company must put the letters “plc”
after its name (Companies Act 2006 58(1)) or the Welsh equivalent
“ccc”.
pleading in the alternative

In law, when a person is allowed to plead two contradicting defences. If
one defence is dismissed, the alternative defence may be used.
pleasure craft In relation to excluded leading activities for venture capital trusts, the
term means “any ship of a kind primarily used for sport and recreation”
pledge In money lending, another words for “pawn”.
pledged giving System by which church or charity members promise to make regular
contributions.
A taxpayer may make such gifts under Gift Aid that allows the
church or charity to recover income tax at the basic rate. Tax at higher
rates is reclaimed by the taxpayer.
plene administravit Latin: administered in full.

This is a defence which an executor may use when a claim is made
against an estate which has been fully settled and where there are no
more assets available to settle further claims.
PLN Penalty Liability Notice, a type of notice sometimes issued if an under

declaration on tax with a VAT return is made, or inaccurate information
is given on the European Sales Lists (ESL).
PLR (1) Estate Gazette Planning Law Reports, a series of law reports
published since 1988.
(2) Public lending right.
PLU code Price look up code
plug and play Colloquial term for tax avoidance schemes where standardised
documents and transactions are made available for the client to use. All
such schemes must be reported to the tax authorities from 1 August
2006.
Plumbers Tax Safe Plan (PTSP)

Scheme run by HMRC from 1 March 2011 to 31 May 2011 to
encourage voluntary disclosure of undeclared tax by plumbers, gas
fitters and similar. Those who use the scheme incur a lower penalty.
PM (1) Prime minister.

(2) Particulate matter.
PMA Plant and machinery allowance, a capital allowance which reduces

the sum subject to income tax or corporation tax.
PMA general pool Value of a business’s plant and machinery which is subject to capital
allowance which have yet to be given in a tax computation. Each year,
new acquisitions are added, disposals are subtracted, and the balance is
reduced by the capital allowance for that year.
The general pool includes all plant and machinery which tax law
does not require to be separately recorded. This includes long-life assets
and integral features which have a lower rate of capital allowance.
POA Pre-owned assets.

[The abbreviation is also used to mean Price On Application.]
POAO Products of Animal Origin, a product as defined in The Products of

Animal Origin (Third Country Imports) (England) Regulations 2002.
POCA Proceeds of Crime Act 2004
Podatek od towarów i uslug

Polish: value added tax
POEM Place of effective management.
poena Latin: penalty.
poet An artist, sculptor, poet, composer or other creator of art may average
profits over three years under certain conditions (Income Tax (Trading
and Other Income) Act 2005 s221).
point In printing, the size of letters where 72-point indicates that the lines of
type are inch apart. This does not mean that the letter is one inch high.
point of sale scheme This works by identifying the tax liability of goods and services made
at the time of sale. This usually means using a till system that is capable
of distinguishing between goods sold at different rates of tax.
poisha One hundredth of a taka, currency of Bangladesh.
polarisation The requirement for a financial adviser to be either 'tied' to one

financial product provider, or completely independent. A provision of
the Financial Services Act.
Police and Criminal Evidence Act 1984 (PACE)

Law that provides a legislative framework for police investigations of
crime. It replaces the previous judges’ rules. It deals with such matters
as police powers of search, interviewing suspects, custody provisions
and the handling of evidence. The Act has been significantly amended
by Serious Organised Crime and Police Act 2005.
PACE extends to other forms of criminal investigation and can
therefore apply to tax officers investigating criminal tax offences.
PACE codes of practice have been issued under the Act.
policy Contract of insurance, setting out the terms of cover.
policy cost Fixed cost or overhead which is created by a policy of the

organisation’s management.
policyholder The person or organisation who owns an insurance policy.
policy holder participation fund

“A fund in the case of which an amount equal to the amount shown in
line 34 of Form 58 for the fund is allocated to policy holders for the
relevant period” (Income and Corporation Taxes Act 1988 s444AJ(8)).
policy reserves Amount of the funds that a life insurance company holds specifically
for fulfilment of its policy obligations.
policy term Period of time for which an insurance policy provides coverage.
political A body is political if it “campaigns for or against legislative and

constitutional changes or campaigns in local and central government
elections” (VAT leaflet 701/5).
political discrimination Discrimination because of a person’s political views. It is illegal in

Northern Ireland, but not in Great Britain.
political donation Donation to a political party, political organisation or candidate in any

election.
Companies must declare such donations under Companies Act 2006
ss362-379. If the donations exceed £5,000 in any 12-month period, the
donation must be authorised by its members.
political economy Old term for the study of economics.
political expenditure Expenditure by a company on activities or literature of a political body

or candidate in an election (Companies Act 2006 s365).
In general, such expenditure is not allowed as a tax deduction, as

discussed in the Inspectors’ Manual at BIM42528. A leading case is
Boarland v Kramat Pulai Ltd [1953] 35TC1.
political fund Fund operated by a trade union to support a political party (usually
Labour). It may be collected from workers as an addition to his union
dues, but no worker can be compelled to contribute. Such donations are
regulated by Trade Union and Labour Relations (Consolidation) Act
1992 ss71-108.
political fund exemption notice

A notice which a worker may serve on his trade union requiring the
union no longer to deduct sums for its political fund. The wording is
given in Trade Union and Labour Relations (Consolidation) Act 1992
s84.
political levy A sum collected by trade unions in addition to the normal trade union
dues. The political levy is passed to a political party supported by the
trade union, which is almost always the Labour party. If the employer
operates the check-off system for collecting trade union dues from
wages, the political levy may also be collected.
A trade union member has the right not to pay this levy under Trade
Union and Labour Relations (Consolidation) Act 1992 s86. An
employee who believes that the political levy is being deducted from
his pay unlawfully may make a complaint to the employment tribunal.
political organisation Political party, independent candidate in an election, or any body which
seeks to influence how people vote in an election or referendum
political parties Organisation that is formed for supporting candidates in political

elections.
Donations to a political party are exempt from inheritance tax
provided that, at the last general election, the party either had two MPs
elected, or had one MP elected and received at least 150,000 votes for
all its candidates (Inheritance Tax Act 1984 s24).
A company must obtain shareholder approval to make a donation of
more than £5,000 in a year to a political party (Companies Act 2006
s378).
An employee who belongs to a trade union may elect not to pay a
levy to a political party (Trade Union and Labour Relations
(Consolidation) Act 1992 s86).
poll tax (1) A fixed fee on all men and women except beggars charged between
1377-1381, originally imposed at 4d a person.
Higher rates applied for people esquires and those of higher
standing. In 1380, the rate was increased to one shilling for everyone
except beggars. It led to Peasants Revolt of 1381. The tax was revived
in 1513.
(2) Three taxes imposed in 1660, 1666 and 1677/78. These taxed social
position, professional status, real and personal property, and the newly
emerging hackney carriage. Further impositions were made between

1689 and 1698 by which time it assessed status rather than persons. A
poll tax was suggested in 1758 but not levied.
(3) The name commonly given to the community charge.
polygamy Having more than one wife. A person who goes through a ceremony of
marriage knowing that he or she is already marriage commits the crime
of bigamy. UK law only recognises a marriage to one person at a time
(Hyde v Hyde [1866]). It is an offence for a British person to contract a
polygamous marriage even in a country which permits it.
In other countries, polygamous marriages are permitted. If the
parties to a polygamous marriage come to the UK, the law generally
recognises the first husband or wife as such. However, there are some
provisions which allow recognition of other husbands or wives for such
areas as social security benefits, though the law is complex.
Ponzi fraud Investment fraud where supposedly high returns are simply paying
early “investors” from money from later investors. It is named after
Charles Ponzi who engaged in the practice.
pool (1) A repository of money from different sources.

(2) Collection of items to be used by various people but without any
one item being allocated to any particular person, such as a car pool.
(3) Typing pool.
(4) In gambling, money collected from many bets.
pool betting Form of gambling where the prize money is a share of the sum staked
Customs notice 147 makes clear that this includes when:
• the winners share the stakes paid;
• the winners share a fixed amount; or
• the winnings are at the discretion of the promoter or some
other person.
The betting must not be at fixed odds. Pool betting usually means
the football pools, but it can extend to other forms of betting.
Such betting is subject to pool betting duty.
pool betting duty Tax charged on pool betting. It is calculated as 15% of net pool betting
receipts (or gross profit). In Customs notice 147, these receipts are
calculated as S + E – W, where S is total stakes, E is total of expenses
and profits and W is winnings. All figures must relate to the same
period.
pool betting licence Licence issued by Gambling Commission to someone who provides
facilities for pool betting (Gambling Act 2005 s65(2)(d)).
pooled car Car provided by an employer for business use only. Ordinarily an
employee is not assessed to tax on the benefit of using such a car
pooled investment fund Means to bring together the investments of many people or
organisations and using the combined funds to obtain economies of
scale and investment management skills not available to individuals.
Examples include unit trusts, investment trusts, etc.
pooled van Van provided by an employer for business use only. Ordinarily an
employee is not assessed to tax on the benefit of using such a van
pooling risk Minimising risk by spreading it, such as by underwriting one tenth of
the risk in ten insurance policies rather than underwriting the risk in the
whole of one policy.
poor law Laws which regulated relief from poverty provided between 1601 and
1948. A common theme was to classify poor people as deserving or
undeserving. The former victims of misfortune should be helped, while
the latter were lazy and should not be helped.
From 1552, parishes collected details of their poor. Magistrates
provided piecemeal assistance in the form of work and grants. The Poor
Law Act 1601 formalised the procedure of supporting the impotent
poor and making the able-bodied work, mainly in the workhouse.
With variations, this system continued under a Royal Commission
of 1832 into the poor law. This concluded that the poor law itself was
becoming a cause of poverty, leading to the Poor Law Amendment Act
1834. This made workhouse conditions harsher as a means of
encouraging the able-bodied to take work. As welfare provisions were
introduced between 1906 and 1914, the poor law became less relevant.
Workhouses were abolished under Local Government Act 1929. Other
elements of poor law were transferred to local authorities before their
final abolition in 1948.
port Alcoholic drink made from blending wine with spirits. It is an

exception to some of the rules regarding the blending of liquors
portability Ability to move something. It applies to financial products such as

mortgages, when it means that a mortgage can be transferred on the
same terms to a new property.
portable drive Hard disk in a case which can be connected to a computer for the access
to large amounts of data. It is also used for security, as it avoids the
need to keep sensitive data in a computer.
porter Type of dark beer, subject to beer duty. Historically the term has been
used for other meanings.
portion In executorship, this word has a specific meaning of the part of the
estate left to a child or person to whom another stands in loco parentis.
portfolio A collection of investments.
portfolio management Buying and selling shares with a view to making a profit.
portfolio theory Basis which an investor or his broker adopts for investing for a
particular client.
Portugal Member state of the European Union, which includes the Azores and
Madeira.
position Financial holdings with an institution, particularly holdings of a client

with a stockbroker.
position audit General review of a business, particularly the elements which are not
financial in themselves but impact on the finances. A position audit
may consider such matters as product mix, marketing, fulfilment,
customer service, management, workforce satisfaction and return to
shareholders.
positioning gap In marketing, an area or means by which a product or organisation can

achieve sales without competition. Such a gap may be found from a
perceptual map.
positive Certain; not negative; greater than zero.
positive carry Deal where the cost of finance is less than the overall return.
positive discrimination Policy of favouring certain categories of people who are seen as
disadvantaged, such as women, blacks or the disabled. In the USA, such
policy is usually called affirmative action.
Positive discrimination is generally illegal in the UK as it is still
discrimination. There are some exceptions. For example, Race
Relations Act 1976 s38 allows for separate workplace training for
particular racial groups. The 1998 Good Friday Agreement in
Northern Ireland requires the police force there to recruit equal numbers
of Catholics and Protestants.
positive externalities Beneficial consequences enjoyed outside an organisation deriving from

activity with an organisation.
positive goodwill The normal goodwill where a business has a value greater than its net
assets.
positive yield curve Graphic representation of when the yield on a short-term investment is
greater than that on a long-term investment.
possess Have custody of.
possessio civilis Latin: civilian possession.
possession Having physical custody even though you may not own the goods.
Strictly speaking ownership is having a legal title to the goods
whereas possession is having custody. So if A lends a book to B, A is
the owner and B is the possessor. However these terms tend to be used
more loosely in everyday parlance.
Legal rights attach separately. For example, the right to sell
generally vests in the owner, but any theft of the goods is generally
from the possessor.
For Customs purposes, duty may be charged on possessions of
travellers. Customs notice 3 says “generally speaking, ‘possession’
means ‘to have’ rather than ‘to own’”.
possessio naturalis Latin: natural possession.
possessive Attitude of being unwilling to share or sell one’s possessions.
POS safe Safe for use with point of sale equipment.

The safe is designed to be robust yet portable. It has two sets of
keys. One set opens the safe, while the other allows it to be locked into
position.
possible future repayment

The possibility that a trader may have to refund money received from a
customer.
This in itself is not sufficient to justify excluding the payment from
taxable income. This was established in Smart v Lincolnshire Sugar Co
Ltd [1937] 20TC643 and is discussed in the Inspectors’ Manual at
BIM40085.
post (1) Assign a transaction to the correct accounts in the bookkeeping

system.
(2) Position in an organisation.
post a credit Enter a credit item in a book of account.
post and pray American term for job recruitment where a position is advertised and it
is hoped that good candidates reply.
post-acquisition profit Profit earned by a business after it has acquired another.
post-acquisition Description of trading, profits or similar after a business has acquired

another.
post-balance sheet event Event that happens between the end of an accounting period and the
approval of the accounts for that period.
The tax implications of such hindsight are discussed in the
postal charge template Temple with two long rectangles cut in it. Postal packages can be
inserted into these holes to see whether the package is a letter or large
letter.
postal order Document used to send money through the post.

A postal order is bought for any amount up to £250 at a post office.
The amount payable is the face value plus a fee, previously known as
poundage. Postal orders are preprinted in various amounts where odd
sums are added by affixing postage stamps. Post orders can be
redeemed for the face value by the recipient at the post office in UK or
more than 40 other countries.
The postal order is completed in a way similar to a cheque, and can
have the same crossings. It has the advantage that neither the sender
nor recipient need have a bank account.
post balance sheet event Event that happens after the date of the balance sheet. If the event
happens before the accounts are signed and is significant, it must be
disclosed in a note to the accounts.
post-cessation There are special tax provisions for income received and expenses
incurred after a trade has ceased.
Broadly, income is taxed but not as trading income.
From 29 November 1984, post-cessation expenses may generally be
offset against post-cessation income.
post-cessation property relief

Tax relief which may be available for payments made in connection
with a property business which has ceased trading (Income Tax Act
2007 s125).
postdated Given a later date, usually on a cheque. Such a cheque may not be paid
in until that later date.
Postdating does not affect the validity of the cheque or bill of
exchange (Bills of Exchange Act 1882 s13(2)).
poster For VAT purposes, a poster is not within the scope of books and
therefore is not zero-rated under Value Added Tax Act 1994 Sch 8
Group 3, according to VAT notice 701/10.
post litem motam Latin: after litigation has been contemplated.
post mortem Latin: after death. The term is widely used to mean a post-mortem
examination.
postnominal letters Letters a person is entitled to put after his or her name, also known as
designatory letters.
post-nuptial After the marriage, as in a settlement between a married couple

regarding what should happen to their property should they separate.
A court may be guided by such an agreement, but is not bound by it.
post-2002 period of account

Accounting period of an insurance company which started after 31
December 2002 and ended after 8 April 2003 (Income and Corporation
Taxes Act 1988 s444AH(3)). This is used in determining the tax
liability for a life insurance company when there has been a
demutualisation transfer surplus.
post-policy holder surplus Term used in Income and Corporation Taxes Act 1988 s444AJ in
relation to taxation of life assurance companies.
postponed debt In Scottish insolvencies, a debt that ranks after other debts, as set out n
Bankruptcy (Scotland) Act 1985 s51.
postponed entry Delay in the importation of goods. The Customs implications are set out
in Customs and Excise Management Act 1979 s37B.
post purchase costs Costs incurred after a purchase has been made, particularly of capital
expenditure on a fixed asset which is designed to reduce costs.
post-shipment declaration
A full statistical export declaration submitted to the CHIEF system after
goods have been exported. A post shipment declaration is required
following the export of goods under the Simplified Declaration
Procedure (SDP) and Local Clearance Procedure (LCP).
post-war credits Additional tax imposed during the war to be refunded to taxpayers
afterwards. They were introduced by Finance Act 1941 s7 by reducing
tax allowances. They were repaid under Income Tax (Repayment of
Post-War Credits) Act 1959 in stages until 1973. In 1996, it was stated
in Parliament that £33 million remained unclaimed.
They are still referred to in tax law. Income and Corporation Taxes
Act 1988 s824(7) states that their repayment is excluded from the scope
of repayment supplement.
potentially exempt transfer (PET)

“A transfer of value —
(a) which is made by an individual on or after 18th March 1986 but
before 22nd March 2006, and
(b) which, apart from this section, would be a chargeable transfer
(or to the extent to which, apart from this section, it would be such a
transfer), and
(c) to the extent that it constitutes either a gift to another individual
or a gift into an accumulation and maintenance trust or a disabled trust.
(Inheritance Tax Act 1984 s3A(1)).
Also, “a transfer of value —
(a) which is made by an individual on or after 22nd March 2006,
(b) which, apart from this section, would be a chargeable transfer
(or to the extent to which, apart from this section, it would be such a
transfer), and
(c) to the extent that it constitutes —
(i) a gift to another individual,
(ii) a gift into a disabled trust,
(iii) a gift into a bereaved minor’s trust on the coming to an
end of an immediate post-death interest”
(Inheritance Tax Act 1984 s3A(1A)).
These definitions are further explained in later sections.
In practice, a PET is any donation made during a person’s lifetime
that is not immediately exempt. (Such exempt donations include a gift

to a spouse, and amounts covered by the annual exemption or small
gifts exemption).
potential ordinary share Financial instrument or equivalent right that may entitle the holder to
acquire ordinary shares (FRS 14).
potior est conditio defendentis

Latin: the condition of a defendant is better.
This is the principle that, in civil law, the onus of proof is on the
claimant.
poultry “Domestic varieties of the following, that is to say, fowls, turkeys,

geese, ducks, guinea-fowls, pigeons and quails” (Animals Act 1971
s11).
For VAT, poultry for food is zero-rated; ornamental breeds are
standard-rated. The exact scope is set out in VAT notice 701/15.
pound (1) Main unit of currency in the UK for more than 2000 years. It is
indicated by the sign £ before the amount. This is a fancy form of the
letter L for the Latin “librum”. The pound is divided into 100 pence
since decimal currency in 1971. Previously it was divided into 20
shillings, each of which was divided into 12 pence. The pound is also
the term used for the currencies of Cyprus, Egypt, Lebanon, Malta,
Sudan and Syria. It was the unit in the Irish Republic until it adopted
the euro.
(2) Imperial unit of weight, denoted by the letters “lb” after the
number. There are 16 ounces in a pound There are 14 pounds in a stone,
112 in a hundredweight and 2,240 in a ton.
A pound is equal to 453.59237 grams. There are 2.2046 pounds to a
kilogram.
pound coin Coin worth one pound minted from 1983 as a replacement for the
pound note.
Historically there have been many gold coins, such as the sovereign,
worth one pound.
pound cost averaging Strategy for purchasing shares or other securities. Typically this
involves spending the same amount regularly each month buying shares
whatever their price. This strategy ensures that more shares are acquired
than if bought at their average price for the year.
For example someone spends £120 each month buying shares that
traded at £6, £8, £10 and £12 when bought. They will buy 20, 15, 12
and 10 shares respectively giving a total of 57. This equates to an
average share price of £8.42.
The investor would only have acquired 53 shares if they were
bought at the average price of £9.
pound in your pocket Term coined by prime minister Harold Wilson on 18 November 1967
when the pound was devalued by 14% from £1=$2.80 to £1=$2.40.
pound sterling UK pound seen as a unit of currency.
poundage (1) Tax introduced on imports in 1748.

(2) Charge made according to an underlying value. The term was once
used to describe the fee payable for buying a postal order.
poverty Insufficiency of funds.

A distinction is usually made between absolute poverty and
relative poverty.
Absolute poverty is when someone has insufficient income to
provide the basics of normal life. Relative poverty is when someone is
disadvantaged compared with their peer group.
poverty line Level of income necessary to sustain a minimum standard of life.
power (1) In law, a legal right to alter the rights, duties or powers of oneself or
others.
(2) For VAT, a supply of power is treated as a supply of goods (Value
rated for other supplies.
power of appointment Right for one person to appoint someone else to a particular position.
Such a power is usually given in a deed or will.
power of attorney Legal arrangement allowing someone to administer another person’s

affairs.
power of maintenance Power provided by a will or deed giving trustees the power to spend
income of trust property on the maintenance and education of children
who will be the ultimate beneficiaries.
The power is given by Trustee Act 1925 s31.
power player Person who uses their position in an organisation for improper
purposes, such as to secure personal financial benefits (such as
backhanders) or for sexual harassment of junior staff.
power to enjoy Term used in determining whether a person benefits from income or
equivalent benefit, and thereby has a tax liability.
PPF Pension Protection Fund.
PPFM Principles and Practices of Financial Management, publication of the

PPF Ombudsman Ombudsman for the Board of the Pension Protection Fund.
PPI Protection plan insurance.
PPIA Protected pension input amount.
PPOB Principal place of business.
PPP Personal pension plan

[There is also a health insurance company called PPP.]
PR (1) Personal representative.

(2) Prospectus Rules handbook, published by the Financial Services
Authority.
(3) Public relations.
(4) Proportional representation.
PRA Position risk adjustment, a percentage applied to a figure representing a

risk in an insurance company.
practice Professional business, as in “accountancy practice”.
practice file File of sample data provided with some software to give the user a
chance to learn how to use the software without using real data.
pre-acquisition profits Profits earned before a new business was acquired.
pre-acquisition write-down
Reduction in the fair value of a new subsidiary in the balance sheet of
its holding company.
pre-acquisition Before a new business was acquired.
praepositus Latin: one put in front. A person in authority.
pre-billing Practice of submitting a bill for services before they have been
provided.
Pre-Budget Report (PBR)

Statement made by the Chancellor of the Exchequer, usually in autumn,
which sets out the state of the economy and gives some indication of
possible tax changes. Some PBRs have been very similar to the main
Budget speech.
precatory trust Trust that is created by precatory words.
precatory words In executorship, words in a will expressing a desire or wish. Such

words can create a precatory trust.
precedence condition Term used in Corporation Tax Act 2010 s121 in relation to loss relief
for EEA tax losses. The condition relates to how far loss relief may be
claimed outside the UK.
precedent A judgment of the court that establishes law in a court case.

Traditionally, the courts ruled on legal matters and decided issues
on the basis of custom and justice. This created the common law. The
courts no longer create new laws, but do clarify existing ones.
The judgment of the court contains the ratio decidendi which states
the reason for the decision. It may also contain obiter dicta, which
refers to other comments made in passing.
A precedent is said to be a binding precedent if it establishes a rule
of law, or a persuasive precedent if it merely indicates a rule.
Persuasive precedents come from obiter dicta and from non-English
jurisdictions which have a similar system of law, such as the USA,
Australia or New Zealand.
It is open to a litigant to argue that a precedent should not apply in a
particular case by distinguishing it from the precedent. Otherwise a
precedent can be overturned only by a ruling from a higher court or by
legislation.
Where precedents are quoted, the citation must be given.
preceding year The year before the current one, particularly when that year is an
accounting period.
precept The amount each non-billing authority, (County Council, Police

Authority or Parish Council) asks the billing authority (district and
borough council) to collect every year to meet their spending.
precious metal A metallic element which is used as a store of value. These coins can be
made into coins or ingots for storage. Precious metals tend to be less
reactive and more ductile than other metals. They also have a greater
lustre. Precious metals are also widely used for jewellery. Some have
other applications, such as for electrical conductivity.
The main precious metals are gold and silver, with the former being
more valuable. Other precious metals are platinum, palladium,
ruthenium, rhodium, osmium and iridium. The value of the metal
largely depends on its rarity.
The Financial Services Authority defines precious metals as gold,
silver and platinum.
predeceasing Dying before someone else. The term is particularly relevant in

inheriting, such as for a surviving spouse.
pre-decimal currency Currency used in the UK before decimal currency was introduced in
1971.
Pre-decimal currency used the same basic unit of the pound, but this
was divided into 20 shillings, each of which was divided into 12 pence.
So there were 240 pence to the pound. The penny was further divided
into halfpennies and farthings (quarter pennies), which could be further
divided into half farthings, third farthings and even quarter farthings.
A decimal penny is worth 2.4 pre-decimal pennies.
predictive value The quality of accounting information in helping users to evaluate

past, present and future events. The information does not need to have
the nature of a forecast; indeed, it includes evaluating past information.
Predictive value is one of the two factors of relevance set out in
Statement of Principles. The other is confirmatory value. Relevance
is one of the four qualities of accounting information required by

Statement of Principles.
predominant activity For VAT on water, test to determine whether the customer is engaged
in industrial activities. Water to such a customer is generally standard-
rated. Details of the test are given in VAT notice 701/16.
pre-empt Take action to prevent some other action from happening.
pre-emption right Right of an existing shareholder to have the opportunity to buy new
shares before they are offered to others.
pre-entitlement gain For capital gains tax, a gain that accrued before being settled in a trust
and which subsequently was disposed of for a loss (Taxation of
Chargeable Gains Act 1992 s71(2A)).
pre-existing condition In insurance, any physical or mental conditions that exist prior to the
effective date of insurance coverage.
preference A system under which eligible goods imported into the EU from certain
non-EU countries qualify for a reduced (often nil) rate of Customs
Duty. These arrangements also cover EU goods exported to the non-EU
country.
preference In debt recovery, favouring one creditor over another. This is unlawful
once insolvency proceedings have started.
preference dividend Dividend paid on a preference share.
preference share Form of debt instrument.
preference shares Shares in a company which give the holder a preference (although not
an automatic right) to receive a dividend before any ordinary share
dividend is declared.
preference shares “Shares:

(a) which do not carry any right to dividends other than dividends at
a rate per cent of the nominal value of the shares which is fixed, and
(b) which carry rights in respect of dividends and capital which are
comparable with those general for fixed-dividend shares included in the
official UK list” (Income and Corporation Taxes Act 1988 s210(4)).
preferences In computing, part of the software which allows the user a choice in
such matters as how data is presented on the screen.
preferential Showing that something or someone is preferred.
preferential creditor Creditor who must be paid before other creditors.
preferential debt Expense which ranks before all other debts except the fees and
expenses of the insolvency practitioner.
preferential payment Payment to a preferential creditor.
preferential share Shares which are part of a new issue set aside for the company’s
employees.
preferred creditor Creditor who must be paid first in a liquidation.
preferred share Another term for preference share.
pre-finance goods An arrangement whereby an export refund is paid on Common

Agricultural Policy (CAP) goods in advance of the actual export. Goods
must be deposited in a customs warehouse or Free Zone specially
approved for pre-financing.
pre-financing Financing in advance.

Specifically, the system permitting payment of CAP export refund
when goods for export are placed in Customs control in warehouse, or
when basic products from which goods for export are to be produced
are placed in Customs control at the manufacturing premises.
pregnancy-related illness
An illness caused by pregnancy. An illness is not pregnancy-related if
the pregnancy merely exacerbates it. Pregnancy itself is not an illness.
The decision on whether an illness is pregnancy-related must be
made by the employer, for which official guidelines are available. If
there is doubt, the employer should seek medical advice. An employer
is expected to consider representations from the employee before
deciding that a condition is pregnancy-related.
If a woman contracts a pregnancy-related illness in the four weeks
before the expected week of childbirth, the start of the illness
automatically starts the maternity pay period (MPP) (assuming that
the woman is eligible for statutory maternity pay and has not already
chosen to start her MPP).
pre-incorporation contract
Contract made on behalf of a company before it is formed (Companies
Act 2006 s51).
The person who makes the contract is personally liable under it
unless the company agrees to ratify the contract.
pre-invoicing Invoicing before the normal date. If this is done to avoid a forthcoming
increase in the rate of VAT, the supply may be caught by anti-
forestalling provisions.
preliminary announcement
The first announcement by a listed company of its profit for the most
recent accounting period. This precedes the publication of the full
annual report. The announcement is made to the entire stock market

so that all investors receive information at the same time.
preliminary hearing Hearing on a preliminary issue.
preliminary issue In tax cases, a matter dealt with before the hearing on the substantive
issue. A preliminary issue is often on an administrative matter such as
whether a claim was in time, or if the tribunal has authority to hear the
issue.
premises licence Licence from a local authority with regard to particular premises
(Licensing Act 2003 s16ff).
premium The single or regular periodic payment made to an insurance company

in respect of an insurance policy.
premium bond National Savings product but where the interest is not paid but
converted into prizes which are allocated on the basis of producing
random numbers.
premium income Income which an insurance company receives from premiums from its
customers.
premium number Another name for a premium rate number.
premium offer Free gift offered to attract new customers.
premium on redemption An additional amount paid by a company to a holder of a share or

debenture above its nominal value when the company buys it back.
premium rate Telephone number that attracts a much higher charge, usually because
part of the payment is paid to the caller. The most expensive premium
numbers start 09. Other premium rate numbers start 070, 0844, 0845,
0870 and 0871.
Such numbers are subject to OFCOM regulation under
Communications Act 2003 s120.
premium rate number Same as premium number.
pre-13 November 1974 will trusts

Trust created by the will of a person who died before 13 November
1974 on terms that the surviving spouse received an interest in
possession, and that spouse was not entitled to demand that the capital
be paid to his or her.
Under Inheritance Tax Act 1984 Sch 6 para 2, such a trust is exempt
from the charge that would otherwise arisen when an interest in
possession trust comes to an end. This provision reflects the fact that
estate duty would have been paid on such trusts.
prenuptial agreement Agreement made between two people before they marry on what
happens if they separate. Such agreements are common when one party
is already wealthy at the time of the marriage.

Although a pre-nuptial agreement cannot be upheld under English
law, it will be considered by a judge when making a divorce settlement.
pre-owned assets (POA) Property that someone owned at some point from 17 March 1986, and
which is no longer owned by them though they continue to receive
some benefit. From 6 April 2005, an income tax charge can arise.
The law is contained in Finance Act 2004 Sch 15, and in Finance
Act 2007 s66. Regulations are contained in SI 2005 No 724.
This measure is an anti-avoidance measure to stop exploitation of
the rules for gifts with reservation. So a new owner may elect to bring
the assets within the scope of his estate. This puts it outside the POA
regime. Details are given in leaflet IHT 500.
pre-preferential debt Expenses and fees of the insolvency practitioner, which are paid before
all other debts.
prepaid interest Where interest has been paid before it is due.
prepaid Where payment has already been made.
prepayment When a payment is made in one accounting period all or some of

which relates to a later period. The opposite is called an accrual.
For example, a business which makes its accounts up to 31 March,
pays six months’ rent of £1,200 in advance on 1 February. Four months
of this relates to the following accounting period, so an adjustment is
made (usually as a journal entry) whereby £800 is charged to the later
accounting period. The double entry is to debit prepayments and to
credit the relevant expense heading in the profit and loss account, such
as rent.
Prepayments appear as a debit in the trial balance. They are
transferred to the balance sheet as a current asset.
prepayment certificate In medicine, an annual season ticket for prescription charges. Such a
ticket is issued for three months or 12 months. It is usually cost
effective to buy such a certificate if the patient would otherwise pay for
four prescriptions in three months or 14 in 12 months.
The legal definition is “a certificate which confers on the person to
whom it is granted exemption from charges otherwise chargeable under
the regulations in respect of drugs, medicines and appliances supplied
during such period as may be prescribed” (National Health Service Act
2006 s174).
prepayment Payment before the period to which it relates. Common examples

include rent and subscriptions.
In bookkeeping, this is the opposite to an accrual. Prepayments
require a journal entry at the end of the accounting period. The amount
of the prepayment which relates to a future accounting period is
calculated. The double entry is: debit prepayments, credit the relevant
expense. This journal needs to be reversed at the start of the next
accounting period.
Usually the accounting treatment determines the tax treatment

(Inspectors’ Manual at BIM42210).
prepayment penalty American term for an additional charge made when a loan is repaid
before the due date.
pre-registration expenses Goods and services received before registration for VAT and on which
there is an entitlement to claim the VAT as input tax.
The entitlement is three years for goods, and six months for
services.
prescribed area For Customs purposes, “means such an area in Northern Ireland
adjoining the boundary as the Commissioners may by regulations
prescribe” (Customs and Excise Management Act 1979 s1(1)).
prescribed occupation Any of the following occupations - Athlete, Badminton Player, Boxer,
Cricketer, Cyclist, Dancer, Diver (Saturation, Deep Sea and Free
Swimming), Footballer, Golfer, Ice Hockey Player, Jockey – Flat
Racing, Jockey – National Hunt, Member of the Reserve Forces,
Model, Motor Cycle Rider (Motocross or Road Racing), Motor Racing
Driver, Rugby League player, Rugby Union Player, Skier (Downhill),
Snooker or Billiards Player, Speedway Rider, Squash Player, Table
Tennis Player, Tennis Player (including Real Tennis), Trapeze Artiste,
Wrestler.
prescribed scheme Any of the following schemes: The Armed Forces Pension Scheme,
The British Transport Police Force Superannuation Fund, The
Firefighters’ Pension Scheme, The Firemen’s Pension Scheme
(Northern Ireland), The Police Pension Scheme, The Police Service of
Northern Ireland Pension Scheme, The Police Service of Northern
Ireland Full Time Reserve Pension Scheme.
prescribed use The final use to which goods will be put and which entitles them to End
Use relief, this is normally specified in the Tariff.
pre-sentence report Report ordered by a judge or magistrate in respect of a person convicted

of a criminal offence but where sentence has yet to be passed (Criminal
Justice Act 2003 s158).
presence State of being in a particular place. The term is used in such contexts as
claiming tax credits, for which presence in the UK is a requirement.
present fairly A condition of the IASB system, equivalent to true and fair view in
the UK ASB system.
present gravity (PG) Current gravity of beer. Customs notice 226 explains how this may be
used to determine alcoholic strength for payment of beer duty.
present value Amount expressed in currency at today’s value, particularly when

talking about a past or future amount which has been adjusted for
inflation.
presentation (1) For Customs purposes, showing of goods or a document as required.

In particular, the term is used for the notification of imported goods
to HMRC in the manner laid down of the arrival of goods at the
customs office, or any other place designated or approved by HMRC.
(2) In accounting, how items appear on financial statements.
The choice of presentation is an accounting policy, so any change
of presentation is a change of accounting policy (FRS 18 para 12).
presentation of goods The notification to customs in the manner laid down of the arrival of
goods at the customs office or at any other place designated or
approved by customs.
preservation of capital Form of financial management which seeks to protect a business’s

capital base, usually by arranging other sources of finance as required.
pre-shipment advice An abbreviated export declaration presented to HMRC at the time of

export. It must be received electronically.
pre-shipment declaration (entry)

Full statistical export declaration lodged with HMRC together with the
goods before the time of shipment. A full declaration may be made
either electronically using the New Export System (NES), or as a
manual declaration. At a designated Export Place (DEP) a CHIEF
declaration must be submitted electronically.
pre-sorted mail Service provided by Royal Mail where items are delivered having been
sorted for different departments, such as sales and accounts.
presumption of legitimacy In law, the presumption that the mother’s husband is the father of her
child. This presumption may be rebutted by contrary evidence.
pre-trading expenditure Tax relief under Income and Corporation Taxes Act 1988 s401.
pre-trial review Private hearing with the judge before a court case.
press release Statement issued by an organisation to the press.
pressure to discriminate An attempt “to induce, or attempt to induce, a person to do any act”
contrary to the Act. It is an offence under Sex Discrimination Act 1975
s40.
presumption In law, that which comes near to proving a fact.
presumption of death Court order which declares that someone is presumed dead.
Civil Partnership Act 2004 s55. Absence of 7 years and no reason to
assume still alive.
presumption of order of death

For estate duty, assumed to be same time under Finance Act 1958 s29
(repealed by Finance Act 1975).
presumptive Person who is presumed to be due to inherit under a will. This

presumption may be negated by the testator, or may fail because
someone with a better claim is found.
pre-tax Description of an amount before any tax has been deducted.
pre-tax net income American term for a corporation’s annual net income before it has paid
taxes.
pre-tax profit margin Pre-tax margin as a percentage of turnover as shown in the profit and
loss account.
pre-tax profit Net profit of a business before income tax or corporation tax has been
deducted.
pre-trading expenditure Expenditure incurred in relation to a trade before it commences.

For income tax and corporation tax, such expenditure is tax
deductible if (from 1 April 1993) incurred in the previous seven years.
Previous limits were five years from 1 April 1989; three years from 1
April 1980, before which pre-trading expenditure was not allowable.
For VAT, input tax may be claimed for goods purchased in the
previous three years and still held at registration, and for services
acquired in the six months before registration.
previous period Description of an accounting period immediately before the one under
consideration.
previous year basis (PYB) Method of determining the basis period for calculating income tax for
trades before 1994.
Broadly, PYB taxed profits in the year to the accounting date in the
previous tax year. Since 1994, taxation applies to profits in the year to
the accounting date in the current tax year, which is one year later.
There were transitional provisions when the change of basis period was
made. There were special provisions for the first two years and last two
years of the business.
price Amount charged for goods or services.

Money consideration for goods (Sale of Goods Act 1979 s2(1)), or
similar money consideration for services.
Price Price’s Reports, Exchequer law reports from 1814 to 1824.
price actually received for it

Term used in Income and Corporation Taxes Act 1988 s100(1A) in
connection with determining the taxable value of stock of a
discontinued trade.
price ceiling Highest price which goods or services can reach.
price change When a price is revised up or down.
price control Any legal provision which attempts to restrict the freedom of sellers to
charge what price they like.
price differential Difference between two prices, particularly when expressed as a ratio
rather than as an amount.
price elasticity of demand Measure of the responsiveness of demand to a change in price.

If demand changes by more than the price has changed, we describe
the good as price-elastic. If the demand changes by less than the price
has changed we describe it as price-inelastic. The formula for
calculating the exact figure is: Price elasticity of demand = % change
in quantity demanded
% change in price
price ending Practice of selling goods for a price ending in 99p or similar rather than
rounding it to a convenient figure. An explanation of this practice is
given under odd pricing.
price fixing Agreement between suppliers to control the prices at which they offer
their goods or services. This is generally an offence under competition
law.
The case Guest Keen & Nettle folds Ltd v Fowler [1910] 5TC511
established that expenditure incurred on price-fixing is tax-deductible.
price insensitive Description of goods or services where sales are largely unaffected by
the price. This often happens because the price is insignificant to the
buyers, the buyers tend not to notice the price, or because the item is so
essential that it will be bought whatever the price.
price label Label attached to goods indicating the price at which they may be
bought.
price list List of goods or services which a business offers to provide with an
indication of the price that will be charged.
A price list itself does not constitute an offer whose acceptance
creates a legal contract. A price list is usually an invitation to treat.
price look up code (PLU code)

Term used by retailers for items where a barcode cannot be entered for
an item, such as sold loose fruit and vegetables. The PLU code must be
entered by the check-out operator.
price tag Another name for a price ticket.
price ticket Indicator attached to goods indicating the price at which they may be
bought.
price war When two or more businesses compete for business by each trying to
reduce their prices below those charged by other businesses.
price–earnings ratio Market price of a share divided by earnings per share.
price-sensitive information
Information which, if known to the market, would affect the price of a
share.
PriceWaterhouse Coopers
One of the world’s largest accountancy and professional services firms.
It was formed in 1998 by the merger of accounting firm Price
Waterhouse with Coopers & Lybrand.
Price Waterhouse was started by Samuel Price in London in 1849.
He went into partnership with Edwin Waterhouse in 1865, becoming
Price Waterhouse & Co in 1874.
Coopers & Lybrand was started in 1854 by William Cooper. This
became Cooper Brothers in 1861 when his three brothers joined. In
1957, the firm merged with Lybrand, Ross Brothers and Montgomery,
an American firm formed in 1898 by William Lybrand.
pricing Policies and practices of determining prices for goods and services
offered.
pricing model System for calculating pricing according to a predetermined policy.
pricing policy Policy for determining the prices at which a business’s goods or
services will be sold.
pricing science Use of various mathematical models in setting prices. Pricing science
was pioneered with the airline industry in the 1980s.
pride of possession Enjoyment from possessing something, particularly an antique or work

of art. The existence of pride of possession indicates that the third
badge of trade may not be present, with the result that any profit or
loss is not of a trade.
Pridetines vertes mokestis (PVM)

Lithuanian: value added tax.
prima facie Latin: at first sight.
Primary Care Trust (PCT)

Organisation which oversees health care provision for an area. From 1
October 2006 there are 152 PCTs in England, reduced from 303. The
PCT oversees hospitals, doctors and dentists in a defined area. They are
one of several forms of NHS trust. The PCT commissions services
from hospitals, doctors and other sources.
primary commodity Farm produce which is traded in large quantities, such as cotton and
grain.
primary data The process of organising and collecting data for an organisation.
primary education Education for children who are at least 2 years old but under
compulsory school age (Education Act 1996 s2(1), as amended).
primary financial statements

The balance sheet, profit and loss account, statement of total recognised
gains and losses and cash flow statement.
primary industry Industry which deals with a basic raw material, such as coil, iron or
grain.
primary lease period First period of a lease in which the payments are related to the value of
goods being leased.
The payment is usually calculated as the cost of the goods plus
interest. This period is usually followed by a secondary lease period
where the lease continues at a nominal charge.
primary market Main market for selling shares and securities, as against private
transactions in a secondary market.
primary poverty Poverty where a person earns insufficient to provide the basics of life. It
has a similar meaning to absolute poverty, but makes a distinction
between secondary poverty. The term was coined by Joseph Rowntree.
primary protection Term used in the taxation of pension contributions.

From 6 April 2006, there is a lifetime allowance for tax-free
pension contributions. If an individual has pension contributions above
this allowance, those additional contributions do not generally qualify
for tax relief. This is one of the two exceptions to that rule. (The other is
enhanced protection.)
If an individual already had pension contributions above the
lifetime limit of £1.5 million on 6 April 2006, those additional
contributions continue to be protected for that individual. So if the
individual had cumulative pension contributions of, say, £1.8 million on
6 April 2006, the individual has protection for the lifetime allowance
plus £300,000 in future years.
Primary protection had to be claimed from HMRC by 5 April 2009.
primary purpose For VAT on professional subscriptions, a sole, main or principal

purpose (VAT leaflet 701/5).
primary threshold Figure at which an employee becomes liable to pay class 1 national
insurance. For the years 2001/02 to 2010/11, the thresholds were known
as the earnings threshold as the figure was the same for employers.
prime bill Bill of exchange where there is no risk of non-payment.
prime book of account Basic books in which financial records are kept.
prime cost Cost of producing a product, including a share of overheads.
prime minister (PM) Political leader of the country. The person also connotes First Lord of
the Treasury.
prime rate American term for the best rate at which a bank will lend to a customer.
prime site Valuable commercial site for development.
prime time In marketing, the time when most people watch television and where
the advertising rates are therefore the highest.
priming (1) In finance, this usually means pump-priming. This is providing an

initial amount of capital to help get a venture going.
(2) For beer duty, “adding sugar solution to beer to encourage
secondary fermentation and increase its alcoholic content” (Customs
notice 226). Priming requires Customs approval.
primo loco Latin: in the first place.
primrose path Life of self-indulgence which leads to ruin. The expression is used by
Shakespeare in Hamlet and Macbeth.
PRIN Part of the FSA handbook that deals with principles for businesses.
Prince’s Trust Charity established by the Prince of Wales in 1976 to assist people aged
between 16 and 30 who are not in work. It is funded by donations,
largely from the public sector and from other sources, such as by
sponsored rock concerts.
The charity operates six activities:
● a business programme to help young people start a business;
● a team programme offering a 12-week personal development
course;
● Get Intos, short courses offering training and experience in a
specific sector;
● development awards in the form of small grants to provide
access to education, training and work;
● community cash awards to help young people set up
community projects;
● xl clubs which are held in schools.
Prince v Mapp Leading case on the general tax disallowance of surgery. The full
citation is Prince v Mapp [1969] 46TC169. It relates to a guitarist’s
injured finger and is discussed in the Inspectors’ Manual at BIM37945.
principal (1) A sum of money (sometimes referred to as capital) which attracts

periodic payments or interest. In a loan, the principal is the sum lent. In
an investment, the principal is the sum invested.
(2) A person who form an agent acts.
principal charge Another name for the ten-yearly charge to inheritance tax, payable by
discretionary trusts and other relevant property trusts.
principal company For capital gains tax, a term sometimes used for a company and its 75%
subsidiaries.
principal place of business (PPOB)

Place where orders are received and dealt with and the business is
carried on and managed.
principal private residence relief

For capital gains tax, another name for private residence relief.
principle of factor sparsity

Another term for Pareto principle.
printing calculator Calculator which has a facility to print out the data entered and its
answers.
printing money Colloquialism for quantitative easing.

This is in allusion to a country printing more bank notes without a
matching increase in national wealth.
prior charge percentage Proportion of a company’s profits which is paid to preference

shareholders and holders of similar security before it is possible to
make a distribution to ordinary shareholders. It is also know as the
priority percentage.
prior importation Rule that Customs must allow for replacement products to be imported
before temporary exports are exported.
prior period adjustment Material adjustment to a prior accounting period because of a change
in accounting standards or the correction of a fundamental error (FRS
3).
prior period of loss Period of up to five years for which special conditions apply for a loss
from hobby farming or market gardening to be available for loss
relief (Income Tax Act 2007 s68(5)).
prior year adjustment (PYA)

An adjustment made in the accounts of a current accounting period to
reflect an amendment to accounts for a previous period.
priority In law, any precedence or preference of one thing over another, such as
in payment of debts from limited funds.
priority classes Those people whom the government thought were the priority for
evacuation from London in 1938.
priority debt Debt whose non-payment has serious consequences for debtor. These
are given priority in any debt management.
priority order Attachment of earnings order issued under Attachment of Earnings

Act 1971 for unpaid fines and child maintenance.
The employer must deduct a sum stated from each payslip and pay
it to the court which issued the notice. A priority order must be
deducted before a non-priority order, even if the latter has an earlier
date.
priority percentage Another term for prior charge percentage.
priority rules Rules for determining how to categorise income that otherwise falls
within two categories of income. These rules are found in Income Tax
(Trading and Other Income) Act 2005 s2, which refers to various later
parts of the Act.
prisage Form of taxation in kind common around 13th century which comprised
taking one cask of wine in ten, and one tenth or one-fifteenth of other
goods.
private In finance, the term usually describes something which relates to an

individual rather than to a company, organisation or the state.
private asset Asset that is not used in a business.

The term is used in VAT notice 701/12 in relation to sale of assets
from historic houses. Generally, the sale of a private asset is outside the
scope of VAT.
private bank Bank which is owned by a single person or a small group of

individuals.
private banking Service offered by a bank to an individual of high net worth. Typically
the services include fund management, financial advice, portfolio
management and tax planning.
private benefits Benefits that an individual or firm receive when they are carrying from
consumption or production. In the case of consumption the benefits are
likely to be mainly satisfaction from consumption. For a firm, the
benefits will be the revenue received from the sale of the good or
service.
private betting Betting which is either domestic betting or workers’ betting

(Gambling Act 2005 Sch 15 para 6).
private company Any company which is not a public company (Companies Act 2006
s4(1)).
private costs Costs that are incurred to an individual or firm when they are carrying
out the activities of consumption or production. They are the costs that
those individuals or firms have to pay themselves.
private currency Currency issued by a person or private institution rather than a

government. Vouchers and coupons can be seen as a form of private
currency.
In the USA, private currencies were common in the free banking
era between 1837 and 1866.
private customs A unique instance of taxation being privatised.

Between 1570 and 1588 customs duties on French wine docked in
London were privatised. Mr Customer Smythe bought the rights,
employed better staff and prospered. The government sought to grab its
share of this prosperity by steep rent increases.
private debt Money owed by individuals, and not by companies, organisations, local
authorities or the government.
private enterprise Businesses which are owned by individuals and organisations and not
by the state. The term also refers to the economic properties of a system
where most supplies are thus provided.
private equity Company which specialises in buying other companies with a view to
turning them round for a quick profit. The companies are usually
companies which are not performing well.
Typically, the private equity business buys a company using heavy
borrowing (usually 70% to 90%) where the company itself pays the
interest making the company highly geared. The private equity
business often introduces a 100-day plan which often involves cutting
staff, closing inefficient divisions and making other quick savings.
Profits are taxed as capital gains which attract lower rates than
income tax on equivalent investments.
private finance initiative (PFI)

Method of funding public infrastructure projects from private finance.
Typically a private company funds the building of a road, school,
hospital or other project in return for payments in subsequent years.
It was first used in the UK in 1992 and was subsequently widely
used by governments of all parties.
private foundation In the USA, a foundation that receives most of its income from, and is
subject to control of, an individual or other single or limited source. See
Foundation. Also in the US, the technical IRS term for an organisation
which is tax-exempt under Section 501(c)(3) and classified as a private
foundation under the Internal Revenue Code. In the US, a private
foundation is referred to as “having a 501(c)(3) status”.
private gaming Gaming which happens in a private dwelling on a domestic occasion

(Gambling Act 2005 Sch 15 para 2).
private hearing For tax tribunals, a hearing to which the public is not admitted. A
private hearing may only be ordered for reasons set out in The Tribunal

rule 32(2).
private income Income of a person other than their main means of support.
The term is often used to mean income of an employee from
activities outside the work, or of a wife or dependant from outside the
person who provides the main support (such as where the dependant
receives income from an inherited investment).
private investor Individual who makes investments.
private limited company (Ltd)

A company which has limited liability but is not permitted to offer its
shares to the public.
privately financed road Road whose construction has been funded by a private company. This
cost is recouped by charging a toll, or by receipts from the government
under the private finance initiative (PFI).
From 6 April 1995, such a road is specifically included in the
definition of industrial building.
private medical attendant’s report

In the USA, a report from an individual's own doctor ('Private Medical
Attendant') which does not require a medical examination to be carried
out. Used for underwriting purposes.
private medical insurance

Insurance that pays for private medical treatment if the policy-holder
suffers from a condition covered by the policy.
private motor vehicle When visiting the UK any road vehicle solely for private use; bringing
a vehicle permanently into the EU, any road vehicle (and any trailer)
which is neither built, nor being used to carry more than nine people,
including the driver; carry goods and do any job apart from carrying
people. Further details are given in Customs notice 3.
private operating foundation

In the USA, a legal classification for an endowed organisation which
uses its income to operate a charitable activity, such as a school or
camp, rather than to make grants.
private ownership Situation where goods or businesses are owned by individuals rather
than the state.
private pension Another term for a personal pension.
private placement Act of placing a new issue of shares with selected institutions rather
than offering them to the public or to institutions generally.
private practice Professional services, such as accountancy, offered to clients.
private property Property which belongs to a person or organisation rather than to the
public.
private rented housing Tax provisions for Business Expansion Scheme are set out in Finance
Act 1988 Sch 4.
private residence relief Relief from capital gains tax on the gain from selling a person’s main
residence. The relief is given in Taxation of Chargeable Gains Act 1992
s222.
private sector “The part of a nation's economy which is not owned by the
government” (HM Treasury website).
private travel “Means travel between —

(a) the employee’s home and a place that is not a workplace, or
(b) two places neither of which is a workplace”
Such travel is not a deductible expense from taxable earnings.
private treaty Agreement between individual people.
private treaty sale “This is a privately arranged sale to bodies, such as the UK National
Museums and Galleries and the National Art Collections Fund. These
bodies are allowed to buy objects by private treaty in accordance with
the relevant legislative provisions” (VAT notice 701/12).
private trust Trust benefiting one person or small group.
private use In tax, description of expenditure that is for personal use and not for
business use.
For VAT, the input tax cannot be reclaimed even though the trader
is registered for VAT and has a VAT invoice.
For income tax, such expenditure is not allowed as a tax deduction.
It should be noted that it is not necessarily wrong for personal
expenditure to be shown in a business’s profit and loss account. But if it
is, such expenditure must be added back in determining adjusted
profit.
In the context of whether a car or van is so available by an
employee for tax purposes, means “any use other than for the
employee’s business travel” (Income Tax (Earnings and Pensions) Act
2003 s118(2)).
For a heavy goods vehicle, the definition is “use other than for
travel which the employee is necessarily obliged to do in the
performance of the duties of the employment” (Income Tax (Earnings
If part of a trader’s stock is taken for personal use, it must be added
back at its selling price and not its purchase price. For example, if a
grocer takes stock that he bought for £10 but sells for £16, he must add
£16 to his taxable profits.
For Customs and other import purposes, there are restrictions on the
amount of goods that may be brought in for private use. For vehicles,
personal use is defined as “the use of a road vehicle, trailer or caravan

(whether or not motorised) for other than business” (Customs notice 3).
private warehouse A customs warehouse reserved for the warehousing of goods by the
warehousekeeper, ie the warehousekeeper is also the depositor of the
goods.
privately held company American term for company owned by a few individuals. It is a similar
concept to the UK close company.
privatisation “The process of transferring a government-owned asset such as a

company or property to the private sector” (HM Treasury glossary).
privatorum conventio juri publico cedit

Latin: an agreement between private persons does not derogate from the
public right.
privatum commodum publico cedit

Latin: private good yields to public good.
privatum incommodum public bono pensatur

Latin: private loss is compensated by public good.
privileged trusts Term used for trusts that are exempted from some tax provisions
because of their nature. The term particularly applies in respect of trusts
that are not caught by the 2006 changes of applying discretionary trust
rules to previously tax-advantaged trusts.
Privileged trusts now include:
• charitable trusts
• pre-2006 accumulation and maintenance trusts where the
beneficiaries inherit absolutely at the age of 18
•age 18-25 trusts
• trusts for a bereaved minor
• employee trusts.
privileged will Will made by a soldier on active service or by a sailor at sea.

It is valid even though any of the below apply, that otherwise
invalidate a will:
• it is not in writing
• it does not have two witnesses
• the testator was a minor.
privilegium non valet contra rempublicam

Latin: a privilege avails not against the state.
privity of contract The general legal rule that only the parties to a contract may sue on it.
There are many exceptions to this rule, such as third parties to a
contract in addition to some exceptions relating to land.
Privy Council means the Lords and others of Her Majesty s Most Honourable Privy
Council” (Interpretation Act 1978 Sch 1).
prize (1) Winning of ships and (from 1939) aircraft in war

(2) Something won. It may be relieved from customs and excise duties
(Customs and Excise Duties (General Reliefs) Act 1979 s9).
prize bingo Bingo where the prizes are other than cash.
prize competition Competition for which a prize is awarded and which is not gaming,
betting or a lottery (Gambling Act 2005 s339). This is not regarded as
gambling.
prize competition In gambling, something which requires a guess, such as the outcome of
a race, regardless of whether any money is staked (Gambling Act 2005
s11).
prize court Court established to determine whether a captured ship or aircraft may
be regarded as prize. [?]
prize gaming Gaming where neither the nature nor size of the prize played for is
determined by the number of persons playing or the amount paid to
participate (Gaming Act 2005 s288).
PRO Personal Reliefs Order - the Excise Duties (Personal Reliefs) Order
1992.
probability In statistics, the mathematical likelihood of an eventuality, expressed as

a number between 1 (certainty) and 0 (impossibility).
probate Legal recognition of a will. The process by which the Will of someone
who dies while living in England or Wales is validated.
A local Probate Office will issue a Grant of Probate to validate a
will and authorising the executors to administer the estate. This Grant
has the status of a decree of the High Court. Hence anyone dealing in
good faith with the executors named in the Grant has legal protection
against any other party claiming to represent the deceased.
probate duty A stamp duty imposed on the grant of probate under Customs and
Inland Revenue Act 1881. It is abolished.
probation purposes Guidance on matters relating to probation and supervision of offenders

(Offender Management Act 2007 s1).
probationary period Period at the start of an employment to see if the employee is capable of
doing the job. If the employee fails, he is usually fairly dismissed. If the
employee succeeds, the period ends and he becomes a permanent
employee. In marginal cases, the period is extended. The period is
typically six months.
probatum est Latin: it is proved.
problem child Term sometimes used for a business or part of a business operating in a
growth market, and where its outcome is highly unpredictable and
therefore very difficult to value. It is also known as a question mark.
procedure Method of doing something. In general, determining a procedure and

following it is a defence to misconduct.
proceedings against the Crown

Any action against the state as personified by the Queen and permitted
under Crown Proceedings Act 1947.
S 38(2) states that this expression “includes a claim by way of set-
off or counterclaim raised in proceedings by the Crown”.
proceeds Amount received from a sale or disposal.
process For spirits duty, “an operation carried out in order to manufacture
spirits, including operations on spirits after their manufacture”
process costing Costing something by adding up the costs of each process which makes
up the whole.
processed date In the USA, the date that a charitable contribution was credited to the
account by the Charitable Gift Fund.
processed product Term used for customs duties. If product A is processed under
Customs control and becomes product B, the duty is paid at the rate
for product B. This is called a processed product.
processed under Customs control

For customs duties, when a product is imported and changed into
another product in accordance with advance authorisation by HMRC.
The duty is charged according to the product it has become.
process now, check later Principle now adopted in relation to most forms of tax return. HMRC
accepts returns from taxpayers at face value, processes them and runs
any checks later.
If HMRC later discovers an error, it may make a repair. A taxpayer
may make a return adjustment. It is known that most returns are
unchecked, and many errors go uncorrected.
processor In computing, the main part of the machine which does the data
processing and computing.
proclamation of emergency
Order made by the King or Queen in Council to Parliament which
invokes proceedings under Emergency Powers Act 1920.
pro confesso Latin: as if conceded.
produce a broadly compensatory amount

Term used in Income Tax Act 2007 s384A in relation to the
produce a post-tax advantage

Term used in Income Tax Act 2007 s384A in relation to the
produced under licence Term used for beer duty when a small brewer produces beer for a large
brewer. Such beer does not attract the lower rate of beer duty for small
brewery beer (Customs notice 226).
producer gas Generic term for any kind of gas used for heating or power and which is
obtained by a process rather than occurring naturally. The main
producer gases are wood gas, town gas and syngas.
producers’ price index In the USA, a measure of the annual increase in the price of goods sold
by producers.
product life cycle The life stage of a product, includes, introduction, growth, maturity
and decline.
production cost Cost of producing goods for sale.
production department Part of a business which is responsible for producing goods for sale.
production order Order which a sheriff may make under Proceeds of Crime Act 2002
s380. The order is made on a person who has possession or control of
property belonging to a person subject to the Act. The subject of the
order must then deliver that property.
production order Order which may be made under Proceeds of Crime Act 2002 s345.
production overhead Another term for production overhead costs.
production overhead costs

Costs of production that are spread across all output, rather than being
identified with specific goods or services.
production target Quantity of goods which a business, department or section is expected

to produce.
production unit Team of workers who have a collective responsibility for an area of
production.
productive capital Capital which is used to generate an income, either in a business or as

an investment.
productive Capable of producing.
productivity Output. In accounting, this is usually as a measure per machine or per

employee.
In economics, this may refer to the wealth which is generated by
producing goods and services.
productivity agreement Agreement between an employer and employees to make an additional

payment according to output.
productivity bonus Additional payment made to workers in respect of their productivity.
productivity drive Effort made to increase productivity.
PROF Professional Firms sourcebook, published by the Financial Services

Authority.
profession Occupation involving skill, either intellectual or controlled manual

skill. Such activities are taxed as trading income, or Schedule D Case II
before 6 April 2005. For the purposes of income tax and corporation
tax, the main differences between a trade and a profession are:
● some capital allowances are only available to a trade;
● the Sharkey v Wernher rule on goods taken for personal use
only applies to a trade.
For tax purposes, “profession” is now taken to mean a discipline
that “normally involves some substantial exercise of intellectual skill”
(Inspectors’ Manual BIM14090).
For VAT, guidance is given in VAT leaflet 701/5.
professional board Type of board of directors which shows concern for both the company’s
tasks and interpersonal relations between the directors.
professional body Organisation which oversees and represents the interests of a particular
profession.
professional experise In relation to VAT and professional subscriptions, means “expertise

connected with what is generally understood to be a profession” (VAT
leaflet 701/5).
professional fee Fee paid to belong to a professional body.

A list of tax-deductible fees is given in Income Tax (Earnings and
Pensions) Act 2003 s343(2).
professional fees Amounts paid to a professional person.
Professional Group (PG) Body which represents taxpayers on a Working Together Steering
Group.
professional indemnity insurance (PII)

Insurance that protects professionals against liability claims resulting
from negligent work.
professional membership Fees for such membership are generally tax-deductible (Income Tax
profit Wealth generated by the activities of a commercial entity.

In terms of accounting, the plural profits is generally used.
profit after tax Net profit after deducting a sum for income tax or corporation tax.
profit and loss Financial statement indicating how much profit or loss has been made
by a commercial entity over a period. The term is a misnomer as a
company makes either a profit or a loss. Companies have been obliged
to publish a profit and loss account since the passing of Companies Act
1929.
profit before interest and tax

Net profit before interest payable and either income tax or corporation
tax has been deducted.
profit before tax Another term for pre-tax profit.
profit centre Part of an organisation which may be considered separately in terms of

determining where profits are being earned.
profit distribution Allocation of profits to different recipients, such as to the government

(as tax), to shareholders (as dividends) and to the company itself (as
retained profits).
profit from ordinary activities

Profit earned in the course of normal trading activities rather than from
unusual items.
profit making Description of an activity which is either intended to make a profit or

does so.
profit margin Profit divided by turnover (sales) multiplied by 100 to give a

percentage. Profit is usually net profit before tax.
profit on ordinary activities before tax

Net profit from ordinary trading activities before income tax or
corporation tax has been deducted. This figure excludes profit from
such activities as investments, rent of excess capacity or profit on
disposal of assets.
profit related Description of anything which is related to the amount of profit earned
by an organisation. An example is profit-related pay.
profit related bonus Bonus paid to a worker according to how much profit has been earned.
profit related pay (PRP) Amount of pay which is related to how much profit was earned.
Between 23 July 1987 and 31 December 1999, PRP attracted tax
relief up to certain limits. Only half of PRP was tax-free before 1 April
1991.
profit retained for the year

Amount of profit which a business does not pay to its members but
keeps for its own use.
profits à prendre In law, right exercised by one person in the soil of another, such as the
rights of pasture or digging for sand.
profit-seeking motive Desire for an organisation to make a profit for its owners or operators.
The presence of such a motive will usually make any profit or surplus
taxable. The absence of such a motive does not necessarily mean that
any surplus avoids tax. The matter is discussed in the Inspectors’
Manual at BIM24345 and elsewhere.
profit squeeze Any circumstance where profits are difficult to maintain. This may
result from government controls, increased competition or changes
within a business.
profit taking Selling an investment which is doing well to realise the profit currently
indicated in its value.
profitability Ability to make a profit.
profiteer Person who maximises profit at the expense of quality or integrity.
profiteering Practice of making excessive profits, usually by cutting the quality of

goods or by engaging in improper practices.
profit-related expense An expense of a business whose amount is related to the profits of the
business.
For tax, the issue is whether the expense is in truth a dividend or
share of the profit, in which case it is not tax-deductible. However,
relation to profits is not fatal to tax-deductibility as was shown in the
case British Sugar Manufacturers Ltd v Harris [1937] 21TC528. The
matter is discussed in the Inspectors’ Manual at BIM37830.
profits tax A tax on commercial profits levied from 6 April 1946 to 5 April 1965.
It replaced national defence contribution, and was succeeded by
corporation tax. During the second world war, there was an excess
profits tax. The profits were calculated on the same basis as Schedule
D Case I for income tax.
The tax was charged at a single rate which was 15% at the time of
its abolition, but had been as high as 30%.
profits Term used in Taxes Management Act 1970 to mean incomes or gains
which are subject to income tax or capital gains tax or (depending on
context) corporation tax.
A company may only pay dividends or other distributions from
profits (Companies Act 2006 s830).
profits à prendre Legal right to take the produce from the land of someone else.
profit share agency arrangements

of Chargeable Gains Act 1992 s151M).
profit-sharing Any scheme which allows another person to share in the profits of an
enterprise. Most commonly this allows employees to share in the profits
of the employer.
The term was used for a tax-advantaged scheme which operated
between 6 April 1979 and 5 April 2002 which allowed employees to
receive up to £8,000 worth of shares tax-free provided they were held in
a trust for three years (longer periods before 25 July 1985). This scheme
has now been abolished in preference to all-employee share schemes.
The legislation was Income and Corporation Taxes Act 1988 Sch 9.
profitto Italian: profit.
pro forma Latin: as a matter of form.
pro forma invoice A document issued before goods or services have been supplied to ask
for prepayment.
It is not regarded as an invoice for bookkeeping, VAT or any other
tax purpose.
prognosis Proposed solution which follows a diagnosis.
program A series of instructions for a computer, telling it what to do or how to

behave. The terms "application" and "app" mean almost the same thing.
"Program" is also the verb that means to create a program.
programmable Description of a computer, calculator or other appliance which is

capable of having instructions entered to perform a function.
programme evaluation and review technique

Method of evaluating and controlling a large project particularly with
regard to completing it on time.
progressive condition Disability whereby a person’s condition slowly deteriorates (Disability

Discrimination Act 1995 Sch 1 para 8). Examples given in the Act
include cancer, multiple sclerosis and muscular dystrophy. A person
with a progressive condition is regarded as disabled as soon as that
condition is diagnosed even if the disability is not yet severe.
progressive duty Old element of stamp duty where the rate increases according to the
length of the document. It is abolished from 1 January 1871.
progressive tax Tax that takes an increasing proportion of income as income rises.
Income tax is an example.
pro hac vice Latin: for this occasion.

The term is commonly used when a person is appointed for a single
occasion, such as to judge one case.
prohibited name Name which a company is not allowed to use (Companies Act 2006
s53).
A name may not be used if it indicates a connection with a public
body or local authority which it does not have or if it contains words or
expressions which have been banned by regulation.
A name may also be prohibited if it uses characters or symbols
which are not permitted (ibid s57). A name may not be used if it is the
same or too similar to a name already in use (ibid s66).
prohibited or restricted goods

“Goods of a class or description of which the importation, exportation
or carriage coastwise is for the time being prohibited or restricted under
or by virtue of any enactment” (Customs and Excise Management Act
1979 s1(1)).
Prohibited goods generally may not be imported into the UK at all,
while restricted goods need a licence or similar authority. Prohibited
goods include “unlicensed drugs, offensive weapons, indecent and
obscene material featuring children, pornographic material, counterfeit
and pirated goods, meat, milk and other animal products” (Customs
notice 3).
prohibition Ban on something, particularly on the consumption of alcoholic drink,

and particularly in the USA between 1920 and 1933.
prohibition order Order that legally prohibits some action or some person.
For housing, notice served under Housing Act 2004 s20 or s21
which imposes conditions on a domestic property where a hazard exists.
For pensions, an order made by the Pensions Regulator under
Pensions Act 1995 s3 which prevents a person being a pension fund
trustee.
prohibitive Description of a price which is so high that the goods or services are not
bought.
pro indiviso Latin: as undivided.
pro interesse suo Latin: as to his interest.
project Plan or piece of work considered separately from other work.
projected unit method In pensions, method of actuarial valuation that makes allowance for
projected earnings.
project finance Funding allocated for a specific project.

promise Voluntary agreement by one person to another for the performance or

non-performance of an act.
Unless made under seal, a promise is not a contract and therefore is
usually unenforceable.
promise not to resign Such a payment made to a director or employment is taxed as

employment income. In the case Prendergast v Cameron [1940]
23TC122, Viscount Caldicott said “I can see no difference between a
promise not to resign and a promise to continue to serve as a director”.
promissory estoppel Legal remedy under equity that certain rights cannot be enforced in
circumstances where it appears that the person’s conduct has accepted
the matter. The doctrine was developed in the High Trees case in 1947.
promissory note “An unconditional promise in writing made by one person to another
signed by the maker, engaging to pay, on demand or at a fixed or
determinable future time, a sum certain in money, to, or to the order of,
a specified person or to bearer” (Bills of Exchange Act 1882 s83(1)).
promote Encourage or advertise.
promoter Someone who advertises or seeks custom, particularly someone who

seeks to raise funds for a new business venture.
promotion (1) Advertising or marketing effort.

(2) In personnel, raising the status, rank or position of an employee.
promotion money Money paid to the promoters of a company for their services in
launching it.
prompt payment Payment when it is due, particularly of a bill.
proof (1) Evidence provided in the form of a copy of a page to demonstrate

that work has been carried out as specified.
(2) Proof spirit.
(3) In coinage, a coin struck from special dies with a mirror-like or matt
surface.
proof of criminal intent A matter for a court or jury to determine in a criminal trial under
Criminal Justice Act 1967 s8.
proof of earnings Statement from an employer confirming an employee’s earnings. Such

statements are sometimes required for mortgage applications, social
security claims or other purposes. (In 2007, it was estimated that 23%
of mortgage applicants overstated their salary.)
An employer should only provide such details if either required by
law or authorised in advance in writing by the employee. Other than
where the law requires otherwise, an employer is entitled to make a
charge for providing this confirmation.
It should be remembered that employers routinely provide payslips
and P60 certificates to the employee, who is free to show them to

whomsoever he wishes.
An employer should not normally make a statement confirming
future earnings.
proof of removal Documentary evidence that goods have been removed from the UK to
another EU member state. Having and keeping such proof is a condition
of being able to zero-rate the supply. VAT notice 725 gives details.
proof spirit Old measure for identifying the alcoholic strength of drinks. This
system has now been replaced by alcohol by volume (abv).
The formal definition was contained in Customs and Excise Act
1952: “Spirits shall be deemed to be at proof if the volume of the ethyl
alcohol contained therein made up to the volume of the spirits with
distilled water has a weight equal to that of twelve-thirteenths of a
volume of distilled water equal to the volume of the spirits, the volume
of each liquid being computed as at fifty-one degrees Fahrenheit.”
Under this system, 100 degrees proof represented 57.27% alcohol
by volume, or 49.5% alcohol by weight. Proof spirit had a specific
gravity of 0.91984.
Pure alcohol is 175.25 degrees proof, or 75.25 “degrees above
proof”.
The USA used the same system but with a different scale. 100
degrees proof in the UK is equivalent to 114.2 degrees in the USA. The
USA now also uses alcohol by volume.
The term originated in the 18th century when sailors were provided
with free rum. To ensure this had not been watered down, it was
“proved” by soaking gunpowder in rum to see if it still ignited.
propaganda expenses Expenses incurred to publicise an opinion or to further a campaign.

The extent to which such expenses are tax-deductible depends on
how far the issue being propagated relates to the business. In the case
Morgan v Tate and Lyle Ltd [1954] 35TC367, expenses to prevent a
trader losing his business were allowed. The matter is discussed in the
proper amounts of tax Term used in Guidance Notes to mean the amount of bank payroll tax
that a bank is expected to pay before engaging in any tax avoidance.
proper liferent A Scottish interest in property.
property Anything which is capable of being owned, particularly land and

buildings.
In tax, the term is sometimes given a specific meaning. For
example, in the Inspectors’ Manual at BIM14070, the term “extends to
anything capable of being owned” for business tax purposes.
Property Acts 1925 Series of laws passed in 1925 that made major changes to the land law.
These were supplemented by further laws in 1926.
The six Acts of 1925 are:
• Administration of Estates Act
• Law of Property Act

• Land Registration Act
• Land Charges Act
• Settled Land Act
• Trustee Act
property and affairs LPA A form of lasting power of attorney (LPA) that may be made from 1
October 2007 under Mental Capacity Act 2005. It is also possible to
make a personal welfare LPA.
An individual who is 18 and has mental capacity may make a
property and affairs LPA appointing someone (the attorney) to make
decisions on his or her behalf should the individual lose mental
capacity. This LPA allows the attorney to take such actions as paying
bills, collecting debts, claiming benefits, and selling property.
property bond Investment in a fund which invests in properties.
property company Company which buys buildings, particularly to lease them.
property developer Person who develops land for sale.
property development Activity which excludes a company from the scope of EIS relief. It is
property development For venture capital trust purposes, this is defined as “the development
of land:
(a) by a company which has, or at any time has had, an interest in
the land, and
(b) with the sole or main object of realising a gain from the disposal
of an interest in the land when it is developed” (Income Tax Act 2007
s307(2)).
Section 307(3) defines interest in land.
property disposed of In insolvency, any sale or gift in the previous five years which appears
unreasonable or may have been intended to frustrate the insolvency.
Such sale or gift may be reversed.
property duty act Name briefly given to income tax when reintroduced in 1803.
property income Income from land and buildings, mainly in the form of rent. Before
2005, it was generally called Schedule A.
Property investment LLP A Limited Liability Partnership whose business consists wholly or
mainly in the making of investments in land and the principal part of
whose income is derived from that business.
property management company

Company that looks after the common parts of a building in multiple
occupation. It is often taxed as a mutual trading organisation as is
property managing subsidiaries requirement

Requirement under tax law that a subsidiary only comes within the
scope of tax relief for a property company if the subsidiary is 90%
owned and meets other conditions (Income Tax Act 2007 s141 and
299).
property obtained through unlawful conduct

Term defined in Proceeds of Crime Act 2002 s242. Such property may
usually be confiscated.
property tax Various taxes charged between the 12th and 14th centuries. The first
was charged between c1166 and 1170 on all animals, grain, household
goods and trading stock at 2d in the pound for the first year, and 1d for
each of the next three years. It was reimposed in the 12th century,
coming under the Exchequer from 1290. It was imposed at rates of
between one thirtieth and one ninth.
proportionate In the same ratio or of similar size or importance to something else.
proportionate charge “An inheritance tax charge on a relevant property trust... which arises
when property in the trust ceases to be relevant property or where the
trustees make a disposition which reduces the value of the relevant
property. The main examples of property ceasing to be relevant
property are when the settlement comes to an end or when some of the
property is distributed to beneficiaries” (HMRC inheritance tax
glossary).
propping-up charge Term used in criminal prosecutions when a second offence is found
which does not justify a prosecution in itself but is brought to add
credence to the original charge.
proprietary Product made by the company which sells it.
proprietary company American term for a company which invests in shares of other
companies, similar to a British investment trust.
proprietary drug Drug which is made by a particular company and marketed under a
trade name.
proprietary trading When a broker also trades for its own benefit. This can lead to a conflict
of interest with clients.
proprietor In relation to excise goods this term includes the owner, importer,
exporter, shipper, or other person owning or being beneficially
interested in the goods.
proprietor in possession Possessor of land described thus: “land is in the possession of the
proprietor of an estate if it is physically in his possession, or in that of a
person who is entitled to be registered as the proprietor of the registered
estate” (Land Registration Act 2002 s131).
proprietor’s interest (PI) Capital invested in a business, particularly by a sole trader. This
expression is sometimes used to distinguish its meaning of capital from
other uses of that word.
pro rata In the same ratio.
pro rata premium A rate charged for a period of insurance cover shorter than the normal
period. For example, if an insured had cover for one quarter of a year,
the Pro Rata premium might be only one quarter of the annual
premium.
proscription order Order which may be made under Communications Act 2003 s329
banning foreign material from being broadcast in the UK.
prosecute Bring proceedings in criminal law.
prospect Chance that something will happen, particularly in respect of something

advantageous.
prospective Possibly happening in the future, particularly something which is

expected to happen.
prospective benefit In accounting for pension funds, is a valuation based on the benefits of
current and deferred members (allowing for any future increase in
pension payments), and the benefit of current members based on past
and future service, allowing for increases in entitlement and pension
payments (SSAP 24).
prospective dividend Dividend which the company intends to pay.
prospective investor An investor who is considering whether to invest in a company.
prospective P/E ratio The P/E ratio expected on the basis of prospective dividends.
prospects Future possibilities, particularly with regard to employment.
prospectus Financial statements and supporting detailed descriptions published

when a company is offering shares for sale to the public.
prosperity State of being wealthy.
prosperity inflation Excess by which inflation is exceeded by wage inflation, traditionally

about two percentage points.
pro tanto Latin: for so much, to that extent.
protected animal Animal which is neither commonly domesticated nor under the control
of man (Animal Welfare Act 2006 s2).
protected building Building which is considered of particular merit. This includes

monuments.
Such buildings are listed by the relevant government department.

They are classified as Grade I, Grade II or Grade II. Generally, the older
the building is, the more likely it is to be listed. Almost any building
built before 1700 will be listed, whereas there must be very special
reasons to list a building built since 1945.
Adaptations to protected buildings are zero-rated for VAT under
Group 6.
protected disclosure Lawful disclosure by an employee of unlawful conduct in the

employer’s business (Employment Rights Act 1996 s43B). A disclosure
is lawful if made to the employer, to obtain legal advice and in some
other circumstances. The protection from employment detriment is
wider than for whistle-blowing.
In relation to proceeds of crime, provisions are given in Proceeds of
Crime Act 2002 s337.
protected earnings Income up to which an attachment of earnings or arrestment of

earnings cannot be operated for an employee in that pay period.
protected information Any information where the duty of disclosure is restricted.

In company law, it specifically means the provisions whereby a
director may be excused disclosing his residential address on returns
filed at Companies House. These provisions are contained in
Companies Act 2006 ss240-246.
protected pension input amount

A payment made to a pension fund before 22 April 2009 (or before 9
December 2009 if the £130,000 income rules apply). Such payments
must be made at least once a quarter. This usually means regular
payments can relate to where at least four irregular payments are made
each year.
Such payments are excluded from the special annual allowance
charge that otherwise reduces income tax relief to 20%.
If the PPIA is a percentage of earnings, the protection extends to
increases that relate to increases in those earnings.
protected rights As defined in regulation 3 of the Personal and Occupational Pension

Schemes (Protected Rights) Regulations 1996, but should be read as
including safeguarded rights, wherever appropriate.
protected trust deed In Scottish insolvency, a trust deed which is registered and therefore
binding on all creditors.
protection business In the context of controlled foreign companies, “means contracts of

long-term insurance where —
(a) either —
(i) the contract has no surrender value; or
(ii) the consideration consists of a single premium and the
surrender value does not exceed the amount of that premium; and
(b) the contract makes no provision for its conversion or extension
in a manner which would result in its ceasing to fall within paragraph
(a) above;
and references to protection business include a reference to reinsurance
of protection business”.
(Income and Corporation Taxes Act 1988 Sch 25 para 11A(3)).
protection money Such payment is not tax deductible as it is a criminal payment.
protection plan insurance Insurance sold to pay off the balance owed on a credit card.
Such insurance has been widely criticised for its high premiums and
for not providing the protection customer believe they have.
protective tariff Import duty imposed as an act of protectionism.
protective trust An interest in possession trust which comes to the end if the life
tenant becomes bankrupt or alienates (such as by selling) his interest
under the settlement. When so ended, the trust becomes a discretionary
trust.
The term may also be used more generally for a trust set up for a
beneficiary with a poor record of managing his or her finances.
prove (1) In law, demonstrated the truth of.

A criminal charge must be proved beyond reasonable dount.
A civil charge must be proved on the balance of probabilities.
In both cases, the onus of proof rests with the person bringing the
charge.
(2) In bankruptcy, state the amount owed.
(3) In executorship, demonstrate the validity of a will for probate.
(4) In general use, the word means either to test or to demonstrate the
truth of.
provenance Check on the weight and quality of something, particularly of gold

bullion.
provident Providing benefits in the event of misfortune, such as personal illness.
provider of capital Person or company which provides the capital in any form for a
business.
providing funds Any arrangement whereby one person is financially assisted by another.
Providing funds is a factor that can determine whether two people are
connected persons.
provision Setting aside funds in the accounts to meet a liability.
provision for credit liabilities

Money set aside to repay outstanding loans or avoid new borrowing.
provision for doubtful debts An estimate of the risk of not collecting full payment from credit
customers, reported as a deduction from trade receivables (debtors) in
the balance sheet.
provisional In accounting, a draft or first document which is subject to revision.
provisional collection of taxes

Arrangements now made under Provisional Collection of Taxes Act
1968 which allows tax to be collected on a provisional basis while an
Act is being prepared to allow the tax to be collected on a permanent
basis. Such tax is known as temporary tax.
provisional licence Licence which is issued before a full licence is issued. The term most
commonly applies to driving licences.
provisional order “An order or scheme made under, and requiring confirmation by, Act of
Parliament” (Parliamentary Costs Act 2006 s18).
provisional order Bill “A Bill to confirm a provisional order” (Parliamentary Costs Act 2006
s18).
provisional statement In licensing, a statement which may be made to the local authority in
respect of premises under construction (Licensing Act 2003 s29).
provisions Those things which it is necessary to provide. The term can be used to
mean money set aside in the accounts for liabilities, or basic products
such as food and cleaning materials for daily living.
proxy Document which delegates authority to another person, particularly to

vote, or the person so appointed.
proxy form Form which a shareholder routinely receives, which can be completed
to allow someone to vote on the shareholder’s behalf.
proxy statement In USA, a document filed with the SEC giving details about directors’
remuneration, benefits, options and similar.
proxy vote Vote by a person appointed by a proxy.
PRP Profit-related pay.
PRR (1) Private residence relief, from capital gains tax.

(2) Position risk requirement, a duty imposed by the Financial Services
Authority on certain institutions.
PRT Petroleum revenue tax.
PRU (1) Police Resources Unit.

(2) Integrated Prudential Sourcebook, an insurance manual produced by
the Financial Services Authority.
prudence Accounting term referred to in prudence concept which requires the

preparer of a financial statement to err on the side of caution.
prudence concept The accounting concept that accounts should err on the side of
understating the financial position rather than overstating it.
Statement of Standard Accounting Practice SSAP 2, issued in
November 1971, made this a fundamental accounting concept. This
approach was revised by Financial Reporting Standard FRS 18, which
applies for accounting periods ending after 21 June 2001.
FRS 18 requires a more realistic approach. Para 35(e) still requires
accounts to be “prudently prepared (ie a degree of caution has been
applied in exercising judgment and making the necessary estimates)”.
Para 37 acknowledges that accounts must reflect any uncertainty in
figures, but addresses this by requiring “more confirmatory evidence
about the existence of an asset or gain than about the existence of a
liability or loss, and a greater reliability of measurement for assets and
gains than for liabilities and losses”.
P38(S) HMRC form which may be completed by students who work in the
main holidays, namely Easter, summer and Christmas.
The form may only be completed by full-time students who work
only in those holidays and whose total income for the tax year does not
exceed the personal allowance. This allows the student to be paid
without deduction of tax, and avoids the need to deduct tax for the few
weeks at work and the student having to claim it back. One of these
forms must be kept for each student for each tax year, so if the Easter
holiday straddles 6 April, two forms must be completed.
PSAs Public Service Agreements
PSBR Public Sector Borrowing Requirement.
PSC Personal service company.
PSE Public sector entity.
PSO Pension Schemes Office.
PSV Passenger service vehicle.
Pt Part, of an Act of Parliament.
PT (1) Primary threshold, for national insurance

(2) Country prefix code for Portugal.
PTA Prevention of Terrorism (Temporary Provisions) Act 1989.

[This is also a common abbreviation for Parent Teacher Association.]
PTSP Plumbers Safe Tax Plan.
Pty Proprietary company, American term.
pub Abbreviation of public house.
public Description of all people generally, or of the government or state. The

term is also used in specific meanings, such as in public company or
public sector.
public accountant (PA) US term for an accountant with a lower qualification than a certified
public accountant. Many states have now closed this qualification to
new entrants.
Public Accounts Committee

Committee of the House of Commons which investigates spending by
each government department.
publican Person who runs a public house.
public assembly “An assembly of 2 or more persons in a public place which is wholly
or partly open to the air” (Public Order Act 1986 s16).
Public Assistance Board Body formed in each major area in 1929 to provide financial assistance
for people without other resources. It replaced the harsh Poor Laws.
The assistance was itself replaced by the welfare state in 1948.
public attestation Authoritative statement made known to the public, such as the opinion
in an audit report. This term is particularly used in the USA.
public benefit status Requirement introduced by Charities Act 2006.

To qualify as a charity, or to continue one’s status as a charity, the
body must show that its objectives benefit the public at large or a
significantly large portion of the public.
Most existing charities are unaffected by this change, though some
private schools and religious groups could lose their status.
public benefit Test for a body to obtain charitable status (Charities Act 2006 s2).
Further guidance on this test is given in s3.
public body Body such as a government department or local authority which

administers funds.
public bus service An employee is not subject to a taxable benefit in kind when his or her
employer provides support for a public bus service to help the employee
get to and from work (Income Tax (Earnings and Pensions) Act 2003
s243).
public charity In the USA, a charitable organisation so designated under Section

501(c)(3) of the Internal Revenue Code.
It must be a private operating foundation, or private foundation. A
public charity as defined in Section 509 (identified by the Service as
"not a private foundation") normally receives a substantial part of its
income, directly or indirectly, from the general public or from
government sources. The public support must be fairly broad, not
limited to a few individuals or families.
public collection Raising funds from a public place other than by going from house to
house, such as carol singing in a town centre. A local authority licence
is needed.
public company A company which either states on its certificate of incorporation that
it is a public company, or which met the relevant requirements for a
public company in force when it was registered (Companies Act 2006
s4(2)).
The differences between public and private companies are set out in
Part 20 of the Act.
public debt Money owed by a government.
public deposit Government’s funds held at the Bank of England.
public dividend capital In relation to a government investment written off, means

“an amount paid by a Minister—
(a) under an enactment in which that amount is so described, or
(b) under an enactment corresponding to an enactment in which a
payment made on similar terms to another body is so described”
public domain Description of software that is free to be used, distributed or modified.

It has been given up to the public free of copyright restrictions.
public expenditure Spending by central or local government.
Public Expenditure Committee (PEX Committee)

“A Committee of senior cabinet ministers appointed to advise the
Government on decisions to be taken in the Spending Review. Also
referred to as the Star Chamber” (HM Treasury glossary).
public finance Study of government finance, including taxation, national spending,

national debt and similar.
public finances “The government’s accounts, including tax receipts, expenditure,

borrowing and debt” (HM Treasury glossary).
public foundation A non-profit organisation the USA that receives at least one-third of its
annual income from the general public (including government agencies
and foundations). Public foundations may make grants or engage in
charitable activities.
public funds Money held by the government, a local authority or other public body.
public goods Goods that would not be provided in a pure free-market system.
Public Guardian Officer appointed by the Lord Chancellor under Mental Capacity Act
2005 s57. The duties include oversight of lasting powers of attorney.
Public Guardian Board Body established under Mental Capacity Act 2005 s59 to assist the
Public Guardian.
Public Guardianship Office

Government body which overseas arrangements for looking after the
affairs of the mentally handicapped. It works closely with the Court of
Protection.
public hearing For tax tribunals, a hearing to which the public is admitted. All tax
hearings are heard in public unless there is a good reason for a private
hearing (The Tribunal Procedure (First-tier Tribunal) (Tax Chamber)
Rules SI 2009 No 273 rule 32).
public holiday Day when employees need not work. The term is now the same as a
bank holiday.
public house (pub) Premises which is licensed for the sale of alcoholic drink. It often
serves food, non-alcoholic drink and sometimes serves meals and offers
accommodation.
In the case McLaren v Mumford [1966] 69TC173, a publican who
owned a house acquired a pub with living accommodation which he
occupied solely to enable him to be a publican. The court refused to
allow him the whole cost of the accommodation expenses, as is
public juris Latin: of public right. This commonly means the right to air and
sunlight.
public inquiry Inquiry established by a government minister on a matter which causes

public concern (Inquiries Act 2005 s1).
public interest bodies “These are bodies of a political, religious, patriotic, philosophical,
philanthropic or civic nature. These bodies have objects which are
directed outside the particular organisation and beyond the members
themselves to the general community” (VAT leaflet 701/5).
public interest immunity (PII)

Common law principle that a court can prevent a litigant disclosing
information if doing so is contrary to the public interest.
PII is usually sought by the government which issues a certificate,
colloquially known as a gagging order. The court usually allows PII
unless there is reason to doubt its appropriateness. Such a case was the
Matrix Churchill trial in 1991.
public liability insurance Insurance cover to protect someone against claims which may be made
by members of the public.
public limited company (plc)

A company which has limited liability and offers its shares to the
public.
public ownership Description of assets which are said to be owned by the general public
rather than by specific individuals or companies.
The term is misleading as ownership by its nature is a package of
personal rights. In practice, public ownership means private ownership
by a government, council or other body which the public elects or
which is appointed by such an elected body. A member of the public
has no rights of ownership of such an asset.
public sector “The part of the nation’s economy that is owned by the government”
(HM Treasury).
Public Sector Net Cash Requirement (PSNCR)

This used to be called the Public Sector Borrowing Requirement
(PSBR) and is the amount of money the government need to borrow to
meet their spending plans. In other words it the amount that their
spending exceeds their tax revenue by.
public service agreement

An agreement made between a local authority and central government
containing a set of agreed stretched targets for improving services. If
the council meets these targets it will receive additional funding from
central government, together with greater freedoms and flexibilities
from regulations.
Public service pension scheme

A pension scheme established by or under any enactment, approved by
a relevant governmental or Parliamentary person or body, or specified
as being a public service pension scheme by a Treasury order.
public service remit Requirements which licensed public broadcasters must comply with
(Communications Act 2003 s265).
public spending Spending by government, local authorities and similar bodies.
public transport strike There is no taxable benefit in kind when an employer provides certain
assistance to employees during such a strike (Income Tax (Earnings and
public trust Trust which benefits the general public or a large part of it.
Public Trustee Official who is appointed to administer a person’s property.
public understanding of financial matters

Financial Services Authority has a duty to enhance such understanding
under Financial Services and Markets Act 2000 s2 as added by
Financial Services Act 2010 s2.
public warehouse A customs warehouse available for use by any person for the
warehousing of goods.
Public Works Loans Board

A government agency, which provides long-term loans to local
authorities at favourable interest rates only slightly higher than those at
which the Government itself can borrow.
publication (1) A newspaper, magazine, or newsletter with information, news, and

feature stories, usually produced to be sold or as a service to members
of associations or organizations.
(2) Process of making a report known, such as making the annual
report and accounts known to members. For companies, the
requirements are set out in Companies Act 2006 s436(2).
publicity budget Money set aside for publicity.
publicity stunt Event which is organised to attract publicity to promote a cause or a

product.
publicity Process of making something known or bringing it to the attention of

people.
publicly quoted company Another term for listed company.
public service pension scheme

An occupational pension scheme established under an enactment, Royal
prerogative or Royal Charter, and which requires a Minister of the
Crown or government department to amend it (Pension Schemes Act
1993 s1(1)).
published accounts Accounts of a business as printed and made available for members.
publisher (1) Person responsible for the profitability of a publication.

(2) Publishing company.
puddle phishing Phishing that is aimed at a small company or small group of users,
rather than at a large pool.
pul One hundredth of an afghani, currency of Afghanistan.
pulp Fruit and vegetable pulp is usually zero-rated for VAT as food (VAT
notice 701/14).
pump and dump Business jargon for the practice of heavily inflating selling prices so
that a profit is still made when large discounts are given.
pump priming Small amount of initial funding for a business or project to encourage
others to contribute funds.
PUO Pyrexis of unknown origin. Common abbreviation for sick notes

(HMRC leaflet E14).
pur autre vie Latin: for the life of another. The term is used in relation to tenancy.
purchase Buy. In accounts, it can be a noun meaning something bought.
purchase and resale arrangements

One of the five forms of alternative financial arrangements. Its
provisions are given in Taxation of Chargeable Gains Act 1992 s151J.
purchase book Book in which purchases are recorded. This is not part of the
accounting system.
purchase day book Books which records the purchases made each day. The totals for each
day are often treated as a journal entry and entered into the nominal
ledger.
purchased goodwill Goodwill acquired as part of the price of buying a business.

Such goodwill is recognised on the balance sheet, whence it may be
amortized.
purchased life annuity An income for life purchased from an insurance company. That part of
the annuity that is deemed to be return of capital is tax-free but any
balance is treated as interest and is subject to income tax.
purchase invoice Invoice received from a seller.
purchase ledger Record of how much you owe your suppliers. Also known as a bought
ledger.
purchase method Method of producing consolidated financial statements (see acquisition

method).
purchase of own shares When a company buys shares in itself. The effect is to extinguish the
share and reduce the capital of the company.
Such a purchase is generally illegal under Companies Act 2006
s658, but this is subject to many exceptions. Further provisions are
provided in Chapter 4 of the Act from s690.
purchase order Order to buy goods or services from a supplier.
purchase price Price paid to purchase goods or services.
purchase requisition Instruction from within an organisation to its purchasing department to

acquire an item.
purchases Total of goods and services bought in a period.
purchasing department Part of an organisation which is responsible for purchasing goods and
supplies.
purchase tax Sales tax charged on certain goods, particularly luxury items. It was
introduced by Finance (No 2) Act 1940 s18 on 21 October 1940 as a
temporary war measure, but continued until 31 March 1973 when

replaced by value added tax. The tax was introduced to diminish
demand for consumer goods in addition to raising revenue. Some
purchase tax provisions have been transferred to VAT.
The tax was charged on the open market wholesale value of the
goods at the point of retail sale.
Goods were divided into classes. The final rates, introduced on 20
July 1971, charged 45% on luxury goods, 30% on household goods,
18% on confectionery, 11¼% on furniture. Tax was calculated on the
wholesale price.
purchasing manager Person in charge of the purchasing department.
purchasing officer Person who works in the purchasing department.
purchasing power The quantity of goods and services which an item of currency can
acquire.
pure endowment Gift to an organisation where the donor describes the purpose for which
the money may be used.
purpose test A determinant in how a business is taxed on a payment for

compensation or damages, as discussed in the Inspectors’ Manual at
BIM 42955.
purpose trust Trust established for a stated purpose, as against a trust merely for
possession and distribution of assets.
purveyance Right of the Crown to requisition goods and services for royal use. This
was a form of taxation.
This was widely practised from 11th to 14th centuries, and was
finally abolished in 1660.
putter-out Old term for a person who took out the first form of marine insurance
policy, particularly for a long and hazardous journey. The voyager
would deposit a sum of money on the basis that he received a much
larger sum (typically five times as much) on his return, but nothing if he
failed to return.
PV Present value.
PVM Pridetines vertes mokestis, Lithuanian for “value added tax”.
PVR Plant variety rights.
PVRO Plant Variety Rights Office.
P Wms Peere Williams’ Reports, law reports of Chancery and King’s Bench
from 1695 to 1735.
PYA Prior year adjustment, in accounting.
Q
QA Quality Assurance
QB or QBD Queen’s Bench Division. Since 1875, part of the citation of a report of
a court case heard in this division of the High Court during the reign of
a queen.
QC Queen’s counsel, a senior barrister during the reign of a queen.
QCB Qualifying corporate bond.
QE Qualifying expenditure for capital allowance. This abbreviation is used

in Proceeds of Crime Act 2002 Sch 10 para 14(3).
QEF Qualifying earnings factor.
QR code Square pattern of black squares, similar to a bar code but two-
dimensional. They were invented in 1994. The letters stand for Quick
Response.
A modern use is for a modern mobile phones or similar appliance to
scan the image to produce an instant e-mail such as a technical
specification of an item.
quaelibet concessio fortissime contra donatorem interpetanda est

Latin: every grant is to be construed as strongly as possible against the
grantor.
quae non valeant singula, juncta juvant

Latin: words which are of no effect by themselves are effective when
combined.
qualec Abbreviation of qualifying low emission car.

Such a case attracts a low fuel benefit tax charge for an employee if
provided as a company car. The term ceased to have any meaning from
6 April 2012 when the rates were extended down to 10%.
qualification In auditing, a reservation or exception in notes to the accounts which

comment on how reliable a figure or figures are.
qualification appropriate to the practice of the profession concerned

Term defined in VAT leaflet 701/5 in relation to fees for a professional
body.
qualification share Share which a director must hold as a condition of holding office. The
existence of such an arrangement must be disclosed in any prospectus.
qualified (1) Description of a person who holds a recognised qualification in the

relevant discipline, such as being an accountant or solicitor.
(2) In accounting, a narrative comment which reflects on the accuracy
or reliability of a figure in the accounts.
qualified acceptance When a person takes over the duty to pay a bill of exchange subject to
a new condition (Bills of Exchange Act 1882 s19(2)).
qualified accounts Accounts with an audit report which either does not accept the accounts
or believes that further comment should be provided.
qualified audit opinion An audit opinion to the effect that: the accounts do not show a true and
fair view; or the accounts show a true and fair view except for particular
matters.
qualified creditor In Scotland, someone who is owed at least £1,500 and may start
sequestration proceedings against the debtor.
qualified domestic trust In the USA, a trust for a non-citizen spouse of a US citizen. The
creation of such a trust has tax advantages on the death of the US
citizen.
qualified report report by auditor or examiner which discloses a concern or which gives
information not included in the accounts.
qualified teacher Person who satisfies the conditions in various regulations (Education
Act 2002 s132). The regulations are contained in various Statutory
Instruments.
qualified valuer Person who holds a recognised qualification in valuing and who has
relevant post-qualification experience. The auditor may rely on the
opinion of such a valuer when accepting values of fixed assets,
particularly with regards to land and property.
qualifying Meeting the conditions set out. This term is widely used in specific
contexts in Finance Acts in many specific circumstances. Only the most
common of these are separately listed below.
qualifying academy provider

Company limited by guarantee that runs an academy (Academies Act
2010 s12(2). Such a provider is charity.
qualifying accessory Additional item added to a company car and which may increase the
value on which the employee pays tax (Income Tax (Earnings and
qualifying care relief Various forms of care relief for which tax provisions apply.
qualifying change Term used in Finance Act 2010 s26 to cover the sale, part-sale, change
of ownership and similar changes in ownership of a business that could
prevent an acquiring company being able to claim the capital

allowances of the acquired company.
qualifying corporate bond (QCB)

In general, this means a financial instrument that represents a loan
relationship.
For capital gains tax, the term is defined in Taxation of Chargeable
Gains Act 1992 s117. The term corporate bond is defined in ibid s132.
qualifying creative work A literary, dramatic, musical or artistic work which provides a
particularly large revenue in one tax year.
From 6 April 2001 there is a special tax provision which helps to
prevent the writer, playwright, composer or artist being highly taxed in
one year.
The provision considers two consecutive years. The provisions is
triggered when either:
● the profit for one year is less than 70% of an adjacent year;
or
● the profit for one year is nil.
In such a case, the profits may be averaged according to a specific
formula. The total profits of all years are fully taxed; the scheme simply
evens up the income between the relevant years.
qualifying distribution Payment of a dividend on which advance corporation tax has been paid.
(This tax was generally abolished in 1999.)
qualifying donation Donation that qualifies for tax relief under Gift Aid in accordance with
Income Tax Act 2007 s416. This imposes various conditions.
qualifying earnings factor (QEF)

For social security, an amount calculated as the earnings factor for a
tax year multiplied by 52 (Social Security Contributions and Benefits
Act 1992 s122(1)). It determines eligibility to certain contributory
benefits.
qualifying employment share trust (QUEST)

An employee share ownership trust (ESOT) that meets certain
conditions when the trust is established. These are set out in Finance
Act 1989 Sch 5. Tax relief is provided by Finance Act 1989 s67.
qualifying financial institution

Organisation whose business includes receiving deposits and granting
credits (FRS 1).
qualifying fuel and power Supplies of fuel and power used for domestic purposes or by a charity
for its non-business activities. Such supplies qualify for the reduced rate
of VAT.
qualifying insurance contract

Contract of employee indemnity insurance that does not create a taxable
benefit (Income Tax (Earnings and Pensions) Act 2003 s349).
qualifying low emission car

Company car which has a carbon dioxide emission of less than
120g/km. The term is abbreviated to qualec.
From 6 April 2008, such a car attracts a fuel benefit tax charge
equal to 10% of the set charge. This is significantly less than for most
other cars where the percentage can be as high as 35%.
qualifying overseas pension scheme

An overseas pension scheme is a qualifying overseas pension scheme if
it satisfies certain HMRC requirements. The scheme manager must
notify HMRC that the scheme is an overseas pension scheme and
provide evidence to HMRC where required. The scheme manager must
also sign an undertaking to inform HMRC if the scheme ceases to be an
overseas pension scheme and comply with any prescribed benefit
crystallisation information requirements imposed on the scheme
manager by HMRC. The overseas pension scheme must not be
excluded by HMRC from being a qualifying overseas pension scheme.
qualifying period Time which must pass before an entitlement applies. Examples include
periods for receiving a grant or tax relief.
qualifying policy A life insurance policy which has been certified HMRC as complying
with the Qualifying Policy Regulations. Proceeds on maturity or death
do not give rise to a tax charge.
Qualifying recognised overseas pension scheme

A recognised overseas pension scheme is a qualifying recognised
overseas pension scheme if it satisfies certain HMRC requirements. The
scheme manager must notify HMRC that the scheme is a recognised
overseas pension scheme and provide evidence to HMRC where
required. The scheme manager must also sign an undertaking to inform
HMRC if the scheme ceases to be a recognised overseas pension
scheme and comply with any prescribed information requirements
imposed on the scheme manager by HMRC. The recognised overseas
pension scheme must not be excluded by HMRC from being a
qualifying recognised overseas pension scheme.
qualifying service (1) In pensions, the period for which an employee must be employed by
a company before becoming eligible to join a group scheme. Also refers
to the service to be taken into account to entitle a member of a pension
scheme to short service benefit.
(2) In employment law, the period of one year before which an
employee is eligible to claim many rights, particularly unfair dismissal.
There is no qualifying service for a claim for dismissal arising from:
● trade union membership or non-membership;
● illegal discrimination;
● work as health and safety officer, pension scheme trustee, or
employee representative;
● refusing to work on a Sunday; and

● breach of Working Time Regulations.
qualifying shares Number of shares which a shareholder must hold to be entitled to

receive a bonus issue or to become a director of the company.
qualifying subsidiaries requirement

Requirement that a company which has a subsidiary or subsidiaries is
only eligible to receive investment under a venture capital trust if the
subsidiary or subsidiaries themselves qualify.
qualifying territory Any country or other territory with whom the UK has a double
taxation treaty. In some contexts, there are further restrictions.
qualifying trade Commercial activity which qualifies investment in a company for a tax
relief. In practice, a qualifying trade is usually defined as any trade
except a non-qualifying one.
qualifying travelling expenses

Travelling expenses that may be claimed by employees and office
holders. Normal commuting is not included.
qualifying votes For determining control of a company in a claim for consortium relief,
“votes which may be cast in a poll taken at a general meeting of the
trading company held during or after the current period” (Corporation
Tax Act 2010 s155(3)).
qualifying week (QW) For statutory maternity pay (SMP), this is the 15th week before the
expected week of childbirth. If the employee was not employed in the
QW, she is not entitled to SMP from that employer.
The QW is also used to determined the period for which average
earnings are calculated to determine payments for the first six weeks of
SMP.
qualifying young person Term used in social security legislation to describe someone for whom
child benefit may be claimed.
A qualifying young person is basically someone aged 16 to 18 (and
in limited circumstances 19) who is in full-time education or training
and for any extension period thereafter.
quamdiu se bene gesserit Latin: during good behaviour.
quando acciderint Latin: when it happens.

The term is used in executorship to mean that a judgment against an
executor applies when the goods come into his possession.
quando aliquid mandatur, mandatur et omne per quod pervenitur ad illud

Latin: when anything is commanded, everything by which it can be
accomplished is also commanded.
quando aliquid prohibetur fieri, prohibiteur ex directo et per obliquum

Latin: when anything is forbidden, then doing it directly or indirectly is
forbidden.
quando duo jura in una persona concurrunt, aequum est ac si essent diversis
Latin: when two titles concur in one person, it is the same as if they
were in different persons.
quando jus domini regis et subditi concurrunt, jus regis praeferri debet
Latin: when the titles of the king and of the subject concur, the title of
the king is to be preferred.
quando lex aliquid alicui concedit, concedere videtur id sine quo res ipsa esse non potest
Latin: when the law gives anything to anyone, it gives also all those
things without which the thing itself could not exist.
quando plus fit quam fiery debet, videtur etiam illud fiery quod faciendum est
Latin: when more is done than ought to be done, then that is considered
to have been which ought to have been done.
quantitative easing (QE) “A process whereby the central bank injects money directly into the
economy in order to stimulate bank lending and control inflation” (HM
Treasury glossary). This is sometimes called printing money.
quantum Latin: amount, quantity.
quantum meruit Latin: as much as has been earned.
quantum ramificatus Latin: the amount of damage suffered.
quantum valebant Latin: the amount it is worth.
quart Imperial unit of liquid capacity equal to 2 pints, 69.355 cubic inches or
1.136 litres. There are four quarts in a gallon.
quarter (1) Fourth part.

(2) Period of three months for which accounts are sometimes prepared.
quarter day One of four days in the year on which payments (particularly of rent)
are often due.
In England and Wales, the quarter days are:
• Lady Day: 25 March
• Midsummer Day: 24 June
• Michaelmas Day: 29 September
• Christmas Day: 25 December
Ireland has the same quarter days, though they are not widely used.
Scotland has old Scottish term days of:
• Candlemas: 2 February
• Whitsunday: fixed as 15 May
• Lammas: 1 August
• Martinmas: 11 November
(These days were also used in Northern England until 18th century.)
Under Terms and Quarter Days (Scotland) Act 1990, Scottish term
days are now 28th of February, May, August and November with effect
from 13 June 1991.
quarterly distillery return Return that must be made every three months by a distillery on form
W21.
quasi-contract An obligation that does not arise from a contract but is similar to one
that does. The implications have been considered in the cases Sinclair v
Brougham [1914] and Nelson v Larholt [1951].
quasi-derivative “A contract or asset having the effect of a derivative contract”

(FSA glossary).
quasi-distribution Loan by a company to a shareholder.

This was a common tax avoidance scheme that has now been made
ineffective.
quasi-easement Implied right of a tenant to enjoy all easements which are necessary to
enjoy the property rights granted. The issue was considered in the case
Wheeldon v Burrows [1879].
quasi-loan Transaction with the nature of a loan arranged through a third party.
If a quasi-loan is arranged between a company and one of its
directors, the approval of members may be required.
The statutory definition is: “A transaction under which one party
(the creditor) agrees to pay, or pays otherwise than in pursuance of an
agreement, a sum for another (the borrower) or agrees to reimburse, or
reimburses otherwise than in pursuance of an agreement, expenditure
incurred by another party for another (the borrower):
(a) on terms that the borrower (or a person on his behalf) will
reimburse the creditor; or
(b) in circumstances giving rise to a liability on the borrower to
reimburse the creditor” (Companies Act 2006 s199(1)).
quasi-subsidiary “A quasi-subsidiary of a reporting entity is a company, trust,

partnership or other vehicle that, though not fulfilling the definition of a
subsidiary, is directly or indirectly controlled by the reporting entity
and gives rise to benefits for that entity that are in substance no
different from those that would arise were the vehicle a subsidiary”
(FRS 5 para 7).
A different definition is given in Corporation Tax Act 2010 s32(3)
in relation to whether dividends from such a company are franked
investment income.
quasi uniform When everyday clothing is so prescribed for work so that it serves the
same function as a uniform.
Unlike a uniform, it does not become tax-deductible. The leading
case is Mallalieu v Drummond [1983] 57TC330. The matter is
Queen Monarch of the United Kingdom who succeeded to the title in 1952 on
the death of her father King George VI. She is also head of state for
seven other countries and the Commonwealth.
All taxes are collected in her name. The Queen is exempt from tax
though she chooses to pay it voluntarily.
QUEST Qualifying employment share trust.
questions for the Secretary of State

Before 29 November 1999, this was the only method of appeal for an
issue relating to national insurance. It was governed by Social Security
Administration Act 1992 s17. From 29 November 1999, appeals are
made as for income tax.
quetzal Currency of Guatemala.
quick ratio Another term for liquidity ratio.
Quick Shoe Leading tax case on the extent to which the purchaser of a business may
claim tax relief for discharging liabilities of the seller.
The full citation is Cooke v Quick Shoe Repair Service [1949]
30TC460. The capital element of the consideration is discussed in the
Inspectors’ Manual at BIM35655; the revenue element at BIM38330.
quick succession relief (QSR)

Relief given when property is inherited for a second time within five
years, such as when a beneficiary dies soon after the testator.
The relief is 100% for a second succession in one year, and then
20%, 40%, 60% and 80% for up to two, three, four and five years
respectively (Inheritance Tax Act 1984 s141).
If the successor also dies within five years, QSR may be claimed
again.
QSR is a long-standing provision of death duties. For example, it
was given for estate duty under Finance Act 1958 s30 (repealed by
Finance Act 1975).
quicquid plantatur solo, solo cedit

Whatever is affixed to the soil belongs to the soil.
quid hoc sibi vult? Latin: what does this mean?
quid pro quo Latin: something for something, consideration.
quietus redditus Latin: quit rent.
qui facit per alium facit per se

Latin: he who acts through another is deemed to act in person.
This is the legal principle that a principal is liable for the actions of
his or her agent. This principle is explicitly stated in tax law regarding
agents, such as in arguing reasonable excuse.
qui jure suo utitur neminem laedit

Latin: he who exercises his legal right inflicts upon no-one any injury.
qui jussu judicis aliquod fecerit non videtur dolo malo fecisse quia parere necesse est
Latin: he who does anything by command of a judge will not be
supposed to have acted from improper motive because there is an
obligation to obey.
quilibet potest renunciare juri pro se introducto

Latin: every man is entitled to renounce a right introduced in his favour.
quindraka One hundredth of a lek, currency of Albania.
Quinizarin Colouring agent that is used to indicate that hydrocarbon oil duty has
not been paid on oil.
qui per alium facit, per seipsum facere videtur

Latin: he who does anything by another is deemed to have done it
himself.
qui prior est tempore potior est jure

Latin: he who is first in time has the strongest claim in law.
qui sentit commodum sentire debet et onus; et e contra

Latin: he who enjoys the benefit ought to bear the burden; and vice
versa.
qui tacet consentire videtur

Latin: he who is silent is deemed to consent.
This principle only applies in a few areas of law.
quoad hoc Latin: regarding this.
quod ab initio non valet, in tractu temporis non convalescit

Latin: that which is bad from the beginning does not improve by length
of time.
quod aedificatur in area legata cedit legato

Latin: that which is built on ground that is devised passes to the
devisee.
quod contra legam fit, pro inefcto habetur

Latin: what is done contrary to the law is deemed not to have been done
at all.
quod fiery non debet, factum valet

Latin: a thing which ought not to have been done may nevertheless be
perfectly valid when it is done.
quod non apparet non est Latin: that which does not appear does not exist.
quod per me non possum, nee per alium

Latin: what I cannot do in person, I cannot do by proxy.
quod semel placuit in electione, amplius disciplere non potest

Latin: where election is once made it cannot be revoked.
quo ligatur, eo dissolvitur Latin: whosoever can bind can also release.
quorate When a meeting has a quorum of members.
quorum Minimum number of members who must be present at a meeting for it

to transact business. The size of the quorum is usually stated in the
body’s constitution.
The quorum is usually expressed either as a number or as a
percentage of the membership. If insufficient people attend, the meeting
is inquorate and cannot transact business.
Where a meeting is inquorate, the rules should allow the meeting to
be reconstituted at a later date subject to proper notification and notice
period, when the meeting may transact its business regardless of
whether it is quorate.
In company law, a single member can be a quorum (Companies Act
2006 s318(1)).
quota Limited amount of something which is permitted, such as for imported

goods or type of person who must be employed.
quota system Any system which uses a quota. The term is commonly used for
restricting imports of particular goods into a country, and for restricting
the supply of essential goods when demand is too great.
quotation The illustration provided to show the costs of insurance cover. The
quotation document forms the basis of a new contract or the renewal of
an existing one. It contains details of the conditions, benefits, caveats
and premiums for the policy.
quotation A statement of how much a contractor or supplier will charge for

providing goods or a service. A quotation is legally binding for a stated
period, unlike an estimate.
quote In finance, give a figure on which another person may rely, particularly
as a price for supplying goods or a service.
quoted company Company “whose equity share capital -

(a) has been included in the official list in accordance with the
provisions of Part 6 of the Financial Services and Markets Act 2000, or
(b) is officially listed in an EEA State, or
(c) is admitted to dealing on either the New York Stock Exchange or
the exchange known as Nasdaq”
quoted investments Investments in quoted companies.
quoted option Option quoted on a recognised exchange.

The term is so defined in Taxation of Chargeable Gains Act 1992
s144, which deals with the capital gains tax implications.
quoted shares Shares in quoted companies.

For inheritance tax valuation purposes, this includes shares quoted
on a foreign exchange.
quote-driven system Operating system of a stock market where market makers quote a
price for a share or other security. The other system is order-driven
system.
quoties in verbis nulla est ambiguitas ibi nulla exposition contra verba expressa fienda est
Latin: when in the words there is no ambiguity then no interpretation
contrary to the actual words is to be adopted.
quousque Latin: until.
R
R Either Rex (Latin: king) or Regina (Latin: queen).
The term is used in many abbreviations, including the citations for
criminal cases.
R40 Form to make a reclaim of tax.
R68 Form to claim tax under Gift Aid.
R105(AUT) Form sometimes used to show that the beneficial recipient of an

investment fund is not ordinarily resident in the UK.
RAC Royal Automobile Club, an organisation that provides breakdown and

other motoring and social services for members. It can also arrange
registration plates for temporarily imported vehicles.
race For the purposes of racial discrimination law, it means a person’s

“colour, race, nationality or ethnic or national origins” (Race Relations
Act 1976 s3(1)).
racehorse tax Tax charged from 1784 to 1874.
Rachmanism Exploitation of tenants by an unscrupulous landlord for his financial

benefit.
The term comes from Peter Rachman (1919-1962) who employed
such methods against tenants in Notting Hill in the 1950s and 1960s.
This included driving out tenants who had legal protection by violence
or threats of violence. Many of these claims are unsubstantiated. The
Rent Act 1965 was passed to address such concerns.
racial discrimination Discriminating against a person because of their colour, race,

nationality or ethnic or national origin. It is generally unlawful under
Race Relations Act 1976.
racial grounds “Any of the following grounds, namely colour, race, nationality or
ethnic or national origins” (Race Relations Act 1976 s3(1)).
racial group “A group of persons defined by reference to colour, race, nationality or

ethnic or national origins” (Race Relations Act 1976 s3(1)).
racial harassment In the context of race relations means “on grounds of race or ethnic or
national origin, [engaging] in unwanted conduct which has the purpose
or effect of:
(a) violating that person’s dignity, or
(b) creating an intimidating, hostile, degrading, humiliating or
offensive environment for him”
(Race Relations Act 1976 s3A(2)).
racking For alcoholic liquor duty, a term given a specific meaning in Alcoholic
Liquor Duties Act 1979 s16 in relation to storage of spirits.
racking line For beer duty, collection of kegs or casks filled at the same time. It is
relevant in determining quantities subject to beer duty, as explained in
Customs notice 226.
rack rent Very high rent.
radio licence Licence required between 1927 and 1971 to receive radio broadcasts in
the UK. It is in effect a hypothecated tax, and was administered as a
tax.
The licence was originally required under Wireless Telegraphy Act
1904. The licence was in effect superseded by the television licence,
first introduced in 1946.
radio transmitter Customs may seize imported radio transmitters that are not authorised
for use in the UK. This includes CB radios and cordless telephones.
RAG Regulated activity group.
raised print Security device on modern Bank of England notes. If the finger is run
over the words “Bank of England” the raised print can be felt.
Ramsay principle Principle of tax avoidance set out in the landmark House of Lords case
W T Ramsay Ltd v Inland Revenue [1981].
The general principle is that a pre-ordained series of transactions
may be considered as one transaction where intermediate steps have no
purpose other than tax avoidance. This applies even when the
intermediate steps have been properly executed as separate transactions.

This principle was extended in Furniss v Dawson.
random check Item arbitrarily selected from a batch as a means of testing the batch.
rank In insolvency, a class of debt determining the order in which it is paid

relevant to other classes.
rank and file Soldiers and non-commissioned officers in the armed forces, as against
commissioned officers. In this context, “rank” means soldiers standing
in a line at the front, and “file” means the soldiers standing behind
them.
The term has come to mean the general workforce up to supervisor
but below management.
Rank litigation The case HMRC v Rank Group [2009] heard in the High Court. It
extended the scope of bingo duty and the VAT exemption for bingo to
other areas, including mechanical bingo.
ransom Sum paid for a purpose such as releasing a kidnapped employee or to

buy off threats to contaminate products. All such payments are
disallowed as tax-deductible expenses as criminal payments
Payments to prevent such situations, such as for additional security
or replacement of damaged goods, will usually be tax deductible.
RAT Rate applicable to trusts.
rate Figure for which an amount may be calculated. An examples is quoting

a rate of so much per hour of a person’s time.
In insurance, it is the pricing factor upon which an insurance
premium is based; it is the price for a given unit of insurance.
rate applicable to trusts (RAT)

Rate of income tax introduced in 2005 for taxing discretionary trusts.
The RAT is 40% except for dividends where it is 32.5%.
rate of interest Rate of interest that can be thought of as the price of money.
It is the extra proportion that has to be paid when borrowing money
or the extra that a saver receives when putting their money aside for the
future (unless they keep it under the mattress). The level of the rate of
interest is determined by the Monetary Policy Committee of the Bank
of England that meets each month.
rate of return Total income from an investment expressed as a percentage of the

amount invested.
rate of return rule Treasury management rule of thumb which states that you should invest
only if the overall rate of return exceeds that available for equivalent
investments in the capital markets.
rate of sales Speed at which units are sold.
rate of yield The amount of compensating product obtained from processing a given
quantity of imported goods.
rate review Used in group insurance to describe the review of premium rate at the
end of a rate guarantee period.
rate tart Person who freely changes from one financial supplier to another to get
the best rate. The term is particularly applied to individuals who switch
credit cards to take advantage of special offers.
The term comes from the word “tart” meaning a woman who offers
her affections freely without any long-term commitment. Rate tarring is
also known as snoozing.
rateable value (RV) A value placed on all non-domestic properties (businesses) on which
rates have to be paid, broadly based on the rent that the property might
earn, after deducting the cost of repairs and insurance. The rateable
value is determined by the Inland Revenue’s Valuation Office Agency.
rated In insurance, description of coverage issued at a higher rate than

standard, usually due to impairment of the insured life.
rated output work Basis for ensuring that the national minimum wage (NMW) is paid
for output work, where a person is paid according to work done rather
than time spent. Examples include homeworkers who assemble items or
put literature into envelopes.
Compliance with the NMW regulations requires either a record to
be kept of hours worked, or for a system of rated output work which
calculates a piece rate based on 120% of the NMW for the mean
hourly output rate, as explained in the entry for output work.
rates Local authority tax which was first introduced in 1694 until replaced by
community charge (or poll tax) in 1982 (1981 in Scotland), which was
itself replaced by council tax in 1993.
rating agency Organisation which determines a rating, particularly of the

creditworthiness of companies.
rating officer Officer working for a local authority who determines the rateable
value of a property.
rating Giving something a value or an indication of is standard.
ratio The proportion one number bears to another.
ratio analysis Analysing accounts by using accounting ratios.
ratio decidendi Reason for a judicial decision. It is distinguished from the obiter dicta
which does not create a binding precedent.
ratione soli Latin: by reason alone.
raw data Information as received without any form of analysis or selection

criteria being applied to it. The term is often used to refer to numbers
fed into a computer.
raw materials Basic materials from which goods are produced.
RBS Royal Bank of Scotland.
RCB Regulated Covered Bond sourcebook, published by the Financial

Services Authority.
RCH Recognised clearing house.
R/D Refer to drawer. Legend written on a cheque which a bank has not
honoured. The most common reason is insufficient funds in the
account.
R&D Research and development.
RDC Regulatory Decisions Committee, of the Financial Services Authority.
RDPR Refer to drawer, please re-present. These instructions may appear on a

cheque when there are insufficient funds to pay the cheque at present,
but may be if the cheque is re-presented.
re (1) About, regarding, concerning. The term is often used to name cases
as an alternative to naming the parties.
(2) One hundredth of a krone, currency of Denmark.
real asset Fixed asset of land and buildings, as against personal assets such as
furniture and vehicles.
real estate Property which consists of land and buildings.
real estate agent Person who buys and sells land and property.
real estate investment trust (REIT)

Company which provides a collective investment in commercial
property.
From 1 January 2007, a special regime operates at the option of the
company.
Under the REIT scheme, the company pays an entry fee of 2% of
the value of the property. This property is then ring-fenced from any
other activities of the company. The property rental business of the
REIT is not subject to corporation tax. However a loss made by the
REIT may be offset against profits of the non-REIT business.
The REIT must meet various conditions.
real exchange rate Exchange rate that has been adjusted to allow for inflation.
real GDP Level of GDP after changes in inflation have been taken into account.
See also
real interest rate Interest rate that has been adjusted to allow for inflation.
real investment Purchase of tangible assets (not necessarily land and buildings) rather
than buying shares or other securities.
realisation Process for turning assets into cash, particularly in insolvency.
realisation basis For taxation of certain securities, means “not recognising a profit or
loss on any asset until it is realised” (Finance Act 2002 s65(2)).
realisation concept Accounting principle that increases in value should only be recognised
when the asset is sold. UK accounting standards depart from this
concept for land and buildings which should be periodically revalued.
realise Process of turning an asset into cash.
realised profit Profit arising from revenue which has been earned by the entity and for
which there is a reasonable prospect of cash being collected in the near
future.
realising In finance, turning assets into cash.
real property Land and buildings.
real rate of return Rate of return after allowing for inflation.
real return after tax Rate of return after allowing for tax and inflation.
real terms Amount expressed in terms which allow for inflation.
real time Where a computer reacts immediately to instructions from the user.
real time information (RTI)

Part of the PAYE system introduced from 2012 that requires employers
to provide a monthly breakdown on payslips.
real time system Computer system which responds immediately to instructions from the
user.
realty Land and buildings.
real value Value after allowing for inflation.
re-approval Approval for a second or subsequent time.

In tax, many existing pensions, annuity contracts and
superannuation schemes were re-approved from 6 April 2006.
reasonable Term widely used in contracts and other documents to mean sensible
and fair.
The term is conveniently imprecise as it thus imposes a burden on a
claimant to prove that the disapproved conduct was unreasonable,
which is necessarily a subjective decision.
reasonable care Standard expected by HMRC when submitting tax returns. Failure to
exercise such care can lead to greater tax penalties.
The following notes are provided in HMRC Notice of 12 March
2010:
“Reasonable care varies according to the person, their
circumstances and their abilities. But we expect everyone to make and
keep sufficient records for them to provide a complete and accurate
return, and to update them regularly.
“Some of the ways you can show you took reasonable care, and
avoid a penalty include:
• keeping accurate records to make sure your records are
correct — see the record keeping guidance at
www.hmrc.gov.uk/record-keeping/index.htm
• checking what the current position is when you don’t
understand something.”
reasonable care, skill and diligence

The qualities which a company director is expected to exercise
This requires “the general knowledge, skill and experience that may
reasonably be expected of a person carrying out the functions carried
out by a director” (ibid s174(2)(a)) plus “the general knowledge, skill
and experience that the director has” (ibid s174(2)(b)).
reasonable excuse A civil penalties term used for a reasonable excuse for a default or
error. This will depend upon the circumstances, and it applies only to
certain types of penalties.
Reasonable Excuse Form Document completed by a taxpayer to explain why a tax return or
payment has not been made by the due date.
reasonable expectation In a divorce settlement, the reasonable expectation of one party may
influence the amount of that party’s settlement.
reasonable expectation of profit

Term used in Corporation Tax Act 2010 s49 to determine whether
farming or market gardening is a trade.
reasonable steps Term used in VAT leaflet 725 with regard to checking the VAT number
of a customer in another EU member state. If the number proves to be
false (as is common in tax fraud), the UK supplier can escape having to
pay VAT on the supply if he can show that he took reasonable steps.
These include making sure that the VAT number follows the
convention for the relevant country, and not using a number that the
supplier has been told is either invalid or does not belong to that
customer.
reasonably accessible document

Document which an employee may reasonably read while at work
(Employment Rights Act 1996 s6). A statement of changes may be
made by such a document.
reasonably believe Term used in connection with bank payroll tax. The accompanying
Guidance Note states that this is “no more than what a reasonable
person would believe given the facts and circumstances, having
considered the proposed transactions in the round. It is a common sense
test”.
reassess Assess again, usually either on the basis of new evidence or by another
person when the original assessment is challenged.
reassessment Second or subsequent assessment.
rebate In the context of excise duty, a reduced rate of duty that is allowed on
oils that have been put to industrial and off-road use. They are marked
to show that they have been rebated. It is illegal to use rebated fuels as
fuel in road vehicles.
rebate licence A licence to use rebated heavy oil as road fuel, issued by us.
rebated heavy oils Usually gas oil or kerosene. These are heavy oils that carry a lower rate
of duty than that for fully duty paid fuel such as Diesel Engine Road
Vehicles (DERV); Ultra Low Sulphur Diesel (ULSD); gasoline; Liquid
Petroleum Gas (LPG) or Compressed Natural Gas (CNG). There are
restrictions to the uses that rebated heavy oils can be put.
rebated oil Oil which has been delivered for home use on allowance of a rebate of
excise duty under the Hydrocarbon Oil Duties Act 1979, sections 11
and 14.
rebuilding cost Cost of reconstructing a building. Typically this includes such related
costs as site clearance, architect’s fees and temporary accommodation.
Buildings insurance usually requires buildings to be insured for
rebuilding cost.
rebuttable presumption Something which is assumed to be true until evidence is found which
suggests otherwise.
Rebuttable presumptions are widely used in auditing. An audit starts
with the rebuttable presumptions that the accounts have been prepared
honestly but may contain mistakes.
REC Recognised Investments Exchange and Recognised Clearing House

sourcebook, published by the Financial Services Authority.
recapitalisation Change in the capital structure of a company when new shares are
issued to restore the value of the capital towards the amount it was
previously. Recapitalisation is often undertaken by a struggling
company seeking to avoid insolvency.
receipt Either money received, or a document confirming that money, goods or

a document have been received.
receipt in kind When goods or services are received as payment.

This turns a sale into a barter. For most tax purposes, the receipt
must be valued and accounted for as if it were a cash payment.
receipt notice Notice that HMRC may serve on a company requiring it to recalculate
its tax less advantageously in certain arbitrage arrangements (Taxation
(International and Other Provisions) Act 2010 ss249-254).
receipt of insignificant value

In the context of EIS relief, means a receipt of no more than £1,000
(Income Tax Act 2007 s215(2)). Such a receipt disapplies the rule in
s213 which requires the relief to be reduced if the investor receives
value from the investee company.
receipt of royalties and licence fees

receipt pad Pad of blank receipts. They are usually pre-numbered with a
counterfoil.
receipts and payments Basis of preparing accounts where the accounts show only actual
receipts and payments made during the period regardless of the period
to which they relate. The alternative basis is accruals basis which is
compulsory when a church’s finance exceed defined limits.
receipts Amounts of money received by a person or business.
receivable Description of an amount a business expects to receive, such as from

unpaid invoices sent to customers.
received date The date the contribution was credited to the account by the Charitable
Gift Fund for tax purposes.
Receiver of Revenue South African Revenue Service.
receiver Person who deals with the affairs of another who is either insolvent or
suffering from mental incapacity.
receivership When an insolvent company is taken over by an insolvency practitioner

who may run parts of it or sell it as will generate most return.
receiving clerk Official who works in an office where goods or payments are received.
receiving office Office which deals with goods or payments received by a business.
receiving order Order from a court appointing a receiver to a company.
recently used documents

In computing, a facility whereby selection of a program automatically
offers you a list of the most recently created or modified documents
which used that software.
reception input In Customs terminology, old term for an input message that records the
physical receipt of export cargo and the associated documents.
This is now replaced by New Export System arrival messages.
recession Period when there is a decline in economic activity.

Various more formal definitions have been made, of which the
generally accepted one now is two consecutive quarters of negative
productivity, that is where gross domestic product contracts.
recipient Someone who receives goods or a payment.
recipient company Company that received a tax credit (Income and Corporation Taxes Act
1988 s813).
reciprocal agreement Agreement between two parties where each agrees to provide similar
assistance to the other.
In tax, this particularly applies to international agreements on
national insurance and social security, of which there are many. The
statutory authority is contained in Social Security Administration Act
1992 s179.
reciprocal holdings Situation where two companies each own shares in the other. This is
commonly done to frustrate takeover bids.
reciprocity Arrangement where one person’s conduct is dependent on and mirrors

another’s, such as A buying from B on condition that B buys from A.
reckon Calculate, particularly by a quick and informal method.
recognised An item is recognised when it is included by means of words and

amount within the main financial statements of an entity.
Recognised European Economic Area (EEA) collective investment scheme

This means a collective investment scheme (within the meaning given
by section 235 of the Financial Services and Markets Act 2000) which
is recognised by virtue of section 264 of that Act (schemes constituted
in other EEA states).
recognised overseas pension scheme

A recognised overseas pension scheme is an overseas pension scheme
which is established in a country or territory mentioned in regulation
3(2) of the Pension Schemes (Categories of Country and Requirements
for Recognised Overseas Schemes) Regulations 2006 – SI 2006/206.
An overseas pension scheme which is not established in such a country
is a recognised overseas pension scheme if it satisfies the requirements
prescribed in regulation 3(4) of those regulations.
recognised transfer A transfer representing a member's accrued rights under a registered

pension scheme to another registered pension scheme (or, in certain
circumstances, to an insurance company) or a qualifying recognised
overseas pension scheme.
recognition In accounting, the process whereby an item is included in the accounts.

“The process of incorporating an item into the primary financial
statements under the appropriate heading. It involves depiction of the
item in words and by a monetary amount and inclusion of that amount
in the statement totals” (FRS 5 para 6).
Guidance on recognition of assets and liabilities is given in FRS 18
para 9 and FRS 5 from para 20.
FRS 18 para 9 states “where accounting standards allow a choice
over what is to be recognised, that choice is a matter of accounting
policy”.
recompense Payment made to repay a sum or to compensate a person for a loss.
recomputation Preparing a tax computation for a second or subsequent time because of

an error or change of practice from the first computation.
reconcile Process of making two figures or two accounting documents agree

when they refer to the same matter. A common example is reconciling a
bank statement to a cash book by listing all the cheques which have
been issued but not yet paid, and similar.
reconciliation In accounting, process of agreeing bank statements and similar reports

to your own records.
reconciliation mechanism Process for ensuing that a scheme with more than one element provides
the overall objective that was intended. The term is used in Energy Act
2010 in relation to fuel poverty.
reconciliation statement Statement explaining how two figures or two documents which refer to
the same matter relate to each other.
reconnoitre Examine with a view to launching a military operation. The term is

sometimes extended to an examination with a view to any type of
operation.
reconstruction (1) In accounting, recreating accounts or figures which have otherwise

been lost.
(2) In building, reinstating a building or turning an existing building
into one of a significant different type.
reconversion of stock Process of turning stock (meaning equity capital) back into ordinary
shares. The company law is contained in Companies Act 2006 s620.
The right to convert shares to stock was given in Companies Act
1985 s121(2)(c). This right has now been repealed by the 2006 Act
though previous stock conversions remain legal. Reconversion of stock
requires an ordinary resolution of the shareholders but no longer
requires prior authority in the articles of association.
record Written entry which evidences some fact, such as amount of invoices
issued or cash paid.
record-keeping Basic financial records that must be kept for tax purposes.
Guidance for the self-employed is provided by HMRC at
http://www.hmrc.gov.uk/sa/rec-keep-self-emp.htm.
recoverable Able to be recovered, particularly an amount of money.
recoverable amount “The greater of the net realisable value of an asset and, where
appropriate, the value in use” (FRS 7 para 2).
recoverable summarily as a civil debt

This term is used in Taxes Management Act 1970 s65(1) to describe the
procedure for recovering tax of amounts up to £2,000 in the magistrates'
court.
recovered debt Bad debt that is paid after being written off.
Such a recovery is added to the trade income for the period in which
it was recovered. Provided that the bad debt was written off properly at
the time, no attempt should be made to reverse the write off in a
previous accounting period.
For VAT, a recovered debt is added to turnover and output tax if
bad debt relief has been claimed.
recovery (1) In finance, getting back an asset or amount of money.

(2) In economics, when the situation improves after a period of bad
performance.
(3) In personnel, when a person is returned to normal health and ability
to work after a period of illness or similar.
recovery charge Income tax charge of 55%
recovery plan Plan made by a business to recover from adverse trading or financial
position.
For financial institutions, the Financial Services Authority has
certain powers and duties as set out in Financial Services and Markets
Act 2000 s139B.
recreational benefits Such benefits provided by an employer may be exempt from tax under
recruiting ground Any area or equivalent means from which people may be recruited.
recruitment Process of finding and engaging suitable people to work for an

organisation.
rectification In contract law, when the parties or a court clarifies what the parties
meant by a particular expression in a contract. Extrensic evidence may
be used.
In inheritance tax, the term is used when the court corrects a faulty
deed of variation to give effect to what the beneficiaries intended. This
must be supported by adequate evidence.
In law, correction of a mistake in a document by the court
(Supreme Court Act 1981 s61(1) and Sch 1).
rectifier “May not distill or extract feints or spirits from any other material than
spirits on which duty has been duly paid” (Alcoholic Liquor Duties Act
1979 s21). A rectifier is severely restricted on what other trades he may
follow (ibid s24).
rectifier’s licence Licence which is required for compounding or rectifying spirits

(Alcoholic Liquor Duties Act 1979 s18).
recto Right-hand page in an open book. The plural is rectos. The left-hand
page is verso.
recuperation Period of recovery, particularly after surgery or certain other medical

treatments. Provided the recuperation is medically necessary, it may be
taken as absence by an employee as sick leave. Statutory sick pay is
paid, provided other conditions are met.
recurrent Something which happens repeatedly.
recurring payments Payments which are made regularly, such as rent or mortgage
payments.
recyclate Valuable elements extracted from recycled waste.
recycle Use again, such as when rubbish is sorted so that the materials may be
reused.
recycle bin In computing, an area where deleted items are stored, allowing for their
retrieval before finally deleting.
recycled pension When a pension lump sum is used to fund a new private pension
scheme.
This is possible and legal for members aged between 55 and 75.
However, from 6 April 2006, tax relief for the new scheme may be
restricted if all five of these conditions are met:
(a) a pension lump sum is received;
(b) because of this lump sum, contributions are made to
another pension plan which are significantly larger than would
otherwise be the case;
(c) the re-cycling was pre-planned;
(d) the amount of the pension commencement lump sum
when added to any other such sums taken in the previous 12 months
exceed 1% of the current lifetime allowance; and
(e) the pension commencement lump sum exceeds 30% of the
cumulative amount of additional contributions.
For (b) and (c), HMRC has issued guidelines which basically say
these conditions are met if a person departs from their usual pattern of
pension funding.
For (d), the lifetime allowance increases each year. Suppose for one
year this allowance was £2 million. 1% is £20,000, so if the lump sum
is below this figure, these provisions need not be considered.
Condition (e) is best explained with an example. Suppose a man has
a second pension fund of £100,000 and receives a lump sum of
£120,000 from his first pension fund. He pays this into his second
pension fund with £80,000 from other savings. The second pension
fund is now worth £300,000. Condition (e) is triggered because the
additional contributions of £120,000 exceed 30% of £200,000.
Red Book Budget book published on the day of The Budget given by the
Chancellor of the Exchequer.
It sets out a statement on the national economy, and summarises
proposals for tax and other matters announced in the Budget. Between
1999 and 2010, the book has not had a red cover but a white cover with
red printing.
REDCENT Accounting Centre for Registered Excise Dealers and Shippers - the
accounting centre processes records of all payments of excise duty
made under the Registered Excise Dealers and Shippers (REDS) system
and holds registration records of all registered traders.
red channel Customs term for the exit at a port or airport that should be used by a
traveller from outside the European Union who:
• has goods or cash that need to be declared to Customs, or
• has commercial goods, or
• where the traveller is not sure whether goods need to be declared.
reddendo singular singulis

Latin: giving each to each. A means of interpreting legal provisions in a
will.
red diesel Diesel oil which has been marked with a red dye.
Such diesel attracts a lower rate of hydrocarbon oil duty but its use
is restricted.
redditus Latin: rent.
redeem Give back in return for what was originally provided, such as
redeeming goods which have been pawned, or redeeming a preference
share for cash.
redeemable Description of an item which may be turned into something else, such
as loan note being redeemed for cash, or a preferred share being
redeemed for an ordinary share.
redeemable government stock

Government stock which may be redeemed for cash at any time. In the
UK, only war loan is so redeemable.
redeemable preference share

Preference share which the company must buy back at an agreed time
for an agreed price.
redeemable security Security which can be redeemed for its face value at a specified date.
redeemable shares Shares that a company may elect to buy back. The conditions are set out
in Companies Act 2006 Chapter 3 starting at s684.
redemption (1) Early payment of a loan. particularly a mortgage.

Redemption sometimes incures a charge or redemption fee.
(2) Process of buying back redeemable preference shares.
redemption amounts Amount that would be redeemed on a financial policy if the policy
holder held the assets for their full term to their redemption date.
redemption date Date on which a loan or security or other item may be redeemed.
redemption penalty Fee which may be payable if someone wants to end a financial
arrangement early, such as paying off a mortgage before the agreed
date.
The fee may be calculated as a certain number of months’ interest,
or it may be a percentage of the loan.
Some lenders only charge a penalty for a period covered by a
special deal. Others may charge a fee for several years afterwards.
redemption value Value of a security when it is redeemed.
redemption yield An estimate of the total long term returns, including income and capital,
on fixed income investments like corporate bonds and gilts.
redenominate In relation to shares means to “convert shares from having a fixed

nominal value in one currency to having a fixed nominal value in
another currency” (Companies Act 2006 s622(1)).
redenomination Changing the currency or nominal value of an asset or liability.

Companies Act 2006 ss623-628 contains provisions relating to the
redenomination of ordinary shares. In particular, a company’s share
capital may not be reduced by more than 10% (ibid s626(4)).
redenomination reserve Capital reserve that a company must create when its share capital is
reduced by a redenomination of share values (Companies Act 2006
s628).
re-distillation Process sometimes applied to wines, feints or spirits. There are no

restrictions on a distiller doing this other than to keep appropriate
records as set out in Customs notice 39.
redistribution Collection of funds or goods on one basis for distribution on another

basis. The national insurance and social security schemes can be
considered as a single redistribution scheme of wealth.
red point phone Telephone in the red channel of a port or airport that may be used by a
traveller to the UK to speak to a Customs officer about whether goods
or cash need to be declared.
redress scheme Term used in NHS Redress Act 2006 s1 with regards to a scheme to
avoid civil litigation in complaints against the NHS.
REDS Registered Excise Dealers and Shippers - revenue traders who are
approved and registered by HM Revenue & Customs to obtain excise
goods commercially from other European Union (EU) countries.
reduce Make smaller.
reduced allotment When an allocation of shares is scaled back because it was

oversubscribed.
reduced payment In an annuity, a payment which is significantly less than an earlier

payment under the same annuity. This may make the annuity a steep-
reduction annuity, for which there are special tax provisions (Income
and Corporation Taxes Act 1988 s437A).
reduced pollution certificate (RPC)

Certificate that a vehicle first registered before 1 October 2001 meets
the exhaust emission standard that exempts it from paying the charge
for the Low Emission Zone.
reduced rate Any rate which is below a standard rate.

The term is particularly used for:
● the 5% rate of VAT for specific items; and
● the rate of national minimum wage for workers aged
between 18 and 21.
reduced rate schedule Value Added Tax Act 1994 Sch 7A which lists those supplies where
VAT is charged at the reduced rate of 5%.
reducing balance method Method of calculating depreciation where each year’s figure is
calculated as a percentage of the previous year’s net balance, as against
the more common straight line method where each year is calculated
as a percentage of the original cost. Under the reducing balance method,
an asset never reaches a value of zero.
For example, an asset costing £10,000 and written off over ten years
on the straight line method would simply have £1,000 charged to profit
and loss account each year and be worth nothing after ten years.
If depreciated on the reducing balance method, the figures would
be:
Year Start value Depreciation End value
£ £ £
1 10,000 1,000 9,000
2 9,000 900 8,100
3 8,100 810 7,290
4 7,290 729 6,561
5 6,561 656 5,905
6 5,905 591 5,314
7 5,314 531 4,783
8 4,783 478 4,305
9 4,305 431 3,874
10 3,874 387 3,487
reduction Making a figure lower, such as reducing a price.
reduction in company’s unappropriated surplus

Term used in Income and Corporation Taxes Act 1988 s444AF in
relation to the taxation of an insurance company when there has been a
transfer of annuity business.
reduction in rank Punishment in armed forces or police of reducing a person’s rank.
reduction of share capital Reduction in the share capital of a limited company.

Under Companies Act 2006 s641(1), this requires:
• a special resolution for a private company limited by shares,
• a special resolution and confirmation by a court in all other
cases.
redundancy Dismissal of an employee because their work is no longer needed.

There are legal consequences.
redundancy pay Amount an employer is required to pay an employee who has been
made redundant.
Statutory redundancy pay is paid at so many weeks’ pay according
to length of service.
For income tax, redundancy pay is always free of income tax
(Income Tax (Earnings and Pensions) Act 2003 s309) and national
insurance. This applies regardless of whether the redundancy pay is
statutory or contractual. However not all payments called redundancy

pay will necessarily be so regarded by HMRC.
Redundancy pay is not taxable, but must be included to see if the
£30,000 limit for termination payments has been reached.
Generally normal redundancy payments are tax deductible from the
employer’s profits. There are some exceptions are discussed in the
redundancy protection insurance

Insurance that continues to meet mortgage payments, usually for a
limited period, if you are made redundant.
redundancy rebate Payment made to a business as compensation for the redundancy pay
paid by the business.
re-engagement order An order made by an employment tribunal or other body requiring an

employer to re-engage an unfairly dismissed employee on equivalent
terms. An employer cannot be forced to comply with the order, but will
have to pay compensation if he or she does not.
re-entry Repossession by a landlord of land held under a lease when the landlord
exercises his power of forfeiture.
re-examination Court procedure of a witness being questioned a second time by the

said that called him or her to give evidence.
reference In employment law, a statement by a previous employer concerning a

job applicant.
re-export Export of goods that have been imported.
reference price In options, the price at which an option may be exercised.
referential bid Bid that refers to amounts in other bids. Such a bid is invalid.
In the case Harvela Investments Ltd v Royal Trust Co of Canada
Ltd [1985] a bidder offered “2,100,000 dollars or 100,000 dollars in
excess of any other offer”. The House of Lords pointed out that if two
or more bidders had made referential bids, it would be impossible to
accept either.
referential settlement Settlement that incorporates terms of a reference from a previous

settlement.
refinery Premises approved by the Commissioners for the treatment of oil

(Hydrocarbon Oil Duties Act s27).
refresher Fee paid to a barrister for attending a court hearing. It is additional to

the fee originally marked on the brief.
refreshing memory In law, rule of evidence which states that a witness may refresh his
memory by referring to a written note which either he prepared or
which someone else has prepared and he has adopted as his own. An
example is when a policeman consults his notebook or a committee
member consults the minutes.
refrigeration For VAT, a supply of refrigeration is treated as a supply of goods

(Value Added Tax Act 1994 Sch 4 para 3). As such, supplies for
residential use are generally reduced-rated under ibid Sch 7A Group 1,
but standard-rated for other supplies. Details are given in VAT notice
701/19.
refund Give back money.
Refund of excess contributions lump sum

because they have contributed more to the scheme than they are entitled
to tax relief on, and which meets the conditions of paragraph 6,
Regional Development Agency (RDA)

Non-departmental public body that promotes the economy in the nine
regions of England. There are equivalent bodies for other parts of the
UK. It is planned to abolish RDAs in 2012.
regional development grant (RDG)

Grant that could be made under Industrial Development Act 1982 until
31 March 1988.
The accounting treatment depends on the purpose of the grant. If for
a piece of capital equipment, the grant may reduce the capital cost. In
general, the tax treatment follows the accounting treatment unless
specific legislation states otherwise.
regional secondary contributions holiday for new businesses

Term used in National Insurance Contributions Act 2011 s4 for the
national insurance holiday introduced in 2010 for new businesses in
defined regions.
registered auditor Accountant who is allowed to audit accounts.
registered cheque Cheque issued by a bank on its own account for the benefit of a
customer who does not have a bank account.
registered company Company which has been registered at Companies House.
registered design Design registered at the Designs Registry and which gives monopoly
rights over that design.
registered factory (tobacco)

Place at which tobacco products are manufactured. Factory premises
must be registered under regulation 4 of The Tobacco Products
Regulations 2001.
registered friendly society Tax Income and Corporation Taxes Act 1988 s460-466.
registered land Land that is registered under Land Registration Acts 1925 to 1986.
registered medical practitioner

“Means a fully registered person within the meaning of the Medical Act
1983 who holds a licence to practise under that Act” (Interpretation Act
1978 Sch 1).
registered office Address to which all communications of a company must be sent.

Every company must have such an address (Companies Act 2006 s86).
registered office clause Clause in the memorandum of association of a company, stating

where its registered office is to be in England, Scotland or elsewhere.
registered owner A person who has been authorised and registered by HM Revenue &
Customs to deposit their duty-suspended goods in an excise warehouse.
registered pension scheme

Pension scheme which has either been registered by the HMRC (or its
predecessor body Inland Revenue), or by acquiring registered status
through being an approved pension scheme on 5 April 2006. It is
registered under Chapter 2 of Part 4 of the Finance Act 2004.
From 6 April 2007, a pension scheme is approved by the Financial
Services Authority under Financial Services and Markets Act 2000.
There is no change in the consequence of registration.
The tax advantages of a registered scheme are set out in the
Inspectors’ Manual at RPSM02103010 thus:
• contribution by members are tax-relieved to the higher of
£3,600 and 10% of earnings (subject to lifetime allowance and annual
allowance),
• for defined benefit schemes, increases in benefits are within
the annual allowance,
• employers may make contributions,
• investment income earned by the fund is free of income tax,
• investment gains are free of capital gains tax,
• lump sum benefits are free of tax up to a limit,
• some life assurance may be provided as a tax-free benefit.
Before 1997, there was also the significant tax advantage that a
pension fund could reclaim tax on dividends received.
registered person An individual or other legal body that is registered for a particular
purpose, particularly an individual, firm or company that is registered
for VAT under the terms of the Value Added Tax Act 1994.
registered security Security, such as a share or debenture, which a company has registered
at Companies House.
registered social landlord (RSL)

Housing association or other not-for-profit body that provides social
housing for people in need. Any profits earned are ploughed back into
providing further housing or improving existing stock. They are

regulated by Housing and Regeneration Act 2008.
From 1 January 2000, short-term tenancy agreements made by
RSLs may be exempt from stamp duty.
registered store (tobacco) Premises registered under regulation 5 of The Tobacco Products
Regulations 2001 for the safe storage of tobacco products without
payment of duty.
registered trade mark symbol

The symbol ® which may be placed by a word indicating that it is a
trade name and not an ordinary English word.
Many trade marks have become household words. Examples
include biro, fibreglass, hoover, Rolls-Royce. Care must always be
exercised when using a trade name even in ordinary usage.
register of common land Register which must be kept under Commons Act 2006 s1(a).
register of companies List of companies kept by Companies House.
register of directors List of directors which every company is obliged to keep (Companies
Act 2006 s162(1)).
register of interests Record that a public company must keep of all information received by
it in relation to interests in its shares other than ownership (Companies
Act 2006 s808).
register of judgments and orders etc

Register required under Courts Act 2003 s98 to be kept of all judgments
from the High Court and county courts.
register of members List of shareholders or guarantors which a limited company must keep
under Companies Act 2006 ss113-121.
If there are more than 50 members, the company must also keep an
index of members (ibid s115).
register of occupational and personal pension schemes

Register compiled and maintained by the Pensions Regulator under
Pensions Act 2004 s59.
register of prohibited trustees

Register kept by the Pensions Regulator under Pensions Act 2004 s66
of persons who are prohibited from being pension fund trustees.
registrant In USA, a company applying to be registered with the Securities and

Exchange Commission.
registrar Person who keeps official records and registers. For companies, this
includes the person who administers the register of shareholders.
Registrar of Companies An official authorised by the government to maintain a record of all

annual reports and other documents issued by a company.
registration Act of registering, getting included on an official list.
registration as citizen Process by which a person may formally acquire British citizenship.
This may be cited as evidence of domicile.
registration certificate Document which shows that something has been registered, particularly
document V5 which shows that a vehicle has been registered to a
particular keeper.
registration fee Charge made to cover the cost of registering for something, such as
being entered on an official register or to book a place at a conference.
registration limit Figure of annual turnover above which an organisation must register for
VAT.
registration mark Legal term for a number plate on a car.
registration number Unique number issued to a person who has registered for something.
registration of birth Registration of the birth under Births and Deaths Registration Act
1963. The baby’s name, sex, date of birth and names of parents must be
registered within 42 days. Copies of the entry may be obtained as a
birth certificate.
registration of death Registration of the death under Births and Deaths Registration Act
1963.
The registration must give the name, sex, address and occupation of
the deceased. It must state the place and cause of death. Registration
should usually be made within five days. A copy of the entry may be
obtained as a death certificate.
registration of marriage Registration of a marriage.

Every marriage in the UK must be registered. For marriages in
England this is governed by Marriage Act 1949 ss53-67. The
registration must be either by a Church of England churchman or by a
registrar.
registration statement Document which gives information about a registration, particularly the
document issued by Companies House to a newly registered company.
registration threshold For VAT, the amount of annual turnover above which a business must
register. The amount is reviewed each year in the Budget. A business
must register if its turnover has exceeded the threshold in the previous
12 months or if it reasonably believes it will be exceeded in the next 30
days.
Registry Trust Where insolvencies are recorded.
regnal year Year of a monarch’s reign. This was the traditional method for dating
Acts of Parliament.
regrating Buying corn or other produce in a market and then selling it as a means
of increasing its price.
regressive tax Tax that takes a smaller proportion of a income as income rises. In
other words it is a tax that hits less well-off people harder than the
better-off.
An example of a regressive tax is the television licence. It is exactly
the same amount for everyone, which makes it a much smaller
proportion of a large income than a small one.
Regulae Generales Latin: General Rules, particularly of the Supreme Court.
regular Happening at fixed intervals, such as once a week. The term should not
be used to mean “frequent”.
regular cost In pension valuation, consistent on-going cost recognised under the
actuarial method (SSAP 24).
regular forces “The Royal Navy, the Royal Marines, the regular army or the Royal Air
Force” (Armed Forces Act 2006 s374).
regular income Income received at fixed intervals, such as wages, royalties, dividends
etc.
regulate Provide a measure of control by requiring compliance with rules and,

often, by the need to have a licence.
regulated activity Activity whose nature can mean that a relationship of trust can develop
between a person and either a child or vulnerable adult. There are
special regulatory provisions for people engaged in such activity
(Safeguarding Vulnerable Groups Act 2006). Other activity between
such persons is called a controlled activity.
regulated agreement Consumer agreement with the scope of Consumer Credit Acts and
which is not specifically exempted by them.
regulated consumer credit agreement

Agreement which is regulated by provisions of Consumer Credit Act
1974.
regulated mortgage Legal mortgage that usually predates 8 December 1965 and is subject to
a regulated tenancy binding on the mortgagee.
regulated payment Payment from the Social Fund to meet one of four specific categories of
need.
regulations Rules designed to provide a measure of control or protection in a

particular area.
Regulation S-X Rule of the US Securities and Exchange Commission which regulates
the contents of annual reports from companies.
regulator Official whose job is to enforce regulations.
regulatory body Organisation whose task is to oversee operations in a defined area.
regulatory powers Powers given to a regulatory body to enforce compliance with

regulations in a particular area.
Regulatory Reform Order

Common name for the Statutory Instrument whose full title is The
Regulatory Reform (Collaboration etc between Ombudsmen) Order SI
2007 No 1889.
It allows ombudsmen to work together on a case which comes
within different jurisdictions, if the complainant agrees.
rehabilitation Process to allow people who have served sentences to resume normal
life in society.
rehearing Second hearing of a case on which a court has already pronounced. An

example is an appeal.
Rehoboam Champagne bottle with a capacity of six standard bottles.
reimburse Pay back money to someone who has incurred an expense for someone
else.
reimbursement Money given to someone who has incurred an expense on someone

else’s behalf.
The tax implications of reimbursement of employes’ expenses is set
out in Income Tax (Earnings and Pensions) Act 2003 s334.
reimbursement scheme Scheme used to refund customers any money they may have overpaid
such as VAT.
reinforcement ring Adhesive ring of paper which can be attached round punched holes to
avoid them tearing.
reinstatement order Order made by an employment tribunal or other body requiring an

employer to give an employee back the job from which he or she was
unfairly dismissed. For all purposes, the employee is then regarded as if
he or she had never been dismissed but had enjoyed continuous
employment. An employer cannot be forced to comply with such an
order, but faces a claim for compensation if he or she does not.
reinsurance The practice whereby one insurer transfers part or all of the risk it has
accepted to another insurer (the reinsurer).
reinsurance “includes retrocession” (Income and Corporation Taxes Act 1988

s431(2)).
reinsurance treaty In relation to taxation of annuity business “means a contract under

which one insurance company is obliged to cede, and another (in this
paragraph referred to as a “reinsurer”) to accept, the whole or part of a
risk of a class or description to which the contract relates” (Finance Act
1991 Sch7 para 16(7)).
reinsurer Insurance company that accepts a risk under a reinsurance treaty.
reinvest Invest the proceeds from another investment.
reinvestment Investing the proceeds realised from a previous investment.
REIT Real estate investment trust
rejection of offer Refusal by an offeree to accept an offer. This has the effect of
preventing a contract being created. Once an offer is rejected, the
offeree cannot subsequently accept.
rejoinder Pleading served by a defendant in answer to a claimant’s (or

plaintiff’s) reply. A rejoinder usually requires the consent of the court
to be accepted as evidence.
related arrangement Any form of agreement which is subsidiary to another.

In company law, the term is used to describe such a relationship to a
credit transaction between a company and one of its directors. Such an
arrangement may require members’ approval under Companies Act
2006 s203.
related company Company in which another company has an interest, usually by holding
shares.
related employments Two or more employments that are treated as being one employment
for determining whether a person is in lower-paid employment. The
provisions are set out in Income Tax (Earnings and Pensions) Act 2003
s220.
related parties For the purposes of related party disclosure, means where either one
party controls or influences another, or where they are both under
control. This is set out in detail in FRS 8 para 2.5.
related party Person or business with which another person or business has a family
or business connection.
related party transaction Financial transaction between two connected bodies, particularly
between a person and a body of which that person is a director or holder
of a similar position.
related party transaction “The transfer of assets or liabilities or the performance of services by,
to or for a related party irrespective of whether a price is charged”
(FRS 8 para 2.6).
related property For inheritance tax, “related property is property that is in the estate of a
spouse or civil partner, or belonging to a charity of one of the political,
national or public bodies to which exempt transfers may be made.
There are special rules for valuing related property” (HMRC
related settlement Where a settlor sets up a trust, any other trusts set up on the same day.
related supplies For VAT, supplies that in truth are part of a single supply. Related
supplies may be treated as a single supply in relation to anti-
forestalling provisions for a future increase in VAT.
relationship breakdown Divorce, separation or other event that causes two people to stop living
together, whether married or not.
Where the arrangements following such breakdown include the
creation of a fixed interest trust, it may be taxed under the more
generous rules that applied before 22 March 2006.
relative Person to whom someone is related.

Many tax and other provisions have specific provisions regarding
“relatives”, the exact scope of which depends on the context.
The narrowest context comprises “ancestor, lineal descendant,
brother or sister” (Income Tax (Earnings and Pensions) Act 2003
s61I(6) and Taxation of Chargeable Gains Act 1992 s286).
In other contexts, relatives are more inclusive. For example,
Inheritance Tax Act 1984 s270 adds uncles, aunts, nieces and nephews.
relative error Difference between an estimate and the actual figure.
release (1) Setting a person or business free from an obligation or restriction.

(2) Issue of a computer program. Such releases are often indicated by
two numbers such as Program 3.7, where the 3 indicates that this is the
third major version of the program, while the 7 indicates that the
original (Program 3.1) has now been tweaked six times to make minor
improvements or corrections.
released debt Debt that is discharged by a composition between the debtor and
creditor. An example is where the creditor accepts a lower sum to
secure a payment in circumstances where otherwise nothing would be
received.
The amount discharged is usually a tax-deductible expense for the
creditor on the same basis as a bad debt.
For the creditor, the amount released is regarded as trading income,
except when (from 30 November 1993) it is part of certain formal
arrangements under insolvency law.
release for free circulation (RFC)

The commonest (by far) Customs procedure when goods are presented
to Customs on importation.
RFC means that the goods may be freely used in the UK by the
importer having paid the appropriate Customs duties.
release note A computer printout, or manual equivalent, for a consignment of goods

which has been given Customs release.
release of goods Term used when Customs allow an importer free access to imported
goods having ensured that this is the appropriate Customs procedure
and that all relevant duties have been paid.
release Allow the removal of goods or a person.

Release of goods to a Customs procedure either at the Frontier
using the Simplified Declaration Procedure (SDP) or entry in the
records using the Local Clearance Procedure (LCP). NB Under NES
‘Permission to Progress’ allows release.
relevance One of the four requirements for accounting information.

Statement of Principles states “information is relevant if it has the
ability to influence the economic decisions of users and is provided in
time to influences those decisions” (Chapter 3).
It can be seen that materiality is an implied condition.
Two characteristics of relevance are predictive value and
confirmatory value.
Relevant administrator For a retirement benefits scheme, former approved superannuation fund
or relevant statutory scheme as defined in section 611A Income and
Corporation Taxes Act 1988 (ICTA), or a pension scheme treated by
HMRC as a relevant statutory scheme, this is the person(s) who is/are
the administrator of the pension scheme under section 611A of ICTA.
For a deferred annuity contract where the benefits are provided
under one of the types of scheme above, or a retirement annuity, this is
the trustee(s) of the pension scheme, or the insurance company which is
a party to the contract in which the pension scheme is comprised.
For a Parliamentary pension scheme or fund, this is the trustees of
the scheme or fund.
For a personal pension scheme, this is the person who is referred to
in section 638(1) of the Income and Corporation Taxes Act 1988).
Relevant annuity For the purposes of Part 4 of the Finance Act 2004 (pension schemes
etc) a “relevant annuity” is a single life annuity without a guaranteed
term.
relevant audit information

“Information needed by the company’s auditor in connection with
preparing his report” (Companies Act 2006 s418(3)).
If the company is audited, the directors’ report must include a
statement that the auditors have received all relevant audit information.
relevant benefits Benefits which derive from the financial instrument or provision under
discussion.
Relevant consolidated contribution

A contribution made by way of discharge of any liability incurred by
the employer before 6 April 2006 to pay any pension or lump sum to or
in respect of the individual.
relevant foreign income Income of a person who is neither domiciled nor ordinarily resident in
the UK that may be taxed on the remittance basis (Income Tax
(Trading and Other Income) Act 2005 from s841).
The term is further defined in the Inspectors’ Manual at SAIM
1130.
relevant goods Excise goods on which the duty has not been paid (excluding
hydrocarbon oils).
relevant inaccuracy In terms of penalties, means “an inaccuracy which amounts to, or leads
to —
(a) an understatement of a liability to tax,
(b) a false or inflated statement of a loss, or
(c) a false or inflated claim to repayment of tax.”
(Finance Act 2007 Sch 24 para 1A(1)).
relevant overseas individual

An individual who either does not qualify for UK relief on
contributions paid to a registered pension scheme because they are not a
“relevant UK individual” as defined in section 178 Finance Act 2004,
or an individual who is not employed by a UK resident employer and
only qualifies for UK relief on pension contributions because they were
resident in the UK both during 5 years immediately before the tax year
under consideration and when they became a member of the registered
pension scheme.
relevant prior gift An associated benefit previously made to a donor under Gift Aid
(Income Tax Act 2007 s418(4)). The tax relief for a donation could be
restricted if the value of an associated benefit and relevant prior gift
exceed £500.
relevant property regime Regime of inheritance tax rules for trusts. Before 22 March 2006, this
was known as the discretionary trust regime.
Broadly a trust that comes within the regime is subject to ten-
yearly charges and an exit charge. Also, the settlement can be a
lifetime disposition for inheritance tax if sufficiently large.
Privileged trusts are outside the regime.
relevant property trust Trust within the scope of the relevant property regime.
relevant qualifying activity requirement

Term used in Income Tax Act 2007 s294 in relation to VCT relief.
The requirement is broadly that the company in which funds are
invested must not engage in a trade which is excluded.
relevant Revenue trader An authorised warehousekeeper, registered owner or duty

representative.
relevant right to vote Term used in Companies Act 2006 s374 with regards to the extent to
which members have sufficient voting strength to call meetings of the
company and to submits statements.
Relevant UK individual An individual is a relevant UK individual for a tax year if the individual
has relevant United Kingdom (UK) earnings chargeable to income tax
for that year, the individual is resident in the UK at some time during
that year, the individual was resident in the UK both at some time
during the five tax years immediately before that year and when the
individual became a member of the pension scheme, or the individual,
or the individual's spouse, has for the tax year general earnings from
overseas Crown employment subject to UK tax.
reliability Qualitative characteristic of being free from material error and bias,
representing faithfully.
This is one of the four requirements of accounting information
required by Statement of Principles.
Reliability is itself broken down into five elements:
• faithful presentation
• neutral
• free from material error
• complete
• prudence.
relief Assistance to help with a difficult situation, or a reduction in taxable

income in respect of expenditure or other financial burden.
For Customs purposes, “freedom from paying duty and tax when
you meet the relevant conditions” (Customs notice 3).
relief shift Period of work (or the people who perform it) which usually comes
between the day shift or night shift.
relievable loss Loss incurred by a business in its final tax year which is not relieved
by being offset against other income of the same tax year (Income Tax
Act 2007 s89(2)). This loss may be relieved against profits of the
previous three years.
Relievable pension contribution

A contribution paid to a registered pension scheme by or on behalf of a
member of that scheme, unless one or more of the following exceptions
applies. A payment is not a relievable contribution if the member was
aged 75 or over when the contribution was made, or the contribution is
paid by the member’s employer, or the payment is an age related rebate
or a minimum contribution paid by HMRC to a contracted-out pension

scheme under section 42A(3) or section 43 of the Pension Schemes Act
1993 or the corresponding Northern Ireland legislation or it is a life
assurance premium contribution in accordance with section 195A
Finance Act 2004..
relievable property For inheritance tax, property on which business relief or agricultural
relief is available.
religion System of belief, such as Christianity or Islam. It has many financial

implications.
A religion may qualify as a charity provided it passes the public
benefit test. So relief from suffering qualifies but private prayer does
not. For the purposes of charity law, includes one which believes in
more than one god or which does not involve any belief in a god
For tax purposes, religion requires a belief in a supreme being, so
atheistic bodies do not qualify.
religious For VAT and such bodies, the term “includes all denominations, creeds,
old and new, that command a following” (VAT leaflet 701/5).
religious community Monastery, convent or similar establishment where people live under
religious vows. These usually include sharing property on a communal
basis.
Members of religious communities are exempt from the national
minimum wage provided:
● the community is a charity or established by a charity;
● the purpose of the community is to practise or advance a
religious belief;
● all or some members live together for that purpose.
religious exemption Right to submit tax returns on paper rather than by computer where a
taxpayer’s religious beliefs are incompatible with using computers. This
applies to partnerships if all partners share such belief. In practice, the
exemption is claimed by some Orthodox Jews and members of certain
Brethren organisations.
religious marriage Marriage which has been conducted in accordance with the usage of a
religion in addition to the requirements of the law. Under Matrimonial
Causes Act 1973 s10A (inserted by Divorce (Religious Marriages) Act
2002 s1), a decree absolute may be refused in a divorce until steps have
been taken to dissolve the religious marriage.
The Act is intended for Jewish marriages, though the provisions is
written to include any religion.
religious order Monastery, convent or similar establishment.

Members are taxed in the normal way even when they have taken a
vow of poverty. The matter is discussed in the Inspectors’ Manual at
EIM69700.
relocation Act of moving a person or business to a different location. Where an

employee is relocated, the employer may generally provide up to
£8,000 as tax-free benefit (Income Tax (Earnings and Pensions) Act
2003 from s271).
relocation package Package of benefits provided by an employer to an employee to

encourage and assist the employee in moving home to a different
location.
remainderman Person who inherits the settled property in an interest in possession

trust when the life tenant dies.
All beneficiaries who are remaindermen must be named; it is not
sufficient merely to identify them such as “my grandchildren”.
remaining amount Expression used in Corporation Tax Act 2010 s23 in relation to
calculating corporation tax on ring fence profits.
remanent pro defectu emptorum

Latin: they are left on my hands for want of buyers.
This is a statement by a sheriff who cannot sell seized goods.
remedial order Order of a court that reverses the sale of shares or other security in a
private company to a member of the public in contravention of
company law (Companies Act 2006 s759(1)).
remedy Means provided by the law for the recovery of a right or compensation
for an infringment of a right. It is distinct from penalties and
punishment.
reminder Notice drawing a person’s attention to an unpaid amount due. This is a

requirement in many legal procedures to recover a debt.
remission Relief or refund of what was previously regarded as owed.
remittance Sending of a payment.

A non-resident individual who remits money to the UK may be
liable to pay UK income tax on the remittance.
remittance advice Document which gives details of income. It is usually numbered, filed
and cross-referenced to the receipts side of the cash book.
remittance basis When tax is charged on foreign income only to the extent that it is
remitted to the UK. The opposite is known as the arising basis.
In general, this basis is used by taxpayers who are resident in the
UK, but who are either not ordinarily resident nor domiciled in the
UK.
remitting bank Bank into which a person has made a payment and which has the
obligation to collect funds from the bank from which the payment is
made.
remortgage This is when you switch your mortgage from your current lender to
another one. You take out a new mortgage to repay your current one.
You may be able to get a better rate that saves you money.
remoteness Lack of sufficient proximity.

In law, this concept is relevant in several contexts. In a claim for
damages, remoteness restricts liability to what was reasonably
foreseeable at the time of loss. Any further loss is considered too
remote and therefore not compensated.
In executorship, remoteness refers to a disposition of property
which cannot be effected within the time limit for perpetuities. Such a
disposition is said to be void for remoteness.
remoteness test Rule on the tax-allowability of expenditure. This generally restricts the
allowability to the direct purpose of the payment and not to the indirect
benefit that may arise. A leading case is Union Cold Storage Ltd v
Jones [1924] 8TC725. The matter is discussed in the Inspectors’
Manual at BIM37200. See also Usher.
remote operating licence Licence issued by Gambling Commission to someone who either offers
remote gambling or who offers gambling services by remote
communication (Gambling Act 2005 s67).
remoter issue Direct descendants of at least two generations, such as grandchildren

and great-grandchildren. For tax purposes, they are usually associated
persons. They may also have inheritance rights.
Remote Transit Shed An approved place situated within the boundaries of the appointed area
of an approved airport, but outside the HM Revenue & Customs
approved area where non-European Union (EU) goods may be held
until they are assigned to a customs approved treatment or use.
removal (1) Process of sending goods to another EU member state.

Since the Single Market, such goods are no longer said to be
exported.
(2) Goods removed with HM Revenue & Customs' permission from
approved inland or frontier premises under New Export System (NES).
This will be achieved through use of a CHIEF print or manual C130EX.
(3) Change of location for a person.
An employer may make a tax-free contribution to the removal
expenses of an employee under Income Tax (Earnings and Pensions)
Act 2003 from s271.
removal authority A release note that is produced when a request has been made for goods
in transit, or for goods being removed to another shed or another
airport.
removal document For customs purposes, either Single Administrative Document (SAD)
copy 3, approved commercial document, laser printed or approved
privately printed versions of the Single Administrative Document
(SAD).
removal expenses The expenses of relocating a business are generally tax-deductible as a

revenue expense (see Inspectors’ Manual at BIM42530).
The expenses of relocating an employee is generally tax-deductible
as a revenue expense (see Inspectors’ Manual at BIM42531).
For an employee, payment of certain removal expenses do not
constitute a benefit in kind provided they do not exceed £8,000.
removal of auditor Decision by members of a company to remove an auditor from that

position. Members may do so at any time by an ordinary resolution at a
general meeting (Companies Act 2006 s510).
The auditor has the right to make written representations to the
company (s511(3)).
These provisions only apply when an auditor is to be removed while
in post. They do not apply when an auditor is not re-appointed, though
there are similar provisions in s514.
removal order Order which requires a Scottish adult at risk to be moved to a place of
safety under Adult Support and Protection (Scotland) Act 2007 s14.
removed Description used for Customs purposes for goods dispatched to another
Member State of the European Union (EU) and goods exported to a
destination outside the EU.
remunerate Pay someone for the work they have done.
remuneration Non-statutory term which “includes salaries, fees, pay, wages, overtime
pay, leave pay, bonus, commission, perquisites, tips, gratuities, benefits
in kind and expenses payments and allowances” (HMRC leaflet 480).
A company may claim remuneration of its staff as a business
expense unless the remuneration remains unpaid nine months after the
year-end (Corporation Tax Act 2009 s1288).
For national insurance, a definition is given in Social Security
(Categorisation of Earners) Regulations SI 1978 No 1689 reg 1(2).
renewable sources Sources of energy which are not finite.

A list of such sources is given in Climate Change and Sustainable
Energy Act 2006 s26(2) as follows:
(a) biomass;
(b) biofuels;
(c) fuel cells;
(d) photovoltaics;
(e) water (including waves and tides);
(f) wind;
(g) solar power;
(h) geothermal sources;
(i) combined heat and power systems.
renewable term insurance

Term insurance providing the right to renew at the end of the term,
without evidence of insurability. The premium rates may increase at
each renewal as the age of the insured is increasing.
renewables obligation certificate

Certificate issued under Electricity Act 1989 s32B or equivalent
Northern Ireland law.
No tax is payable on receipt of such a certificate under Income Tax
(Trading and Other Income) Act 2005 s782A as inserted by Finance
Act 2007 s21.
renewal An agreement to continue insurance beyond any original term. For

group insurance it is often used to refer to the annual update of
membership details and production of annual accounts.
renewal notice Notice inviting a customer to continue with a subscription or similar

arrangement for a further period.
renewal premium Amount charged to continue with a subscription, insurance policy or

similar for a further period.
renewal of a lease Grant of a further lease at the end of a term of an existing lease.
renewal of a tax Term used in Provisional Collection of Taxes Act 1968 to refer to the
position where some taxes need a fresh mandate each year, particularly
income tax. Section 1(2) makes clear that this expression includes
reimposition of a tax.
renewals accounting System of accounting where an infrastructure is maintained by the

routine replacement of parts, usually under an asset management
programme. FRS15 allows this method only in restricted
circumstances. The matter is discussed in the Inspectors’ Manual at
BIM31065.
renewals allowance For capital gains tax, means “a deduction allowable in computing the
profits of a trade, profession or vocation for the purpose of income tax
by reference to the cost of acquiring an asset for the purposes of the
trade, profession or vocation in replacement of another asset” (Taxation
of Chargeable Gains Act 1992 s41(5)).
The renewals allowance is treated as an allowable deduction from
the disposal proceeds of the replacement asset.
renouncing probate When a person appointed executor in a will refuses to accept the office.
rent Arrangement whereby one person pays money to another to use that
person’s property.
rent tribunal Body which settles disagreements between landlords and tenants about
the amount of rent which should be payable at a rent review.
rental Amount paid to use another person’s property.
rental value Full value of rented property at current market prices.
rental value of the accommodation

“The rent which would have been payable for that period if the property
had been let to the employee at an annual rent equal to the annual
value” (Income Tax (Earnings and Pensions) Act 2003 s105(3)).
rent-a-room Scheme whereby a person may let a room in their home and not pay tax
on the rent up to a certain limit.
The scheme was introduced on 6 April 1992 with an annual limit of
£3,250, increased to £4,250 from 6 April 1997.
The room must be furnished. The relief may be claimed by an
individual or a business, however the tenant must not use the room for
business purposes. Incidental use, such as a desk for private study or
occasional work is accepted.
The allowance is per taxpayer not per tenant, except that a husband
and wife may only claim one allowance. If two people let a room in the
same building, the rent-a-room allowance is apportioned between them.
rentcharge Any annual or other periodic payment charged on land other than lease
payments or interest (Rentcharges Act 1977 s1).
No rentcharges may be created after 22 August 1977 (ibid s2(1)).
renunciation Act of giving up something, particularly a right or entitlement to shares.
renvoi Doctrine regarding the choice of law where a matter falls within the
scope of alternative jurisdictions.
If an agreement seeks to make judges of country A impose the law
of country B, or judges of country B to impose the law of country A,
then a judge in country A imposes the law of country A.
The principle is that a choice of jurisdiction must accept the totality
of that jurisdiction. The parties cannot choose the laws of one country
and the court system of another.
reorder (1) Place a further order.

(2) Work done on the interior of a building to arrange its facilities to
make it more appropriate to current requirements.
reorder level Stock quantity below which further supplies should be ordered.
reorder quantity Amount of stock which should be reordered when the reorder level has
been reached.
reorganisation Taking an existing organisation and making changes in how it is

operated, usually either to respond to an external factor (such as a
merger of two businesses) or to make the organisation more efficient.|
For capital gains tax, a reorganistion is not treated as a disposal
repackaging (tobacco) The replacement of any packaging or wrapping material that is

customary, necessary or both customary and necessary to enclose and
present tobacco products for retail sale purposes.
repair Term used when HMRC amends a return it has received from a
taxpayer.
This procedure is used for obvious errors such as transposed
figures, arithmetical errors, errors of principle and similar. HMRC has
nine months from receipt of return to make a repair. It must notify the
taxpayer who may then accept it or reject it.
repatriation Returning something or someone to its original land.

For a person this means a person returning to his native land, or the
expulsion of an immigrant to his country of origin.
For money or goods, it means returning them to the country of
origin.
repayment mortgage Mortgage where each payment includes some repayment of capital as
well as interest.
repayment schedule Offer made by a debtor to a creditor saying how he intends to clear the
debt.
repeal Revocation of a law, rule, regulation or similar.

A repeal of a repeal does not revive the law (Interpretation Act 1978
s15).
repeated misdeclaration penalty

A penalty HMRC may impose where repeated or significant
misdeclarations have been made on VAT returns.
replacement Person, business, asset or funds which are used in place of such item
which is no longer available.
replacement car For income tax on employment income, a car that replaces the normal
car of an employee (Income Tax (Earnings and Pensions) Act 2003
s145(1)(b)).
replacement cheque Cheque issued to replace one which was stopped, dishonoured or
became stale.
replacement cost A measure of current value which estimates the cost of replacing an
asset or liability at the date of the balance sheet. Justified by reference
to value to the business.
replacement cost accounting

Form of current cost accounting where assets are valued at the cost of
replacing them.
replacement cost depreciation

Depreciation of a fixed asset which has been valued under replacement
cost accounting.
replacement expenditure Expenditure to replace a fixed asset.

In bookkeeping, this is regarded as an expense and so is charged to
the profit and loss account and not capitalised.
In tax, replacement expenditure on an integral feature may attract a
capital allowance, provided the expenditure meets the more than 50%
test.
replacement investment This is where companies buy new machinery and equipment that
simply replaces something they had already that was worn out or
inefficient. Depreciation is often used as an approximation for this.
replacement loan (1) Term used in various parts of taxing acts (such as Income Tax Act
2007 s408) to mean a loan that pays off a loan taken out for a particular
purpose. In general, a replacement loan is treated for tax purposes on
the same basis as the loan it replaces.
(2) A loan that replaces an employment-related loan (Income Tax
replacement right For national insurance on share options, term used in Social Security
Contributions (Share Options) Act 2001 s3.
replacement securities Term used in Taxation of Chargeable Gains Act 1992 s138A when
shares or other securities are acquired by an earn-out right.
replevin Legal remedy of a person whose goods have been unlawfully taken
from him.
repo Sale of securities with an agreement to buy them back later, almost
always for a higher price. A repo is sometimes also called RP or sale
and repurchase agreement. The security is often used as collateral to
secure a loan. There are many variations on this arrangement.
In relation to the sale and repurchase of securities, the term “means
—
(a) a debtor repo or debtor quasi-repo, or
(b) a creditor repo or creditor quasi-repo (including anything
treated, as a result of section 547 of CTA 2009, as a creditor repo for
the purposes of section 546 of that Act)” (Finance Act 2007 Sch 13 para
15(9)).
repo legislation Tax provisions in Part 6 of Corporation Tax Act 2009.
repo rate Difference between the amount paid to repurchase a repo security and
the same at which it is sold.
report Document which describes what has happened or proposes a course of

action.
report by skilled persons Report which the Pensions Regulator may require from the trustees or
managers of a pension fund with regard to a matter stated in a report
notice. These reports are regulated by Pensions Act 2004 s71.
report form (1) Document which should be completed as indicated as a means of

providing a report.
(2) Vertical form of the balance sheet.
reporting accountant Accountant who is engaged to report on financial statements,

particularly in relation to a check that is less extensive than an audit.
reporting boundaries In accounting, the limit of where activities must be reported. So a

subsidiary reports its activities in its own accounts and in the group
accounts, whereas an independent associated company reports its
activities only in its own accounts.
reporting entity Person, business, organisation or other entity for which a set of
accounts relates.
reporting period The time after the end of an accounting period during which all
transactions for that period must be finalised.
reporting restriction Requirement for an unlawful immigrant to report regularly pending

deportation or consideration of asylum application (Asylum and
Immigration (Treatment of Claimants etc) Act s36(b)).
Reporting Statement Document produced by ASB.
report notice Notice issued by the Pensions Regulator under Pensions Act 2004 s71
requiring the trustees or managers of a pension fund to provide
specified information.
report of attachment In Scotland, a report which must be made to the sheriff in respect of the
execution of an attachment in collection of a debt (Debt Arrangement
and Attachment (Scotland) Act 2002 s17).
repossession When a landlord, lender or mortgagee takes back property for unpaid
amounts due.
representation When one person acts on behalf of another.
representation In fraud, means “any representation as to fact or law, including a

representation as to the state of mind of:
(a) the person making the representation, or
(b) any other person”. (Fraud Act 2006 s2(3)).
representational trade association

The VAT position is explained in VAT leaflet 701/5.
representative A person appointed on behalf of another to carry out the acts and
formalities required by customs rules. Representatives may be either
Direct or Indirect. A representative must state who they are acting on
behalf of, specify the type of representation, and be empowered to act
in that capacity.
representative board Type of board of directors which places more emphasis on the
directors’ tasks than it does on interpersonal relations between
directors.
representative member A company applying for group treatment, which is nominated to

represent the group. It is registered for VAT and is responsible for
completing VAT returns and paying, or reclaiming VAT on behalf of
all the other members of the group.
representative member In VAT, the company in a group which is responsible for the submitting
the group’s VAT returns.
representative occupation For capital gains tax, a condition for claiming rollover relief.
representative partner Member of a partnership who is responsible for declaring the income
and capital gains of the partnership. This is then used by the individual
partners in submitting their own tax returns. The term nominated
partner is sometimes preferred.
representee Person to whom a representation is made.
reprice Change the price of something.
reprimand Formal rebuke, particularly when given by a professional body for

misconduct by a member. In this context, it is less severe than a severe
reprimand and more severe than an admonition.
Republic of Ireland Independent state of the island of Ireland, excluding Northern. The
Republic was born as the Irish Free State on 6 December 1922 and
became completely independent of the UK in 1949 when it became a
Republic. It joined the EU at the same time as the UK in 1973.
Tax in the Republic is very similar to that in the UK, based on the
common system before independence. Terms such as P45 and Schedule
E have the same meaning.
Since 2002, the Republic uses the euro as its currency and the
calendar year as its tax year.
Income tax is assessed under Schedules C to F which have the
same meaning as they had in the UK (except they have no Schedule D
Case VI). It is charged at a standard rate of 20% and then a higher rate
of 41%. The amount may be reduced by tax credits. These replaced the
UK-style allowances in 2001.
An income levy was introduced from 2009 as an addition to income
tax. Discretionary trusts also pay an additional tax.
Corporation tax is charged at the low rates of 10% and 12.5%.
Employment income is collected under PAYE which is similar to
the UK system but is completely independent of it. Other income tax is
paid under self-assessment.
Pay Related Social Insurance (PRSI) is charged under various
classes as the equivalent to national insurance.
Capital gains tax is charged at 22% or 25%.
VAT is levied at rates ranging from 0% to 21%.
Deposit interest retention tax (DIRT) is charged on interest on bank

accounts.
Stamp duty is charged on property conveyancing, share transfers,
cheques, payment cards and insurance policies.
Capital acquisitions tax is the equivalent of inheritance tax, charged
at 25% above a threshold.
The Republic also charges withholding taxes, relevant contracts tax,
dividend withholding tax, excise duties, plastic bag levy, vehicle
registration tax, non-principal private residence levy, motor tax and
local taxes.
repudiation Refusal to accept something which has previously been accepted, or the
removal of such acceptance often by a higher authority.
repurchase Buy something again.
repurchase agreement Agreement between a company and its shareholder whereby the
company makes arrangements to buy back the shares. The tax
implications are set out in Income and Corporation Taxes Act 1988
s231AB.
reputation The extent to which tax relief may be claimed for protecting one’s
reputation is discussed in the Inspectors’ Manual at BIM37965. A
leading case is McKnight v Sheppard [1999] 71TC419.
request for abandonment Application to Customs made jointly by a right-holder and interested
parties for imported goods to be destroyed.
This procedure is used when goods are intercepted for breaching
intellectual property rights, such as smuggling in pirated goods. The
procedure is given in Customs notice 34.
requirement Something which is needed for a particular purpose.
required information Information which a person must provide to another, particularly tax
information which must be provided to HMRC under Taxes
Management Act 1970 s20(7AC).
required rate of return Amount of return which an investor is looking for in an investment.
re-registration Changing the status of a registered company, particularly from a private

to a public company (Companies Act 2006 ss90-96) or from a public to
a private company (ibid ss97-101).
RES (1) Race Equality Scheme
(2) Retail Export Scheme - a voluntary scheme that allows a VAT

registered retailer to zero-rate a supply of goods sold to entitled
customers (usually overseas visitors). The scheme is subject to
conditions.
res Latin: things

res accessoria sequitur rem principalem

Latin: accessory things follow principal things.
resale Selling of goods which have been bought for that purpose.
resale price maintenance (RPM)

Arrangement whereby a manufacturer states the price at which an item
may be sold and retailers are not allowed to sell it for less. Generally
such schemes are now illegal under competition law.
reschedule Arrange a new timetable for something, particularly for the payment of
debts.
rescind Cancel, repeal or annul the effect of something.
rescission Ending of an arrangement by one party to it, such as termination of an

insurance contract by the insurer on the grounds of mis-statement by the
insured.
research and development

Expenditure by an organisation in trying to develop new products. It is
vital that firms spent a significant amount on this if they are to stay
ahead of the competition and be able to launch new and innovative
products.
research institution spin-out company

Trading company set up by a research institution, usually to exploit an
invention or similar intellectual property.
There is a specific capital gains tax provision in Taxation of
Chargeable Gains Act 1992 s149AB.
reseller Someone who sells goods bought for the purpose, particularly when the
people to whom the goods are sold acquire them for sale.
reservation of title Clause in a contract which says that ownership of supplied goods only
passes when they have been paid for. Such a clause is sometimes
known as a Romalpa clause.
For a supplier, this has the advantage that if the customer becomes
insolvent, the supplier can claim back the goods which minimises the
loss. Otherwise, the supplier would be an unsecured creditor and
would receive little or nothing of the sum owed.
For accounting purposes, reservation of title clauses are usually
ignored.
reserve Sum set aside in the accounts for a particular future purpose.
In insurance, it is the sum set aside by an insurance company as a
liability to meet future claims and other obligations.
reserve currency Strong currency used in international trade, and held by countries
whose own currency is not strong.
reserve for fluctuations Money put aside to deal with day-to-day variations in exchange rates.
reserve fund Profits of a business which have been retained for a specific purpose.
reserve price Minimum price which a seller is prepared to accept in an auction.
reserved forces “The Royal Fleet Reserve, the Royal Navy Reserve, the Royal Marines
Reserve, the Territorial Army, the Royal Air Force Reserve or the
Royal Auxiliary Air Force” (Armed Forces Act 2006 s374).
reserved legal activity Term used in Legal Services Act 2007 s12(1) to mean the right of
audience in court, conduct of litigation, reserved instrument activities,
probate, notarial activities and the administration of oaths.
reserved occupation Occupation which was considered essential and therefore excused the
person from military duty during the war. The list was first issued to
prevent essential workers from joining the military.
reserved Schedule D status

Special tax provision for certain actors and other entertainers.
On 28 February 1990, Inland Revenue (now HMRC) decided that
the standard Equity contract made the actor or entertainer an employee
and assessable to income tax under what was then Schedule E.
However those who had already established their self-employed status
are allowed to keep it.
reserves Amounts of retained profit which are retained for either a general or
specific purpose.
reservists People in normal occupation who can be called up for military duty.
A training allowance for such a person is not a taxable benefit
resettlement grant Sum paid to a person to adopt a different way of life, such as when a
person emigrates or when a politician ceases to hold office.
res furtivae Latin: stolen goods.
res gestae Facts relating to a transaction that is the subject of legal proceedings.
This legal rule can admit observations by people that would otherwise
be ruled inadmissible as hearsay.
residence (1) The country where a person lives. It has tax implications.
Guidance on company residence is given in statement of practice
SP1/90.
(2) The premises in which a person lives.
For employment, it is where the employee lives (Income Tax
(Earnings and Pensions) Act 2003 s276). An employee who is obliged

to change residence may be paid tax-free relocation expenses.
residence permit Authority issued by a state allowing a person to live there.
residence requirement Requirement that an offender subject to certain types of order must
reside at a specified place (Criminal Justice Act 2003 s206).
residence restriction Condition which may be imposed on an unlawful immigrant pending

his removal (Asylum and Immigration (Treatment of Claimants etc) Act
2004 s36).
resident Person who lives in a particular area or building.
residential address Where a person lives. A company director once has to disclose his
home address in the register of directors. It is now permissible for the
director to give a service address which may be the company’s
registered office (Companies Act 2006 s163(5)).
residential care home This activity is excluded from the tax relief for venture capital trusts by
Income Tax Act 2007 s309. For this purposes s309(3) defines a
residential care home as “any establishment which exists wholly or
mainly for the provision of residential accommodation, together with
board and personal care, for persons in need of personal care because
of:
(a) old age;
(b) mental or physical disability;
(c) past or present dependence on alcohol or drugs;
(d) any past illnesses; or
(e) past or present mental disorder”.
residential property “Means premises in England and Wales consisting of a single dwelling-
house, including any ancillary land” (Housing Act 2004 s148(1)).
residential status In relation to identity documents about A, “means —

(a) A’s nationality,
(b) A’s entitlement to remain in the United Kingdom, and
(c) if that entitlement derives from a grant of leave to enter or
remain in the United Kingdom, the terms and conditions of that leave”
residential trip School trip which involves children staying overnight. There are
provisions for relieving parents of the cost of such trips under
Education Act 1996 s457 as amended by Education Act 2002 s200.
resident period Period in which a migrating settlement was UK resident (Taxation of

Chargeable Gains Act 1992 s89).
residual input tax Input tax incurred by a business on goods and services used or to be
used in making both taxable and exempt supplies. This value is
apportioned between taxable and exempt supplies by the partial
exemption method.
residual income Net profit before tax minus a nominal interest charge for the cost of
capital. This measure is often used to assess the performance of a
division.
residual or scrap value In relation to wasting assets, means “the predictable value, if any,
which the wasting asset will have at the end of its predictable life”
(Taxation of Chargeable Gains Act 1992 s44). Other parts of this
section indicate how this is to be calculated.
residual value The estimated amount that an entity would currently obtain from
disposal of the asset, after deducting the estimated cost of disposal, if
the asset were already of the age and in the condition expected at the
end of its useful life.
residuary devisee In executorship, a person entitled to the residue of the testator’s land
and buildings (Wills Act 1837 s25).
residuary estate Testator’s property not otherwise specifically bequeathed or devised

(Administration of Estates Act 1925 s33(4)).
residuary legacy Legacy of whatever is left when all other legacies have been paid.
residue Something left over, such as money left over after all expenditure has
been met.
In executorship, the term means what is left of a person’s estate
after payment of all taxes, debts, funeral expenses, legacies and similar.
The will should specify who is entitled to the residue.
residue of the suggestion maximum

Amount that may be paid tax-free to an employee as a suggestion
award when a previous payment has been made (Income Tax (Earnings
and Pensions) Act 2003 s322).
resignation (1) Voluntary ending on one’s employment or similar standing down

from an office.
(2) In human resources, Self-pity and similar behaviour which avoids
dealing with a problem.
resignation letter Letter from an employee stating why they are ending their employment
and giving the date from which it is ended.
resignation of auditor When an auditor gives notice of his ceasing to act in that capacity for
any reason. The legal consequences are explained in Companies Act
2006 ss516-526.
resigning auditor Auditor who has resigned his appointment as such. Such an auditor has
certain statutory rights, including the right to issue a statement to
members on why he has resigned (Companies Act 2006 s518(3)).
res integra A matter that is governed by no known rule of law but which must be
determined upon principle.
res inter alios acta alteri nocere non debet

Latin: a transaction between others does not prejudice one who was not
a party to it.
res ipsa loquitur Latin: the thing speaks for itself. This term is particularly used in cases
of negligence, as in Byrne v Boodle [1863].
res judicata Latin: a thing adjudicated.

This is the legal principle that once a matter has been determined by
a court, tribunal or other judicial authority, the decision stands unless
overturned by a higher court.
It also means that the matter cannot be litigated again.
res nova Latin: a new thing, particularly a legal matter not yet settled.
res nullius A thing that has no owner. The meaning is similar to bona vacantia.
resolution Motion to be debated by a board, committee or similar body.
resolution for voluntary winding-up

Resolution made by the members of a company to wind it up
(Insolvency Act 1986 s84(1)).
resolute jure concedentis resolvitur jus concessum

Latin: the grant of a right comes to an end on the termination of the
right of the grantor.
resolution plan Document that sets out the circumstances when a business may fail.
For financial institutions, the provisions of such plans are addressed
in Financial Services and Markets Act 2000 s139C.
resolve Settle a disagreement, such as in the workplace.
resource equalisation Process introduced by central government in 2003/2004 as part of the

grant review which aims to bring the average assumed level of council
tax which authorities need to charge broadly in line with actual council
tax levels.
resource spending “Current government expenditure, such as staff pay, running costs,
procurement and grants” (HM Treasury glossary).
respondeat superior Latin: let the principal answer. Where an employment exists, the
employer is liable for the acts of the employee in the employment. See
also vicarious liability.
respondent Party to a tribunal hearing against whom the proceedings are brought.
The party bringing the proceedings is called the appellant.
For tax hearings, the term “means —
“(a) HMRC, where the appellant (or one of them) is not

HMRC;
(b) in proceedings brought by HMRC alone, a person against
whom the proceedings are brought or to whom the proceedings relate;
(c) a person substituted or added as a respondent under rule 9
(substitution and addition of parties)”
(The Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules SI
2009 No 273 rule 1(3)).
responsibility accounting Financial records that indicate who is responsible for each item.
responsible clinician Person who makes judgments about a patient’s mental capacity under
Mental Health Act 2007.
rest break Break from work, usually when an employee may eat and drink.....
For the national minimum wage, rest breaks do not count as
working hours.
restate Where a figure which has already been published in accounts is

retrospectively changed. This is where we have changed figures that we
have been published in the past to show like-for-like comparisons with
later year’s figures.
restated figures Accounts, or figures in accounts, which have been amended to correct
an error or to reflect the true and fair position more accurately.
restitutionary claim Claim for money to be returned such as when an overpayment has been
made. The right of someone to make such a claim does not prevent the
possessor of the money being taxed on it as trading income (Pertemps
Recruitment Partnership Ltd v HMRC [2011] UKUT B8).
restoration order (Order made by the Pensions Regulator when a final salary (or defined
benefit) occupational pension scheme has made a transaction at
undervalue.
[The term also has other legal uses, such as to restore devolved
government in Northern Ireland.]
restoration Putting something or someone back into a place previously occupied,

such as restoring Charles II as monarch in 1660.
restore button In computing, this is a small icon which the user may click to restore
the window to its full size. In Microsoft this looks like two overlapping
documents.
restraint of trade Contract that seeks to limit the trading activities of one of the parties.
A complete restraint of trade is usually void. A partial restraint of
trade may be legal.
restraint order Order which a Crown Court may make under Proceeds of Crime Act
2002 s41. This prohibits a person from dealing with any of his
realisable property.
restrict Limit something, such as by imposing rules or setting a financial limit.
restricted funds Grants and donations, particularly to a church or charity, which are
made for a clearly specified purpose and can be used for none other.
restricted goods Goods needing a licence or certificate before they can be imported into,
or exported from, the UK. This contrasts with prohibited goods that
cannot be imported at all.
Restricted goods include “firearms, explosives and ammunition,
live animals, endangered species, certain plants and their produce, and
radio transmitters” (Customs notice 3).
The legal definition is “goods of a class or description of which the
importation, exportation or carriage coastwise is for the time being
prohibited or restricted under or by virtue of any enactment” (Customs
and Excise Management Act 1979 s1(1)).
restricted right to dividends

For corporation tax, term used in relation to shareholdings. It is
extensively defined in Corporation Tax Act 2010 s161.
restricted stock units (RSU)

“Deferred share awards made overseas” (ERSM70450).
An RSU is usually structured to give an employee shares in a
business if certain conditions are met. They comprise earnings under
Income Tax (Earnings and Pensions) Act 2003 Chapter 5 Part 2, with
special provisions for non-resident taxpayers who become UK-resident.
restriction In law, a notice to the Land Registry that a charging order has been
made on a property.
restriction on disposal Such a restriction may reduce the value of an asset for capital gains tax
or inheritance tax purposes.
restriction on shares Any arrangement that limits the rights of a shareholder in relation to his
or her shares.
For a public company, such a restriction may be challenged. The
provisions are set out in Companies Act 2006 ss794-802.
restrictions and sanctions Rules governing goods which need a licence or certificate before they
can be imported into, or exported from, the UK.
restrictive covenant Clause in a contract which prevents someone from doing something,
particularly a clause in a contract of employment which imposes
restrictions on what an employee may do.
Whether such a payment is revenue or capital is discussed in the
restrictive indorsement An indorsement on a bill of exchange or promissory note that seeks to

restrict its negotiability. Examples include restrictions on whom may be
paid or where.
restrictive undertaking In relation to payments to directors and employees, means “an

undertaking which restricts the individual’s conduct or activities. For
this purpose it does not matter whether or not the undertaking is legally
enforceable or is qualified” (Income Tax (Earnings and Pensions) Act
2003 s225(8)).
restructuring Programme that is planned by the management of an organisation in

relation to the scope of its activities or how they are performed (FRS
12).
rests In banking, periodic balancings of an account to convert interest to

principal for the purpose of calculating compound interest.
resulting trust Trust which arises from the conduct of the parties.
retail Sale of items to the general public in quantities small enough for their
personal use. Supplies in larger quantities to retailers are known as
wholesale.
retail banking Services provided by a bank to members of the public. Such services
include cheque book accounts, deposit accounts, issue of various cards,
mortgages, investments and the provision of other financial services.
retail credit Arrangement to buy goods and pay by instalments. The goods are taken
back if payment is not made.
retail dealer Person who sells directly to the general public.
retail deposit Deposit placed by an individual with a bank.
retail elephant Business that dominates or monopolises an area.
retail investor Ordinary individual who invests, as against an institutional investor.
retail price Price at which goods are sold by a retailer to a customer.
retail price maintenance (RPM)

System of law which once operated in the UK under which a
manufacturer set a retail price. Shops committed an offence if they sold
goods for less than this price.
Retail Prices Index (RPI) Index that measures increases in prices of consumer goods.
For general economic use, it has now largely been replaced by the
consumer price index (CPI). However RPI is still used to index
various tax allowances, social security payments and National Savings
products.
Retail Scheme A method of arriving at the value of VAT due on retail sales where this
is not separately identified at the point of sale. There are a number of
these schemes.
retail service providers (RSPs)

Term used from 1997 for marketmakers when the SETS share trading
system was used.
retailer Shop or other business that sells goods directly to consumers.
retain Keep rather than pass on, such as profits which are retained by the
business for its future development or commission which a seller
deducts from money collected.
retained assets Term used in Income and Corporation Taxes Act 1988 s444AB(6A)
retained earnings Accumulated past profits, not distributed in dividends, available to

finance investment in assets.
retained liabilities Term used in Income and Corporation Taxes Act 1988 s444AB(6A)
retained profit Profit of the period remaining after dividend has been deducted.
retainer Money paid to someone other than as a reward for specific work, such
as to be able to give advice or not to work for someone else.
retention The amount of risk retained by an insurance company and not

reinsured. Also used in reference to the portion of premium that is used
by the insurance company for administration costs.
retention of title Another name for reservation of title.
retention payment (construction industry)

A proportion of the contract price held back pending confirmation that
the work has been properly carried out and that any faults have been
remedied.
retention-positive Description of an event which is intended to retain loyalties of

customers, staff, suppliers or similar group. Such an event typically
comprises lavish hospitality with a short speech of appreciation for the
group. As costs of changing staff, finding new customers etc can be
high, such events can be easily cost-justified.
retiral US term which means the same as retirement.
retire Finish work, usually because a person has reached a particular age.
retirement Process of ceasing full-time work at a particular age (often 65).
retirement age Age at which a person retires from work.
retirement annuity Financial arrangement very similar to a personal pension.

No new retirement annuity could be written from 1 July 1988 but
existing retirement annuities may continue.
Their operation and benefits were almost identical to personal
pensions, though they were governed by different rules. For example, a
retirement annuity could not be paid until the age of 60, whereas a
personal pension could be paid from 55.
Retirement annuity contract

A retirement annuity contract or trust scheme previously approved by
the Board under Chapter 3 of Part 14 of Income and Corporation Taxes
Act 1988.
retirement annuity trust Form of retirement provision for the self-employed and others in non-
pensionable employment that could be approved by Inland Revenue
before 1 July 1988 under Income and Corporation Taxes Act 1988 Part
14 Chapter 3.
From 6 April 2006, such trusts are treated as a registered pension
scheme.
retirement benefit scheme A retirement benefit scheme is any of the following a scheme which
was approved under Chapter 1 of Part 14 of Income and Corporation
Taxes Act (ICTA) 1988; a relevant statutory scheme (as defined in
s611A ICTA 1988);
retirement benefits Amounts provided to a person who has retired, usually by the pension
scheme.
retirement pension Pension paid to a person who has retired.
retiring partner Partner who leaves a partnership. Such a partner remains liable for
debts and other obligations incurred before retirement (Partnership Act
1890 s17(2)) unless an agreement has been reached with the new
partnership under ibid s17(3).
For tax, a retirement ends a partnership and creates a new one
unless the old and new partners sign an election to treat them as one
continuing partnership.
retraining course If provided by an employer under certain conditions, this is exempt

from tax (Income Tax (Earnings and Pensions) Act 2003 s311).
retroactive Description of tax provisions that apply to past periods. An example

includes the treatment of pre-owned assets. Finance Act 2004 included
several examples.
retrocession A process by which a reinsurer obtains reinsurance from another

company.
return (1) The yield or reward from an investment. The reward earned for
investing money in a business. Return may appear in the form of
regular cash payments (dividends) to the investor, or in a growth in the
value of the amount invested.
(2) Form which must be submitted as part of a financial procedure, such
as a tax return or company’s annual return.
return (1) For tax management, “includes any statement or declaration under
the Taxes Acts” (Taxes Management Act 1970 s118(1)).
(2) In investment, total amount received from all sources. This often
means dividends plus capital gain.
return amendment An amendment made by a taxpayer to a return already submitted to

HMRC.
A return amendment may be made up to 12 months after the due
date for the original return. Such an amendment may be to correct an
error, give the exact figure where an estimate was previously provided
or similar purpose.
HMRC has an equivalent provision known as a repair, but their
period is limited to nine months.
return date Date by which a return must be submitted.
return of allotment Form that a company must make to Companies House within one
month of allotting shares (Companies Act 2006 s555).
return on assets Profit divided by the net assets of the undertaking.
return on capital Profit divided by net assets multiplied by 100.
return on capital employed (ROCE)

Operating profit before deducting interest and taxation, divided by
share capital plus reserves plus long-term loans. Return on capital
employed measures the profit as a percentage of the capital employed
(the total capital invested in the business). It is a measure of how well
the money invested in the business is providing a return to the investors.
return on investment (ROI)

Calculation used to determine the relative efficacy of an ad campaign in
financial terms, in particular whether or not an ad campaign has
generated more or less new revenue than it cost. Due to the direct
response nature of many internet ad campaigns, it may be possible to
determine ROI with much greater precision than, for example, a
television commercial. The response to broader, branding-style
campaigns may be more imprecise.
return on net assets Ratio of profits of a business as a percentage of its average net assets.
return on shareholders' equity

Profit for shareholders divided by share capital plus reserves.
return on total assets Operating profit before deducting interest and taxation, divided by total
assets.
return path The means by which a viewer may respond to an interactive

advertisement. This usually requires connection to a digital telephone
line or a DSL connection.
returns Profits or income from investment.
return to work credit Social security benefit that may be able for up to 52 weeks on starting a
new job earning up to £15,000 a year.
The benefit is paid under Employment and Training Act 1973 s2.
revaluation Process of attributing a different value to an asset to reflect the passing

of time or some other factor.
revaluation method Method for revaluing an asset, particularly the depreciation policy for a
fixed asset.
revaluation reserve The claim which owners have on the assets of the business because the
balance sheet records a market value for an asset that is greater than its
historical cost.
revalue Attribute a different value to an asset or liability.
revenue Created by a transaction or event arising during the ordinary activities

of the business which causes an increase in the ownership interest.
revenue account Account which deals with income and expenditure of the day-to-day
activities, as against a capital account.
For local authorities, the term is defined in Local Government Act
2003 s22.
revenue charge In VAT, the general rule that tax is charged according to the country
where the supplier is based.
There are several exceptions to this rule, particularly with regard to
intra-EU supplies.
Revenue Decision (RD) Statements from Inland Revenue (now HMRC) which clarify a point of
tax law. Some were issued in 1983 since when no more have appeared.
They appear identical in purpose and status to Revenue
Interpretations.
revenue expenditure Money spent on the day-to-day activities of an organisation or

individual, as against capital expenditure.
revenue expense An amount spent on the day-to-day activities of an organisation or

individual, as against a capital expense.
Revenue Interpretation (RI)

A formal statement from HMRC (or Inland Revenue) on its view of a
particular law. They were first issued in February 1983.
A taxpayer who follows an RI will not have that view challenged.
However a taxpayer who dissents from an RI may adopt a different
interpretation. The taxpayer should disclose this to HMRC, such as by
an appropriate statement in the white space on a tax return.
revenue ledger Record of all income and expenditure received by an organisation.
Revenue-neutral policies If the government decide to reduce the level of taxation, they may also
want to reduce the level of government expenditure by an equivalent
amount. This would mean that the tax cut has no effect on the PSNCR
(the level of government borrowing). It is therefore termed a revenue-
neutral policy.
revenue officer Person who works within a tax authority.
revenue recognition The point at which sales income is recorded in the accounts of a trading
organisation.
There is no formal accounting standard on this point. In practice,
this is usually when an invoice is issued, that is when the trader has
discharged either all the obligations to the customer, or had discharged
such part of them as justifies a payment. This is generally known as
accruals accounting.
Sometimes a business may take the later stage of when the customer
has paid. This is generally known as cash accounting. It is generally
not acceptable for income tax or corporation tax; it is acceptable for
VAT up to a monetary limit.
Other tax implications of revenue recognition are discussed in the
Inspectors’ Manual from BIM40075.
revenue reserves Money put aside for day-to-day spending.
revenue sharing Distribution of revenue income, particularly within a partnership.
revenue spending Spending on the day-to-day running of services - mainly wages,

running expenses of buildings and equipment, and debt charges. These
costs are met from the Council Tax, government grants, fees and
charges.
Revenue Support Grant The main government grant to support local authority services.
Revenue trader A person importing, exporting, producing, handling, processing,

packaging, transporting or dealing in goods chargeable with excise
duty.
reverse (1) Change a decision or record to the opposite, such as correcting a

mistake in financial records.
(2) The back or “tails” of a coin, as opposed to the obverse.
reverse accounting In VAT, accounting for reverse charges.
reverse burden of proof Where the burden of proof is on the opposite party to the one on
whom the burden would otherwise fall. This arises particularly in
claims for sex discrimination or racial discrimination. If an employee,
for example, can prove that an employer’s action disadvantageously
impacts on one sex or one race more than others, the burden of proof is
then reversed so the employer must show that the action was not
sexually or racially motivated.
reverse charge Normally, it is the supplier of goods or services who must account to
HM Revenue & Customs for any VAT due on supplies. In certain
situations, however, it is the customer who must account for the VAT
instead. Also known as Tax Shift.
reverse engineering In computing, a process of analysing someone else’s software to make

your software compatible with it.
reverse leverage Borrowing money at a rate of interest which is higher than the expected
return on capital.
reverse premium Payment by a landlord to persuade someone to lease a property.

From 9 March 1999, such premiums are treated as revenue receipts.
The position before this date is discussed in the Inspectors’ Manual at
BIM35610.
reverse takeover Takeover where the company being taken over becomes the new owner
of the acquiring company. This is achieved by the acquiring company
shareholders exchanging their shares for those in the acquired company.
A reverse takeover happens when the company taken over is seen as a
more appropriate vehicle for the new group. An example is when a
trading company takes over a listed shell company as a shortcut to
getting a Stock Market listing.
reverse yield gap Amount by which a bond yield exceeds equity yield or interest rates. It
is usually expressed as a percentage of the cost of the underlying assets.
reversing entry Entry made in the accounts to correct an error.

It is generally good accounting practice to make two entries: one to
reverse the incorrect entry (and for both of them to be cross-referenced
as such) and then the correct entry.
reversion Any legal or practical process which passes the ownership of an asset or
liability to someone who previously owned it.
reversionary annuity An annuity paid to someone on the death of someone else, such as to
the husband or wife of the annuity holder.
reversionary bonus Bonus added to the value of a with profits policy each year.
reversionary interest Interest in real or personal property in remainder or reversion.
review (1) General examination. It particularly applies to a review of a year in

the life of an or, or an occasion to review the pay of an employee.
(2) In relation to tax disputes, it means the process whereby a taxpayer
may ask for a matter to be looked at by another tax officer who has not
been involved the issue for an independent opinion. A request for such
a review is at the discretion of the taxpayer, and does not compromise
his right to proceed to start proceedings.
(3) For tax tribunals, the limited right of a tax tribunal to consider
whether there was an error of law in a previous decision, as set out in
The Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules SI
2009 No 273 rule 41.
review period For determining national insurance rates, means the period from 1
October to 30 September for every year starting in 1998 (Social
Security Administration Act 1992 s148A).
revise Change something from a planned or previous figure. An example is

when a figure in a budget is revised during a year in the light of trading
experience in the opening months.
revised accounts In company law, accounts which are issued after accounts for the same
period have been published (Companies Act 2006 s454).
revive Give life back to something which is otherwise of no effect. An

acknowledgment of debt can revive a debt which is statute-barred.
revocation Act of revoking something. In contract law, an offer may be revoked

before the other party has accepted it.
revocation of probate Where probate is revoked having been granted. This may happen if a
later will is found, or if there is other sufficient cause.
revolving credit System where someone may borrow any amount to a fixed limit,
including borrowing while making payments. All credit cords offer
revolving credit.
revolving loan A loan where the borrower may borrow up to a fixed limit, and may
continue to borrow up to that limit while making repayments.
reward for failure Bonus or similar incentive which is payable to a director or senior
manager even when the person fails to do their job properly. The term
started to be used in 2008 in the context of directors of banks who
continued to be paid huge bonuses despite the failure of their banks.
reward for services Term used in cases concerning the tax liability of employment income.
For example, in the case Hochstrasser v Mayes [1960], Upjohn J said
that a profit from employment “must be in the nature of a reward for
services, past, present of future”. The inspectors’ manual at EIM 00610,
however, states that “the words ‘reward for services’ should not be
taken too literally”.
rex non potest peccare Latin: the king can do no wrong.

This principle extended to government meaning that the citizen had
no redress against the government. This was addressed in Crown
Proceedings Act 1947. For tax purposes, it is also addressed by appeals
procedures and by such bodies as the ombudsman and Revenue
Adjudicator.
rex nunquam moritur Latin: the king never dies. The monarchy and government continues
automatically on the death of a monarch.
Reynaud Leading case on associated operations for discretionary trusts. Four

brothers transferred shares in a family company to a discretionary trust
from which the company and an unrelated purchaser bought the shares.
Inland Revenue unsuccessfully argued that these were associated
operations. The decision is Reynaud v CIR [1999] SpC 196.
RFC Release for free circulation, term used in relation to customs duties
and VAT on imported goods.
RFU Rugby Football Union.
RFTU Road Fuel Testing Unit - a mobile unit which tests fuels in both
vehicles and terminals, to detect oils that are being misused and to
ensure that the revenue is protected.
RGR Returned Goods Relief - a system of duty relief for goods previously
exported from the European Union (EU) and re-imported in the same
state as at export.
RHA Road Haulage Association - The Road Haulage Association is a trade

organisation representing the UK road haulage industry.
Rheolwr ac Archwilydd Cyffredinol

Welsh: Comptroller and Auditor General.
RI Indexation factor for chargeable gains subject to corporation tax. The

RI refers to the month in which a fixed asset was acquired, or to March
1982. For every month of disposal from April 1982, tables of factors
are produced for RIs going back to March 1982.
These tables are no longer used for capital gains tax.
rial Currency of Iran.
riba Islamic term for usury. In this context this means all charging of
interest, which is forbidden under Sharia law.
There are two types of riba:
• increase in capital without providing any services; and
• commodity exchanges of unequal amount.
RIBA Royal Institute of British Architects. Their contracts are widely used for
building projects.
rider An amendment to an insurance policy that modifies the policy by

expanding or restricting its benefits or excluding certain conditions
from coverage.
RIE Recognised investment exchange.
riel Currency of Cambodia.
rien ne va plus French: nothing goes any more. Expression used by croupiers that no
more bets may be placed.
RIF Risk Information Form.
right Legal entitlement to something. One person can only have a right if
someone else has a duty to provide it.
right first time, every time

Management term for the approach that the perfect product or service
should be provided from the beginning.
right holder “The holder of a trade mark, copyright, right in a performance, design
right, patent, supplementary protection certificate, plant variety right,
protected designation of origin, geographical designation, any person
authorised to use those rights or an authorised representative” (Customs
notice 34).
Customs may seize goods where the rights of the right holder are
infringed.
right of admission Right to be admitted to premises. If this is granted in return for a

charitable donation under Gift Aid, the right must meet the conditions
set out in Income Tax Act 2007 s420, failing which the donation may
not qualify for tax relief.
right of audience Right to be heard in a court.

Under English law, this right rests in:
• a barrister
• a solicitor who has been admitted or enrolled to conduct
litigation in the lower courts, or who is a solicitor advocate
• any citizen in a case in which they are a party (with a few
exceptions).
right of members to require audit

The right of shareholders or other members of a company to demand
that the accounts be audited, even though the company meets the
conditions for exemption from audit.
This right may be exercised by members who hold at least 10% of
the company’s voting rights (Companies Act 2006 s476).
right to buy legislation Laws that allowed tenants to buy their council houses and similar
property.
The laws are Housing Act 1985 Part V and Housing (Northern
Ireland) Order 1983 Chapter I of Part II.
These laws are referred to in Finance Act 1988 Sch 4 para 13 in the
context of the Business Expansion Scheme.
right to collective enfranchisement

Right given to leaseholders under Leasehold Reform Housing and
Urban Development Act 1993 s4A, and which may be exercised by an
RTE company.
right to manage (RTM) Description of a company formed to manage property, known as an

RTM company. The term is used in Commonhold and Leasehold
Reform Act 2002 s71 with regard to leasehold property. The section
allows this right to be acquired by an RTM company.
rights issue An issue of shares where a company gives its existing shareholders the
right to buy more shares in proportion to those already held.
RIH Right ingual hernia. Common abbreviation for sick notes (HMRC
leaflet E14).
RILOR Recompense in lieu of relocation, in armed forces.
ring In purchase tax, the term was used for registered suppliers who were
allowed to supply goods to each other free of tax. This provision was
abolished in 1973 with the tax.
ring fence Process by which assets, liabilities, income and expenditure are
considered separately from the other assets, liabilities, income and
expenditure.
Ring-fencing may be for legal or financial reasons. Legal reasons
may be for tax purposes, such as for tonnage tax.
ring fence amount Figure used to calculate corporation tax on ring fence profits¸ as
ring-fenced When activities are regarded separately from other activities, usually
become some different rules or tax provisions provide.
Examples of ring-fencing in taxation can be found for real estate
investment trusts and tonnage tax.
ring fence fraction Figure used to calculate corporation tax on ring fenced profits
ring fence income Income which must be considered separately from other income,
particularly income from oil extraction (Income Tax Act 2007 80(1)).
ring fence trade Trade whose income is ring-fenced for tax purposes and not mixed with
other income (Income Tax Act 2007 s87). The most common example
is oil extraction.
rise (1) Increase or growth of something represented by a figure or amount.

(2) Pay increase.
risk Chance that something adverse will happen. Risk can rarely be avoided
but can usually be mitigated, see risk mitigation.
In investment, factors that may cause the profit or cash flows of the
business to fluctuate.
“Uncertainty as to the amount of benefits. The terms includes both
potential for gain and exposure to loss” (FRS 5 para 5).
“In respect of an occurrence assessed and expressed (as for
insurance and scientific purposes) as a combination of the probability of
the occurrence with its potential consequence” (Flood and Water
risk arbitrage Business of buying shares in companies which are expected to be taken
over and thus expected to rise in value.
risk arbitrageur Person who engages in risk arbitrage.
risk-adjusted return on capital

Figure which is equivalent to return on capital, but which has been
multiplied by a factor between 0 and 1 to reflect the element of risk.
risk assessment Formal process of determining risks faced by an organisation according

to likelihood and impact.
risk asset ratio In banking, the proportion of the assets which are in risk assets.
risk-based pension protection levy

Part of pension protection levy which may be made under Pensions
Act 2004 s75. The other part is the scheme-based pension protection
levy.
risk capital Another term for venture capital.
risk capital schemes requirement

Term used in Income Tax Act 2007 s292A in relation to venture
capital trust tax relief. The requirement is basically that the company
may not receive more than £2 million as VCT investment in a tax year.
risk management Managerial processes to reduce the adverse consequences of a risk.

Traditionally these involve:
• steps to prevent the risk happening (eg fire precautions);
• steps to minimise loss from risk occurring (eg fire
extinguisher);
• steps to mitigate the loss (eg fire insurance).
In relation to floods, a full legal definition is given in Flood and
Water Management Act 2010 s3.
risk premium Additional payment to investors in risky ventures. Such a premium is

often added to the dividend.
risk-reward ratio The requirement for a risky venture to provide a disproportionately

higher return than a safe venture. If a safe return provides 5%, and a
risky has a 50% chance of producing no return (but preserving the
capital), the risk-reward ratio would require a return above 10%.
risk transfer Any arrangement by which a financial risk is transferred to another

person. Finance Act 2010 s46 and Sch 19 contains provisions to restrict
tax relief to the underlying economic reality.
risk-weighted assets Assets which include off-balance sheet items for insurance purposes.
Ritchie, Charles Scottish Conservative politician (1838-1906) who was Chancellor of

the Exchequer from 11 August 1902 to 9 October 1903 in the
Conservative government of Arthur Balfour. He was sacked for
opposing a preferential tariff.
RL13 “The amount by which AL13 exceeds VE” (Income and Corporation
Taxes Act 1988 s444ABB). These are figures shown on Form 14
completed by life assurance companies, and are used to calculate the
companies’ retained assets in determining their tax liability.
RMAR Retail Mediation Activities Return, that may be requied by the

RMP Remote Marking Premises - Duty Paid Terminals (unbonded premises

and plants) that have been registered and approved to mark oils.
RO Country prefix code for Romania.
ROA Return on assets
road fuel Fuel for a mechanically propelled vehicle constructed or adapted for
use on roads.
road fuel gas “Means any substance which is gaseous at a temperature of 15ºC and
under a pressure of 1013.25 millibars, and which is for use as fuel in
road vehicle” (Hydrocarbon Oil Duties Act 1979 s5 and Income Tax
In the UK there are two types of such gas in use: compressed
natural gas (CNG) and liquid petroleum gas (LPG). Company cars
which run on this fuel may attract a lower rate of tax for the employee.
For employment income, there is a special provision in Income Tax
road roller Road vehicle which is category G on a driving licence.
road safety grant Grant which a transport authority may make to a local authority for
measures to promoted road safety (Road Traffic Act 1988 s40).
road tax Colloquial name for vehicle excise duty.
road-pricing Proposed additional tax on motorists, charging per mile for using
certain roads at certain times. Such a system needs cars to be fitted with
chips or for significant infrastructure expenditure. The proposed tax is
in addition to congestion charges, low emission zone charges and all
other taxes imposed on driving.
ROCE Return on capital employed.
ROCH Recognised overseas clearing house.
ROE Return on equity.
ROI Return on investment.
ROIE Recognised overseas investment exchange.
roll up To aggregate, consolidate or accumulate. The term is commonly used

for extending a loan by consolidating the interest accrued so far as
capital on a new loan.
rolled-up coupons Interest coupons on securities where no payment is made, but the value
is added to the capital.
rolled-up holiday pay When payment for holiday is not made at the time of the holiday but as
an addition to pay for all weeks that the employee is at work with no
payment at all for the weeks on holiday.
The Working Time Directive specifies a minimum period of paid
leave to which all workers are entitled. The European Court of Justice
has made it clear that it would like to see rolled-up holiday pay
outlawed, however it has also been held that it does not contravene the
directive provided the rolled-up holiday pay is made “transparently and
comprehensively”. Useful guidance on this has been provided by the
Employment Appeal Tribunal in Lyddon v Englefield Brickworks. EAT
[2007]
rolled-up indexation For capital gains tax, indexation on a rolled-over disposal (Taxation of
rolling account US term for the stock market system where there is no fixed account
days but where transactions are settled as they occur.
rolling budget Budget which proceeds during the year on a cumulative basis, usually
one month at a time.
rolling settlement Another name for rolling account.
rolling up Adding a profit or gain from one period to that of a future period.
rollover (1) In accounting, any arrangement which extends what would

otherwise be the term of a financial provision. Examples include
extending a fixed period loan, or using the proceeds from the sale of an
asset to buy another asset.
(2) In relation to lotteries, “an arrangement whereby the fact that a prize
is not allocated or claimed in one lottery increases the value of the
prizes available for allocation in another lottery” (Gambling Act 2005
s256).
roll-over relief Tax relief for capital gains tax. If the proceeds from the disposal of
certain categories of fixed asset are used to buy a similar asset, the tax
is postponed until the disposal of the new asset, unless rolled over
again. So if a business sells its premises and uses the proceeds to buy
new proceeds, it pays no tax.
The relief is set out in Taxation of Chargeable Gains Act 1992 s152.
A separate relief may be claimed for transfer of a business (ibid s162).
[Note that the Act hyphenates roll-over.]
Romalpa clause Reservation of title clause in a contract for sale of goods.

This means that ownership of the goods does not pass to the buyer
until he has paid for them. In an insolvency, the seller can therefore take
the goods back and does not have to be listed as an unsecured creditor,
which usually means receiving little or no payment.
In accounting, such a clause is ignored in determining control of an
asset.
The name comes from the case Aluminium Industrie Vasseen BV v
Romalpa Aluminium Ltd [1976] 2 All ER 577. CA.
Rooker-Wise Amendment
Requirement that the main income tax allowances should be increased
each year in line with inflation unless Parliament decides otherwise
(which it had done many times). This provision is now enacted as
The provision is named after the then Labour MPs Geoff Rooker
and Audrey Wise.
root Fractional power of a number used in such calculations as to calculate

what rate of compound interest is represented by an increase in value
over a period.
root and branch Description of the entirety of something.
rouble Currency of Belarus.
round Term which has acquired many specialist meanings in different

contexts, including:
(1) Description of a number of few significant figures such as 50 rather
than 47.87 (see rounding).
round down Reducing a number to express it to fewer significant figures, eg 24.7

can be rounded down to 24.
round off Reduce the digits in a decimal number by removing the final zeros.
Sometimes the term is used to mean simply rounding.
round sum allowance Addition to an employee’s pay to cover some expense, particularly
when a figure has been agreed rather than pay the exact amount.
Such a payment is always treated as gross pay, which means it is
subject to tax and national insurance unless covered by a dispensation.
The employee may be able to claim tax relief.
round up Increasing a number to express it to fewer significant figures, eg 24.3

can be rounded up to 25.
rounding Mathematical process of adjusting a figure to express it with sufficient

accuracy. The general rule for rounding is that decimals of .5 or above
are rounded up, and decimals of below .5 are rounded down. So 134.5
and 134.7 would be rounded to 135, but 134.2 and 134.4 would be
rounded down to 134.
For tax, the general rule is that amounts of income are rounded to
the nearest pound, and tax to the nearest penny. The rounding is always
in the taxpayer’s favour, so a taxable income of £24,269.98 is regarded
as £24,269.
In a parliamentary statement of 18 May 1993, it was stated that
Inland Revenue (now HMRC) would accept computations for
corporation tax rounded to the nearest £1,000 provided:
(a) the turnover of the business is at least £5 million in the
current year or previous year;
(b) the company accounts are prepared to the nearest £1,000;
(c) the rounding is fair, unbiased, defined in the accounts and
consistently used; and
(d) any program or software used in the rounding is identified.
The limit of £5 million in (a) relates to the company and not to a
group of companies.
For VAT, the European Court of Justice has ruled that the UK is
free to make its own rules on rounding: re Wetherspoon [2009] Case C-
302/07.
routine domestic tasks Tasks “such as housework, simple odd jobs, shopping and collecting a
prescription or pension” (VAT notice 701/2).
If an organisation provides a service of doing such tasks for a
person unable to perform them himself or herself, the provision may be
zero-rated as a welfare service under Value Added Tax Act 1994 Sch 7
Group 9.
Royal Assent When the monarch signs a Bill making it an Act of Parliament.
Originally the Bill had to be signed by the monarch personally or
by commission by letters patent under the Great Seal. The procedure is
now as set out in Royal Assent Act 1967.
Royal Bank of Scotland (RBS)

The bank started as the Equivalent Society in 1707, which became the
Equivalent Company in 1724.
Part of the Act of Union 1707 which merged Scotland and England
was to provide compensation for investors who had lost money in the
ill-fated Company of Scotland.
The company wished to become a bank. As the existing Bank of
Scotland (which remains a separate bank) was suspected of having
Jacobite sympathies, a royal charter was issued in 1727. In 1728, RBS
became the first bank to offer customers an overdraft facility. The two
banks became bitter rivals, and remain competitors.
RBS took over English banks in the late 19th and early 20th
century, particularly William Deacon’s in 1930 and Glyn Mills and Co
in 1939. This was rebranded as William and Glyns Bank in 1970 until
1985.
RBS has continued to grow, notably by acquiring National
Westminster Bank in 2000. RBS is one of three Scottish banks which
still prints its own banknotes.
royal charter Method by which a company, charity or other body may come into
existence.
royal commission Body of persons nominated by the Crown (in practice, by the prime
minister) to look into a matter and report back.
royal dues Taxes charged between 1066 and 1215, and levied by the monarch as
he saw fit. Abuses of the system led to the Magna Carta.
royal lives clause Clause in a trust defining time according to the life of a royal person,
such as “during the lifetime of the children of HM Elizabeth II”. Such a
clause was traditionally used to define the perpetuity period.
Royal Mail Steam Packet case

The name often given to the landmark auditing case of R v Kylsant
[1931].
The company reported trading losses by transferring from reserves
accumulated during the first world war. This was not explained in the
accounts. Chairman Lord Kylsant was arrested and imprisoned for
issuing a company prospectus that was “false in a material particular”
even though every word of it was true.
Royal Mint Body responsible for producing Britain’s coins. It also produces
medals, and coins for other countries.
royalties A business established to receive royalties is an excluded activity for

venture capital trust purposes under Income Tax Act 2007 s306.
royalty Payment to someone for the right to use their property. Examples
include copyright payments to authors and composers, patent payments
to inventors, and similar payments to land-owners.
royal warrant Official authorisation for a supplier to provide goods or services to the
royal household. The supplier may display a crest on his premises and
notepaper.
RPA (1) Receipts and payments account.

(2) Rural Payments Agency, anagency with responsibility for issuing
agricultural licences, collecting Common Agricultural Policy (CAP)
charges and paying CAP refunds.
The Rural Payments Agency (RPA) was previously known as the
Intervention Board Executive Agency (IBEA), the Intervention Board
for Agricultural Products (IBAP) or simply as the Intervention Board
(IB).
RPB (1) Recognised professional body

(2) Regional planning body.
RPC Reduced pollution certificate.
RPI Retail prices index; the official measure of inflation until December
2003 when replaced by CPI.
RPM Retail price maintenance.
RPPD “Regulatory Guide which contains a statement of the responsibilities of

providers and distributors for the fair treatment of customers” (FSA
glossary).
RPSM Registered Pension Schemes Manual, an Inspectors’ Manual produced

by HMRC.
RR(A)A Race Relations (Amendment) Act 2000 .
RRL Relevant retained liabilities (as used in Taxes Management Act 1970
s444ABB).
RRMPR The Registered Remote Marking Premises Regulations 2002.
RS Repayment Supplement - supplement paid automatically if a repayment

due from a VAT return takes longer than a net total of 30 days.
Conditions apply.
RSC Rules of the Supreme Court.

[This is also the abbreviation of the Royal Shakespeare Company.]
RSRB Regulated sale and rent back.
RSU Restricted stock units
RTAR Revenue Traders Accounts and Records - the Revenue Traders

(Accounts and Records) Regulations 1992.
RTE company Private company limited by guarantee which is not a commonhold

association and whose purpose is the right to collective enfranchisment
of leaseholders of a leasehold property (Leasehold Reform Housing and
Urban Development Act 1993 s4A).
RTI Real time information, part of PAYE system.
RTM Right to manage, particularly in the expression “RTM company”.
RTM company “A company is a RTM [right to manage] company in relation to

premises if —
(a) it is a private company limited by guarantee, and
(b) its memorandum of association states that its object, or one of its
objects, is the acquisition and exercise of the right to manage the
premises”
(Commonhold and Leasehold Reform Act 2002 s73(2)).
RTP Registered Tobacco Premises - any premises registered under

regulations 4 or 5 of The Tobacco Products Regulations 2001; ie
premises approved either for the manufacture of tobacco products or for
the safe storage of tobacco products without payment of duty.
RTR The Revenue Traders (Accounts and Records) Regulations 1992.
rub-down search “Search which is neither an intimate search nor a strip search”
The person to be searched, known as the suspect, may require the
Customs officer to refer the matter to his superior (ibid s164(3).
The search must be done by an officer of the same sex as the
suspect (ibid s164(4)).
rubber-stamp board Term used for boards of directors of letter-box companies and similar
companies. They simply endorse what the real directors of the company
says.
rufiyaa Currency of Maldives.
rugby Sport played in two forms: Rugby Union and Rugby League.
It was originally an amateur game with 15 players a side; the latter
is the main professional game with 13 players a side. The tax case
Jarrold v Boustead [1964] held that a player was not liable to pay
employment tax on a signing-on fee when joining a Rugby League side
from Rugby Union. The payment was compensation for giving up his
amateur Rugby Union status which then barred him for life from Union.
The inspectors’ manual at EIM00710 states that this precedent is
unlikely to be followed now as a result of changes in the status of
Rugby Union players.
The extent to which a rugby club is a mutual trade is discussed in
ruination State of being ruined, particularly financially.
rule Regulation which determines proper procedure or behaviour. The term

also has a specific meaning of one of the Rules of Court.
rule against perpetuities Law that imposes restrictions on perpetuities.
rule of 72 Rule of thumb for calculating the number of years over which
compound interest will cause a figure to double.
You simply divide 72 by the interest rate. The answer is the number
of years it will take that rate for the money to double. So, for an interest
rate of 6%, the principal will double in 12 years.
Although this is an approximation, it is remarkably accurate. After
12 years at 6% compound interest a sum will have grown to 2.012 times
its original amount.
rule of 78 Method of calculating depreciation, not widely used in practice. It is

also more accurately known as the sum of the digits method, though
“rule of 78” is the expression used in SSAP 21.
It works by adding up digits representing the order of months or
years of the expected life of the fixed asset and charging a fraction of
the total, where the numerator is the number of the month or year,
starting with the highest, and the denominator is the sum of the digits.
So if an asset is to be depreciated over five years, depreciation in
the first year would be 5/15 or one third under rule of 78, but one third
under the straight line method.
The numbers 1 to 12 add up to 78. So if calculating depreciation
over 12 months, the fractions would be 12/78, 11/78, 10/78 and so on to
1/78 in the final month.
rule of 85 Pension provision uniquely found in Local Government Pension

Scheme. It states that if a person’s age and years of service add up to
85, the person may retire on a full pension.
So if someone started work for a local authority at the age of 16,
they would be able to retire on a full pension at the age of 51 (as 51 +
35 = 86).
This generous provision was abolished for new starters from 1
October 2006, and for existing members from 1 April 2008 subject to
some transitional provisions.
rule of 97 Algorithm used in VAT numbers.

A VAT number has nine digits of which the last two are check
digits. The first seven digits are respectively multiplied by 8, 7, 6, 5, 4,
3 and 2. These products are then totalled. The last two digits are the
lowest number which must be added to make the total divisible by 97.
rule of court (1) Order made on a motion in court (usually open court), or to a rule
that generally applies in court.
(2) A submission to arbitration or the award of an arbitrator when it is
made under Arbitration Act 1950.
rule of law Doctrine that the affairs of society are regulated by everyone being
equally bounds by law.
rule of thumb Simple rule which usually gives the right answer, provided its
limitations are appreciated. The expression comes from the ancient use
of a thumb as a measure of one inch.
In business, examples include:
• rule of 72
• Pareto principle.
Rules of Court In relation to any court means rules made by the authority having
power to make rules or orders regulating the practice and procedure of
that court, and in Scotland includes Acts of Adjournal and Acts of
Sederunt; and the power of the authority to make rules of court (as
above defined) includes power to make such rules for the purpose of
any Act which directs or authorises anything to be done by rules of
court” (Interpretation Act 1978 Sch 1).
rum-running Illegal smuggling of liquor, not necessarily rum. The practice

particularly applies to the period of prohibition in the USA between
1920 and 1933.
Sometimes a distinction is made between bootlegging as illegal
supply over land, and rum-running as a supply over water.
run on the bank When a bank is deluged with customers seeking to withdraw funds.
This is usually caused by a panic induced by fears that the bank has
insufficient bank reserves to cover deposits. Customs withdraw the
money while there still is some and before the bank becomes insolvent.
running account credit Another name for revolving credit. It allows people to borrow more
money while repaying previous borrowings, provided a limit of
borrowing is not exceeded. Credit cards operate on this basis.
running costs Cost of using an asset (particularly a car) as opposed to the costs of
owning it.
running costs The cost of using an asset rather than of owing it. This term is of
particular application to cars where it applies to petrol, tyres, repairs,
servicing and parking. Other costs, such as road tax, MOT, insurance,
cost of capital and depreciation, are classified as standing charges.
running tank Tank on a vehicle that stores fuel used to propel the vehicle, as against
an auxiliary tank or belly tank that stores fuel to operate separate
machinery. Fuel in the running tank must be duty-paid (Customs notice
75).
running total Sum of figures to which further figures will be added.
running yield An estimate of the annual rate of interest paid out by fixed income
investments like corporate bonds and gilts. It doesn't take into account
any increases or decreases in the capital value of the investment.
rupee Currency of India.
rupiah Currency of Indonesia.
rural fuel duty Proposed reduced rate of road fuel duty for rural areas. It was
mentioned in June 2010 Red book at para 2.101.
ryal Gold coin worth 10 shillings minted between 1464 and 1470, and gold
coin worth 15 shillings minted in reigns of Mary and Edward I.
Rysaffe Tax-effective arrangement where several discretionary trusts are

established on different days.
The term comes from the case Rysaffe Trustee Company (CI) Ltd v
CIR [2003]. In that case, a settlor established five equal value
settlements over 35 days. Inland Revenue unsuccessfully argued that
they should be treated as a single trust. The decision follows the
Reynaud case.
S
S Shaw, Scottish law reports of Session Cases, published between 1821
and 1838.
SA (1) Self-assessment
(2) Abbreviation used in Income and Corporation Taxes Act 1988
s444AJ(5) to mean “surplus arising” in relation to life assurance
business.
S&L Savings and loans.
S2P State Second Pension.

[The abbreviation SSP is used for statutory sick pay.]
SA South Africa, including its law reports published from 1948.
SAAD Simplified Administrative Accompanying Document
SAARC South Asian Association for Regional Cooperation.

Its members are: Bangladesh; Bhutan; India; the Maldives; Nepal;
Pakistan and Sri Lanka.
sabbatical Period of leave, usually paid, to allow a person to study or rest. These
are common in education and the church.
sabotage Deliberate damage to another’s property.

Payments to buy off a saboteur are not tax deductible as they are a
criminal payment and disallowed by Corporation Tax Act 2009 s1304.
SAC Summary Appeal Court.
sack Dismissal from employment. The term comes from the old practice of
giving the worker a sack in which to remove his belongings.
sacrifice Voluntary offering of one’s property, particularly to appease gods.

In finance, the term is used to mean giving up one benefit to receive
another, such as a salary sacrifice scheme to gain a better pension.
SAD Single Administrative Document.
safe A secure repository for storing cash, documents and other valuable
items. They are also known as coffers and strongboxes. A safe can be
as large as a room, though such safes are more commonly known as
strong rooms or vaults. A safe may be disguised as a concealment
device.
The term has a specific meaning for spirits duty, as set out in
Customs notice 39.
safety need Second level under Maslow’s hierarchy. The security a person needs to
feel to be able to address social needs.
safety net Net placed below acrobats to prevent injury if they have an accident.
In finance, the term is used to mean any similar provision designed
to minimise the consequences of an adverse situation.
SAIL address Single alternative inspection location. This term is used by Companies
House when a business holds its records for inspection at an address
other than its registered office.
sailaway boat A vessel supplied VAT free in the UK, which is to be exported under its
own power to a destination outside the VAT territory of the EU.
Saladin tithe A levy of one tenth of rents charged in 1188 to pay to recover
Jerusalem. This was the first taxation to include a specific provision
against fraud.
salami cuts When an asset is reduced by many series of small slices being removed.
Salami is a seasoned Italian sausage which is traditionally sliced thinly.
salaried Description of a person who is employed for a salary.
salaried hours One of the four bases for determining whether national minimum
wage (NMW) regulations have been followed. A worker is on salaried
hours if paid so much per week, month or year, rather than per hour.
The requirement under NMW rules is that the employee is paid the
NMW for the contracted hours during each pay reference period.
The procedure is similar to that for time work, except that the
NMW must generally be paid for absences (such as holidays and
sickness) under salaried hours. There is an exception for absences

where the contract of employment states that the employee is not
entitled to his full pay and, in fact, does not receive his full pay.
salaried partner Member of a partnership who receives a salary either in addition to or

instead of a share of partnership profits.
salary Amount paid to an employee, particularly on an annual basis. The word

originally meant salt money, as workers were once paid in salt.
A salary paid to a worker by a business is tax-deductible. The
worker is liable to income tax and class 1 national insurance on the
salary. This is usually collected under Pay As You Earn.
A salary paid to a partner or sole trader is not allowable. These are
regarded as drawings and must be added back to taxable profit.
salary cheque Either a cheque issued to a person in payment of salary, or a cheque

drawn to a bank to allow the salaries of all salaried staff to be paid.
Such cheques are usually issued monthly.
salary definition Term used in group insurance to define what is meant by an

employee’s salary when calculating insured benefits.
salary scale Another term for pay scale.
sale (1) Transaction where an item is sold.

A contract is a sale where one party provides money to the other for
goods or services.
(2) Period when goods are offered at a reduced price, such as for
clearing stock.
sale and leaseback Arrangement where an organisation sells an asset and then leases it
back from the buyer.
The arrangement is most commonly used when the organisation has
valuable assets but needs a lump sum of cash.
sale and repurchase A form of trading where the seller agrees to buy back the goods on
certain conditions. Such trading methods are common in specific trades
such as book selling.
The accounting treatment is explained in Application Note B to
FRS 5. Basically this requires the repurchase terms to be considered to
determine whether the stock should be regarded as belonging to the
seller.
sale by description Sale of goods which are described in the contract.

Sale of Goods Act 1979 s13(1) requires that the goods sold must
conform to that description.
sale by retail Term used in Licensing Act 2003 s192 to mean (broadly) a sale of
alcohol for consumption on the premises.
sale by sample Sale of a quantity of goods of the same specification as a sample.

Sale of Goods Act 1979 s15(2) imposes the condition that “the bulk
will correspond with the sample in quality”. S3(2) requires all the goods
to conform to the sample; it is not sufficient that most of the goods do.
sale consideration This term is given a specific meaning in Taxation of Chargeable Gains
Act 1992 s145 in relation to capital gains tax indexation on options.
sale of goods Sale of goods for money.

Where this is a consumer sale, it is regulated by Sale of Goods Act
1979. This implies certain conditions into the sale. Such conditions are
not implied in a sale to someone for their business.
sale of work Sale of items made for the purpose, particularly by members of a
church or other fund-raising body.
sale or return (SOR) Method of trading where a customer takes goods on the basis that they
are either returned or bought.
sale price Price asked for goods which is below the normal price.
sales Term in profit and loss account which indicates income from trading
activities.
sales analysis Management accounting exercise to determine how much each product
or service contributes to overall sales.
sales book Record of sales completed, as against the order book which is a record
of sales orders received.
sales budget Budget which determines what sales are required by an organisation.
sales chart Graphic representation of sales from one period to the next.
sales curve Graphic representation of how sales are varying from one period to the
next.
sales department Section of a commercial organisation which is responsible for

generating and administering sales of the organisation’s products or
services.
sales figures Total sales for a defined period.
sales force Collective term for all those engaged in selling an organisation’s
products or services.
sales forecast An estimate of what sales are expected to be achieved in a defined

period.
sales invoice Document sent to customers recording a sale. Unless the customer has
already paid, the invoice is also a request for payment.
sales journal Book in which sales are recorded. Such a journal is usually restricted to
non-cash sales. Entries from it are later posted to the sales ledger, and
totals from the sales journal are posted to the nominal ledger.
sales ledger Record of how much each of your customers owe you.
sales ledger clerk Junior member of accounts department who is responsible for
maintaining the sales ledger.
sales manager Person in charge of the sales department.
sales mix Combination of different products and services which comprise an

organisation’s overall sales for a defined period.
sales mix profit variance Different profit margins on products and services within the sales mix.
sales per employee Ratio of turnover divided by number of employees.
sales pitch Method used by a salesman to encourage customers to buy the goods or
services being offered.
sales promotion An incentive to encourage the sale of a product or service, such as

money off coupons, or a “buy one, get one free” offer.
sales price variance Difference between expected income from sales and actual income.
sales return Report of actual sales made for a defined period.
sales tax A tax which is imposed on the sale of items. VAT is sometimes called a
sales tax, though strictly it is a tax on supplies.
sales volume profit variance

Difference between the forecast sales volume and the actual sales
volume.
sale work Work undertaken to produce goods for a special sale, often at a low
price.
saleable Able to be sold.
saliferous Capable of yielding salt.
Salmanezah Champagne bottle with a capacity of 12 standard bottles.
Salomon v Salomon Court case from 1897 which clearly established that a company has a
separate legal personality from its owners.
SALR South Australian Law Reports, published from 1866 to 1892, and from
1899 to 1920.
salt For VAT, salt for culinary use is zero-rated as food, “including fine salt,
dendritic salt, and, in retail pack (12.5g or less) — rock and sea salt”.
These forms of salt are standard-rated: “compacted salt (pellets and
tablets), granular salt, rock salt (other than retail packs), soiled salt, salt
for dishwashers and salt of any type for non-food use” (VAT notice
701/14).
salus populi suprema lex esto

Latin: let the welfare of the people be the final law (Cicero).
salvage Process of recovering some value from an asset which would otherwise
have no value, such as removing parts from a car which has been
scrapped or ship which is stopped from sinking.
salvage Generally zero-rated under Value Added Tax Act 1994 Sch 8 Group 8.
salvage charges “Charges recoverable under maritime law by a salvor independently of

contract” (Marine Insurance Act 1906 s65(2)).
Typically maritime law allows a salvor to claim up to 10% of the
value of the item salvaged. Such costs may be recoverable under a
policy of marine insurance.
salvo jure Latin: saving the right, ie without prejudice.
salvor One who salvages something, particularly a ship.
same premises test In tax, a test for eligibility for the annual investment allowance.
Companies are eligible if they are within the same business
classification and operate from the same premises at both the beginning
and end of the chargeable period.
sample Small quantity of an item which is considered as representing the

whole, such as when testing a batch of goods or trying out a product
before buying a quantity of it.
Samurai sword Customs may seize any such sword with a curved blade exceeding
50cm in length unless it is imported for participation in martial arts
events or religious ceremonies (Customs notice 1).
sandwich For VAT, this is zero-rated as food when supplied as a grocery item,
but standard-rated as catering when provided as part of a party or buffet
service (VAT notice 701/14).
sanitary protection For VAT, such products may (from 1 January 2001) be reduced-rated
for VAT under Value Added Tax Act 1994 Sch 7A Group 4. The exact
scope is given in VAT notice 701/18.
sans frais Without expense.

sans recours Without recourse.

Where an agent so signs a bill of exchange, he is not personally
liable on it (Bills of Exchange Act 1882 s16).
santim One hundred of lats, currency of Latvia.
Sapir Report Report published in 2003 by a panel of experts chaired by André Sapir.
The report was commissioned by the European Commission to analyse
the Lisbon Strategy in relation to the European economy.
SAS Statement of Auditing Standards.
SASR South Australian State Reports, law reports from 1921.
SATR Self-assessment tax return
Saturday fund Mutual insurance fund as originally set up in the 1870s. The name
comes from the then current practice of paying workers on a Saturday
from which they contributed to their health insurance. The current tax
treatment is discussed in the Inspectors’ Manual at BIM24685.
Sav Savile’s Reports, law reports of Common Please from 1580 to 1594.
save as you earn (SAYE) Process of putting aside money from earnings for use later. If the
money is used to buy shares in the employer, there are some tax-
advantaged schemes available to the employee.
saver Person who puts money aside for use later.
Saving Gateway Proposed scheme of tax-advantaged saving due to be introduced in July

2010. It was scrapped on a change of government.
The Act to introduce it was Saving Gateway Accounts Act 2009. It
was repealed by Savings Accounts and Health in Pregnancy Grant Act
2010 s2.
savings (1) Amount of money someone has put aside.

(2) Reductions in expenditure, particularly when this is achieved
without any loss of quality or service.
savings account Bank account which is designed to accommodate the savings of an

individual. Typically such an account pays interest but requires notice
for withdrawals.
savings bank Bank which offers savings accounts.
savings bond American term for savings certificate.
savings certificate Document showing how much an individual has saved with the
organisation issuing the certificate.
savings credit One of two elements of the state pension credit. The other is the
guarantee credit (State Pension Credit Act 2002 s3).
savings credit threshold Amount of a pensioner’s income which meets one of the conditions for
receiving the savings credit element of the state pension credit (State
Pension Credit Act 2002 s3).
Savings Gateway Government sponsored savings account for the disadvantaged which
was planned for introduction in July 2010. The details are contained in
Savings Gateway Accounts Act 2009. The June 2010 Budget
announced that they would not be introduced.
savings income Income which arises from savings rather than from earnings or other
sources.
The term has been used from 6 April 1996 for income which was
subject to income tax at 20% rather than the normal basic rate. From 6
April 2008, the basic rate of income tax is 20%, so the distinction has
largely been dropped. The full definition is given in Income Tax Act
2007 s18.
Savings Income Information Regulations (SIR)

Name of SI 2003 No 3297, in force from 1 July 2005. It transposes into
English law the European Savings Directive. It sets out the duties of
paying agents in reporting savings income to HMRC.
savings plans Package of financial products, that typically have high charges and a
poor return.
savings-related share option scheme

Tax-advantaged scheme which allows employees to buy shares in their
employer by deductions from their pay.
savoury snacks For VAT, three types of savoury snack are standard-rated, namely
potato snacks (eg crisps), cereal snacks, and nuts that are roasted and
salted. Other savoury snacks are zero-rated as food. The exact scope is
set out in VAT notice 701/14.
SAYE Save As You Earn.
SBA Small Business Administration.
sc Scilicet.
SC Court of Sessions, Scottish law reports from 1906.
scab Trade union slang for a person who works during a strike.
scaccarium The Exchequer.
scale In finance, any arrangement where one figure is dependent on another,

such as pay rates for different grades or sales discounts for different
quantities.
scale charges Set charges for calculating output tax due on road fuel used for private
motoring, if the fuel was bought by a business. The charges are based
on the type of fuel and engine size.
scam Fraud perpetuated by pretence.
Sch Schedule, particularly to an Act of Parliament.
schedular system System of determining income tax and corporation tax according to a
schedule (designated A to F) according to the nature of the income.
The system was abolished in 2005 for income tax, and in 2009 for
corporation tax.
Schedule A Basis for taxing income from land and buildings, such as rent. It was
introduced in 1803 for income tax and in 1965 for corporation tax. It
was abolished in 2005 for income tax but is still used for corporation
tax. For income tax purposes, Schedule A income is now called
property income.
Until 1963, Schedule A included a nominal charge paid by owner-
occupiers for the notional benefit of the rent they received from
themselves. Mortgage interest relief was originally a tax-deductible
expense of this Schedule.
Schedule A was abolished for the tax years 1964/65 to 1969/70
when rent was collected under Schedule D Case VIII.
Schedule A loss Loss incurred by a company on its Schedule A activities (usually

renting property). Corporation tax relief may be claimed under Income
and Corporation Taxes Act 1988 s392A.
Schedule B (1) Former basis for taxing income from farming and woodlands.
The schedule was introduced in 1803. In 1963, farming became
subject to Schedule D Case I on the same basis as other trading, and
Schedule B was restricted to the commercial occupation of woodlands.
By the 1980s, the income from Schedule B was less than the
amount lost by its use in tax avoidance schemes. Accordingly Schedule
B was abolished in 1988, since when the commercial occupation of
woodlands is generally tax-free.
(2) Form which must be completed by Methodist treasurers
Schedule C Former basis for taxing investment income from public funds, including
local authorities and foreign states.
Schedule C was introduced in 1803, but abolished in 1996 when
such income was taxed under Schedules D Cases III, IV or V for
income tax and Schedule D Case III for corporation tax. This income is
now known as investment income.
Schedule D Basis for taxing income from trading and similar activities. The
Schedule was introduced in 1803 and used for income tax until 2005. It
is still used for corporation tax.
Schedule D was divided into six to eight cases as follows:

● Case I trade;
● Case II profession or vocation;
● Case III certain investments;
● Case IV foreign investments;
● Case V foreign possessions;
● Case VI other income;
● Case VII short-term gains;
● Case VIII property.
Case VII only operated between 1962/63 and 1964/65 when it was
replaced by capital gains tax.
Case VIII only operated between 1964/65 and 1969/70 while
Schedule A was abolished.
For income tax, these Schedules are now replaced by descriptions
of types of income. Cases I and II are generally called trading income;
Case III is investment income; Cases IV and V are relevant foreign
income.
Schedule E Former basis for taxing income from employment, usually under
PAYE. It was introduced in 1803 and abolished in 2003, and is now
known as employment income.
Schedule E was divided into three cases:
● case I: UK earnings by UK residents;
● case II: UK earnings by non-residents;
● case III: overseas earnings by UK residents.
Schedule F Former basis for taxing income from share dividends which applied
from 1965 to 2005. Such dividends were charged under the imputation
system.
scheduled and admitted bodies

A scheduled body is an organisation which has the right under
legislation to become a member of the Local Government Pension
Scheme An admitted body is an organisation which does not have the
automatic right to join the Local Government Pension Scheme but can
join (be admitted to) with the agreement of the administering authority.
It must be non-profit-making and will normally be receiving a grant
from either central or local government.
schedules (1) Part of Act

(2) Tax schedules, as categories of income. This meaning comes from
the fact that they were schedules to Acts from 1799 and 1803 onwards.
In 1952, the Schedules were incorporated into the Act. They are now
abolished.
schema Framework of knowledge about some aspect of the world.
scheme Plan, method of working, layout or arrangement.
Scheme administration employer payment

Payments made by a registered pension scheme that is an occupational
pension scheme, to or in respect of a sponsoring employer or a former

sponsoring employer for the purposes of administration or management
of the scheme.
Scheme administration member payment

Payments made by a registered pension scheme to or in respect of a
member or a former member for the purposes of administration or
management of the scheme.
Scheme administrator The person(s) appointed in accordance with the pension scheme rules to
be responsible for the discharge of the functions conferred or imposed
on the scheme administrator of the pension scheme by and under Part 4
of Finance Act 2004. This person must be resident in an EU member
state or in Norway, Liechtenstein or Iceland (EEA states which are not
EU states). The person must have made the declarations to HMRC
required by section 270(3) Finance Act 2004.
scheme-based pension protection levy
Part of pension protection levy which may be made under Pensions
Act 2004 s75. The other part is the risk-based pension protection
levy.
Scheme chargeable payment

Scheme chargeable payments are any unauthorised payment by the
pension scheme other than a payment that is exempted by section
241(2) Finance Act 2004 from being a scheme chargeable payment (see
list below), and a payment that the pension scheme is treated as having
made and classed as a scheme chargeable payment by section 183 or
184 Finance Act 2004 because of unauthorised borrowing.
scheme of arrangement Proposal drawn up by an independent or organisation to offer ways of

repaying debts which it cannot pay under the original terms.
Scheme pension A pension entitlement provided to a member of a registered pension

scheme, the entitlement to which is an absolute entitlement to a lifetime
pension under the scheme that cannot be reduced year on year (except
in narrowly defined circumstances) and meets the conditions laid down
in paragraph 2 of Schedule 28 to Finance Act 2004. Section 9 (2B)
Rights derived through section 9(2B) of the Pension Schemes Act 1993.
schemes for rationalising industry

Schemes for rationalising the ship building industry and so certified by
the Secretary of State. Payments to such a scheme may be deducted
from profits subject to corporation tax under Income and Corporation
Taxes Act 1988 s568.
schilling Old currency of Austria. For VAT, gold investment coin issued by
Austria and listed in VAT notice 701/12A.
scholarship This may be a taxable benefit in kind when provided by an employer

(Income Tax (Earnings and Pensions) Act 2003 s211). For this purpose
“scholarship includes a bursary, exhibition or other similar educational
endowment” (ibid s211(3)).
School Certificate The main examination taken by students between 1918 and 1951 at the
age of 16. Students who stayed on, usually took the Higher School
Certificate two years later. The School Certificate was replaced by O-
levels.
school company A company which is formed by the governing body of a school under
the provisions of Education Act 1996 s482 (as amended by Education
Act 2002 s65).
school improvement partner

Person appointed by a local education school to each school to advise
the head teacher and governors on how they may improve standards
(Education and Inspections Act 2006 s5).
Schools Medical Service Body formed in 1907 to monitor and improve the health of school
children.
school surplus Amount that a local authority holds on behalf of a school. On becoming
an academy, it must be transferred to the governing body (Academies
Act 2010 s7).
School Teachers’ Review Body

Body established to review pay and conditions of teachers. It is
established under School Teachers’ Pay and Conditions Act 1991 s1,
and was renamed under Education Act 2002 s119.
school trip Visit arranged by a school for its pupils. If this involves an overnight
stay, there are provisions for relieving parents of the cost of such trips
under Education Act 1996 s457 as amended by Education Act 2002
s200.
scientific management View that a precise approach should be taken to issues of work and its
organisation.
scientific research “Any activities in the fields of natural or applied science for the
extension of knowledge” (Income and Corporation Taxes Act 1988
s82B(2)).
scilicet (sc) Latin: that is to say, to wit.
scintilla juris Latin: a spark or fragment of a right. This relates to an old property law
that could allow property to revert to a previous owner. This provision
was abolished by Law of Property Amendment Act 1867 s7.
SCIO Scottish charitable incorporated organisation.
ScLR Scottish Law Reporter, series of law reports from 1865 to 1925.
Scotch whisky “Whisky which has been distilled and matured in Scotland” (Customs
notice 39).
Scotch Whisky Association

Body with whom HMRC administers the Whisky Export Refund
Scheme.
Scotland Country that forms Great Britain, with England and Wales. The
kingdoms were united in Union with Scotland Act 1706 that remains
law. Common currency is determined by Article XVI. Three Scottish
banks retain the right to issue banknotes. These are promissory notes
that are not legal tender anywhere, however they are accepted at face
value by the Bank of England and are widely accepted in everyday use.
Scotland has a separate legal system from England and Wales. Tax
law is common under laws passed since 1706, though differences in law
can be relevant in legal proceedings and enforcement. The Scottish
Parliament (reinstituted in 1998) has the right to vary the rate of basic
income tax, but has never used this power.
There are differences in the laws regarding land, insolvency,
inheritances, evidence, criminal law, trusts and family law. There are
very few differences in company law, tax law, social security and
consumer law.
There are also many administrative differences. For example,
Scottish universities do not charge university fees to Scottish residents,
reducing student loan repayments.
Scots law The independent system of laws and legal procedures which apply in
Scotland.
Scottish banknotes Currency notes issued by Bank of Scotland, Clydesdale Bank and Royal
Bank of Scotland (RBS). These are issued under Bank Notes (Scotland)
Act 1845, when there were 19 banks issuing their own notes.
These notes are legally promissory notes. They are not legal tender
(which is not part of Scots law) but are accepted at face value by the
Bank of England, and thus by clearing banks and most traders.
Scottish charitable incorporated organisation (SCIO)

Form of charitable body that may be established in Scotland. It is
similar to the charitable incorporated organisation in the rest of the
UK.
Scottish Development Agency

Body formed in 1975 to promote the economy in Scotland. In 1991 it
was replaced by Scottish Enterprise.
Scottish Enterprise Public body of the Scottish government that promotes economic
interests in Scotland. It was formed in 1991 under Enterprise and New
Towns (Scotland) Act 1990.
Scott Report Report published by Sir Richard Scott in 1996 into the export of
defence equipment to Iraq in the 1980s, particularly by Matrix
Churchill. The report was highly critical of the government and its
departments, noting, for example that Customs could not even find out
what the Ministry of Defence’s export policy was.
Scottish Departments Government departments which dealt with certain functions for
Scotland. These were transferred to the Secretary of State for Scotland
under Reorganisation of Offices (Scotland) Act 1939 s1. Some have
been further devolved to the Scottish Parliament.
Scottish Legal Complaints Commission

Body established under Legal Profession and Legal Aid (Scotland) Act
2007 s1 to hear complaints of professional conduct or unsatisfactory
professional conduct by members of the legal profession in Scotland.
Scottish legal services ombudsman

Person employed to hear complaints about Scottish lawyers. This office
is replaced by the Scottish Legal Complaints Commission.
Scottish Parliamentary Standards Commissioner

Person appointed under Scottish Parliamentary Standards
Commissioner Act 2002 s1.
Scottish public sector companies

Public sector company whose registered office is in Scotland. Under
Companies Act 2006 s483, Scottish ministers may require that such a
company be audited by the Auditor General for Scotland.
Scottish shilling Particular design of shilling minted from 1937, but legal tender
throughout the UK.
Scottish term dates Four dates that correspond to the English quarter days. From 13 June
1991, these dates are 28th of February, May, August and September.
The old Scottish term days were Candlemas (2 February), Whitsunday
(15 May), Lammas (1 August) and Martinmas (11 November).
Scottish variable rate (SVR)

The right of the Scottish parliament to vary the basic rate of income tax
by adding or subtracting 3p in the pound for all residents in Scotland.
This right has never been used, though it was once considered as a
means of scrapping the council tax.
SCP Simplified Clearance Procedure - a procedure under which exporters of

good used to submit an abbreviated customs pre-entry, or an approved
commercial document at the time of export. Full statistical information
would be provided after the goods are exported. Now replaced by
electronic Simplified Declaration Procedure (SDP).
scrap Material left over from manufacturing activities, but which still has a
value. A common example is metal left over from machining. It can be
sold to a scrap metal dealer who melts it down for re-use.
In accounting, care must always be taken to ensure that scrap sales
are accounted for as turnover. Where a scrap dealer is VAT-registered,

it is common for the reverse charge method to be used.
scrappage Government scheme whereby a person receives an allowance for

scrapping and old car and buying a new more environmentally-friendly
car. In the UK the scheme was introduced from 1 June 2009. It
provided £2,000 (half from the government, half expected from the car
company) discount when a person bought a brand new car and scrapped
one that was at least ten years old.
scrap value The value of an asset in terms of using it for the material it contains
rather than as an asset. Almost always, the scrap value is much less than
the asset value.
screen scraping Process which allows one website to access data from other websites,
such as in account aggregation.
scriber est agere Latin: to write is to agree.
scrip Document issued to a person of evidence of ownership of a financial

instrument. Examples include share certificates and savings certificates.
scrip dividend Dividend payable in the form of new shares rather than in cash.
scrip issue Another name for a bonus issue.
scrutineer Person who scrutinises, particularly of a trade union ballot under Trade
Union and Labour Relations (Consolidation) Act 1992 s226B.
sculptor An artist, sculptor, composer or other creator of art may average profits
scutage A feudal duty levied at various times between 1100 and 1322.
scuttling Deliberate sinking of a ship, usually your own, for such purpose as
preventing it falling into enemy hands or to claim insurance.
SD Supplementary Declaration - another name used to describe a post-

shipment declaration. Under the New Export Scheme (NES) it is an
electronic message sent to the Customs Handling of Import and Export
Freight (CHIEF) system to declare statistical and control information
for all consignments exported under either the Local Clearance
Procedure (LCP) or the SDP.
SDA Service Delivery Agreement.
SDI Simplified Declaration Imports.
SDL Share and deposit liabilities, an accounting term used for banks and
other financial institutions.
SDP (1) Simplified Declaration Procedure - requires a two-stage declaration

to the CHIEF system. The first stage is the provision of brief details of
the consignment against which Customs clearance is given. The second
stage requires the submission of a full supplementary declaration within
a specified period. SDP is only available under the NES.
(2) Social Democrat Party; a political party which was formed in the
early 1980s and became very popular. Most of the SDP merged with the
old Liberal party to form the Liberal Democrats.
SDR Special drawing rights.
SDRT Stamp duty reserve tax.
SDW Simplified Declaration Warehouse - a supplementary declaration

submitted for goods removed from warehouse under Customs Freight
Simplified Procedure (CFSP) arrangements.
SE Country prefix code for Sweden.
sea “Includes any estuary or arm of the sea” (Prevention of Pollution Act
1971 s29(1)).
SEA Single European Authorisation.
sea lawyer Colloquialism for a person who seeks to avoid blame on grounds of
trivial technological grounds. It is an allusion to the practice allegedly
developed by lawyers in the American Navy.
seafarer For tax purposes, employment as a seafarer means “employment

consisting of the performance of duties on a ship or of such duties and
others incidental to them” (Income Tax (Earnings and Pensions) Act
2003 s40(5)).
National insurance provisions for mariners are given in Social
Security Contributions and Benefits Act 1992 s117.
seafarer’s earnings deduction (SED)

Right of mariners to deduct 100% from taxable earnings.
seal Impression made on a document to indicate its authenticity or authority.

A seal may be made by pressing a metal object such as a signet
ring into soft sealing wax, or by making an impression on paper using a
metal die.
For many years, every company had to have a company seal. This
was circular and bore the company name. It was used on share
certificates and other documents. In practice this was a metal die
operated by a lever mechanism. The seal was often impressed on an
adhesive red circle with triangular edging like a starburst.
sealing fee A charge made by some lenders when they release their legal charge
over the deeds.
sealing press Office machine comprising a press with a big lever. It allows a metal
die to make an impression on documents. A smaller version is known as
a library press.
Such presses were traditionally used when a company seal was
required, or to indicate that stamp duty had been paid.
sealing wax Compound which has been used for sealing letters and packages from
the 16th century. It is still available though rarely used other than for
ceremonial purposes. It is necessary for the seal to be covered with oil
before use.
seaman Another term for a seafarer.
SEAQ Stock Exchange Automated Quotation system.

It is “the London Stock Exchange’s non-electronically executable
quotation service that allows market makers to quote prices in AIM
securities (not traded on SETS or Sets) as well as a number of fixed
interest securities” (London Stock Exchange website).
search Examination of a person. For Customs purposes, there are three types of
search specified in Customs and Excise Management Act 1979 s164(5):
intimate search, rub-down search and strip search.
search and seizure warrant

Warrant which may be issued under Proceeds of Crime Act 2002 s352.
Search (frictional) unemployment

When somebody loses their job (or chooses to leave it), they will have
to look for another one. If they are lucky they find one quite quickly,
but they may be unlucky and it may take some time. On average it will
take everybody a reasonable period of time as they search for the right
job. This creates unemployment while they look. The more efficiently
the job market is matching people to jobs, the lower this form of
unemployment will be. However, if there is imperfect information and
people don't get to hear of jobs available that may suit them then search
unemployment will be higher.
season Part of a year which has a common characteristic. Traditionally the four
seasons are spring, summer, autumn and winter, each of about three
months. In commerce, a season usually refers to a period which has a
common characteristic, such as a summer season or Christmas season
which has a particularly relevant pattern of income.
seasonal adjustment Any amendment made to an accounting figure to reflect the season to
which it relates.
seasonal business Business whose activities vary from season to season, such as those
businesses which particularly cater for holidays or Christmas.
seasonally adjusted Adjusted to reflect the season to which it relates. Some unemployment
figures are seasonally adjusted.
SEC Securities and Exchange Commission, the US regulatory authority for

stock markets.
second (1) That which ranks as number 2 in an order.

(2) Unit of time equal to one sixtieth of a minute.
second adult Adult who lives with a claimant for council tax benefit. A second adult
can increase the amount of benefit.
The second adult must be at least 18, count as an adult for council
tax purposes, and not be someone who is jointly liable for council tax.
second adult rebate Addition to council tax benefit that allows a claimant to claim an
additional sum for a second adult who is not liable for council tax and
does not pay rent to the claimant.
secondary action Action taken by a trade union in support of a dispute in which it is not
directly involved. This is generally unlawful under Trade Union and
Labour Relations (Consolidation) Act 1992 s224.
secondary contract A contract whose purpose is to influence the operation of another

contract.
In Unfair Contract Terms Act 1977 s23, a secondary contract is
void if it seeks to negate consumer rights given by the Act in the other
contract.
secondary contributor Person who is liable to pay the secondary rate of class 1 national
insurance (Social Security Contributions and Benefits Act 1992 s7).
For employment, this is the employer. In other cases, the secondary
contributor is identified by the Act or regulations.
secondary data Researching information which has already been published.
secondary home A home which is either owned or rented; and is used only occasionally.
For Customs purposes, a definition is given in Customs notice 3.
secondary industry Industry which uses prime materials (produced by a primary industry)
to produce manufactured items. Examples of secondary industry
include tiles or flour.
secondary lease period Period of a lease when only nominal payments are paid for the use of
goods.
secondary market Private transaction between two parties involving a trade in shares or
similar securities, as against a trade on a primary market such as a
recognised stock exchange.
secondary threshold (ST) Threshold at which an employer becomes liable to pay class 1 national
insurance in respect of a particular employee. For the years 2001/02 to
2010/11, the threshold was the same as for employees and were
therefore known as the earnings threshold.
second half The last six months of a particular year. The second half of a calendar
year is from 1 July to 31 December.
second hand Description of an item which has already been used by someone else.
second-hand goods Items which have been previously owned.

Income tax and pre-owned assets ,.....
For VAT, there are special margin schemes for second-hand goods
which allows VAT to be charged on the profit margin only, and not on
the whole price of the goods. Before 1 January 1995, such schemes
could only be used for certain types of second-hand goods.
second home allowance Allowance provided to a person towards the cost of a second home
which is required by their work. Such an allowance is paid to Members
of Parliament. In May 2009, there was a scandal about how some
members exploited this allowance for their personal benefit.
second land tax A tax charged in 1405 at a rate of £1 on each £20 worth of land.
second mortgage Further mortgage granted on a property which is already subject to one
mortgage.
secondment Arrangement where a person or asset is lent to another organisation for

a defined period. The term is most commonly used when a person from
one organisation works for another.
Second Pension Scheme System of additional pension proposed by the Conservative party in
1974 as a replacement for graduated pension but never implemented
as they lost both general elections.
Eventually, the Labour government introduced SERPS in 1978
with all-party support.
second poll tax Taxed charged from 1513 to 17th century.
second purchase price Term used in relation to the alternative finance arrangement known as
purchase and resale arrangements (Taxation of Chargeable Gains
Act 1992 s151J).
second purchaser A guarantor in a sale.
second quarter The second three-month period in a particular year. The second quarter
of a calendar year is the period from 1 April to 30 June.
seconds (1) In retailing, goods which are not of normal saleable quality but are
still good enough to be sold, usually at a lower price.
(2) In gambling, cheating by dealing the second card instead of the top
card.
second unique tax A tax of 1411 which repeated the unique tax of 1404.
secrecy Withholding information for its own sake, which is neither privacy nor
confidentiality.
secret Concealed or hidden from general view. The term refers to something
which is deliberately concealed. Confidentiality and privacy are forms
of secrecy for which there are particular legal provisions.
secretariat Group of secretaries.
secret reserves Reserves which are concealed so as not to be evident from a balance
sheet. A distinction is usually drawn between secret reserves and hidden
reserves, where the latter are shown on the balance sheet but may not be
obvious.
Secretary of State Means one of Her Majesty s Principal Secretaries of State”

secretary (1) Clerical assistant who deals with the day-to-day business or another
person, usually a senior person.
(2) Chief administrative officer, particularly of a non-profit-making
body.
secret trust Trust created by a testator who leaves property to someone in a will for
to hold for the benefit of another who is not identified in the will. A
secret trust is legal.
section Part of an Act of Parliament.
section 25 List of Schengen Acquis states

List of member states of the European Union. It is referred to in
Immigration Act 1971 s25(7).
section 30 disposal Term used in Taxation of Chargeable Gains Act 1992 in relation to a
disposal of shares where value shifting has taken place.
section 32 policy Another name for a buyout policy used to transfer a pension
entitlement.
section 35 losses Term used in Income and Corporation Taxes Act 1988 s444AEB(4) to
mean “... losses computed in accordance with life assurance trade
profits provisions”. The reference is to Corporation Tax Act 2009 s35.
Before 2009, these were known as Case I losses.
section 35 profits Term used in Income and Corporation Taxes Act 1988 s444AEB(4) to
mean “profits... computed in accordance with life assurance trade
profits provisions”. The reference is to Corporation Tax Act 2009 s35.
Before 2009, these were known as Case I profits.
section 37 application Application to vary a local authority licence regarding the premises
supervisor (Licensing Act 2003 s37).
section 38 contribution notice

Notice sent by the Pensions Regulator under Pensions Act 2004 s38
where there is evidence that steps have been taken to avoid recovery of
a debt owed by an employer to a final salary (or defined benefit)
pension scheme.
section 42(7) claim Claim made in accordance with Taxes Management Act 1970 s42(7).
This section lists provisions in other Acts under which a claim may be
made for tax relief.
section 47 contribution notice

Notice issued by the Pensions Regulator under Pensions Act 2004 s47
when there has been insufficient financial support for a final salary (or
defined benefit) scheme.
section 62 earnings Earnings that come within the scope of Income Tax (Earnings and
The expression is used in s287 of the same Act.
section 104 holding Holding of shares under the terms of Taxation of Capital Gains Act
1992 s104. This regards shares of the same class in the same company
as being treated as a single asset.
section 106 money Amounts paid under Town and Country Planning Act s106 as a
condition of receiving planning permission. The funds must be to
address a matter without which the permission could not be granted,
such as improved transport facility.
section 131 rights Inheritance rights of a civil partner and their children, as conferred by
Civil Partnership Act 2004 s131. These rights are generally identical to
those of a husband or wife. In Scotland, these rights also apply to
legitim.
section 338 expenses Travelling expenses that may be paid to an employee tax-free under
sectional balancing Bookkeeping procedure of balancing part of a ledger as a step in

balancing the whole ledger. Each part is balanced separately, and the
total of all parts are then balanced. Such methods are not required in
computerised accounting.
sectioning Informal term when a person is committed to care under Mental Health
Act 1983.
sector Identifiable part of an economy, such as the private sector or charitable

sector.
secured Description of a loan subject to a condition that the lender may take
ownership of an asset if the borrower defaults on payment. A mortgage
is a secure loan.
secured creditor Person to whom money is owed under a secured loan.
secured debt Debt, non-payment of which allows the creditor to take the debtor’s
property.
secured loan Loan made on the basis that certain goods may be seized by the lender
if not paid. A mortgage is a secured loan on a home.
secured pension Either a lifetime annuity or a scheme pension.
securities Another name for stocks and shares but also applies to any approved or
registered financial instrument, such as bonds.
For company law, the term is defined in Companies Act 2006 s783.
securities account Account which records the securities held by an individual or

organisation.
Securities and Exchange Commission (SEC)

American official body which regulates the securities markets.
Securities and Futures Association (SFA)

A regulatory body which polices investment businesses, such as
stockbrokers.
Securities and Investments Board (SIB)

The overall regulator of financial services set up under the Financial
Services Act 1986. It is now replaced by the Financial Services
Authority.
securities of negligible value

Securities regarded as being of negligible value for purposes of capital
gains tax.
securitisation Process of making something into a saleable financial product. A

common example is packaging loans.
security An asset which a borrower offers to give up to a lender should the

borrower default on the loan.
security (For VAT) VAT law allows HM Revenue & Customs to require the provision of an
amount of security where it is considered that a business represents a
risk to the collection of VAT.
security deposit Amount paid by one party to a transaction to indicate the seriousness
which that party attaches to the transaction. Should the transaction not
proceed, the security deposit is forfeited to the other party.
security feature Characteristic of a document which is intended to make forgery

difficult. Examples include threads such as stardust, holographic
features, changing images, special paper, complex background
designs, tactile surfaces, tactile printing, and signatures.
security management functions

Term used in National Health Service Act 2006 s195 to describe
functions to prevent and detect fraud in the NHS.
security threat For tax, the provision of accommodation is not a taxable benefit if
provided to protect an employee from a security threat (Income Tax
The threat must be to the employee rather than to property.
security Provisions taken to reduce risks, and which can therefore lead to a
reduction in insurance premium.
SED (1) Single European Declaration, the EU form used to declare imported
goods to Customs.
(2) Seafarer’s earnings deduction.
sederunt book In Scotland, register of sequestrations.
sediment Solid matter that settles from a suspension in liquid.

For some beer this may produce undrinkable sediment on which
beer duty may be relieved.
SEE Small earnings exemption, for class 2 national insurance.
seed For VAT purposes, seeds are zero-rated if used to grow plants for
human or animal consumption. Seeds for other purposes, such as flower
seeds, are standard-rated.
SEED System for Exchange of Excise Data - a EU wide database of Tax

Warehouses and Registered Traders.
seed corn Another term for seed money. The analogy is to grain which a farmer
does not sell but keeps to produce future harvests.
seed money A grant or contribution used to start a new project or organisation.
see through Description of a tax provision that looks beyond the structure of a
transaction or relationship in determining tax liability.
An example is a bare trust¸ where the beneficiary is taxed on the
trust income. Another example is a controlled foreign company that
does not meet the conditions for avoiding UK tax. Such tax avoidance
cases as Furniss v Dawson introduce see through provisions.
see-through register Security feature on modern Bank of England notes.

Each side of the note has part of the £ sign printed on it. Only when
held up to the light does the complete £ symbol appear.
SEF Structured enquiry form, a method whereby payrollers may obtain

answers to questions by e-mailing HMRC using its website.
segmental reporting Reporting revenue, profit, cash flow assets , liabilities for each
geographical and business segment within a business, identifying
segments by the way the organisation is managed.
segmentation (1) In investment, the option to take a proportion of the investment and
leave the rest invested, such as taking 10% of a pension and leaving the
other 90% invested.
(2) The process of dividing a market into groups that display similar
behaviour and characteristics.
seisin Possession of a freehold interest in land.

Historically this arose from feudal law.
seisina facit stipitem Latin: seisin makes the stock of descent. This is an obsolete rule
relating to the inheritance of property.
seizable property Property that may be seized under Proceeds of Criminal Justice and
Police Act 2001. The term is used in sections 50 and 51.
seize The term includes “copy” in Criminal Justice and Police Act 2001 s63.
seized money Money that is claimed under Proceeds of Crime Act 2002 s67.
seizure Forcible removal of someone’s property, such as when a debt or tax is

outstanding and normal methods of recovery have failed.
Sel Cas t King Selected Chancery Cases, series of law reports for the period 1724 to
1733.
selective employment tax (SET)

Tax charged at a flat weekly rate on employing people between 5 April
1966 to 31 March 1973. It was abolished when value added tax was
introduced.
The tax was payable for every employee for whom the employer
had to pay national insurance.
From 4 September 1967, all employers were classified in one of
three groups. The first group (mainly manufacturing in development
areas) had the tax refunded with a premium added. The second group
(mainly food, agriculture, transport and mining) had the tax refunded
without a premium. The third group comprised everyone else who paid
the tax without refund.
A lower rate was paid for women, and lower rates for boys and girls
under 18. The final weekly rate, charged from 5 July 1971, was £1.20
for a man, 60p for a woman or boy, and 40p for a girl.
self-actualisation Highest level of Maslow’s hierarchy, when a person is sufficiently

motivated to achieve their goals.
self administered scheme Occupational pensions scheme where the assets are invested and
managed by the trustees or an in-house investment manager.
self-assessment Requirement for a taxpayer to calculate the amount of tax due when
submitting a personal return. Alternatively, the taxpayer may submit
the return earlier to allow HMRC to calculate the tax. The general
requirement is contained in Taxes Management Act 1970 s9.
self-balancing ledger Ledger where both individual transactions are recorded and where the
total of those transactions are also recorded. The two sets of totals
should always agree. Even in manuscript accounting, this procedure
should not be necessary.
self-billing Where a customer makes out tax invoices for his or her VAT registered
supplier and sends a copy to the supplier, usually with the payment.
self-build Building project where a house is constructed to a person’s exact

specification.
self-certification When a person signs a certificate about himself or herself. An example

is form SC2 that may certify an employee’s sickness for up to seven
days.
self-contained unit For council tax, a building or part of a building that has been
constructed or adapated for separate living accommodation. It can
include a caravan or boat.
The unit should usually contain provisions for sleeping, cooking
and washing.
self-employed Someone who works for himself.

Great care must be exercised in ensuring that a person is legally
within the scope of self-employment to avoid tax liabilities. See
Demibourne.
self-employed contributions
National insurance contributions made by self-employed people. In
practice these are class 2 and class 4.
self-employed earner For national insurance, “means a person who is gainfully employed in
Great Britain otherwise than in employed earner’s employment
(whether or not he is also employed in such employment)” (Social
Security Contributions and Benefits Act 1992 s2(1)(b)).
self-financing Description of an organisation or activity which generates enough

money for its own future needs.
self insured scheme A program financed entirely by the employer for insuring employees
instead of purchasing coverage from an insurance company.
self-liquidating loan Short-term loan secured against something that will raise the funds to
pay back the loan, such as on growing crops.
self regulating organisation (SRO)

A body authorised by the Securities and Investment Board to regulate
and supervise investment business or financial service activities.
self regulation System whereby an area of activity sets up an organisation to regulates

its proceedings. Most professions are subject to self regulation.
self-representation When a person is assumed to be representing himself, and not acting as

an agent for someone else.
UK law and Customs law generally assume that a person is acting
on his own behalf unless he makes it expressly clear that he is acting as
agent.
self-select PEP A general PEP where you can choose which funds you'd like to invest
in.
self-sequestration In Scotland, sequestration proceedings started by the debtor himself.
self-service Shop where customers select the goods they wish to purchase and take
them to a counter for payment. Such shops started to emerge in the
1940s and became the standard method for most retailers during the
1960s.
self-sufficient Description of a person, group or organisation which can manage

without outside assistance. In the context of people from overseas, self-
sufficiency means with an income above income support rates.
self-supply Where the use of goods or services in a business, which the business
itself has made or acquired. Normally, no VAT is due as a taxable
supply has not been made. Under certain conditions, however, VAT on
self-supplies must be accounted for.
sell Make a transaction whereby a person or organisation provides a product

or service for payment.
selon les règles French: according to their rules.
semble It appears. The term is used in law reports to indicate what appears to
be a legal argument, though there is still some doubt.
semi-fixed cost Another term for semi-variable cost.
semi-variable cost Cost which has elements of both fixed cost and variable cost.
semper in dubiis benigni ora praeferenda

Latin: in doubtful matters the more liberal construction should be
preferred.
semper praesumitur pro negante

Latin: the presumption is always in favour of the negative.
sen (1) One hundredth of a riel, currency of Cambodia.

(2) One hundredth of a rupiah, currency of Indonesia.
SEN Special educational needs.
SENA Special educational needs allowance, in armed forces.
senior (1) American term for a retired person.

(2) Description of a sum which is payable before others.
senior capital Capital which takes the form of secured loans to a company. It is repaid
before junior capital, such as share capital, if the company is liquidated.
senior executive Director or other person who holds a high position in an organisation.
senior holder of a share Person who has the right to vote in respect of a jointly owned share
The senior holder is the person whose name appears first on the
share certificate.
senior manager Person in an organisation who holds a managerial position below that of
a director (or equivalent) but above junior managers.
senior partner Partner who acts as the chief executive of a partnership.
senior statutory auditor The individual in an accounting firm who is so identified under either
an EU standard or statutory guidelines (Companies Act 2006 s504(1)).
The senior statutory auditor must sign the audit report for all audits
conducted by his firm.
SEN obligations Obligations imposed on schools by Education Act 1996 Part 4 Chapter
1 in relation to special educational needs.
sensitive personal data Data about a person which is regarded as too personal to be required
automatically but which an individual may be prepared to divulge in
certain circumstances.
Such data include a person’s racial origin, disability, sexual
orientation, criminal record, religion and political view.
sensitivity (1) In management accounting, the ratio of consequence to cause. For

example if a 2% increase in price leads to a 7% drop in income, the
price-income sensitivity is 3.5. Anything above 1.0 is usually regarded
as highly sensitive.
(2) In human resources, the characteristic of some people to react
strongly to negative stimuli. Although this cannot be measured with the

same accuracy as in management accounting, the meaning of the word
is the same. Small variations in sensitivity may be attributed to different
personalities, but high sensitivity should be seen as a personality defect.
sensitivity analysis Analysis of the relationship between causes and effects. Such analysis
usually considers small changes, such as a small variation in price or
small variation in sales volume, and considers how this will impact on
the business.
sent for trial “Means, in relation to England and Wales, sent by a magistrates’ court
to the Crown Court for trial pursuant to section 51 or 51A of the Crime
and Disorder Act 1998” (Interpretation Act 1978 Sch 1).
sents One hundredth of a kroon, currency of Estonia.
sentence Punishment imposed by a court for breach of criminal law. Courts Act
1971 s57 states that the term includes hospital orders and
recommendations for deportation.
Sentencing Advisory Panel

Panel established under Criminal Justice Act 2003 s169 to give advice
on sentences under criminal law.
Sentencing Guidelines Council

Council established under Criminal Justice Act 2003 s167 to provide
guidelines on sentences under criminal law.
sentiment In economics, belief as to what is happening or will happening.

In general, markets tend to move on sentiment rather than on reality,
partly because reality is not always fully known at the time. If investors
feel optimistic, they will invest in accordance with that optimism which
then becomes a self-fulfilling prophecy.
Seoul Declaration Agreement reached in September 2006 between various tax

administrations, including the UK. This agreement came from the
routine meeting of the OECD’s Forum on Tax Administration which
meets about once every 18 months.
The declaration pledged the participants to work together on matters
of common interest, particularly regarding tax intermediaries.
separate maintenance Maintenance paid by a former partner to the other, on condition that
they live apart.
separable net assets Assets which can be separated from other fixed assets of a business and
sold separately.
separate use Words used in Value Added Tax Act 1994 Sch 8 Group 6 Item 2 Note
(c) in relation to the zero-rating for approved alterations to a protected
building.
The meaning of these words were considered by the Upper Tax
Tribunal in the case HMRC v Kunn [2009] UKUT 244 in relation to a

building within the cartilage of a protected building.
separate valuation concept

Accounting principle that assets and liabilities must be separately
disclosed and not netted off.
separation of legal title When the financial recognition does not follow the legal recognition.
This follows from the accounting concept of substance over form.
Common examples include fixed assets acquired under a finance
lease, and goods bought or sold with reservation of title. The issue is
discussed in FRS 5 para 48.
separation In marriage, living apart.

A deed of separation may be made. This typically includes clauses
relating to financial arrangements, and may include provisions about
non-molestation.
A decree for separation may be granted by a court under
Matrimonial Causes Act 1973 s17.
An order for separation may be made by a court under Matrimonial
Proceedings (Magistrates’ Court) Act 1960 s2.
A couple that is separated is still legally married, though they are
generally regarded as not married for most tax purposes.
separation order The equivalent of divorce in a civil partnership (Civil Partnership Act
2004 s179).
sequester Seize a bank account or other assets under a sequestration (either

meaning).
sequestration (1) Process of seizing the bank account or similar assets of a body under
a court order
(2) In Scotland, procedure similar to bankruptcy.
sequestration for rent In Scotland, insolvency procedure started by a landlord.
SER (1) Special Export Refund.

(2) Small employer’s relief.
serial entrepreneur Person who keeps starting new businesses.
series Run of consecutive numbers, such as for invoices.
Serious Fraud Office (SFO)

Government department which investigates serious fraud in UK.
serious loss of capital When the net assets of a company are worth half or less the value of its
called-up share capital.
A public company in such a situation must call a general meeting
under Companies Act 2006 s656.
Serious Organised Crime Agency (SOCA)

Body corporate established under Serious Organised Crime and Police
Act 2005 s1.
SERPS State Earnings Related Pension Scheme.

This was a form of additional pension which operated from 1978
to 2002 when it was replaced by the similar state second pension.
sertum For VAT, gold investment coin issued by Bhutan and listed in VAT
notice 701/12A.
SERV Handbook Guide for service companies, produced by the Financial

Services Authority.
servant Person who works for another, such as an employee or apprentice.
servants It is still a criminal offence for a master or mistress not to provide food,
clothing or lodging for an apprentice or servant when required to do so
(Offences Against the Person Act 1861 s26). A similar offence appears
in Conspiracy and Protection of Property Act 1875 s6.
server Computer or software package that provides a specific kind of service

to client software running on other computers. An ISP's servers allow
users to connect to the Internet.
service (1) Intangible supply, such as sweeping a drive, repairing equipment or

producing accounts.
(2) Process by which documents are considered to have been legally
passed to a person.
(3) Quality of treatment a customer receives from a shop or other
provider of goods or services.
(4) Length of time an employee has worked for the employer.
service address Address which a director of a company must give for himself in the
register of directors.
The address is either his residential address or the company’s
registered office (Companies Act 2006 s163(5)).
The company must know the residential addresses of all its directors
and notify these to Companies House. However, residential addresses
do not have to be made public. Certain statutory bodies, such as the
police, have the right to know the director’s residential address.
service bureau Organisation whose function is to help other organisations.
service charge (1) Amount added to a bill to reflect services provided, such as a charge
imposed on a bank account or added to the bill in a restaurant.
(2) Amount paid by tenants for the maintenance of common parts of the
building, such as cleaning, maintenance and repairs.
Service Civilian Court Court other than a court martial which try military offences (Armed
Forces Act 2006 s51). It comprises a single judge from outside the
military.
service company For pensions, a company which is formed solely or principally to

provide pension services to other companies in the group (Pensions Act
2004 s44).
service comptabilité French: accounts department
service contract Contract between a company and a person who personally undertakes
to provide services to that company.
There are special provisions for directors’ service contracts.
service detention Punishment of holding a military person in custody for an offence.
service industry Industry which does not provide tangible goods but offers services for
sale.
service offence Offence committed by military personnel which may be tried by court
martial (Armed Forces Act 2006 s50(2)).
service police Royal Navy Police, Royal Military Police or the Royal Air Force Police
(Armed Forces Act 2006 s375).
service policy Statement which a broadcaster must draw up under Communications

Act 2003 s268 to show how it is meeting its public service remit.
service restraining order

Order which may be imposed on military personnel after a hearing of
an offence (Armed Forces Act 2006 s229).
services (1) Intangible supplies offered for sale.

(2) Help and other forms of assistance provided to businesses.
(3) Utilities, such as electricity and water, provided to premises.
(4) The armed services.
SES Standard Exchange System - is a variant of Outward Processing Relief

(OPR), which allows duty relief to be granted on goods imported as
replacements for faulty goods which have been exported from the
Community for repair. Traders may import replacements before the
faulty goods are exported, if they are authorised to use SES with prior
importation.
set Collection of items which are designed to be sold or used together.
set against Process of offsetting one amount against another.
set off Process of using a debt owed by A to B to reduce a debt owed by B to

A, or a similar arrangement.
set rate An amount laid down by law, particularly for such payments as
statutory maternity pay (SMP) or statutory sick pay.
A woman receives SMP at the set rate except for the first six weeks,
when she receives 90% of average earnings provided this is greater
than the set rate.
SETS Stock Exchange Electronic Trading Service.

It is the main trading system for the London Stock Exchange.
Less liquid securities are traded on SETSqx.
SETSqx Stock Exchange Electronic Trading Service — quotes and crosses.

Trading platform introduced by London Stock Exchange from 8
October 2007 for securities that are not sufficiently liquid to be traded
on SETS.
setting For capital allowances, a distinction is made between plant and its
setting. The latter does not attract a capital allowance unless the setting
itself comes within the definition.
settle (1) Place a property in a trust. The property is placed by a settlor where
trustees deal with it for the benefit of beneficiaries.
(2) Pay a debt or otherwise conclude a matter.
settled account An account where both the accountable party and the person to whom
he is accountable have agreed terms which they both accept as correct.
A settled account must be in writing and signed by both parties.
Settled account is a good defence against to an action for account unless
it can be shown that there was error or fraud.
settled estate Estate that is put into a trust.
settled land Land that is limited by way of succession (Settled Land Act 1925).
An example is where land is left to A for the rest of his life, and
then to B.
settled property Assets put into a trust.

For capital gains tax, the definition is “any property held in trust,
other than trust to which section 60 applies” (Taxation of Chargeable
Gains Act 1992 s68). Section 60 deals with nominees and bare trusts.
settlement (1) Financial arrangement where one party, the settlor, provides money
or other assets for use by a beneficiary (which may include the settlor).
All trusts are settlements, but “settlement” is wider and also
includes such arrangements as a joint bank account.
There is no definition for tax purposes, except one for the limited
purpose of tax avoidance. This defines a settlement as “any disposition,
trust, covenant, agreement, arrangement or transfer of assets” (Income
Tax (Trading and Other Income) Act 2005 s620(1)).
(2) Payment of an account, or otherwise clearing the balance.
(3) The form of an agreement once negotiations have successfully been
agreed.
settlement business assets For entrepreneurs’ relief, “means —

(a) assets consisting of (or of interests in) shares in or
securities of a company, or
(b) assets (or interests in assets) used or previously used for the
purposes of a business,
which are part of the settled property
(Taxation of Chargeable Gains Act 1992 s169J(2)).
settlement costs The cost arising when a lump-sum payment is made to a pension
scheme member in exchange for their rights to receive certain pension
benefits.
settlement date Date on which payment must be made, particularly for securities.
settlement day (1) Day on which a purchaser of a security must pay for it.
(2) In the USA, the day on which securities become the property of the
purchaser.
settlement terms The period which a seller allows a buyer to pay for the goods or
services supplied.
This is usually expressed as a time, such as 30 days or 60 days.
There are other possible settlement terms such as net monthly account.
settlor Person who provides property in a trust and creates the trust.
For capital gains tax, the term means “the person, or any of the
persons, who has made, or is treated for the purposes of this Act as
having made, the settlement” (Taxation of Chargeable Gains Act 1992
s68A(1). The section goes on to define settled property.
settlor-interested Description of a trust where the settlor retains a benefit. In such cases,
the trust income is usually taxed as being the settlor’s.
For capital gains tax, the trust is taxed from 2008/09. This can
create a problem in that the settlor cannot offset his own capital gains
against trust losses, and vice versa.
settlor’s threshold amount

The exception that applies to the first slice of a trust’s taxable income,
as set out in Income Tax Act 2007 ss491-492.
The amount is £1,000 for a single trust created by one settlor, or this
figure divided by the number of trusts created by one settler (so each of
four trusts has an amount of £250, for example), except that the figure
is never less than £200.
seven-day money Investment or deposit which matures or may be accessed in seven days.
seventh directive Term commonly refers to the EC seventh directive on company law
issued in 1983 relating to consolidated accounts. It was given effect in
UK by Companies Act 1989.
severally Description of a liability which applies individually. The term “jointly

and severally” is often used in a financial transaction where there is
more than one person on one side of the transaction. The expression
means that the other party may claim from the people collectively or
any one of the people that he chooses.
severance pay American term for termination payment.
severe disablement allowance

Social security benefit that was abolished for new claimants from 6
April 2001, but is still paid to existing claimants under Social Security
Contributions and Benefits Act 1992 s68. New claimants will instead be
considered for employment support allowance.
severe disfigurement This can amount to a disability (Disability Discrimination Act 1995 Sch
1 para 3).
severe impairment of intelligence

This can be a factor in determining eligibility for social security
benefits, such as disability living allowance. The criterion is generally
accepted as an IQ of 55 or less.
severe mental impairment

Old term referring to a person of reduced mental capacity. This term is
dropped under Mental Health Act 2007 s1(3)(a).
severe reprimand Formal rebuke, particularly when given by a professional body for
misconduct by a member. In this context, it is more severe than a
reprimand or admonition.
sewerage Service of disposing of foul water.

Generally this supply is zero-rated for VAT for domestic premises
under Value Added Tax Act 1994 Sch 8 Group 2, but standard-rated
from 1 July 1990 for business premises. Further details are given in
VAT notice 701/16.
sex (1) Whether a person etc is male or female.

(2) Colloquialism for the act of sexual intercourse.
sex discrimination Treating a person less favourably because of their sex, marital status or
pregnancy.
This is generally outlawed under Sex Discrimination Act 1975.
Note that this does not apply to pay which is governed by Equal Pay
Act 1970. This only allows a woman to claim equality with a man, it
does not allow a man to claim equal pay to a woman, though such a
claim has now succeeded under the 1975 Act.
sexual orientation Whether a person (male or female) is heterosexual or homosexual.
SFA (1) Securities and Futures Authority.

(2) Skills Funding Agency.
[Neither body seems to have realised or cared that these letters also
stand for Sweet Fanny Adams or Sweet F*** All, both of which mean
no money when some was expected.]
SFAS Statement of Financial Accounting Standards.
SFD Simplified Frontier Declaration.
SFO Serious Fraud Office.
SFT Securities financing transaction.
shadow ACT Unrelieved advance corporation tax (ACT) from 6 April 1999.
ACT was a prepayment of corporation tax. It was charged every
time that a company paid a dividend. The company could deduct ACT
paid from its main payment of corporation tax to a limit. Unrelieved
ACT was carried forward.
Although ACT was abolished from 6 April 1999, unrelieved ACT
may continue to be offset against payments of corporation tax under
rules similar to those that previously applied.
shadow banking system Collective term for financial institutions that are not banks but help
provide funding for businesses. They can include unit trusts and other
forms of collective investment, insurance companies, investment banks,
pension funds and trusts. The system grew significantly from 2000.
As these institutions are not banks, they are not subject to the same
financial regulation as banks. This was regarded as one of the factors
which led to the financial crisis of 2007-2009.
shadow cabinet Group of politicians from the opposition party comprising its leading
spokesmen, copying the Cabinet of the ruling party.
shadow director Person who acts as a director of a company even though he does not
officially hold that position. Such a person usually has all the duties and
liabilities of a director.
The statutory definition is “a person in accordance with whose
directions or instructions the directors of the company are accustomed
to act” (Companies Act 2006 s251(1)).
Someone is not a shadow director just because he provides advice
in a professional capacity (ibid s251(2)).
sham Description of something that is not genuine, particularly where an act

appears to create legal rights other than those that are created.
sham transaction Transaction which is not genuine.

“It is of the essence of this type of sham transaction that the parties
to a transaction intend to create one set of rights and obligations but do
acts or enter into documents which they intend should give third parties,
in this case the Revenue, or the court, the appearance of creating
different rights and obligations” (Arden LJ in Hitch’s Executors v Stone
[2001] STC 214. CA).
For VAT purposes, input tax may not be claimed for a sham
transaction. It is not necessary for HMRC to show that there is any
fraud. It is sufficient that HMRC provides sufficient evidence to
demonstrate that the transaction is not genuine. Examples include
Plasma Trading Ltd v HMRC [2006] and Senergy (UK) Ltd [2006].
shandy Mixture of beer and lemonade (or other non-alcoholic sparkling drink).
If the shandy’s alcoholic strength is more than 1.2%, it is treated as
an alcoholic drink and is subject to beer duty.
share Part of something. The term is particularly used to mean a part of the
ownership of a company.
In company law, a share “means a share in the company’s share
capital” (Companies Act 2006 s540(1)).
share account Account at a mutual building society where the depositor part-owns the
society.
share acquisition agreement

Agreement between parties relating to the future acquisition of shares in
a company. The relevant law is Companies Act 2006 ss824-828.
share allotment form Another name for an allotment letter.
share at par Share whose current value is the same as its nominal value.
share attachment Tendency of private investors to retain shares for sentimental reasons
when they should be sold.
share capital Name given to the total amount of cash which the shareholders have
contributed to the company.
share certificate A document providing evidence of share ownership.

Under Companies Act 2006 s768(1), a certificate is “prima facie
evidence” of ownership.
share costs Costs in relation to a company’s share dealing and records.

In general, costs of maintaining share registers and communicating
with shareholders are allowable as tax deductions. Costs in relation to
share issues are not. The matter is discussed in the Inspectors’ Manual
at BIM42510.
share coupon Detachable portion of a share warrant by which the bearer may claim
a dividend. The law is contained in Companies Act 2006 ss779-781.
shared car Company car that is used by two or more employees. The tax
implications are set out in Income Tax (Earnings and Pensions) Act
2003 s148.
share dividend Dividend paid according to the number of shares held.
share disposal Process by which a person no longer possesses shares. The three main
methods are:
● transfer: the shares are sold or given by the owner to another
party;
● transmission: the shares change ownership on the death of the
shareholder;
● forfeiture: the shares are cancelled, such as for non-payment of a
call.
shared ownership Term used by international property companies for a form of

timeshare.
The main differences are that the number of participants is usually
fewer (typically about five) and they collectively own the property and
thus benefit from any capital gain.
shared lives Scheme whereby individuals may look after adults, usually by taking
the adult into the individual’s home, similar to fostering of children. It
was previously known as adult placement.
From April 2010, the tax regime for foster carers is extended to
shared lives carers (SL carers).
share exchange Where shares in one company are exchanged for shares in another.
If either company is a transparent entity, the provisions of
Taxation of Chargeable Gains Act 1992 s140H apply.
ShareGift Charity that allows for the equitable disposal of small shareholdings.
Suppose that a holding of £1,000 is now worth just £10. The
holding is impossible to sell as the sum realisable is less than the
dealing cost. Continuing to hold the shares creates the inconvenience
for both the company and shareholder of receiving regular dividends of
a few pence, where the bank charges may be greater than the dividend.
Under ShareGift, registrars waive their usual fee, so that the £10
holding is wholly assigned to the charity. It is aggregated with other
small holdings in the same company to provide a significant income for
charity. This arrangement provides an equitable solution for cleaning up
portfolios to everyone’s advantage.
A donation to ShareGift constitutes a disposal for the purposes of
capital gains tax.
shareholder Person who owns one or more shares in a company.
shareholder value Total return to shareholders collectively.
shareholder valuer analysis (SVA)

Calculation of the value of a company according to the return it
provides to shareholders.
shareholders Owners of a limited liability company.
shareholders’ equity Another name for shareholders’ funds.
shareholders' funds Name given to total of share capital and reserves in a company
balance sheet.
shareholders’ funds “The aggregate of called up share capital and all reserves, excluding
minority interests” (FRS 4 para 15).
shareholding The shares which a shareholder holds in a particular company.
share loss relief Tax relief for certain loss suffered on qualifying shares, such as
acquired in Enterprise Investment Scheme, which may be offset against
earnings subject to income tax (Income Tax Act 2007 s131) or
corporation tax (Corporation Tax Act 2010 s68).
Capital gains tax implications are set out in Taxation of Chargeable
Gains Act 1992 s125A.
share number Number allocated to a share certificate or shareholding. It is a general

requirement that shareholdings are so numbered (Companies Act 2006
s543).
share option Right to buy or sell shares at a future date for a fixed price.
There are two types of share option. The traditional option is
simply buying the right. A traded option is a right which is itself a
saleable security.
Share options are sometimes provided free to directors and senior
managers as an incentive.
A share option is a highly-geared form of investment. Suppose a
person pays 20p for an option to buy a share for £2 in a year’s time. If
the share is then worth £1.99, the option is worth zero as it is cheaper to
buy the shares on the open market. If the share is then worth £2.40, the
investor makes an immediate profit of 40p per share, which is a return
of 200%.
National insurance provision is given in Social Security
Contributions (Share Options) Act 2001.
share pooling For capital gains tax, the rules that determine the acquisition cost for
shares and other securities acquired at different times.
The rules are given in Taxation of Chargeable Gains Act 1992 from
s104.
share premium Amount paid by a shareholder to buy a share above its nominal value.
share premium account Amount by which a company issues shares at a premium. There are
various provisions in company law from Companies Act 2006 s610
onwards that relate to such accounts and restrict their use.
share quoted ex dividend Share whose price does not include the right to the next dividend.
share split When one share is divided into several shares of smaller value to make
trading in them easier.
shares requirement Conditions which must be met by the shares to obtain tax relief for their
acquisition under a scheme, particularly the requirements for EIS relief
under Income Tax Act 2007 s173.
shares with limited rights Certain corporation tax implications on distributions are discussed in
shares with temporary rights

Certain corporation tax implications on distributions are discussed in
share value Value of a share of a company. Most shares have a nominal value. This
is the amount for which they were originally sold.....
shareware Computer software which may be used free of charge for a trial period,
after which a registration fee must be paid to be allowed to continue
using it.
share warrant Rare form of share certificate where ownership is vested in whoever
possesses the document. The relevant law is Companies Act 2006 s779.
Payment may be made by presenting a share coupon attached to the
warrant.
Sharia Code of conduct and law for Muslims.

In finance, Sharia excludes payment of interest which has led to the
development of Islamic finance.
Sharkey v Wernher Leading tax case from the House of Lords in 1955 which held that
where goods are removed from a trade for the taxpayer’s personal use,
the value of the goods must be their retail price and not the cost price at
which the goods will usually be recorded in the accounts. This usually
means that a profit margin must be added to the value for tax purposes.
The original case concerned a stud farm where five horses were
removed to racing stables. Their value considerably exceeded the cost
of breeding them. The matter is discussed in the Inspectors’ Manual at
BIM33630.
This rule is now contained in Income Tax (Trading and Other
Income) Act 2005 ss172A-172F, and, for companies, in Corporation
Tax Act 2009 Chapter 10 Part 3.
shark Colloquialism for someone who engages in aggressive practice that is

either illegal or on the borders of the law.
shark hunter Term coined by the Department of Trade and Industry in 2005 to
describe officers who seek to catch loan sharks.
shearing Term used in inheritance tax when a person makes a disposition of less
than the whole property, such as when a right over land is granted but
the ownership is retained. The principle was established in the Munro
case.
Shed identity A 3-letter code that provides a unique identity for a transit shed located
at a Cargo Community System (CCS-UK) airport.
shekel Currency of Israel.
shelf registration American term for a registration of a company with the Securities
Exchange Commission before shares in the company are offered to the
public. A shelf registration is valid for two years.
shelfware Business jargon for computer software that is bought but not used.
shellfish For VAT, shellfish are only zero-rated if for food. VAT notice 701/15
defines this as “oysters, mussels, whelks etc”.
shelter Protected place. This may be a physical place, or a financial

arrangement which protects funds, such as placing them overseas.
sheltered accommodation Living accommodation where assistance is available on site, such as

from a warden.
There is an exemption from the national minimum wage where
work and sheltered accommodation are provided as part of a
programme to assist people back into normal life. The conditions for
this exemption are:
● the worker is at least 26 years old;
● the shelter is provided as part of the rehabilitation
programme;
● the worker is provided with training as part of the
programme.
sherry Alcoholic drink made from blending wine with spirits. It is an

exception to some of the rules regarding the blending of liquors
shilling One twentieth of a pound, now worth 5p.

Before decimal currency was introduced in 1971, a shilling was a
unit of currency divided into 12 (old) pence.
ship For the purposes of establishing whether a taxpayer is a seafarer, a ship

“does not include an offshore installation” (Income Tax (Earnings and
Pensions) Act 2003 s40(5)(b).
For VAT, supply is zero-rated under Value Added Tax Act 1994
Sch 8 if the ship weighs at least 15 tonnnes, or is a lifeboat, houseboat
or boat adapted for use by a disabled person. The weight is the gross
tonnage.
Leasing of ships is an excluded activity for venture capital trust
purposes under Income Tax Act 2007 s305.
A merchant shipping company may use tonnage tax.
shipbuilding This activity is excluded from eligibility for venture capital trust under
Income Tax Act 2007 s307A.
This section defines shipbuilding as set out in EU Framework to
State Aid on Shipbuilding 2003/C 317/06, where para 10 states:

“‘shipbuilding’ means the building, in the Community, of self-propelled
seagoing commercial vessels”.
SHIP code of practice Code for businesses which offer various equity release schemes.
ship leasing Activity which excludes a company from the scope of EIS relief. It is
ship money Tax that Charles I tried to levy from 1634 without parliamentary
consent.
shop Place where the public may enter to purchase goods.
short-dated gilts Government security which is payable within five years. They are also
known as shorts.
shortfall Amount by which the actual is less than the budgeted.
short lease Lease which lasts for a short period, typically up to three years.
In tax law, a term that applies to a funding lease where the term is
either:
● less than five years; or
● between five and seven years and the lease meets three
further conditions.
These conditions are that:
● the lease is treated as a finance lease in the books of the
lessor;
● the residual value of the finance lease is less than 5% of the
market value of the plant at the start of the lease term: and
● total rentals in the first year are no lower than 90% of the
rentals in the second year. and rentals in any year after the second year
are no greater than 110% of those in the second year.
The third of these conditions is to exclude leases where a large
payment is made on the first day for tax avoidance purposes.
short life asset For capital allowance purposes, an asset which is plant and machinery
but which is not a long life asset.
short list Reduce list, particularly of applicants for a position.
short order Court order giving a person limited powers to deal with the affairs of a
person who lacks mental incapacity.
short period driving licence

Driving licence issued to a person with a medical condition which
makes a normal indefinite licence inappropriate. The period is usually
one, two or three years.
short position Situation where an investor sells short, that is he sells he does not yet
own in the hope that he will be able to buy them more cheaply later.
short-range forecast Statement of what a person expects to happen in the immediate future,
typically a few months.
short return In tax, four-page tax return that may be used under the self-assessment
system for straightforward cases. The form is issued at the discretion of
HMRC. A taxpayer who is asked to complete a short return may
complete the normal return, and should do so if his or her tax affairs
cannot be adequately disclosed on the short return.
short rotation coppice Method of producing renewable fuel. It involves dense planting willow
or poplar which are cut back to ground level each year. From 29
November 1994, this is taxed as farming and not as commercial
ownership of woodlands.
shortseller American term for uncovered bear.
short selling Selling a security which a person does not own in the expectation of
being able to buy it later at a lower price. Such a person is known as a
bear.
The Financial Services Authority has powers to prohibit short
selling under Financial Services and Markets Act 2000 s131B. The term
is defined in s131C(2).
short service refund lump sum

A lump sum benefit paid to a member of an occupational pension
scheme because they have stopped accruing benefits under the scheme
and have less than two years of pensionable service under the scheme,
and which meets the conditions of paragraph 5, Schedule 29 to the
Finance Act 2004.
short-service refund lump sum

Refund of an employee’s contributions to an occupational pension
scheme when the employee leaves before becoming entitled to any
pension benefits. This usually applies when an employee leaves within
one year.
Such a lump sum is taxed at 20% on amounts up to £10,800 and at
40% on any excess. This is regardless of the rates of income tax the
employee otherwise pays.
short skirt The VAT and economic implications are explained under mini-skirt.
short-term Description of anything which relates to a short period of time.
short-term annuity An annuity contract purchased from a member's unsecured pension

fund held under a money purchase arrangement that provides that
member with an unsecured pension income for a term of no more than
five years (not reaching to or beyond their 75th birthday), and which
meets the conditions imposed through paragraph 6, Schedule 28 to the

Finance Act 2004.
short-term assurance Life assurance policy where any pay-out is likely to be made soon after
the policy was issued. The term is used in Income and Corporation
Taxes Act 1988 Sch 15 para 10 which disallows from tax relief such a
policy issued by a friendly society with a life of less than one year.
short-term benefit Contributory social security benefit payable for a short period.
These are defined in Social Security Contributions and Benefits Act
1992 s20(2) as:
(b) short-term incapacity benefit; and
(c) maternity allowance.
Item (a) was jobseeker's allowance but was removed from the list
by Jobseekers Act 1995 Sch 3.
Item (b) is repealed by Welfare Reform Act 2007 s67 from a date to
be announced.
short-term capital Capital which a business acquires for less than 12 months to fund its
business activities.
short-term creditor Person to whom money is owed that is due for payment in the next 12
months.
short-term debtor Person who owes money that is due for payments in the next 12
months.
short-term employment Employment for a period of three months or less (Trade Union and
Labour Relations (Consolidation) Act 1992 s282). Such an employee
does not have protection against redundancy.
short-term finance Money lent to a business for a short period of time, usually repayable
on demand and also repayable at the choice of the business if surplus to
requirements.
short-term forecast Same as short-range forecast.
short-term security Any form of security which matures within five years.
short ton American measure of weight equal to 2,000 pounds. The British ton is
2,240 pounds. The metric tonne is about 2,204 pounds.
The British ton is therefore 12% heavier; the US ton is 11.72%
lighter. The short ton equals 907.185 kilograms.
shoulder surfing Practice of looking over someone’s shoulder while they are using a
chip and pin card to find out their PIN number.
showcasing Arrangement whereby someone in the arts arranges an exhibition,

concert or similar production to demonstrate his or her talent.
Provided this has a genuine commercial nature, the loss is tax-
deductible as revenue. A leading case was Lunt v Wellesly [1945]

BIM37785.
showroom tax Term coined in 2008 for the increased vehicle excise duty payable for
the first year for new large cars with high carbon dioxide emissions.
shrinkage Amount by which something reduces in size. The term is particularly

used for loss of stock through shoplifting and staff theft.
SI (1) Statutory Instrument, secondary legislation, made by ministers

under powers granted to them in an Act of Parliament.
(2) Country prefix code for Slovenia.
SIB Securities and Investments Board.
sic Latin: thus.

Indication in a text that it is reproduced correctly, such as when it
contains a grammatical or other error.
sick club Scheme run by many doctors in general practice from around 1858 to
1948. Members paid a subscription, originally sixpence a week, to
cover the cost of any medical treatment.
sickness and accident Description of an insurance policy which pays a benefit to a beneficiary
who is unable to work through sickness or accident. Normally pays out
for a set period, i.e. one or two years.
sickness benefit Social security benefit payable to those who are sick and not eligible for
statutory sick pay. It was introduced on 5 July 1948 in its present form
at a rate of £1 6s (£1.30) a week for a man.
Before 5 October 1986 there were half and three-quarters rates for
claimants with insufficient national insurance to claim the full rate.
sickness benefits-related voucher

Expression used in Income Tax (Earnings and Pensions) Act 2003 s76,
which states how such a voucher should be taxed as a benefit in kind.
sickness payment For national insurance, “any payment made in respect of absence from
work due to incapacity for work” (Social Security Contributions and
Benefits Act 1992 s4(3)).
sick pay Payment of normal or reduced wages while an employee is sick.
sic utere tuo et alienum non laedas

Latin: so use your own property as not to injure your neighbour’s.
SID Senior independent director.
sideways loss relief When a loss from one trading activity may be offset against the profits
of another trading activity in the same accounting period. It should be
noted that this relief cannot be carried forward or back to other periods.
It must be claimed within two years of the end of the loss-making

accounting period.
For companies, this relief is given by Corporation Tax Act 2010
s37. For individuals, it is given by Income Tax Act 2007 s75.
From 2 March 2007, there are restrictions on the ability to offset
such losses from a partnership or limited liability partnership,
particularly when the partner has not been actively involved in the
management of the partnership.
sideways relief Another name for sideways loss relief.
SIFA Part of the Financial Services Authority’s Handbook Guide entitled

Using the FSA Handbook: an Overview for Small IFA firms.
sight deposit Funds in a bank which may be withdrawn immediately.
sight draft Bill of exchange which is payable when presented.
sigma The Greek letter denoted by the symbol Σ.

In mathematics this is used to denote the sum of a series of a digits.
signatory Person authorised to sign documents for an organisation.
signature Stylised form of a person writing his or her name to indicate that that
person authorises the document. It is not a requirement that the
signature be legible, though legible signatures are often seen as more
difficult to forge.
It is a requirement that a tax return on paper must be hand signed by
the taxpayer (Taxes Management Act 1970 8(2)).
Where a taxpayer cannot act for his or her own benefit, an attorney
may sign the forms under statement of practice A13 of 18 June 1979.
An attorney may also claim tax on building society interest for
taxpayers unable to act for themselves (Tax Bulletin TB04/96-5 of 22
April 1996).
For bills of exchange, “where, by this Act, any instrument or
writing is required to be signed by any person, it is not necessary that he
should sign it with his own hand, but it is sufficient if his signature is
written thereon by some other person by or under his authority” (Bills
of Exchange Act 1882 s91).
signet ring Ring worn on the finger which bore an impression identifying the
wearer. This could be pressed into soft sealing wax to indicate that the
document had the authority of the wearer.
significant This word is used in various accounting contexts, such as in FRS 5 on

reporting the substance of financial transactions. In this context,
whether an asset or liability remains recognised depends on whether
there have been any “significant” changes. Para 25 says “’significant’
should be judged in relation to those benefits and risks that are likely to
occur in practice, and not in relation to the total possible benefits and
risks”. A similar definition appears in para 75.
significant difference In statistics, a difference which indicates a relationship between results.

This is usually regarded as being around 20%.
If a test to see if there was any correlation between A and B showed
average results of 1.03 with B and 1.07 without B, there is no
significant difference, as such a difference could just be down to
statistical sampling. If the results were 1.03 and 1.27, there is an
indication that there probably is some significant different. This leads
on to considerations of causation.
significantly below cost Term used in VAT notice 701/1 in relation to supply of welfare
services.
These are treated as being not a business supply if significantly
below cost, which means for no more than 85% of the cost to the
welfare service provider.
significant pain or discomfort

Term used in VAT notice 701/2 in relation to the supply of welfare
services.
If a person cannot perform routine domestic tasks without
significant pain or discomfort, an organisation performing such tasks
for such a person may be providing a zero-rated supply.
signing-on fee Fee paid to someone, particularly a sportsman, to join an organisation.

The tax treatment of such fees is discussed in the inspectors’ manual at
EIM00700 and EIM00710. In most cases, a signing-on fee is now
regarded as taxable as employment income.
sign-up A term used for the process of signing up for VAT Online Services by
obtaining and using a Government Gateway user ID.
silver ceiling Business jargon for an unofficial limit to promotion for older
employees.
silver coins Silver has been used as a means of exchange from early days. Until
1920, British coins were minted from sterling silver, where 925 parts
are silver and only 75 base metal. In 1920, the ratio was reduced to
500:500. From 1947, “silver coins” are minted from cupro-nickel
except for Maundy money.
silver plate tax Excise duty charged on silver plate between 1756 and 1776.
silver threepence Small silver coin minted between 1547 and 1937 worth three old pence
(1¼p). It was traditionally put in Christmas puddings.
silverware tax Excise duty on the manufacture of silver goods, charged between 1720
and 1758, and again from 1784 to 1790.
Sim Simon’s Reports, law reports of Chancery from 1826 to 1852.
simalcrum Sham arrangement.
similiter Latin: in like manner.
Simon, John English Liberal politician (1873-1954) who was Chancellor of the
Exchequer from 28 May 1937 to 10 May 1940 under the coalition
government of Neville Chamberlain. He subsequently became Lord
Chancellor. As a judge, he edited the early editions of what became
Simon’s Taxes.
simple average cost The average value of a unit of stock, calculated as the average price
paid during the accounting period. This method is usually not used in
preference to First In First Out.
simple contract Contract made other than under seal, but which is a formal contract.
simple contract debt Debt arising from a simple contract.
simple interest Where interest is charged on the principal but not on any interest
already applied, as with compound interest.
If simple interest of 10% is charged on capital on £100, the interest
is £10 in year 1, £10 in year 2, and £10 in every subsequent year.
For compound interest, the interest is still £10 in year 1. But in year
2, the balance is now £110, so the interest is £11. In year 3, it is £12.10.
The sum keeps increasing in future years.
simple journal entry Journal entry that involves just one debit entry and one credit.
simple lottery Form of lottery where all the prizes are awarded by chance (Gambling
Act 2005 s14(2)). This covers most forms of raffle and tombola, as well
as the National Lottery.
simple trust Trust created simply by passing property to trustee.
simpliciter Latin: simply, without addition or qualification.
Simplified Administration
The system most often used to administer group insurance. Designed to
keep administration overheads to a minimum. Normal changes in
membership and benefit need only be advised to the insurer on a
periodic (usually annual) basis.
Simplified Administrative Accompanying Document (SAD)

A control document for duty paid goods moving between European
Union (EU) Member States.
simplified card Part of the original PAYE scheme where domestic servants could
always be paid on a week 1 basis without using cumulative tax codes.
Simplified Frontier Declaration (SFD)

Customs declaration for goods imported under the CFSP arrangements.
An SFD contains a minimum amount of information and is

submitted at the frontier. Presentation of an SFD enables clearance at
the frontier or removal to Local Clearance Procedure Clearance
Procedure for goods imported under CFSP.
Simplified International Trade Procedures Board (SITPRO)

Trade facilitation organisation funded through the Department for
Business Enterprise and Regulatory Reform. Mainly concerned with
procedures and documentation related to international trade.
Reconstituted as a company in 2001, under the name SITPRO Ltd.
simplified procedure Any alternative tax procedure that is less involved than the normal
procedure and may be used in simple cases.
The term is particularly used for VAT on installed and assembled
goods supplied to another EU member state, as explained in VAT
notice 725.
There is also a simplified procedure in triangulation which means
that the intermediate supplier need not register in another EU member
state. This is also explained in VAT notice 725.
sine die Latin: without day. Expression used to refer to a case that is adjourned
indefinitely.
sine ira et studio Latin: without ill-will and without favour.
sine qua non Latin: an indispensable condition.
single The status of being unmarried. A single man is a bachelor; a single

woman is a spinster.
Single Administrative Document (SAD)

A multi-purpose customs document which must generally be completed
for Customs purposes for goods imported into the UK.
The SAD must state:
● the ship’s name or aircraft flight number;
● date of arrival;
● bill of lading or air waybill number;
● post or place of loading;
● identification number of ship or aircraft;
● original place of loading;
● destination;
● description of goods, including identification marks on
containers, and details such as quantity, weight or volume;
● any other Customs document completed for the importation;
and
● the name, address and capacity in which the form is signed.
A SAD may be commercially produced if approved by Customs.
single alternative inspection location (SAIL)

Term used by Companies House for where a company’s records are
kept for inspection and which is not its registered office.
single claim Term used for tax credits by a person claiming for themselves alone,
unlike a joint claim.
single collection Service offered by Royal Mail, whereby a single item of mail is
specially collected for an additional charge.
single company In relation to tax provisions for venture capital trusts, this is defined as
a company without qualifying subsidiaries (Income Tax Act 2007
s332).
single company PEP A tax efficient investment where you invest in the shares of only one
company.
single currency Term originally used for the euro, adopted by ten of the then 15 EU
states on 1 January 1999 and subsequently adopted by other countries
thus:
• 1 January 1999: Austria, Belgium, Finland, France, Germany,
Irish Republic, Italy, Luxembourg, Netherlands, Portugal, Spain
• 1 January 2001: Greece
• 1 January 2007: Slovenia
• 1 January 2008: Cyprus, Malta.
single entry bookkeeping Bookkeeping where just one entry is made for each financial
transaction, unlike traditional double-entry bookkeeping.
Single entry bookkeeping usually records everything in a cash book.
There is no law against using single entry bookkeeping, though the lack
of a journal means that it is not possible to produce statutory accounts.
Single Market Term used from 1993 to refer to trading between EU states.
Measures brought into force by the EU on 1 January 2003, creating an
area without internal frontiers in which the free movement of goods,
persons, services and capital is ensured. This required important
changes to the way VAT and some excise duties are charged and
accounted for.
single member company A limited company which has only one member. Such companies are
now legal under UK company law. The register requirements are set out
in Companies Act 2006 s123.
single premium costed A method of cost calculation used for group insurance schemes with a
small number of members (typically less than 20). The overall premium
is based on the costs calculated in detail for each member and based on
age, sex and other factors.
single premium bond Life assurance policy sold as an investment product. Each year up to
5% (cumulative) of the sum deposited may be withdrawn from the bond
without payment on tax.
The whole sum is taxed at the end, usually when the bond holder’s
tax liability has reduced, such as in retirement. There is no capital gains
tax on the profits of such a bond, and most anti-avoidance provisions do
not apply.
single premium policy Life insurance policy paid for in advance by one single premium rather
than in periodic premiums.
single stakes about In betting, a term for an up and down bet which uses the same stakes
as for a normal bet.
single-tier adviser Financial adviser who advises on the financial products of only one
company and is usually and employee of that company.
single trip insurance Insurance policy arranged for a single journey or one return journey,
such as for a holiday.
sinking fund Fund where money is put aside to meet a future requirement,
particularly repayment of a loan. When the requirement is met, the fund
“sinks”, which means it disappears.
sinking fund method Method of calculating depreciation by providing a sum which increases
each year using compound interest.
sin taxes Colloquial term for sumptuary taxes on products seen as socially
undesirable. An example is excise duties on tobacco and alcohol.
SIP Share incentive plan.
SIPP Self-invested personal pension scheme.
SIR (1) Standard for Investment Reporting.

(2) Savings Income Information Regulations 2003.
sister company Another company which is part of the same group.
site restoration payment Payment to restore a site which had been used for disposing of waste.
From 6 April 1989 such a payment is tax deductible (Income and
Corporation Taxes Act 1988 s91A(4)).
site-wide operation Arrangement whereby someone who operates an amusement arcade

may account for VAT on the basis of all machines rather than for each
machine separately (VAT notice 701/13). HMRC permission must be
obtained.
SITPRO Simplified International Trade Procedures Board.
sitting tenant Person who is legally occupying a domestic or commercial premises

when the freehold is sold. The presence of a sitting tenant often
significantly reduces the value of the premises.
SIV Standard Import Values.
SJ Solicitors’ Journal. This includes law reports from 1857.

SK Country prefix code for Slovakia.
skattur av nytstlugjaldi Royalty tax in Faroe Islands. It comes within the scope of the
UK/Faroes Double Taxation Convention.
skattur eftir kolvetnisskattalógini

Revenue tax on hydrocarbon oil in Faroe Islands. It comes within the
scope of the UK/Faroes Double Taxation Convention.
ski travel insurance Travel insurance with additional medical cover for skiing holidays.
skill machine Term used in VAT notice 701/13 for a machine that tests a person’s
skill or knowledge. They are not regarded as gaming machines.
Skills Funding Agency (SFA)

Government-backed body formed in April 2010 to provide further
education for young people. It works with the Young People’s
Learning Agency formed at the same time.
skill with prizes (SWP) Description of a machine that is a skill machine.
skimming Practice of removing many small amounts of money from funds. This is
usually theft.
skimming pricing Pricing strategy where an organisation sets an initial high price and
then slowly lowers the price to make the product available to a wider
market.
SLA Short life asset, for capital allowances.
slab basis Basis of calculating tax whereby the whole amount is subject to tax
once a threshold has been reached. Stamp duty and national insurance
are computed on the slab basis. It also applies to other taxes such as the
“all or nothing” income tax provisions on Christmas parties.
The alternative is the slice basis.
slack In finance, spare capacity. The term comes from sailing where a slack
rope can be tightened to get more speed from a sail.
slack period Time when business is light. Normally such periods are expected to be
slack.
SLA election In tax, an election to treat an integral feature of a building as a short

life asset for the purposes of capital allowances. The election must be
made within two years of the end of the tax year in which the
expenditure arose.
slatted flooring area This qualifies as plant and machinery (at the higher rate) in the pig
industry when used in connection with a slurry system (HMRC Brief
03/2010 issued on 23 February 2010).
slavery contract Contract whereby an entertainer sells his services to a company in

exchange for a regular income.
Such income is generally assessable as employment income, except
that the broadcaster David Frost managed to maintain his self-employed
status in a case in 1980 when he sold his services to an American
company.
SL carer Shared lives carer, an adult who looks after another adult.
sleeping partner Person who is a partner in a business but plays no part in its
management. Such a person has usually provided significant funding
for the business. His share of the profits represents his return on that
funding.
slice basis Basis for calculating tax where progressive rates are applied on each
slice of a figure. Income tax uses the slice basis.
The alternative is the slab basis where the same rate is applied to
the whole amount once a threshold has been reached. Stamp duty land
tax uses the slab basis.
slimming products For VAT, edible products are generally zero-rated as food. Appetite
suppressants are generally standard-rated. The exact scope is set out in
VAT notice 701/14.
slow moving stock Stock that takes longer to sell than expected. For such stock, HMRC
may accept that the net realisable value is less than cost, as discussed
slow payer Customer who habitually is late in making payment.

For such a customer, the debt is not deductible as a bad debt unless
there is evidence of the customer’s poor financial position. The matter
is discussed in the Inspectors’ Manual at BIM 42710.
SLRP Supervisory Liquity Review Process.
SLT Scots Law Times, Scottish law reports from 1893.
sludge dewatering system This qualifies as plant and machinery (at the higher rate) in the pig
industry (HMRC Brief 03/2010 issued on 23 February 2010).
slug Name for a counterfeit blank coin intended for use in machines. Making
and using slugs is a criminal offence.
The term can also be used for a legal foreign coin that has the same
physical properties as the coin for which it is unlawfully used.
slurry storage Place where farmers (and some others) are required to store fertilisers
under The Control of Pollution (Sludge, Slurry and Agricultural Fuel
oil) Regulations 1991. The regulations are tightened up in Nitrate
Vulnerable Zones from 1 January 2009. Slurry storage typically
comprises a tank or pit, with pipes or channels.
Guidance on the right to claim capital allowances for slurry storage

was given by HMRC in HMRC Brief 66/2008. Broadly this allows the
facilities to claim allowances as plant and machinery, except to the
extent that they comprise buildings.
slurry storage systems This qualifies as plant and machinery (at the higher rate) in the pig
industry (HMRC Brief 03/2010 issued on 23 February 2010).
small brewery beer Beer that is produced in quantities of less than 60,000 hectolitres a year
(30,000 hectolitres) before 1 June 2004.
If this and some other conditions are met, it attracts a lower rate of
beer duty (Customs notice 226). This provision was introduced from 1
June 2002.
small business rate relief Scheme introduced from 1 April 2005 to provide relief from business
rates by small businesses in properties with a low rateable value. It
provides relief of up to 50%.
Small Caps For investment, another name for smaller companies, as measured by
their market capitalisation. A typical definition is one which has a
market capitalisation of less than US$500 million.
small change Small amount of money. Literally it means coins of a low value.
small claim Claim in the county court which uses the small claims procedure.
small claims court Misnomer for the county court. There is no separate court for small
claims; there is just a small claims procedure.
small companies rate Term used before 2010 for the lower rate of corporation tax which
applies to businesses which have made a smaller taxable profit. It is
now called the small profits rate.
small company Company which for any year meets at least two of these conditions:
• turnover not more than £6.5 million;
• balance sheet total no more than £3.26 million
• no more than 50 employees.
These limits apply for accounting periods that start after 5 April
2008. Previously the turnover and balance sheet limits were £5.6
million and £2.8 million respectively. They are given in Companies Act
2006 s382(3).
The amounts are set by the EU in euros, which is the amounts are
not round figures.
A small company is relieved from some provisions of company law,
and comes within the scope of some tax reliefs.
small craft For Customs purposes, any sea-going vessel of up to 100 tons.
Hovercraft are also classified as small craft.
Small craft may be given a Customs licence which exempts them
from certain Customs regulations.
small disposal For capital gains tax, no tax is payable for small disposals in four
circumstances:
• on a capital distribution (Taxation of Chargeable Gains Act
1992 s122(2));
• on a share reorganisation (ibid s116(13));
• a premium on conversion of securities (ibid s133(2)); and
• cash on compulsory acquisition of land (ibid s43(1)(a).
In each case, the amount received is treated as a reduction in
acquisition cost.
The legislation does not define “small”, though the courts have
provided guidance in cases such as O’Rourke v Binks [1992] STC 703.
The courts say that “small” is a question of fact and degree, and
must be considered in the light of the circumstances of each case. The
aim is to avoid paying tax on trivial amounts.
HMRC has published guidance indicating that “small” means up to
£3,000, or up to 5% if greater. A taxpayer may argue that a larger figure
is “small”.
small earnings exemption (SEE)

Amount of annual earnings below which a self-employed person need
not pay class 2 national insurance contributions nor register for national
insurance. The law is Social Security Contributions and Benefits Act
1992 s11(4).
small employer’s relief (SER)

Additional amount of statutory maternity pay and related payments that
may be recovered from the government by a small employer.
Eligibility for the relief is determined by the total national insurance
paid in the previous year. The limit has been £45,000 since 6 April
2004. It was £40,000 from 6 April 2002, and £20,000 previously from 6
April 1994. This relief also applied for statutory sick pay for 1994/95
only.
SER attracts relief at 100% plus a compensation rate (reflecting
that SMP often incurs employers' national insurance). Other businesses
may only recover 92%.
small gift exemption For inheritance tax, a gift of up to £250 a person in one tax year. This is
exemption from inheritance tax (Inheritance Tax Act 1984 s20).
Provided that the limit is not breached for any one person in any
one tax year, the donor may make any number of gifts of this value. So
a man with ten children and grandchildren could give them a total of
£2,500 tax year. If larger donations are made, they may be exempt
under other exemptions, such as the annual exemption.
The exemption is not an allowance. So if a donation of £300 is
made to a person, it is not possible to use this exemption to reduce the
chargeable gift to £50.
small gifts from third parties

When provided to an employee for a total value of £250, such gifts are
s324.
small income relief Relief that was available for income tax on small incomes before
unified tax was introduced in 1973.
small non-commercial consignments relief (SNCCR)

Relief from excise duty on small quantities of excisable goods sent to
UK. This relief was abolished from 19 July 2007.
small or medium-sized enterprise (SME)

Business which is not large, as defined. The definition is the same as for
small company, though it is not necessary for an SME to be legally
constituted as a limited company.
small pack For beer duty, a container up to 10 litres. For such packs, there are
rules relating to average size rules, as explained in Customs notice
226.
small pool balance In tax, a balance on the PMA pool (written down value of plant and
machinery) which has reduced to less than £1,000. From 1 April 2008,
a business may write off the whole balance in the tax year that the pool
reduces to that size.
small pools allowance In tax, a small balance of written-down plant and machinery which may
be written off in 2008 when the new system of capital allowances is
introduced.
Under the capital allowances scheme before April 2008, plant and
machinery was written down each year, usually by 25% on the reducing
balance method. This meant that plant and machinery never reached a
value of zero until it was disposed of, but stayed in a pool which slowly
shrank (unless new equipment was added). Under the system
introduced from April 2008, a pool of up to £1,000 may be written off
immediately.
small profits rate (SPR) Lower rate of corporation tax payable on taxable profits below
£300,000 a year. Before 2010, this was known as the small companies
rate. The new term is more accurate.
The legislation for the rate is Corporation Tax Act 2010 s3, and for
determining the profits subject to this rate is ibid s18.
small trades Incidental trading. Below a threshold it avoids tax.
small works contract Contract for building work of less than £150,000.
SME Small and Medium Enterprises - there is no definitive delineation

between a small and medium sized business. As a general reference,
small is often from 5 to 20 employees, medium from 20 up to 200.
Smeed Report Report published in 1964 into alternative methods of charging for road
use.
SMI Support for Mortgage Interest.
Smith, Adam Scottish philosopher (1723-1790) who developed theories of the

political economy that are still widely quoted.
His most popular work is The Wealth of Nations published in 1776
and subsequently reprinted with amendments.
smoke-farthing Church tax imposed between 16th and 19th centuries. Everyone who
owned a property with a chimney was obliged to pay a farthing to the
church or cathedral at Whitsun.
smuggled goods Keeping on premises is offence under Licensing Act 2003 s144.
snake, the Colloquial name for European Monetary System.
SNCCR Small non-commercial consignment relief.
SNG Syngas.
Snowden, Philip English politician (1864-1837) who was the first Labour party
Chancellor of the Exchequer from 22 January 1924 to 3 November
1924, and again from 7 June 1929 to 5 November 1931 under the
Labour and National governments of Ramsey Macdonald.
He reduced some taxes and tariffs, but did not introduce other
promised socialist measures.
soap duty Excise duty on soap, charged between 1712 and 1853.
SOCA Serious Organised Crime Agency.
Social Fund Part of the social security system, largely designed to address need not
otherwise covered.
Certain maternity expenses, funeral expenses and cold weather
payments may be paid almost as of right. Other payments are
discretionary. Most payments are in the form of repayable loans, though
some grants may be made. Awards are cash-limited by region, so an
otherwise good claim may be refused on the grounds that the fund is
exhausted.
The main legislation is Social Security Contributions and Benefits
Act 1992 s139.
social lending Organisation or group which borrows and lends money in a less formal
way, often by websites such as Zopa. Such bodies usually still need a
consumer credit licence.
social security Arrangements whereby the state makes payments to its citizens in need.
Social Security Advisory Committee

Body established under Social Security Administration Act 1992 s170.
social security benefits Benefits paid to claimants under social security legislation.
Benefits may conveniently be classified as:
• contributions-related (such as jobseeker's allowance and state
retirement pension) where entitlement depends on sufficient national
insurance having been paid;
• non-contributory (such as anti-avoidance and state pensions
for over-80s) where entitlement depends on meeting certain conditions;
and
• means-tested (such as tax credits and incapacity benefit)
which depends on the claimant having sufficiently low income.
social security contributions

Payments made by workers to fund social security. In the UK, this is
the same as national insurance contributions.
social security functions HMRC functions as set out in Finance Act 1989 s182(2A) in relation to
disclosure of information.
social wage Economic term for the value of publicly-funded facilities provided to
each citizen at no direct cost. These include health services, emergency
services, defence, parks and libraries, police, education, roads and the
suchlike.
Society of Trust and Estate Practitioners (STEP)

Professional body for trust and estate practitioners.
STEP “is a unique professional body providing members with a local,
national and international learning and business network focusing on
the responsible stewardship of assets today and across the generations”
(STEP website).
Full members use the designatory letters TEP.
SOFA Statement of financial activities.
soft commodity Commodity which is not “hard”. In practice this means any commodity
which is not a metal, such as grain, pork bellies, cotton, wool and
timber.
soft currency Currency of a country which is economically weak. Such currency is

often difficult to exchange for hard currency. Soft currency is rarely
acceptable in international trade.
soft landing Change in economic policy which does not have adverse consequences,
either because the change is so managed or because provisions are
made to mitigate any adverse consequences.
soft loan Loan given at no interest or at a low rate. Loans to employees are often
soft loans. Such loans can trigger an income tax charge as explained for
beneficial loans.
software Programs and similar which run computers, as distinct from hardware
which is the tangible equipment on which software runs.
solar shading For capital allowance purposes, is treated as an integral feature, which
soldier’s friend Old term for someone who represents a soldier before an army pension
board.
sold loose Term used by retailers for items which are not pre-packaged but where
the customer selects the quantity, such as fresh fruit and vegetables
which are traditionally sold by weight.
Such items must be capable of ready identification by the check-out
staff, who can weigh the item and enter an appropriate code to
determine the price.
solicitor Lawyers who deal directly with clients and generally instruct barristers
(or advocates in Scotland) to represent them in court. The UK is one of
the few remaining jurisdictions which has this split in the legal
profession.
Solicitors’ work is traditionally divided into contentious and non-
contentious. The former involves litigation; the latter such matters as
preparing wills and conveyancing property.
A solicitor may be admitted or enrolled to have right of audience
in the lower courts. A Solicitor Advocate has right of audience in the
higher courts also.
Solicitors in practice are licensed by the Law Society.
Solicitor Advocate Solicitor who has acquired the same rights of audience in the higher
courts as a barrister.
Solicitors Regulation Authority (SRA)

Body launched on 29 January 2007 to regulate solicitors.
It was previously the Law Society Regulation Board. The change of
name reflects its greater independence.
solid fuel For VAT, solid fuels may be reduced rated under Value Added Tax Act
are given in VAT notice 701/19.
solus account Term sometimes used to mean accounts of an entity rather than one that
pertains to its client.
There is a restriction in an entity hedging certain foreign exchange
in a solus account, are discussed in the Inspectors’ Manual at
BIM39522.
solvency Ability to pay debts as they fall due.
solvency statement Statement made by the directors giving their opinion that the company
is solvent.
Such a statement may be required for a reduction in share capital
under Companies Act 2006 s643.
solvent Able to pay debts as they fall due.
Solvent Yellow 124 Yellow dye used in all EU states to indicate road fuel on which
hydrocarbon oil duty has not been paid.
solvit ad diem Latin: paid on the day. It is a defence to a claim that a bond, bill or
similar was not paid when due.
solvitur ambulando Latin: the question is resolved by action.
solvitur in modum solventis

Latin: money paid is to be applied according to the wish of the person
paying it.
som Currency of Kyrgyzstan.
son’s or daughter’s services allowance

Additional tax allowance available before 6 April 1988 when a taxpayer
was dependant on a son or daughter. Before 1978, it could only be
claimed for a daughter.
SOR Sale or return.
sorner Old term for a person who lives off another; a sponger. The term comes
from an old Scottish practice whereby a chieftain expected to be
provided with free accommodation when he decided to revel with his
tenants.
SORP Statement of recommended practice; a statement which bodies in

particular areas are expected to follow when preparing accounts. The
term is defined in FRS 18 para 6.
sort code Any code which is used to help sort data, particularly the sort code
allocated to bank branches. This appears as three pairs of digits in the
form 12-34-56. Since 1991, the allocation of numbers has been
overseen by the British Bankers Association.
The first pair of digits identifies the bank, starting with 01 for some
National Westminster branches. Scottish banks are given numbers in
the 80s, and Irish banks in the 90s.
source In accounting, where money comes from. The main sources are capital,
sales, borrowings, insurance claims and similar.
source and application of funds statement

Cashflow statement in a business’s published accounts which states
where funds came from and how they have been used. Unlike the profit
and loss account and balance sheet, this statement is factual with no
subjective element of opinion.
source doctrine Tax principle that income is taxed according to its source. The principle
is explained in the Inspectors’ Manual at BIM14065.
source document Document which records details of a financial transaction, from which
the prime books of account are kept. Source documents include
invoices, remittance advices, payment advices, expense claims and
petty cash vouchers.
South Eastern Region For purposes such as national insurance holiday, “means —
(a) the counties of Buckinghamshire, East Sussex, Hampshire, the
Isle of Wight, Kent, Oxfordshire, Surrey and West Sussex, and
(b) the non-metropolitan districts of Bracknell Forest, Brighton and
Hove, Medway, Milton Keynes, Portsmouth, Reading, Slough,
Southampton, West Berkshire, Windsor and Maidenhead [,] and
Wokingham” (National Insurance Contributions Act 2011 ss11(1)).
sovereign (1) Gold coin which remains legal tender for £1, though it has been
replaced in everyday use by notes and other coins since 1914. It is now
used as a bullion coin valued according to the price of gold.
Sovereigns were first minted in 1489, but only those minted since
1838 remain legal tender.
The VAT position is explained under gold coin.
An unsuccessful attempt to use sovereigns for income tax avoidance
was made in Jenkins v Horn [1979].
(2) The office of monarch. The moment a monarch dies, the next in
line succeeds to the throne. Under Interpretation Act 1978 s10,
references to the sovereign mean whoever is the monarch unless the Act
specifically states otherwise.
S & P 500 American share price index produced by Standard & Poor’s reflecting
the value of 500 largest US companies. It was started in 1957. It is the
second most popular US share index after Dow Jones.
S & P Global 100 World share price index produced by Standard & Poor’s taking the
share prices of the 100 largest multi-national companies.
Spaak Report Report published in 1956 by a committee led by Paul-Henri Spaak. It

led to the Treaty of Rome and the eventual formation of the European
Union.
Spain Member state of the European Union. The state includes the Balearic
Islands, but excludes the Canary Islands, Ceuta and Melilla.
sparkling Description of wine which is fizzy, or the process for achieving this.
Provisions about rendering wine sparkling are set out in Alcoholic
Liquor Duties Act 1979 s59.
Cider is sparkling “if, due to the presence of carbon dioxide, the
pressure in the bottle, measured at a temperature of 20 degrees C, is not
less than 3 bars in excess of atmospheric pressure” (Alcoholic Liquor

Duties Act 1979 s62A(2)). The definition also includes cider with a
mushroom-shaped stopper, and cider with other similar characteristics.
sparkling wine Wine which is carbonated or fizzy, such as Champagne.

All wine is subject to alcoholic liquor duty. Sparkling wine is
subject to a higher rate if its alcoholic strength is above 5.5%.
SPC (1) Reference for published decisions of the Special Commissioners.

The reference is sometimes given in the form SpC.
These decisions have been published from January 1995 to March
2009, when they were superseded by the TC decisions from tax
tribunals. Decisions from April 2003 to March 2009 (numbers 362 to
738) are available on the tax tribunals website.
These decisions set a persuasive precedent rather than a binding
precedent.
(2) Supplementary protection certificate.
speakeasy Private club that sells illegal liquor, particularly during prohibition in
the USA between 1920 and 1933. They are also known as blind pigs or
blind tigers.
special administrative region

“The Hong Kong or the Macao Special Administrative Region of the
People’s Republic of China” (Income and Corporation Taxes Act 1988
Sch 25 para 5(4)).
special adviser Person who is personally chosen by a politician to provide advice, and
who becomes a civil servant. The term is fully defined in Constitutional
Reform and Governance Act 2010 s15.
special advisers code Code of conduct for special advisers to politicians (Constitutional
Reform and Governance Act 2010 s8).
special agent Person who has been given authority to act as agent for another person
for one specific transaction.
Special Areas Term used in Special Areas Act 1931 to mitigate the worst of the
economic crisis. The areas were South Wales, Tyneside, West
Cumberland and Scotland. This provided funding for public works.
special auditor’s report In company law, a statement from a company’s auditors that the
company may submit abbreviated accounts (Companies Act 2006
s449). This report must be submitted with the abbreviated accounts.
Special Commissioners Appeal Commissioners (now abolished) who are legally trained to
hear tax appeals. The other type of Commissioners were General
Commissioners. They are both replaced by tribunals from April 2009.
Since March 1995, Special Commissioners’ decisions are made
public. They are usually indicated by a reference such as “SpC 419” or
similar.
Special Commissioners Regulations

Special Commissioners (Jurisdiction and Procedure) Regulations 1994.
special contribution A capital levy charged between 1947 and 1948 on investment income
over £250 at rates graduated from two to ten shillings in the pound.
special crossing Crossing on a cheque with a place or name of bank indicated. Such a
cheque may only be cashed at that place or bank. Special crossings are
now rare.
“Where a cheque bears across its face an addition of the name of a
banker, either with or without the words ‘not negotiable’” (Bills of
special cumulation An imaginary total used in calculating the ten-yearly charge on certain
trusts for inheritance tax purposes. The figure is the total of:
• the total of the settlor’s chargeable transfers in the seven
years before the commencement of the settlement; and
• the amounts on which the exit charge has been imposed in
the previous ten years.
special deposit Large sum of money which may be deposited with the Bank of
England.
special destination Provision under Scots law whereby a person does not inherit properly
jointly held with a former husband and wife who dies (Family Law
(Scotland) Act 2006 s19).
special discount In retail, a discount which is offered to promote a product, such as buy
one get one free, or the cheapest of three items is free. An EPOS
system must have special software to cope with such offers.
special drawing rights (SDR)

The equivalent of a currency used by the International Monetary
Fund (IMF). It has the ISO code of XDR.
The SDR is defined as basket of currencies which is periodically
revised. For the period 2006-2010, it comprises 44% US dollar, 34%
euro, 11% Japanese yen, and 11% British pound sterling.
SDR was developed to replace gold as a unit of international
transactions. For this reason SDR has sometimes been called paper
gold. SDR are credits which nations may draw on as required. In reality
it exists only as ledger entries.
The SDR has lesser uses in that financial instruments are
denominated in SDRs and some countries have pegged their currencies
against the value of the SDR. Some international prices are
denominated in SDRs.
special educational needs (SEN)

Requirements of a child beyond those of a normal education. They are
given in Education Act 1996 Part 4 Chapter 1.
special enactment Act of Parliament which specifically amends a company’s constitution

(Companies Act 2006 s34(4)). A company is required to notify
Companies House of such an enactment.
specialia generalibus derogant

Latin: special words derogate from general ones.
special indorsement When a bill of exchange has been indorsed to a specified person (Bills
of Exchange Act 1882 s34(2)).
Special Method (Partial Exemption)

A method for working out how much residual input tax a business can
reclaim if the standard method does not produce a fair and reasonable
result. HMRC must provide approval to use a special method.
special offer Temporary price reduction or similar (such as 3 for the price of 2)
designed to increase sales.
special presentation A service to inform a customer paying in a cheque that the payer's bank
will make the payment. This does not reduce the time taken for the
cheque to clear - this will still take three working days.
special purpose financial report

One of three types of financial report identified by Statement of
Principles for Financial Reporting.
A special purpose financial report is prepared by the entity itself in
a form specified for the purpose. Examples include regulatory reports,
tax computations and reports for banks.
special rate pool In tax, the written-down value of long-life assets from April 2008.
In April 2008, the system for capital allowances changed. Before 1
April 2008, most plant and machinery was written down at an annual
rate of 25% a year on the reducing balance method, except for long-life
assets which were written down at 6%. Plant and machinery was
recorded in a pool which did not distinguish between assets, whereas
long-life assets were written down separately.
The system of capital allowances introduced from 1 April 2008,
broadly replaces the 25% and 6% rates with 20% and 10% respectively,
and allows long-life assets to be put into their own pool. This is called
the special rate pool to distinguish it from the pool which is written
down at 20%.
special register body Organisation similar to a trade union set up before 16 September 1974
under Industrial Relations Act 1971. Some transitional provisions apply
under Trade Union and Labour Relations (Consolidation) Act 1992
s117.
special relief Relief introduced from 1 April 2011 to allow an excessive assessment
or determination to be displaced when the normal time limit has
expired. It replaces equitable liability that applied previously.
special resolution In company law, a decision of shareholders which requires at least 75%
of them to vote in favour (Companies Act 2006 s283(1)).
special subsidy In tax, a special charge initially made in 1473 on goods and chattels, but
which could be extended to freehold land. This tax was never properly
collected.
Special Territories Countries or areas that are effectively part of the customs territory of
the EU but not part of the fiscal (excise duty and VAT) territory. Goods
imported from these territories are liable to VAT and excise duty (if
appropriate) unless they are eligible for a relief. These territories are:
the Åland Islands; the Canary Islands; the Channel Islands; French
Guiana; Guadeloupe; Martinique; Mount Athos and Reunion.
Andorra has a union with the EC for goods in chapter 25 to 97 of
the Tariff only.
special trust rates Another term for rate applicable to trusts (RAT).
special verdict Verdict that a person committed a criminal offence but was insane at
the time (Trial of Lunatics Act 1883 s2).
Acquittals on the ground of insanity may be made under Criminal
Procedure (Insanity and Unfitness to Plead) Act 1991 s1. Procedures
are governed by Criminal Procedure (Insanity) Act 1964 s5.
special warranty Undertaking or assurance provided by a guarantor under a contract.
specie Money in the form of coins.
specific bequest Bequest of a specific item of property other than land, made in a will.
An example is leaving a grandfather clock to a named grandson.
specific devise In executorship, a specific piece of land which is left to someone in the
will. Note that the second word is spelled with an S.
specific duty Duty based on a unit quantity (for example litre or kilogram) of the
imported goods.
specific employment income

Tax term for any amount which counts as employment income
excluding exempt income. In practice, this relates to certain notional
charges to income tax which arise on ownership of the employer’s
shares.
specific grant Payment from the Government to cover local-authority spending on a

particular service or project. Specific grants are usually a fixed
percentage of the costs of a service or project.
specific gravity Ratio of weight of liquid to the same quantity of water, which has a
specific gravity of 1000. For example, beer duty was charged for a
specific gravity between 1016 and 1030 with additional duty for each
degree above.
Before 1 June 1993, the excise duty on beer was calculated
according to its specific gravity. Customs notice 226 explains how
specific gravity, now known as present gravity, may still be used for
this purpose in some circumstances.
specific identification Inventory method where each sale is matched directly to its purchase.
Such a method is only used for large-value items or low-volume sales.
specific legacy When a specific item of property is left to someone in a will.
specific purpose financial statements

Documents containing accounting information which is prepared for a
particular purpose and is not normally available to a wider audience.
specified disclosure obligations

Disclosure requirements relating to insider trading. They are listed in
Proceeds of Crime Act 2002 Sch 9 para 1(6).
specified steps Provisions that must be made with regard to a historic building, work of
art, scientific collection or similar as a condition of its being a
conditionally exempt transfer for inheritance tax.
The steps must be adequate to ensure the maintenance, repair,
preservation of and public access to the asset (Inheritance Tax Act 1984
s31(4A).
specified supplies Supplies specified by Treasury Order which are not taxable supplies,
but which carry the right to recover input tax incurred in making them.
specified transfer Transfers which, if sufficiently large, mean that an estate must be
reported for inheritance tax purposes and cannot be an excepted estate.
This is one of four limits that must be met for an excepted estate.
For deaths from 6 April 2004, the limit is £150,000. It was
£100,000 from 6 April 2002; £75,000 from 6 April 2000; and £50,000
from 6 April 1996 when the limit was introduced.
A specified transfer is a transfer made in the seven years before
death of cash and quoted shares or securities. If the disposal was made
to the same person at the same time, it also includes an interest in land
and chattels.
specimen charges Criminal charges that represent a large number of offences. If a person
has committed 1,000 similar tax offences, he or she is likely to be
charged only with a few specimen charges.
speculative cost Any cost incurred without knowing whether it will lead to a return. If
the cost does not lead to a return, it is known as an abortive cost.
For VAT, these terms are specifically used to mean the cost of
finding sites for possible building development. A speculative cost is
regarded as a genuine business expense on which input tax may be
reclaimed. If a developer later decides to proceed with an aborted

scheme, it may be necessary to apportion the abortive cost between
business and non-business use and disallow the latter.
speculator Person who invests money, particularly where both the risk and desired
return are high.
spending envelope “The overall level of public spending. This is set out as part of the
Budget and allocated to pay for all areas of Government activity as part
of the Spending Review” (HM Treasury glossary).
Spending Review Process that “[sets] firm and fixed multi-year budgets for government
departments. They outline the improvements that the public can expect
from government spending” (HM Treasury glossary).
spes successionis Latin: hope of succession.

The term often refers to the next of kin of a person believed not to
have made a will.
SPIC Simplified Procedure for Import Clearance, a simplified procedure for

Customs clearance of imported goods of a value not exceeding £600.
This procedure was withdrawn on 1 October 2003.
spinster Woman who has never married. Her marital status is therefore single.
The male equivalent is bachelor.
spirit production premises

Whisky distillery, or other premises where potable spirits are produced.
Guidance is given in Customs notice 39.
spirits Any alcoholic drink whose production involves distillation. Common

spirits include whisky, gin, rum, vodka and brandy. The term also
applies to mixtures which include these drinks, such as alco-pops.
Spirits are subject to the excise duty on alcoholic liquor at the
highest rates. From 1 January 1980 duty is calculated as so much per
litre according to the alcoholic strength.
From 1 April 2006 all spirits must display a duty stamp.
spirits Alcoholic liquor which has a strength exceeding 1.2% or any drink
which is combined with such liquor of such strength (Alcoholic Liquor
Duties Act 1979 s1(2)). There are exceptions for methylated spirits,
angostura bitters, methyl alcohol and other liquids as defined by
Treasury order.
Spirits duty (Charles II- today) Charged on all distilled liquor. Wars with France in 17th century
led to banning of brandy and the growth of whisky which became the
main taxed spirit. In 18th century, the tax favoured gin which allowed
the poor to be “drunk for a penny, and dead drunk for twopence”
(Hogarth). Laws were introduced in 1736 to control the supply. The tax
was sharply increased in 1796.
spirits of wine “Means plain spirits of a strength not less than 80% manufactured in the
United Kingdom” (Alcoholic Liquor Duties Act 1979 s4(1)).
spirits receiver Part of the still in which spirits are distilled.

Customs notice 39 states that, unless the receiver is approved as a
warehouse vat, remnants in a spirit receiver must be collected and
removed before any newly produced spirits are put in.
spiritual welfare A form of welfare services that may be zero-rated. Details are provided
in VAT leaflet 701/2.
split approval Situation where a retirement benefit scheme had only part approved
under Income and Corporation Taxes Act 1988 s611. Under current tax
law, only the approved part is now regarded as a registered pension
scheme.
split commission Commission which is divided between two or more people.
split-level trust Unit trust where the shares do not attract both capital growth and
income. These elements are sold separately as capital shares and
income shares respectively.
split payment Payment which is made in more than one instalment or by more than
one instrument.
SPOC Single point of contact.
spoiled stamp For stamp duty, a provision that allows repayment when the document
fails to achieve its purpose.
spoilt beer Beer which “has become spoilt or otherwise unfit for use” (Alcoholic
Liquor Duties Act 1979 s46). Such beer may have its beer duty remitted
or repaid.
spoilt cider Cider which “has accidentally become spoilt or otherwise unfit for use
and.... has been returned to the maker” (Alcoholic Liquor Duties Act
1979 s64(1)). Cider duty may be remitted or repaid on spoilt cider.
spoilt wine Wine or made-wine which “has accidentally become spoilt or otherwise
unfit for use and... has been returned to the producer” (Alcoholic Liquor
Duties Act 1979 s61(1)). Wine duty may be remitted or repaid on spoilt
wine.
sponsored walk Walk organised by a charity to raise funds.

For VAT purposes, the funds raised are outside the scope of VAT
unless the participant receives a benefit. VAT notice 701/1 states that
HMRC does not regard any of the following as providing a benefit:
• free training and health advice,
• free T-shirt, running vest or similar that identifies the charity,
• free massages and support for physical well-being,
• free pre-event meeting, which may include free professional
advice and support, a simple meal, energy drinks and encouragement,

• free post-event meeting, which may include medical
treatment or advice, changing facilities, light refreshments and an
opportunity for the charity to thank participants,
• a reasonable prize for top fund-raisers.
Any entry fee or participation fee payable by participants is a
standard-rated supply.
These provisions apply to similar sponsored events.
sponsoring employer In relation to an occupational pension scheme means the employer, or

any of the employers, to or in respect of any or all of whose employees
the pension scheme has, or is capable of having, effect as to provide
benefits.
The term is defined in the Inspectors’ Manual at RPSM02200040.
sponsorship A commercial arrangement whereby a business provides funds in return

for receiving a perceived benefit. The benefit is usually either
marketing or reputation enhancement.
The extent to which this is a tax-deductible expense is discussed in
the Inspectors’ Manual at BIM 42555. HMRC will always check to see
that the sponsorship of a small business is not just a cover for a director
to indulge a personal interest.
When used in relation to sponsoring a charity, it should be
remembered that the arrangement is commercial and not altruistic. The
sponsor is paying to buy a benefit, and is not making a charitable
donation.
The word is also used for agreeing to pay a sum to someone
undertaking an activity to raise funds, such as agreeing to pay someone
£10 if they run a marathon.
sports drinks For VAT, these are generally zero-rated as food, though there are
exceptions as set out in VAT leaflet 701/14.
sports facilities When such facilities are provided by an employer, they may be exempt
from tax under Income Tax (Earnings and Pensions) Act 2003 s261.
sports league For VAT, such services are generally standard-rated, as explained in
HMRC Brief 4/11. The leagues are not providing an exempt supply of
land use.
spot cash Cash paid immediately for a sale.
Spotlight Term used by HMRC to indicate a tax planning scheme being

investigated. Spotlight 1, for example, relates to goodwill acquired by
companies from businesses that traded before 1 April 2002.
Spotlights also provide hallmarks of tax planning of which
taxpayers should be wary.
spot market Another name for cash market.
spot price Price for buying something and paying in cash immediately.
spot-the-ball Competition where participants must guess the location of a football in

a photograph.
If the competition is to identify the actual position of the football
before the photograph was edited, this is pool betting subject to pool
betting duty. It is not pool betting if the answer is to be decided by a
panel of judges (Customs notice 147).
spouse Husband or wife in marriage. Although the term does not include civil
partner, in practice all tax provisions relating to spouses relate to civil
partners also.
There are many tax provisions that relate specifically to spouses,
including:
• transfers between them are exempt from inheritance tax;
• transfers between them are treated as being for no gain or
loss for capital gains tax
• they are associated persons for many tax avoidance
provisions
• older couples may qualify for married couple’s allowance
for income tax.
SPR Small profits rate, of corporation tax.
spread Difference between buying and selling prices. In other contexts, this is
also known as gross profit or turn.
spreading Action of allocating income or expenditure over more than one

accounting period. For tax, this is permitted for long-term work such as
building contracts or the creation of artistic works.
spreading election Election made by a taxpayer under Finance Act 2002 Sch 22.
Where there has been a change of tax law affecting an accounting
period start ends after 31 July 2001, the taxpayer may be able to make
an election to spread the consequential adjustments over six accounting
periods. The matter is discussed in the Inspectors’ Manual at
BIM34120.
Spring-Rice, Thomas Irish-born Whig politician (1790-1866) who was Chancellor of the
Exchequer from 18 April 1835 to 26 August 1839.
spruce beer Form of black beer which is exempt from alcoholic liquor duty
SPV Simplified Procedure Values. This is a special system for valuing

certain fresh fruit and vegetables for Customs purposes.
square foot (Sq Ft) Unit of area of equal size to a square where each side is one foot long.
A square foot equals 144 square inches or 929.03 square
centimetres. There are nine square feet to a square yard.
square metre Unit of area of equal size to a square where each side is one metre long.
It is an SI derived unit with the symbol m2.
A square metre equals 1.196 square yards or 10.764 square feet.
There are 10,000 square metres to a hectare.
square mile Unit of area of equal size to a square where each side is one mile long.
A square mile equals 640 acres or about 259 hectares.
square yard Unit of area of equal size to a square where each side is one yard (three
feet) long.
A square yard equals nine square feet, 1,296 square inches or 0.836
square metres. There are 4,840 square yard to an acre.
SR (1) Starting rate of income tax.

(2) Tax code used for PAYE before 1973. It indicates that income tax is
to be deducted at the standard rate without any allowances.
SRA Solicitors Regulation Authority.
SRB Sale and rent back.
SREP Supervisory review and evaluation process, term used by the Financial
Services Authority.
SRO Self-regulating organisation.
SR&O Statutory Rules and Orders.
SSAP Statement of standard accounting practice.
SSAS Small Self-Administered Scheme.

A self-administered occupational pension scheme with usually less
than 12 members.
SSE Substantial shareholder exemption.
SSFA School Standards and Framework Act 1998.
SSN Standard Shipping Note.
SSP Statutory sick pay.
SSP1 Form given by an employer to an employee who is sick and where the
employee is either not entitled to statutory sick pay (SSP) or where
entitlement to SSP has ceased. This form may allow the employee to
claim social security benefits instead.
SSP2 Form used to record amounts of statutory sick pay. The form is
provided free by HMRC in either paper or (from 2008) computerised
form. The use of the form is entirely voluntary; an employer may
choose to use an alternative provided that the records are adequate.
SSPE Securitisation special purpose entity.
SSP1L Form which was given by an employer to an employee whose

employment finishes while receiving statutory sick pay (SSP). The
form was discontinued from 27 October 2008 when the law changed so
that an employee’s period of sickness with one employer is no longer
aggregated with a period with a new employer.
ST Secondary threshold, for national insurance.
stabit praesumptio donec probetur in contrarium

Latin: a presumption will stand good until the contrary is proved.
stable employment case “A case where the [equal pay] proceedings relate to a period during
which a stable employment relationship subsists between the woman
and the employer, nothwithstanding that the period includes any time
after the ending of a contract of employment when no further contract
of employment is in force” (Equal Pay Act 1970 s2ZA(2).
stabling For VAT, an exclusive right of stabling a horse (or other animal) is
exempt as a supply of a right over land. The lessor may standard-rate
this supply under the option to tax provisions. Any separate supply of
animal feed may be zero-rated. Details are given in VAT notice 701/15.
stag Investor who specialises in new issues of securities.
staged payments Another term for stage payments.
stage gate Point in a process where particular matters must be considered.

This term was used in HMRC guidance notes on transfer pricing
issued on 10 July 2008.
stage manager Person who supervises the technical aspects of a dramatic performance.
Sometimes stage managers also stand in for absent actors. On 5 March
2010, HMRC issued Guidance Note 5 regarding the extent to which
stage managers may be taxed on the same basis as Equity contract
actors, that is paying income tax as self-employed but national
insurance as employees.
stage payments Payments received during the completion of contracts, particularly in

the construction industry. There is a tax point whenever an invoice is
issued or a payment made - whichever happens first.
stagger The schedule of months in which quarterly returns for VAT and
Insurance Premium Tax (IPT) are due. Traders registered for VAT and
IPT are generally required to submit returns every quarter. For
administrative purposes, the dates on which returns are due are
staggered through the year. When you register for one of these taxes,
you will be notified of which four months will mark the end of your
quarterly tax periods. These are known as the 'stagger'. Normally, a
stagger will be allocated by Customs and Excise. Under some

circumstances, however, a trader can request to be put on a particular
stagger.
staging date Date on which an employer is required to have arranged automatic

enrolment of employees in the NEST pension scheme.
staircasing Practice of making payments to co-owners of a property to acquire a

greater stake. This can lead to owning the freehold.
There are some special provisions for the purposes of stamp duty
land tax (SDLT) effective from March 2008. The person may pay
SDLT on the whole price at the outset, in which case no further SDLT
is payable.
Alternatively, SDLT is payable on the amount paid for the person’s
interest in the property plus the net present value of rent payable. In
practice SDLT is rarely charged for the rent.
No further SDLT is then payable until the person owns at least an
80% interest in the property.
stake Investment or involvement in an organisation or activity.
stake a claim Make a claim that a person has a particular right over some land or
property.
stakeholder Someone who has an interest or involvement in an organisation or

activity.
stakeholder pension The name given to a type of personal pension, introduced on 6 April
2001. The scheme was extensively modified from when the government
first announced it. In particular, the employer is not required to
contribute to it.
An employer of five or more people must make a stakeholder
pension scheme available to any employee who wishes to use one. As
the relationship is then entirely between the employee and pension
provider, the employer is in effect acting merely as an introduction
agency.
stakeholder products Financial products which meet government standards in that they are:
● simple to understand;
● low-cost; and
● risk-controlled.
The term was introduced from 6 April 2005 to replace the previous
CAT standard.
stakeholders A general term devised to indicate all those who might have a
legitimate interest in receiving financial information about a business
because they have a 'stake' in it.
stale cheque Cheque which the payee has not paid into his account and where the
time limit for doing so (usually six months) has expired.
stamp Device of making a mark on a document. This may be by making an

impression as in stamping documents or in attaching an adhesive piece
of paper, as in a postage stamp.
For stamp duty, stamp “means as well as a stamp impressed by
means of a die an adhesive stamp for denoting any duty or fee” (Stamp
Act 1891 s27).
Stamp Act Law relating to stamp duty.

The current Act is of 1891 as modified by Finance Acts. This
replaces Acts of 1870, 1854 and 1765, the latter of which led to
revolution in and eventual independence of the USA.
Stamp Act 1854 s11 is still in force. It relates to the definition of a
bank note, even though these are not now stampable.
stamp album Book provided to keep a stamp collection.

Such a book is standard-rated for VAT unless the section for
mounting stamps is less than 25% of the whole (VAT notice 701/10).
stamp duty Tax charged on documents. There is no penalty as such for non-
payment of stamp duty; the penalty is that an unstamped document may
be ineffective in its purpose.
The tax dates from 1694. The main laws are now Stamp Duty Act
1891 and Stamp Duty Management Act 1891. Both Acts have been
extensively modified by Finance Acts. In particular Finance Act 1999
changed the heads of charge, and Finance Act 2003 removed land
transactions completely and made them subject to stamp duty land
tax.
stamp duty land tax (SDLT)

Tax paid on transactions in land and buildings.
It was introduced on 1 December 2003 when it replaced stamp
duty. The main law is contained in Finance Act 2003.
Tax is charged as a percentage on the price or value of a long lease.
There is a limit up to which a transaction is not taxed. Above this, a rate
of tax of up to 5% is charged on the whole of the value.
stamp duty reserve tax (SDRT)

Tax charged on agreements to transfer chargeable securities for money
or money’s worth (Finance Act 1986 ss86-99).
SDRT was introduced on 1 July 1996 for transactions in securities
that did not attract stamp duty.
stamped For stamp duty, the term “is applicable as well to instruments and
materials impressed with a stamp by means of a die as to instruments
and material having adhesive stamps affixed thereto” (Stamp Act 1891
s27).
stand-alone lump sum A lump sum benefit paid as a single BCE to a member (aged under 75)
of a registered pension scheme that represents all the member’s
uncrystallised rights under the scheme.
The lump sum must meet the conditions of Articles 25 – 25D of
The Taxation of Pension Schemes (Transitional Provisions) Order 2006

- SI 2006/572 - as amended by The Taxation on Pension Schemes
(Transitional Provisions)(Amendment No.2) Order 2006 – SI
2006/2004.
stand-alone policy Policy that is not part of any other financial arrangement.
standard (1) Usual quality or requirements for goods or services.

(2) Normal quality of goods or services, as against other descriptions
such as economy, high quality, de luxe etc.
standard accessory In the context of company cars for tax purposes, “an accessory
equivalent to an accessory assumed to be available with cars of the
same kind as the car in question in arriving at the list price” (Income
standard agreement Terms of a contract which are usually followed by the parties, as set out
in a written document.
Standard and Poor’s A US-based financial services company that provides widely-used
analysis on shares, stocks and other types of security. They also rate
government securities. The company was formed in 1860.
Securities are rated in order from the highest: AAA, AA+, AA, A+,
A, BBB, BB, B, CCC, CC, C, CI, R, SD and D. It uses NR for a
company that is not rated.
standard case For tax tribunals, a case “which will usually be subject to more detailed
case management [than a basic case] and be disposed of after a
hearing” (The Tribunal Procedure (First-tier Tribunal) (Tax Chamber)
Rules SI 2009 No 273 rule 23(2)(c)).
In employment law, a claim for equal pay which is not a stable
employment case, concealment case or disability case (Equal Pay Act
1970 s2ZA(2)).
standard cider Cider which is not sparkling and which has an alcoholic strength not
exceeding 7.5% (Alcoholic Liquor Duties Act 1979 s62B(4)(a)).
standard cost Cost of a future provision, against which the actual cost may be
measured.
standard costing Process of costing for a future period, against which actual costs may be
compared.
standard debt Debt which causes concern but is not too serious.
standard direct labour cost

Cost of labour to produce a unit according to a standard which has been
predetermined, such as how much time workers of different grades need
to spend.
standard exchange scheme (SES)

Scheme which may be used in outward processing to provide relief
from Customs duty when goods are imported which were previously
exported purely for a process, such as assembly or repair.
If the goods cannot be re-imported, equivalent goods may be
imported under SES.
Standard for Investment Reporting (SIR)

Document issued by the Auditing Practices Board (APB) in relation to
investment circulars.
standard fraction The fraction used to calculate marginal relief for corporation tax on
profits that lie between the lower and upper limits. The law is
Standard Import Values For Customs purposes, a special system for valuing certain fresh fruit
and vegetables at certain times of the year, when the entry price system
is in force. Standard Import Values (SIV) do not operate concurrently
with Simplified Procedure Values (SPV).
standard letter Letter which is written to provide routine information and answers to
correspondents. Such letters are widely used by the tax authorities, as
letters of engagement by auditors and in credit control.
standard lifetime allowance

The overall ceiling on the amount of tax-privileged savings that any one
individual can accumulate over the course of their lifetime without
taking any special factors into account that may increase or decrease the
tax-privileged ceiling.
For the year 2006-07, this amount is £1,500,000. The standard
lifetime allowance for following tax years will be specified by an
annual order made by the Treasury, and will never be less than the
amount for the immediately preceding tax year.
standard method In VAT, the partial exemption method which is available to all partly
exempt businesses without seeking prior approval from HMRC.
standard rate Rate which applies unless another rate is specified.

The term is particularly used for:
(a) rate of national minimum wage for all workers aged 22
and above;
(b) rate of VAT which is charged on a supply unless another
rate is specified;
(c) (sometimes) basic rate of income tax. It was the official
term between 1907 and 1973.
For beer duty, the standard rate is paid by brewers who produce
more than 60,000 hectolitres annually.
standard scale “with reference to a fine or penalty for an offence triable only
summarily,̶
(a) in relation to England and Wales, has the meaning given by
section 37 of the Criminal Justice Act 1982;

(b) in relation to Scotland, has the meaning given by section 225(1)
of the Criminal Procedure (Scotland) Act 1995;
(c) in relation to Northern Ireland, has the meaning given by Article
5 of the Fines and Penalties (Northern Ireland) Order 1984.”
standard variable rate A lender’s standard mortgage rate. This goes up and down with interest
rates generally.
standby When a worker is required to be available for work at short notice.

Doctors, caretakers and residential wardens are often required to work
on standby. Such arrangements are also known as being on-call.
Payment for being on standby is treated as gross pay, and is subject
to tax and national insurance in the usual way.
Issues have arisen as to whether a worker is entitled to receive the
national minimum wage (NMW) while on standby but not required to
work.
The National Minimum Wage Act 1998 states that an employee is
entitled to the national minimum wage for hours on standby when:
● actually working having been called out;
● required to be at or near work premises; or
● when not allowed to sleep.
Subsequent cases have confirmed that NMW was payable to:
● a person who operated a telephone booking service during
the night from home (British Nursing Association v Inland Revenue
[2002]);
● a watchman who was allowed to sleep at work but be ready
to attend any alarm (Scottsbridge Construction Ltd v Wright [2003]);
and
● a care manager who was on-call for 24 hours in a housing
association for elderly people (MacCartney v Oversley House
Management [2006]).
The NMW must be paid for all hours that a person may be called
out, unless the risk of being called out is “trifling”.
standby credit Credit which a bank or other financial institution makes available to a
company to draw on when required.
standing charges Cost of owning an asset (particularly a car) as opposed to the costs of
running it.
standing charges The cost of owing an asset rather than of using it. This term is of
particular application to cars where it applies to road tax, MOT,
insurance, cost of capital and depreciation. Other costs, such as petrol
and maintenance, are classified as running costs.
standing order Arrangement whereby a fixed amount is paid at regular intervals, such
as a subscription to a club or a donation to a church or charity.
Standing orders are not generally used by commercial businesses
who prefer direct debits where they can change the amount drawn. A
standing order can only be changed by the bank’s customer. A standing

order may be set up for any person or organisation whereas a direct
debit may only be made for an organisation which meets strict
guidelines imposed by the bank.
standing statement of fixed deductions

Statement provided by employer to employee listing deductions made
from every payslip and which need not therefore be detailed on each
payslip (Employment Rights Act 1996 s9).
starch For VAT, this is zero-rated when supplied in edible form but standard-
rated when supplied for such purposes as stiffening shirt collars (VAT
notice 701/14).
Star Chamber Common nickname for Public Expenditure Committee.
stardust Name sometimes given to the metallic strip in bank notes.
stare decisis Latin: stated decision. The principle that a precedent is binding in law.
start menu In computing, a menu which first appears when a program is selected
and offers basic choices, such as creating a new file or opening an
existing one.
start up Begin a business, or the beginning of a business. The term is sometimes

hyphenated.
start-up financing Providing the funds to start a new business.
starting rate limit Maximum slice of income subject to the starting rate of income tax.
starting rate (SR) Income tax rate of 10% which was charged on the first slice of taxable
income between the tax years 2001/02 and 2007/08.
starting travelling expenses

“Expenses incurred by the employee in travelling from a place in the
United Kingdom to take up employment” (Income Tax (Earnings and
This is generally tax-deductible if the employment is overseas.
stash Deposit of funds which are kept, sometimes secretly, for a particular
purpose.
state (1) An independent country seen as a single financial and legal entity.
(2) Give factual information about something.
state bank American term for a commercial bank licensed by the individual state.
Such a bank is not always a member of the Federal Reserve system. A
bank run by the federal government is called a national bank.
state benefits Social security and other welfare payments.
State Earnings Related Pension Scheme (SERPS)

Government-backed additional pension arrangement which ran from 6
April 1978 to 2002, when it was replaced by the similar state second
pension (S2P).
Under SERPS, employees pay some additional national insurance to
secure more pension from the government. As originally planned, an
employee who was a member of SERPS for his or her entire working
life and who earned more than the upper earnings limit for national
insurance would receive additional pension of 25% of band earnings.
This would be a significant sum which could more than double the state
pension.
In fact, the scheme did not last long enough for anyone to receive
such a high figure, though state second pension is broadly similar. In
1999, the scheme was reduced in terms of benefits provided. The
maximum benefit was progressively reduced to 20% of band earnings,
among other changes.
state maternity allowance Term used in Income Tax (Earnings and Pensions) Act 2003 s677 for
maternity allowance.
statement Document which summaries a financial position, particularly a

document which summaries what invoices are still owing. Such a
statement is usually supplied at the end of each month.
statement of account List of sums due, mainly in the form of unpaid invoices.
statement of affairs Formal statement provided to court to support an IVA proposal.
statement of assets and liabilities

Statement of assets and liabilities of a body which prepares a receipts
and payments account. The statement is an alternative to the balance
sheet.
Statement of Auditing Standard

UK auditing standard issued by Auditing Practices Board.
statement of capital Statement made by directors about the company’s share capital.
Such a statement may be required for a reduction in share capital.
The contents of such a statement are set out in Companies Act 2006
s644(2).
statement of cash flows Statement which sets out where an organisation has received its funds
and how it has spent them.
statement-of-cash-flows method
Method of accounting which uses cashflows, rather than the accruals
method.
statement of changes Document which an employer must give to an employee within one
month of any change in the contract of employment (Employment
Rights Act 1996 s4).
statement of changes in equity

A financial statement reporting all items causing changes to the
ownership interest during the financial period, under the IASB system.
statement of changes in financial position

Financial report produced by a commercial organisation stating how its
cash position has changed during the period.
statement of community involvement

Statement a planning authority must prepare to state the involvement of
principal parties in its area in developing the local development
scheme (Planning and Compulsory Purchase Act 2004 s18).
statement of company’s objects

Statement which may appear in a company’s articles of association
stating the purpose for which the company is formed (Companies Act
2006 s31).
If no such statement appears, the objects are unrestricted, and the
company may engage in any activity.
statement of compliance A document submitted with the draft memorandum of association to

say that all the requirements of the Companies Act 2006 have been met
For a public company, such a statement may be accepted in issuing
a trading certificate (Companies Act 2006 s762(3)).
Statement of Financial Accounting Standards (SFAS)

American accounting standard.
statement of financial activities (SOFA)

Record of income and expenditure produced by a charity using the
accruals basis.
statement of guarantee A document which must be submitted with the draft memorandum of
association when forming a company limited by guarantee.
Companies Act 2006 s11 requires this statement to specify the
amount each member will contribute if the company is wound up.
statement of high net worth

Statement made by an individual that he has assets above a specified
value (Consumer Credit Act 1974 s16A). Such a person is exempt from
some of the provisions of the Act.
statement of initial employment particulars

A document which an employer must provide to an employee within
two months of starting work which set out the conditions of work
(Employment Rights Act 1996 s1). This section details what must be
included.
statement of practice Document issued by HMRC (formerly Inland Revenue) explaining how
it understands a taxing provision and how it will apply a provision.
They are numbered in the form “SP 1/87”, which refers to the first such
statement issued in 1987.
If a taxpayer follows a Statement of Practice, HMRC will not
challenge that decision. However a Statement of Practice does not have
the force of law. A taxpayer who believes that a Statement of Practice is
wrong may follow another interpretation, but should disclose this in the
white space on a tax return to allow HMRC to challenge such decision.
statement of principles A document issued by the Accounting Standards Board in the United
Kingdom setting out key principles to be applied in the process of
setting accounting standards.
Statement of Principles for Financial Reporting

Document produced by Accounting Standards Board to determine the
criteria for accounting standards and similar pronouncements. The
statement does not itself have the status of an accounting standard.
The Statement states in para 7 that its purpose is to ensure that
financial statements are true and fair.
statement of proposed officers

A document which must be submitted with the draft memorandum of
association when forming a company.
This must give the names and addresses of every person who is to
be a director when the company is formed and any person who is to be
company secretary.
statement of recognised income and expense

A financial statement reporting realised and unrealised income and
expense as part of a statement of changes in equity under the IASB
system.
statement of recommended practice (SORP)

An accounting policy developed for a particular trading activity. It
should be noted that the term used in FRS 18 is SORP and not
“statement of recognised practice”.
statement of rights In company law, a statement outlining the rights of members to vote or
appoint a proxy. Such a statement must be sent with all notices of
meeting (Companies Act 2006 s325(1)).
statement of standard accounting practice (SSAP)

UK accounting standard issued between 1971 and 1990.
statement of total recognised gains and losses

Financial statement reporting changes in equity under the UK ASB
system.
state of emergency Declaration by the King of Queen in Council which allows Parliament
to take emergency action under Emergency Powers Act 1920.
state of indebtedness Fact of being in debt. The term is usually restricted to cases where a
person is seriously in debt and is likely to become insolvent.
state pension Another name for the state retirement pension.
state pension credit Social security benefit created by State Pension Credit Act 2002 s1(1).
It has two elements, the guarantee credit and savings credit. It is
more commonly known as pension credit.
state retirement pension (SRP)

An amount paid by the state to its older citizens.
In the UK, the pension is paid from the age of 65 for men, and from
the age of 60 to women who retire before 2010. From 2020, it is paid to
women at the age of 65. Between 2010 and 2020, the retirement age for
women is gradually increased from 60 to 65. It is planned to increase
the retirement ages to 66 in ?????
A person is eligible for the pension if they have paid sufficient
national insurance contributions for nine out of ten years of working
life. This means that if a person started work at 21 and retired at 65,
they have 44 years of working life and must have paid sufficient
national insurance for 39 years. For those who retire from 2012, the
requirement is that a person has sufficient national insurance for 30
years, regardless of working life. If someone has less than a full
national insurance contribution, they receive a pro rata pension.
Since 1975, men and women have been able to have an SRP
pension on the same terms. It is also possible for a husband, wife or
civil partner to receive a smaller pension based on their partner’s
contributions.
The amount of pension is usually increased each April to allow for
inflation.
The SRP may be supplemented by additional pension. A pensioner
with low income may be entitled to claim pension credit.
state second pension (S2P)

Government-backed additional pension arranged introduced in 2002 as
a replacement for State Earnings Related Pension Scheme (SERPS).
S2P has two stages. Stage 1 continues most of the provisions of
SERPS. The main change is to stratify the band earnings and apply
different earnings factors to the different strata. The consequence is to
enhance the pension payable to lower paid workers. S2P also extended
additional pension to full-time carers.
Stage 2 replaces the earnings-related pension with a single flat rate.
This was originally intended for 2007, but has now been postponed to
2012.
state second pension (S2P)

Name for the state pension system which replaced SERPS from 2002.
S2P was recast to favour lower-paid workers and to include carers.
stationery Stationery used in a business is a normal business expense and is

therefore usually deductible from taxable profits.
For VAT, stationery is generally standard-rated even in the form of
books. If a book is sold completed, such as a historic diary or ship’s log,
it may be zero-rated under Value Added Tax Act 1994 Sch 8 Group 3,
as explained in VAT notice 701/10.
status Standing of a person in the eyes of the law.
status discount Term used in relation to people who are ignored for the purposes of
determining liability to council tax. Such people include full-time
students and people who have severe mental impairment.
status inquiry Act of checking on a person or organisation, particularly with regard to

their financial reliability.
status quo Latin: state as it is.
Statute of Dues Contentious law of 1532 which created a form of taxation in that it gave
the king land rights on the death of a tenant. It was of limited effect in
stemming the continuing low revenues for Henry VIII, who lacked his
father’s financial skill.
Statute of Frauds Law passed in 1677 which, among other matters, required certain
contracts always to be in writing. Originally there were six categories.
These have now been reduced to two: guarantees, and purchases of
land. There are other contracts which must be evidenced in writing (eg
insurance, employment and consumer credit) but which may be made
verbally.
statute An established written law, usually an Act of Parliament, the primary

source of law.
statute-barred When something no longer has any life or effect because of the time
which has passed. Most debts and civil actions become statute-barred
after six years.
statute book Collective terms for all laws passed in a country. It does not exist as a
book.
statutory Having the authority of the state government.
statutory adoption pay (SAP)

Social security benefit paid to a man or woman who adopts a child.
Their partner (male or female) may be eligible for statutory paternity
pay.
The right is contained in Social Security Contributions and Benefits
Act 1992 from s171ZL.
statutory audit Audit that a company is required by law to undertake.
statutory auditor Person who conducts an audit as required by law.
statutory books Financial records which an organisation is required by law to keep.
statutory declaration Declaration made before a magistrate or commissioner of oaths under

Statutory Declarations Act 1835.
Making a false statement in such a declaration is perjury (Perjury
Act 1911 s5).
statutory demand Formal notice sent by creditors before starting bankruptcy proceedings
(Insolvency Act 1986 s268(1)).
statutory funding objective

Requirement that every pension scheme “must have sufficient and
appropriate assets to cover its technical provisions” (Pensions Act 2004
s222(1)). Technical provisions means sufficient to cover its liabilities.
statutory instrument Rules made by government ministers who have been so authorised by
an Act of Parliament.
statutory interest Interest HMRC may pay on an overpayment made following an error
by the department.
statutory maternity pay (SMP)

Payment which an employer may be obliged to pay to a female
employee who is absent from work because of pregnancy or recent
childbirth. SMP was introduced on 6 April 1987.
Entitlement may depend on the woman’s confinement date.
An employer may not refuse to pay SMP when it is due. An
employer may pay occupational maternity pay in addition to SMP
provided the total does not exceed the woman’s normal pay.
SMP is only paid to a woman who:
● has worked for long enough (basically a woman who became
pregnant in that employment); and
● has earnings above the lower earnings limit for national
insurance.
The main points about SMP are:
● it is payable for a maternity pay period (MPP) of 39 weeks
(26 weeks before 1 April 2007). She may take up to 13 weeks further
leave unpaid;
● payment is usually of 90% of average earnings for the first
six weeks followed by a set rate thereafter;
● the woman may choose when the MPP starts provided this is
no earlier than 11 weeks before the expected date of birth, and no later
than the day after the actual birth;
● SMP is only paid for a live birth (which includes a baby that
dies immediately after birth) or for a pregnancy which lasts for at least
24 weeks;
● only one payment of SMP is payable for twins and other
multiple births;
● SMP is subject to income tax and national insurance on the
same basis as normal pay;
● the employer may reclaim 92% of the cost of SMP from the
state under the PAYE scheme, or a higher percentage if the employer
qualifies as a small employer.
From 6 April 2011, a woman may return to work after 26 weeks and
transfer the remaining 26 weeks to her husband or partner.
SMP entitlement is determined by reference to expected week of
childbirth (EWC), maternity pay period (MPP) and qualifying week
(QW).
A woman who does not qualify for SMP may qualify for maternity
allowance.
From 14 January 2007 there are no age limits for SMP.
The rules on SMP have changed many times since its introduction.
There was a major revision of the rules in 1994.
The right to reclaim statutory maternity pay is contained in Social
Security Contributions and Benefits Act 1992 s166.
statutory maximum with reference to a fine or penalty on summary conviction for an

offence,̶
(a) in relation to England and Wales, means the prescribed sum
within the meaning of section 32 of the Magistrates Courts Act 1980;
(b) in relation to Scotland, means the prescribed sum within the
meaning of section 225(8) of the Criminal Procedure (Scotland) Act
1995; and
(c) in relation to Northern Ireland, means the prescribed sum within
the meaning of Article 4 of the Fines and Penalties (Northern Ireland)
Order 1984.” (Interpretation Act 1978 Sch 1).
statutory nomination When a law makes provision for property held by a person to pass to
someone nominated by the person regardless of what is in their will.
Statutory nominations apply to certain funds held by a friendly
society, industrial and provident society or trade union, provided the
amount does not exceed £5,000. It also applies to nominations made
before 1981 for National Savings certificates.
statutory paternity pay (SPP)

Social security benefit for two weeks payable for absence by the father
of a natural child or adopted child, or by a woman whose partner has
adopted a child.
statutory payment General term for statutory sick pay, statutory maternity pay,
statutory paternity pay or statutory adoption pay.
statutory regulations Regulations which relate to financial dealings. They are a Statutory
Instrument with the force of law, as against regulations produced by a
regulatory body.
statutory sick pay (SSP) Social security benefit paid to an employee from a fourth day of
sickness. It is compulsory if the employee meets the conditions. An
employer may pay additional occupational sick pay, or may opt out of
SSP completely if the occupational sick pay is at least as generous as
SSP. The main law is Social Security Contributions and Benefits Act
1992 ss151-154.
An employer may recover SSP from the state to the extent that
payments in a month exceed 13% of national insurance (Social Security
Contributions and Benefits Act 1992 s159A and SI 1995 No 512).
statutory travel concession permit

Bus pass issued to anyone who is at least 60 years old and which is
valid throughout the UK under Concessionary Bus Travel Act 2007.
statutory trust Trust created by an Act of Parliament.

A statutory trust is created when a person dies intestate under
Administration of Estates Act 1925 s47.
statuts d’une société French: articles of association
stay When a court temporarily suspends a legal action or process.
stay of execution Temporary stopping of a legal order, usually to allow additional time
for a matter to be checked or for an alternative to be considered.
stealth bag Bag, wallet, purse or similar which is designed to conceal its purpose.
stealth tax New tax or adjustment to an existing tax which generates additional
revenue in a manner which is not immediately obvious.
steam For VAT, steam is generally standard-rated as a supply of heat rather

than as water which is zero-rated under Value Added Tax Act 1994 Sch
8 Group 2.
In some cases, the supply of steam may be reduced rated, or
standard-rated as a supply of heat (VAT notice 701/16).
steel Metal comprising iron with a controlled amount of carbon added. It is

much stronger than iron. One of the first users was the Midland
Railway Company which found steel rails still satisfactory after ten
years whereas iron rails needed replacing every six months.
Before 1853, the word “steel” referred to a very hard form of iron
used to make sword blades.
steel Alloy of iron and carbon. Producing steel is excluded from eligibility
for venture capital trusts under Income Tax Act 2007 s307C.
For this purpose steel is defined by reference to the list in Annex 1
to the Guidelines on national regional aid 2006/C 54/08 published on 4
March 2006.
steep-reduction annuity An annuity where:

“(a) the amount of any payment in respect of the annuity (but not
the term of the annuity) depends on any contingency other than the
duration of a human life or lives;
(b) the annuitant is entitled in respect of the annuity to payments of
different amounts at different times; and
(c) those payments include a payment (a reduced payment) of an
amount which is substantially smaller than the amount of at least one of
the earlier payments in respect of that annuity to which the annuitant is
entitled” (Income and Corporation Taxes Act 1988 s437A(1)).
stellar contribution Legal principle sometimes used in working out divorce settlements.
The principle is that if one party has a particular talent which
generates income, the other party has a reduced claim to such income.
step (1) One part of a sequence of actions.

(2) For financial instruments, the term means a rate or level at which
something applies.
step- A prefix to a relationship where a parent has remarried. So a person’s

step-mother is the wife of a father who is not the person’s mother. Tax
law sometimes treats step-relations in the same way as a direct
relationship. An example is in creating a trust for a bereaved minor.
STEP Society of Trust and Estate Practitioners.
stepped bond Loan finance that starts with a relatively low rate of interest which then
increases in steps.
stepped costs Costs which remain fixed to a stated level, and then increase to a new
level.
sterling Another name for the pound, as a UK currency.
sterling area Term, now rarely used, for the parts of the world where UK currency is
used.
sterling balances Trade balance of a country expressed in UK currency.
sterling crisis Serious fall in the value of UK currency which leads to economic
problems.
sterling index Index which shows the value of UK currency against a basket of other
currencies.
sterling silver An alloy of silver and base metal with at least 92.5% silver.
Stern Review Report issued by Lord Stern in 2006 on climate change. The Review
points out the economic costs of climate change, and has been the basis
for government policy in this area. Some of its conclusions have been
challenged by other scientists.
stet Mark in an account or record that a correction or amendment is to be

ignored and the original figure or text is correct.
stet processus Latin: stay of proceedings.
stewardship Taking care of resources owned by another person and using those
resources to the benefit of that person.
Stewardship Code Code of practice produced in July 2010 by the Financial Reporting
Council under which pension funds exercise their rights as shareholders
and set out in their accounts how they voted.
stick to your knitting Business jargon for a business that keeps to its core activities, and does
not diversify. It is also called zero-basing. The opposite has been called
buy a cow.
still “The apparatus, or any part of an apparatus, in which spirits are

produced” (Customs notice 39).
still licence Licence required to keep and use stills for making spirits (Alcoholic
Liquor Duties Act 1979 s82).
stipend Payment of a regular allowance to a clergyman or similar person for not

working so that they are available for pastoral and religious duties. For
all purposes, it is taxed and subject to class 1 national insurance as a
salary.
stock (1) Inventory of goods held for resale or for use in business. The tax
implications are discussed in the Inspectors’ Manual at BIM33015.
(2) The equity capital of a company, but expressed in amounts of
amount rather than as numbers of shares.
(3) In computing, a series of registers which are written and read in a
strict order.
stock certificate American term for a document which provides evidence that a person
holds stock (equity capital) in a company.
stock code Sequence of numbers or letters which an organisation uses to identify

items it holds in stock, either for sale or for its own use.
stock company Provincial theatre company which provides the main cast for a show
with a visiting star actor.
stock deficiency Loss of items on sale in a shop. If this happens, the shopkeeper may
deduct the cost of the items from the shop assistant’s wages under
Employment Rights Act 1996 s17, provided the amount does not
exceed 10% of gross wages.
stock depreciation Reduction in the value of stock. The term usually refers to a loss of
value while an item is in stock.
Such loss of value usually relates to either a deterioration in the
physical quality of the goods (such as metal going rusty), or in the

goods becoming less sellable (such as books going out of date or
clothes going out of fashion).
stock dividend When a dividend is paid in the form of additional shares.

Such a dividend is treated for tax as if it were paid in cash (Income
and Corporation Taxes Act 1988 s249).
The capital gains tax treatment is given in Taxation of Chargeable
Gains Act 1992 s142.
stock exchange A forum for the trading of stocks, shares and other securities.
The London Stock Exchange is the main stock exchange in the
United Kingdom.
Stock Exchange listing Arrangement where a company’s shares or other securities are listed on
the London Stock Exchange.
stock figures Details of how much stock (inventory) is held by an organisation. The
figures usually list each item held in stock with the quantity held. This
is turned into an amount by multiplying each item by the stock value.
stock holding period Average number of days for which inventory (stock) is held before use
or sale. It is an accounting ratio.
stock-in-trade Goods held by a business for sale.

The term is sometimes used as an adjective to describe a person’s
standard response or activity.
The term is also used in Taxation of Chargeable Gains Act 1992
s161 in relation to capital gains tax treatment.
stock item Item which an organisation usually holds in stock for immediate supply
or use, as against those items which it buys in when required.
stock ledger Book or equivalent which records movements in stock (inventory).
stock lending Arrangement whereby a company lends shares to another company.

The tax treatment is set out in Income and Corporation Taxes Act 1988
s231AA.
stock level Quantity of a specific item which an organisation keeps in stock.
stock market A stock exchange or other place where shares and similar securities
may be traded.
stock market manipulator

Person who attempts to influence a stock market in his favour.
stock market valuation Valuation of a company based on the price at which the stock market is
valuing its shares. So if a company has 2 million shares and the stock
market is £1.50 a share, its stock market valuation is £3 million.
stock option Right to buy shares at a special price. Such options are commonly
provided to directors and employees in the company.
stock transfer form Form signed by a person when selling shares in a company.
stock turn Another term for stock turnover.
stock turnover Accounting ratio which measures how long stock is held by a business
before being sold. It is calculated as the total value of stock sold in the
year divided by the average value of goods held in stock.
stock value Value of stock (inventory) held by an organisation.
stockbroker Person who buys and sells shares and other securities on behalf of his
clients.
stockbroker’s commission Payment to a stockbroker for buying or selling shares or other

securities. It is usually calculated as a percentage of the amount
involved.
stockholder Person who owns stock (equity capital) in a company.
stockholding Amount of stock (equity capital) held by a person or organisation in a

company.
stockjobber Term used before 1986 for a market maker.
stocks and shares Term widely but loosely used to mean holdings in the equity capital of
trading companies. Stocks are the US term, and shares are the UK term.
stocktaking Process of counting the stock held by a business at a particular time,

usually the end of the accounting period.
This stock is then valued to give the closing stock figure.
stocktaking sale Sale of items at a discounted price before stocktaking. The purpose is
to clear the shelves of unwanted items. Such a sale will usually require
the closing stock to be reduced for accounting and tax purposes.
stone Imperial unit of weight, still widely used in the UK for the weight of
people. A stone equals 14 pounds. There are 8 stones in a
hundredweight, and 160 stones in a ton.
A stone equals 6.3503 kilograms. There are 157.47 stones in a
metric tonne.
stop In banking, an instruction not to pay a cheque (or similar) which has
been issued.
stop and question Power given to the police in Northern Ireland under Justice and
Security (Northern Ireland) Act 2007 s21.
stop-go Term used to describe a common economic problem in the 1950s. The
government of either party would relax economic controls, only to re-
introduce them when this led to high levels of inputs. In 1961 the
National Economic Development Council (NEDC or Neddy) was
formed to find ways to avoid stop-go.
stop-loss insurance Protection purchased against the risk of large losses or a severe adverse
claim experience.
stop-loss order Instruction to a stockbroker to sell a share or other security if its price
falls below a stated figure.
stop order (1) Order preventing sale of shares or payment of dividend if a charging
order has been made.
(2) American term for a stop-loss order.
stop over Interruption to a journey.

A stop over does not in itself convert commuting into tax-deductible
business travel. A leading case on this is Sargent v Barnes [1978]
52TC335 which is discussed in the Inspectors’ Manual at BIM37935.
stoppage Act of stopping something, particularly stopping work in an industrial

dispute.
stopped cheque cheque you have issued but where you subsequently tell the bank not to
pay it, usually because the cheque has been lost or misappropriated.
storage Charge made for storing property belonging to someone else.
storage capacity Space available for storing items. The term may be used literally, such
as the storage capacity in a warehouse, or may be used in similar
contexts, such as the amount of space on a computer available to hold
data and software.
store card Credit card issued by a large store for use by customers.
The card is usually operated by a finance company on behalf of the
store; GE Finance is the largest such finance company. Typically store
cards have a very high interest rate.
store of value Any item which is widely regarded as being valuable and which is
therefore the basis of currency. Precious metals and gems are stores of
value, as can be land, antiques, and works of art.
The term is also used as one of the two functions of money. The
other function is as a means of exchange.
stores Goods supplied duty free on a vessel or aircraft, for use or sale on a
voyage or flight leaving the UK.
stotinki One hundredth of a lev, currency of Bulgaria.
stout Dark beer. It is subject to beer duty.

Stra Strange’s King’s Bench Reports, law reports published from 1716 to
1749.
straddle (1) Span a date, such as a date when a tax law changes. Such a straddle
can require the person to apportion an amount between before and after
the change.
(2) In investing, the difference between bid and offer prices.
(3) In investing, buying a put option and a call option at the same
time.
straight line method Method of calculating depreciation whereby the charge is the same
figure for each year of the estimated life of the fixed asset.
So if a fixed asset cost £6,000 and is estimated to last for six years,
under the straight line method, a depreciation charge of £1,000 would
be made for each of six years.
The name comes from the graphic representation. If the years are
numbered on the x-axis, and the depreciated value on the y-axis, the
graph will show a straight descending line thus:
straightline restriction on allowable expenditure

Term used in Taxation of Chargeable Gains Act 1992 s46. It relates to
the calculation of a gain on a wasting asset.
stranger In law, a person who was not a party to proceedings or a transaction but
who becomes involved. For example, under Bills of Exchange Act 1882
s56, a stranger who indorses a bill of exchange incurs liability of an
indorser to a holder in due course.
strap In investing, a security that is similar to a strip but which has two calls
and one put on a share or other security.
Strategic Investment Fund

Government fund launched in the Budget 2009 “to support advanced
industrial projects of strategic importance”. The initial fund was £750
million. One third is designated to low-carbon projects.
strategic management accounting

Branch of management accounting which lays particular emphasis on
the financial implications of factors outside the business.
stratified Description of an amount into strata for different treatment.

The term is particularly used in the accrual rate of class 1 national
insurance for the purposes of calculating State Second Pension.
Under SERPS, the entitlement accrued at the rate of 20% of band
earnings between the lower earnings limit and (what is now) the upper
accruals point. In its modified form of State Second Pension, band
earnings are stratified into three strata where the lowest stratum accrues
at 40%, a middle stratum at 10% and the highest stratum at 20%
(subject to some annual variations).
The consequences is that people on the lowest incomes accrue
entitlement at twice the normal 20% rate, while those on higher
incomes accrue entitlement at an overall rate of between 20% and 40%.
From 2010, there are only two strata of 40% and 10%, but the principle
remains the same.
straw For VAT, this is generally standard-rated, as explained in VAT notice

701/15.
strength In terms of alcoholic liquor, “means its alcoholic strength computed in

accordance with this section, the ratio referred to in paragraph (c) above
being expressed as a percentage” (Alcoholic Liquor Duties Act 1979
s2(2)).
“The alcoholic strength of any liquor is the ratio of the alcohol
contained in the liquor to the volume of liquor (inclusive of the alcohol
contained in it) (Alcoholic Liquor Duties Act 1979 s2(2)(c)).
stricto senso Latin: in its strict meaning.
strict settlement Settlement where land is held for the beneficial interest of people in
succession, such as to keep land in a family. The terms for such a
settlement are set out in Settled Land Act 1925.
strike (1) “Any concerted stoppage of work” (Trade Union and Labour
A strike sanctioned by a trade union may be official, whereas a
strike prompted by workers themselves is unofficial.
(2) Agree a striking price, sometimes by a predetermined mechanism.
striking price Price at which a security is sold by tender. Bidders make offers of
varying amounts. The striking price is the figure that ensures sufficient
sale is made.
striking the fiars Old Scottish practice of fixing grain prices between counties by a
sheriff and jury.
strip (1) Form of tradeable security, usually comprising two puts and one call
on a share or other security (unlike a strap which as two calls and one
put). The puts and calls have the same expiration date.
There are some specific tax provisions, such as Taxation of
Chargeable Gains Act 1992 s151C.
(2) A security issued by the government under National Loans Act
1968. Its tax provisions are set out in Finance Act 1942 s47.
strip search “Search which is not an intimate search but which involves the
removal of an article of clothing which:
(a) is being worn (wholly or partly) on the trunk; and

(b) is being worn either next to the skin or next to an article of
underwear” (Customs and Excise Management Act 1979 s164(5)).
The person to be searched, known as the suspect, may require the
Customs officer to refer the matter to his superior (ibid s164(3).
The search must be done by an officer of the same sex as the
suspect (ibid s164(4)).
strong cider Cider which is not sparkling and has an alcoholic strength exceeding
7.5% (Alcoholic Liquor Duties Act 1979 s62B(4)(b)).
structural assets In the context of insurance companies “means —

(a) shares, debts and loans the value of which is required to be
entered in lines 21 to 24 of Form 13 in the periodical return (UK
insurance dependants and other insurance dependants), and
(b) assets of such other description as are specified by regulations
made by the Treasury”.
(Finance Act 1989 s83XA(3)).
structural deficit One of two elements of the Budget deficit. The other is the cyclical
deficit.
HM Treasury glossary says that structural deficit “occurs when
government spending exceeds tax receipts. A government can run a
structural deficit even if the economy is growing strongly.
Consequently, it can only be tackled by reducing government spending
or raising taxes.”
structured enquiry form Any form which asks a question in a structured way, particularly the
way that payrollers may ask HMRC technical questions using its
website.
structured settlement Damages set out as a lump sum and an annuity, as allowed for in
Damages Act 1996.
student Person engaged in studying.

For PAYE, there is a special procedure using form P38(S). This
form may be completed by a student who:
● is in full-time education;
● works only during the three main holidays; and
● whose total taxable income for the tax year is less than the
personal allowance.
Completion of the form allows the employer to make payment
without deducting income tax under PAYE. If the employee does start
to earn more than the personal allowance or ceases full-time study, the
employer must obtain a tax code from HMRC and use the BR tax code
until then.
For Customs, “a person attending a school, college or university in
the EC for full-time study” (Customs notice 3).
Student Tax Advice Campaign

Programme started by HMRC on 3 March 2008 to help students
understand their tax responsibilities.
Stylophone Electronic musical instrument played with a stylus on a metal keyboard.

It was manufactured between 1968 and 1975, and again from 2007. A
court case (The Times 13 October 1970) held that this was not a
“keyboard instrument” and was therefore not exempt from purchase
tax.
sub (1) Abbreviation of subsidy, particular in the sense of providing a

worker with some money before he is due to be paid.
(2) Prefix denoting something with is less important or one link down
the chain.
sub-agent Person appointed as an agent by someone who is already acting as an

agent.
sub-club Part of a club that operates with some degree of independence.

For VAT, a sub-club is only treated as a separate body if it can be
demonstrated “that it has both constitutional and financial independence
from its parent organisation” (VAT leaflet 701/5).
sub colore juris Latin: under the colour of the law.
subcontract Engage a person to do some of the work which you have been engaged
to do, such as when a builder engages the services of an electrician or
gas fitter.
subcontractor Someone a contractor engages to do some of the work for which you
have engaged the contractor.
sub-division In relation to shares, means splitting the nominal value into a larger
number of lower value shares, such as splitting each £1 share into ten
10p shares. The company law is found in Companies Act 2006 s618.
The opposite process is known as consolidation.
subduct In law, to withdraw.
subject to contract Term used in negotiation indicating an intention to create contractual

relations but not doing so yet. The legal authority for this comes from
the case Chillingworth v Esche [1924]. The term is widely used in
purchases of land and property.
sub judice Latin: in the course of trial. There are some legal restrictions on the
conduct of parties while a trial is proceeding.
sublease Lease from a tenant to a subtenant. This is only legal if the lease either
allows such subletting or the landlord has given consent.
sublessee Person to whom property is sublet; a subtenant.
sublessor Tenant who subleases property to a sublessee.
sublet Let a property when the lessor is himself a tenant.
sub-menu A menu of software functions which appears when an item is clicked

on a main menu.
submission Documents, evidence and argument put to a judge or arbitrator.
sub modo Latin: under condition or restriction.
subnational entity County, borough, city, region or other defined area that is a recognised
part of a nation and may have delegated powers to impose taxes.
sub nom Abbreviation of sub nomine.
sub nomine Latin: under the name.
suboptimisation Management term for the problem when a director is so keen on

exploiting one favoured part of a business that he lets the business as a
whole suffer.
subordinate legislation “Orders in Council, orders, rules, regulations, schemes, warrants,

byelaws and other instruments made or to be made under any Act”
(Interpretation Act 1978 s21).
subordinated loan Loan which ranks after others regarding payment of interest or capital.
sub-prime lending Lending to people who cannot use the normal facilities for borrowing.
subprime mortgage crisis Economic crisis which became evident in 2007 as a consequence of
banks (particularly in USA) granting mortgages to those who could not
afford the repayments.
The demand for higher profits, and higher personal bonuses,
prompted lenders to reduce the conditions for granting mortgages.
These included the notorious liar loans and 125% mortgages. In the
USA, about 80% of mortgages are at variable rate. Interest rates rose in
2006 as house prices fell. This led to soaring mortgage defaults. As
homes were often worth less than the mortgage, foreclosure became
common, which exacerbated the problem.
The problem was further exacerbated by mortgages having been
securitised into a financial product that was then traded without people
being fully aware of what they were buying. When the bubbles burst, it
took a while for the consequences to become fully apparent.
subpurchaser Person who buys property immediately after the seller has purchased it.
This is called a sub-sale and may be relieved from stamp duty.
sub-sale When a buyer acquires goods to sell to another buyer.

Normally there are no legal consequences as the sub-sale is simply
regarded as a second contract for sale. There are some special
provisions regarding sub-sale as it affects seller’s lien in Sale of Goods

Act 1979 s47.
For stamp duty, the sale of a property by a purchaser to a
subpurchaser. A subsale can be relieved from duty.
subscribe Apply for shares in a new company.
subscriber Person who applies for shares in a new company.
subscription (1) Payment and application to buy shares in a new company.

(2) Money paid in advance for a time-based service, such as
membership of an organisation or to buy a series of publications.
The VAT position for subscriptions to a club or association are
given in VAT leaflet 701/5.
subscription deduction arrangements

Arrangements between a trade union and an employer whereby a
worker may agree to have his union dues deducted from wages and paid
to the union. Under Trade Union and Labour Relations (Consolidation)
Act 1992 s68 this requires the written authority of the worker who may
withdraw that authorisation whenever he wishes.
subscription price Price at which new shares in an existing company are offered for sale.
subsidiarity Policy of transferring control from a central body, such as a head office
or central government, to local bodies. The opposite is known as
centralisation.
subsidiary Company in which parent owns at least 50%. The company which owns
the subsidiary is called the holding company (Companies Act 2006
s136), or sometimes the parent company.
A subsidiary may not own shares in its holding company
(Companies Act 2006 s136(1)(a)) with exceptions for
● holdings before the relevant law started;
● when acting as a representative or trustee (ibid s138);
● when acting as a trustee of an employer’s pension fund (ibid
s139); or
● when acting as a dealer in securities (ibid s141).
subsidiary account Bank account or similar which may be used by some members of an
organisation which holds another account. An example is where a
company puts money into an account for an employee to use on
business.
subsidiary analysis Bookkeeping method of keeping control of very large ledgers by

splitting them. An example is where customers are broken down into
four sales ledgers according to their name as A-D, E-K, L-R and S-Z.
Such methods are not required for computerised accounting.
subsidiary company Company in a group which is controlled by another (the parent

company). Sometimes called subsidiary undertaking.
subsidiary trading company

Trading company owned by a charity.
For tax purposes, it is taxed as a trading company and not as a
charity. For direct taxes, this is easily overcome by covenanted the
company profits to the charity. For indirect taxes, particularly VAT,
there is no tax relief.
subsidiary undertaking Undertaking of which another undertaking is its parent undertaking.
subsidie Early form of income tax charged between 1435 and 1436, based on
experiments of 1404 and 1411. The subsidie was charged at 6d in the
pound on annual incomes from £5 to £100; 8d from £100 to £400, and
two shillings (10%) above £400. (This last rate was adopted when
income tax was introduced in 1799.)
subsidies (1) Taxes demanded by monarchs in 16th and 17th centuries for specific
purposes such as wars.
(2) Plural of subsidy.
subsidise Pay part of the price to assist or encourage others. At various times, the
government has subsidised the sale of food or property. Tax breaks are
a form of government subsidiary.
subsidised accommodation
Accommodation where the occupant does not pay the whole cost. If the
balance is paid by the employer, the employee may be liable to pay
income tax on the amount of the subsidy.
subsidised facilities Facilities provided at less than the full price.

When provided to an employee, this may create a taxable benefit in
kind.
subsidy (1) Money given to something which is either not profitable, or where
money is provided to make something affordable or to promote its use
as a matter of public policy.
(2) Land tax charged between 1083 and 1163 of 72 pence per hide of
land (between 60 and 180 acres depending on soil quality). The
Domesday Book was compiled to form a register.
substance (1) In accounting, information in the financial statements should show

the economic or commercial substance of a situation.
(2) A chemical mixture or compound. The term is used in VAT leaflet
701/1 in relation to drugs for medical research which may be zero-
rated. A substance may be solid, liquid or gas, and may be a natural or
artificial product. If a gas, any zero-rating extends to cylinder rental.
substance of the document

For stamp duty, examination of a document to ascertain its nature to
determine the credit amount of duty payable.
substance of transactions Term used in identifying the nature of a financial transaction. This
involves identifying assets and liabilities, and recognising them. Details
are provided in FRS 5 paras 16-38.
substance over form A basic accounting concept which requires that accounting transactions
are reflected in the accounts according to the underlying substance of
the transaction rather than to its legal form.
The following statement appears in FRS 5 para 14: “A reporting
entity’s financial statements should report the substance of the
transactions into which it has entered. In determining the substance of a
transaction, all its aspects and implications should be identified and
greater weight given to those more likely to have a commercial effect in
practice. A group or series of transactions that achieves or is designed
to achieve an overall commercial effect should be viewed as a whole”.
This principle can lead the accounting differing from the legal form
in such areas as fixed assets acquired on a finance lease, consignment
stock and goods bought or sold with reservation of title.
substandard risk Insurance term for a risk of a claim which is higher than average.
substantial In finance, large and significant in relation to other items.
substantial and habitual visits rule

Rule that is used to determine ordinary residence.
substantial donor In tax, person who contributes a large sum to a charity.

Special provisions were introduced in 2006 as Income and
Corporation Taxes Act 1988 ss506A-508C and Income Tax Act 2007 ss
549-557, to prevent substantial donors using charity relief for tax
avoidance. The main provision is that the relief is withdrawn to the
extent that the donor receives any benefit.
substantially invested Description of offshore fund that holds more than 60% of its assets in
interest-bearing form. There are special tax provisions for dividends
paid from such a fund.
substantial non-cash asset

In company law, an asset other than cash whose value exceeds either:
● 10% of the company’s value and £5,000; or
● £100,000.
If a transaction for such an asset is made with a director, the company
must usually obtain members’ approval under Companies Act 2006
s190.
substantial property transaction

In company law, a transaction which exceeds either:
● 10% of the company’s value and £5,000; or
● £100,000.
If such a transaction is made with a director, the company must obtain
members’ approval under Companies Act 2006 s190.
substantial shareholder exemption (SSE)

This broadly exempts from tax the gain on selling shares where the
seller owned at least 10% of the shares for at least 12 months out of the
previous 24.
The law is contained in Taxation of Chargeable Gains Act 1992
Sch7AC and applies for periods after 31 March 2002.
substantially unfurnished Description of premises which contains insufficient furnishing to allow

someone to live there. Such a premises may qualify for a lower rate of
council tax for six months.
substantive Referring to the subject matter than a procedure. For example, a

substantive motion in a debate is whether to buy new premises. A
procedural motion is whether to end discussion and proceed to taking
the vote on the substantive issue.
substantive issue The main issue in dispute in legal proceedings. This contrasts with a
preliminary issue that deals with such matters as procedure or
hardship applications.
substantive trust fund Trust which contains the funds for which it was set up, as against a
nominal trust fund which holds a small amount to allow the trust to be
set up.
It is common practice to create a trust with a nominal sum such as
£10. This means that the trust is ready when the more valuable assets
are ready to be settled into the trust.
substituted remuneration Lump sum received in lieu of normal pay. The inspectors’ manual at
EIM 00670 states that this is taxable as employment income under
Income Tax (Earnings and Pensions) Act 2003 s62. A leading case on
this is Bolam v Muller [1947] 28TC471.
substantive law Law as it relates directly to matters, as opposed to procedural matters.

Such law is known as adjectival law.
substitute value Value that may be used when stock is transferred between businesses.
substratum Old term literally meaning bottom or basis. A company may be wound
up if its substratum has gone, namely when the basis for which the
company was formed is impossible to continue.
sub-subsidiary Subsidiary of a subsidiary.
subtenancy Tenancy where the property is let by someone who is himself a tenant
and not the landlord.
subtenant Tenant who occupies property from another tenant, and not from the
landlord.
subtotal Total to which further figures may be added. It is sometimes

hyphenated as sub-total.
sub-total Sum of figures which is itself to be added to other figures to give a

total.
subtraction (1) Mathematical process of reducing one number by another.

(2) In law, neglect or refusal to perform a duty or a service.
subvention Another term for subsidy.
sub voce Latin: under the title.
succession Process by which one person takes over the rights, duties or property of
another, particularly the right to take over property on death. The law
on this is explained in executorship.
succession duty One of the death duties. It was charged under Succession Duty Act
1853. The duty was repealed by Finance Act 1949 s27 from 30 July
1949. The current equivalent is inheritance tax.
succession planning Human resources term for the processes put into place to replace key
people as necessary.
successive life interests Arrangement when a life interest trust nominates a series of
beneficiaries, so when the interest of one beneficiary expires, the
benefit passes to another identified beneficiary.
successor company In relation to the tax provisions for merged venture capital trusts, this is
defined in Income Tax Act 2007 s323(3).
successor election The designation, in writing by a donor, of a person to be assigned the

rights and duties associated with the donor's account at the Charitable
Gift Fund upon the donor's death. Successors are eligible only after the
deaths of all donors named on the account. The donor designates an
individual as the successor, or the donor may choose to recommend that
one or more charitable organizations receive the proceeds of any
remaining units in the account upon the donor's death.
successor in title Person who will succeed to a right, particularly in intellectual property.
sue Issue proceedings in civil law.
sufferance wharf Old term for what is now known as an approved wharf for Customs
purposes.
sufficient but not adequate

Description of consideration for a contract. “Sufficient” means that
there must be some consideration, while “adequate” means that it need
not reflect the true value of the benefit received. Many valuable items
have been sold for a nominal £1 as a means of creating a contract for

what in reality is a gift or disposal.
suggestion award Award made to an employee in respect of their suggestion. This is tax-
free up to a permitted amount under Income Tax (Earnings and
suicide Killing oneself. It cease to be a crime under Suicide Act 1961, though
assisting a suicide remains an offence under s2. A suicide may
invalidate the terms of a life insurance policy.
sui generis In planning law, the term used for any development for which there is
not a use class order. Such developments include theatres, houses in
multiple occupation, hostels providing no significant element of care,
scrap yards, petrol filling stations, motor showrooms, retail warehouse
clubs, night clubs, laundrettes, taxi businesses, amusement centres and
casinos.
sui juris Latin: of full capacity. The term describes a person who has legal
capacity and is not, for example, under age, lacking mental capacity or
bankrupt.
suing and labouring clause

Term in a policy of marine insurance as set out in Marine Insurance Act
1906 s78. It broadly allows those in charge of a vessel to do what is
necessary to save ship and its cargo without invalidating the policy.
suit (1) Law suit.

(2) Matching garments, such as trousers and jacket, or skirt and jacket,
which are seen as smarter than normal clothes. They are sometimes
prescribed as compulsory in offices.
(3) Colloquial term for person who acts as an unthinking functionary,
so-called from wearing a suit.
sum (1) An amount of money.

(2) Total; result of adding two or more numbers or amounts are added.
sum at risk Amount which a person risks losing. This may be in the form of start-
up capital or investment.
summarising Counselling skill of identifying main elements in a problem.
summary dismissal Instant dismissal when an employee’s conduct is such that the employer
cannot reasonably expect the employment to continue during a notice
period.
summary warrant In Scotland, order granted to a government body or local authority to

recover a debt.
summons Legal notice from a court served on a person who must respond.
summum jus summa injuria

Latin: extreme law is extreme injury.
sum of the digits Method of calculating depreciation, not widely used in practice. It is
sometimes known less accurately as the rule of 78.
The method works by adding up digits representing the number of
(usually) years of the estimated life of a fixed asset. Each year the
depreciation charge is calculated by multiplying the asset value by a
fraction. The numerator is the number of the year, starting with the
highest. The denominator is the sum of the digits. So if an asset has an
estimated life of four years, depreciation is charged as 4/10, 3/10, 2/10
and 1/10 respectively.
The method is sometimes favoured over the much more common
straight line method as it provides greater depreciation in the early
years when most fixed assets suffer the greatest loss of value. The
argument against this is that there is no indication that the relative loss
of values will be fairly represented by numerators based solely on the
number of years.
The formula for calculating the sum of the digits from 1 to n is:
Sum = n (n + 1)
2
sum of the years’ digits Method of depreciation which uses the sum of the digits method based
on the number of years of an asset’s estimated useful life.
sumptuary tax Any tax that is imposed partly or wholly to dampen demand for social
reasons. This is the basis for most excise duties and is a factor in other
taxes. Such a tax is also called a Pigovian tax.
sums chargeable to the reserve

Sums which may be debited to an organisation’s reserves.
Sunday working Working on a Sunday.

Workers in shops and betting offices may serve a notice on their
employer that they will not work on a Sunday, for which they must
suffer no detriment. The law is Employment Rights Act 1996 ss36-43.
The rights started on 26 August 1994 for shop workers and from 3
January 1995 for betting shop workers.
sundry Category of expenditure for items which do not have their own
category.
sunk cost Management accounting for an item which has been spent, cannot be
un-spent, and is therefore ignored in decision-making.
Suppose someone spends £1,000 repairing a car. He then finds that
he needs to spend another £1,200 to make the car roadworthy or he can
spend £1,500 to buy another car which is roadworthy and of equivalent
worth.
The £1,000 is a sunk cost and therefore ignored. The decision is
whether to spend £1,200 on repairs or £1,500 on purchase. The former
is the better option.
sunset clause Clause in a law, contract or similar that states when the provisions will
cease. Many short-term tax incentives contain sunset clauses.
suo moto Latin: on one’s own initiative.
superannuation Pension paid to someone who is too old or ill still to work.
supercargo Person employed by a ship charterer to sell a cargo overseas.
super-majority Any system of voting which requires more than 50% of the votes for a
motion to be carried.
A super-majority is usually restricted to matters which are
considered so serious or fundamental that a simple majority is regarded
as insufficient. A super-majority typically requires two-thirds, 75% or
even 90%.
Company law requires a super-majority for special resolutions.
In some situations, a 100% majority is required, such as to turn a
limited company into an unlimited company, or for a partnership to
admit a new partner.
super podcast Term used by HMRC for a recorded audio explanation that can be
downloaded and listened to. The first super podcast was announced on
1 March 2010 and explains to businesses how they may pay VAT,
PAYE and corporation tax.
super spike Very rapid or unprecedented rise in a commodity price, as for oil in
2008.
superstitious uses Object of a trust for the propagation of a rite not permitted by law. Such
an object invalidates the trust.
supervening trade Trade which is created after a non-commercial activity.

If someone inherits an asset and then sells it at a profit, the sale can
only be taxed as a trade if it can be shown that the asset became trading
stock after inheritance. The matter is discussed in the Inspectors’
Manual at BIM20315.
supervision In regard to disability living allowance, a distinction is made between

attention and supervision. Attention means that another person must do
something for the disabled person, whereas supervision means simply
that a person must be present while the disable person does the task
supervisor (1) Person who is a worker’s immediate boss.

(2) In an IVA, insolvency practitioner appointed to oversee the IVA.
super visum corporis Latin: upon view of the body. Term for a procedure of the coroner.
supplemental deed Deed that must be read in conjunction with another deed.
supplementary benefit Name for an old social security benefit.

supplementary charge In VAT, a charge made in respect of a known future increase to counter
avoidance in defined circumstances. For example, in 2010, a
supplementary charge of 2.5% could be imposed in respect of the
published increase in VAT rate from 17.5% to 20%.
supplementary contribution
Further sum paid by HMRC into a child trust fund if certain conditions
are met (Child Trust Funds Act 2004 s9).
Supplementary Fund Protocol

Protocol of 2003 which establishes a Supplementary Fund for pollution
damage from merchant ships (Merchant Shipping (Pollution) Act 2006
s1(1)).
supplementary petrol duty

An addition to petroleum revenue tax charged for four half-yearly
periods in 1981 and 1982.
supplementary protection certificate (SPC)

European certificate issued in respect of goods confirming that they are
protected by a patent.
supplementary tax invoice

An invoice issued to adjust the amount of VAT previously charged for
a supply.
supplier Person who sells goods or services to a person or business.
suppliers' payment period

Average number of days credit taken from suppliers.
supply Provision of goods or services. If made in the course of a trade, a

supply is subject to VAT at the appropriate rate.
The term “supply” is wider than provision under a contract. For
VAT purposes, a supply also includes free gifts, self-supply and some
compensation payments.
supply and demand Basic principle of economics that any imbalance between supply and
demand affects the price of goods or services in a free market.
supply VAT The VAT due on supplies of goods and/or services deemed to be made
in the UK.
support component An addition to the basic allowance of employment support allowance

that may be paid in the main phase after the assessment phase (usually
of 13 weeks) has ended.
The component is paid when someone has a limited capability for
work.
Support for Mortgage Interest (SMI)

Part of the social security system that provides help with paying
mortgage interest. It is paid directly to the lender.
support price Price in the EU at which a government will buy farm produce to stop its
price falling.
Supported Capital Expenditure (Revenue)

Capital schemes for which the government will provide revenue
support. This was introduced from 2004/2005 to provide revenue
support for traditionally funded capital schemes and replaces credit
approvals.
supporting documents Any written material which indicates the truth of a statement.
Taxes Management Act 1970 s12B(6)(b) states “supporting
documents includes accounts, books, deeds, contracts, vouchers and
receipts”.
suppression veri Latin: suppression of the truth, misrepresentation.
supra Latin: above.

The term is sometimes used in legal reports to indicate a matter
previously covered.
Supreme Court The term now usually means the final appeal court of the UK,
established by Constitutional Reform Act 2005 s23. This replaced the
House of Lords from 1 October 2009.
The first tax case it heard was Grays Timber Products Ltd v HMRC
[2010] All ER (D) 31 (Feb) which held that when employer-related
shares are sold for more than their true value, the excess is chargeable
to income tax as employment income.
The term also means a wider system of courts.
Thus, “Supreme Court” means:
“(a) in relation to England and Wales, the Court of Appeal and the
High Court together with the Crown Court;
(b) in relation to Northern Ireland, the Supreme Court of Judicature
of Northern Ireland” (Interpretation Act 1978 Sch 1).
Also, Supreme Court “shall consist of the Court of Appeal and the
High Court, together with the Crown Court established by this Act”
(Courts Act 1971 s1). This definition is introduced from 1 February
1991.
sur Latin: upon. The word is sometimes used to indicate on what law on
action is founded.
surcharge Additional charge imposed.
Sure Start maternity grant

Social Fund payment to a woman on means-tested benefits who gives
birth.
surety Deeds or other valuable assets which are offered as a security that
someone will do something, or a person who makes a similar promise
on behalf of someone else.
surface runoff “Rainwater (including snow and other precipitation) which —

(a) is on the surface of the ground (whether or not it is moving), and
(b) has not entered a watercourse, drainage system or public sewer”.
(Flood and Water Management Act 2010 s6(5)).
surgery Generally surgery is not a tax-deductible expense. A leading case is

Prince v Mapp [1969] 46TC169, which is discussed in the Inspectors’
Manual at BIM37945.
surplus Excess of income over expenditure. This is the equivalent to profit for
a non-trading body.
surplus-increasing transfer of assets

“A transfer of assets to the transferor’s long-term insurance fund to the
transferee which is not brought into account for any period of account
of the transferee but increases the amount of total surplus shown in line
39 of Form 58 in any periodical return of the transferee” (Income and
Corporation Taxes Act 1988 s444AEA(6). This refers to the tax
implications on a transfer of life assurance business.
surrender Where an investment or policy is cancelled. The holder may receive a

reduced payout, due to the impact of charges.
surrenderable amount Amount of loss that a company may surrender to another company as
group relief (Corporation Tax Act 2010 s139).
surrendering company In group relief, a company that makes a loss that is offset against the
profits of a claimant company in the same group. The law is contained
in Corporation Tax Act 2010 Part 5.
surrender of share Giving up a share or shares by a member of a company. The company

may accept this is allowed by the articles of association.
surrender value The amount of money paid to the policyholder by the insurer when
certain types of life policy are discontinued before the full benefit
becomes payable.
surrendering company Company in a group which surrenders its loss relief to another group
company (Income and Corporation Taxes Act 1988 s402(1)). The other
company is known as the claimant company.
surrender period For group relief, accounting period for which a loss is passed to
another company (Corporation Tax Act 2010 s142).
surtax Addition to income tax introduced in 1909. In 1973, it was replaced by

income tax and the higher rate.
This additional tax on income was controversial because it broke
the principle that tax paid was in relation to income. This controversy
was overshadowed by proposals to impose a 20% tax on increased land
values, which sparked a two-year constitutional crisis.
survey method In statistics, indirect method of data collection, usually when direct
observation is not possible. Examples include asking people for
opinions in questionnaires
surviving partner Husband, wife or civil partner who outlives their partner.
This term is widely used in pensions and retirement planning. The
normal assumption is that a surviving partner needs two-thirds of the
income of the couple. Some expenses, such as food, halve on the death
of a partner while other expenses, such as house insurance, remain the
same.
A pension can have provisions for a surviving partner in a joint life
annuity. A pension without such provision is known as a single life
annuity.
For a private pension, choosing a joint life annuity can lead to a
significant reduction in the amount of pension paid. The amount
depends on the age of the partner which a greater reduction for a
younger partner. A choice must also be made of how much of the
pension should be paid to the surviving partner. The figure is usually
50% or two-thirds, but can be 100% or any other percentage.
On average, men marry women three years younger. If a 65-year
old man with a 62-year old wife retires with a pension fund of
£100,000, recent annuity rates indicate that he could receive a level
pension of £616 a month. This would stop when he dies. To provide a
pension to a surviving partner reduces the monthly pension to £519 for
50% pension, £501 for a two-thirds pension, or £473 for a full pension.
If the pension is index-linked the payments to the surviving partner
are also index-linked.
If there is a pension guarantee, the payments to the surviving
partner start when the guarantee period has finished.
For occupational pensions, the provision of a pension for a
surviving partner depends on the terms of the scheme. The maximum
allowed is two-thirds. Such schemes also often include provisions for
further pensions to children under 18, usually to a maximum of two-
thirds of the surviving partner’s pension, which is four-ninths of the full
pension.
surviving spouse A partner to a marriage who outlives the other.

From 1 January 1996, a surviving spouse must live for 28 days after
their partner’s death to inherit. This provision is contained in
Administration of Estates Act 1925 s46(2A) as inserted by Law Reform
(Succession) Act 1995 s1.
survivorship Living after someone else, and the rights that follow from doing so.
survivorship clause For inheritance tax, a condition that someone must survive to inherit.
The disposition is treated as being made when the potential entitlement
arises, except that a disposition that involves transferring property more
than 12 months later does not give rise to a disposition until then.
suspend Stop doing something for a while, such as not allowing a particular
company’s shares to be traded while a matter is investigated.
suspended beer Term used in Customs notice 226 to mean beer subject to suspended
duty.
suspended order Order committing a debtor to prison for non-attendance at court, but
which will not be enforced if debtor attends on a second request.
suspense account Account to which one side of a double entry is posted when the true
account is not known, such as when a payment is received but its
purpose is not obvious.
The suspense account allows the books to balance while the true
account is identified. The appropriate adjustment is then made by a
journal entry. The existence of a balance in the suspense account is a
reminder that the matter must be investigated.
suspension of penalties Procedure introduced from 1 April 2010 in relation to tax penalties.
Suspension may only apply for penalties that would otherwise for
carelessness. There is no suspension for penalties that arise from
negligent or fraudulent conduct.
Suspension means that no penalty is imposed but, for the taxpayer
must follow conditions imposed by HMRC to ensure that such
carelessness does not arise again. The original penalty is suspended for
two years. If no further penalty arises in this period, the original penalty
is then cancelled.
suspension system One of two methods by which Customs administers inward processing
relief. The other is drawback system.
This applies when goods are imported for processing before being
exported again. The re-exported goods are known as compensating
goods or equivalent goods.
sustainable drainage Term defined in Flood and Water Management Act 2010 Sch 3 para 2.
This Act also introduced Water Industry Act 1991 s106A.
sustainable growth “Economic growth that can continue over the long-term without
damage to the environment or the exhaustion of non-renewable
resources” (HM Treasury glossary).
SVA (1) Single vehicle approval.

(2) Shareholder value analysis.
SVR Scottish Variable Rate of income tax.
Swan Swanston’s Chancery Reports, law reports for 1818 and 1819.
swap Exchange of one thing for another.
swear “includes affirm and declare” (Interpretation Act 1978 Sch 1).
sweeper Term sometimes used for what was Schedule D Case VI income. The
term means a provision that sweeps up income not taxed under other
schedules. This meaning is used in BIM14030.
sweeteners For VAT, these are zero-rated as food. This covers both natural
products such as honey and sugar, and artificial products such as
saccharin, aspartame and sorbitol (VAT notice 701/14).
sweetheart deal Arrangement where existing customers receive preferential terms.
sweets “Sweetened prepared food which is normally eaten with the fingers”
(VAT case 18437 Unibev [2004]).
Sweets are standard-rated as they are excluded from zero-rating for
food. There have been many marginal cases on what comprises sweets
rather than food.
[In previous centuries, the word was sometimes used in excise Acts to
mean sweet wine.]
swipe card Plastic card that gives access to premises or stores money.
VAT notice 701/5 gives advice on when such cards are used for bar
purchases in a club.
switching In investment, practice of moving an investment (or part of it) from one
fund to another.
There is usually a cost of doing so in the form of either (or both of)
a management charge from the fund provider, or a spread in that the old
investment is sold at a lower rate than the new one is bought.
SWP Skill with prizes, type of amusement machine that is not regarded as an
amusement machine for VAT purposes.
syllogism In logic, a proposition from which a proof may be inferred.

The simplest example is if A = B and B = C, then we may infer that
A = C. Tax cases are full of syllogisms.
syndicate Group of people who are so organised for a common purpose,

particularly in providing insurance at Lloyd’s.
syngas (SNG) Synthetic gas which basically comprises carbon monoxide and
hydrogen and is made by a process such as steam reforming of natural
gas. The gas may either be used for heating and power, or is sometimes
used for producing other products.
synthesis Form of logic developed by Aristotle, which advances a thesis, advance

the opposite known as the antithesis, and then reconciles them to a
synthesis.
SYSC Part of the Financial Services Authority Handbook that deals with
senior management arrangements, systems and controls.
system requirements In computing, the hardware and software which a person must have for
a new piece of software to work.
The requirements are usually expressed in terms of:
● how much hard disk is required;
● the minimum size of RAM need;
● what operating system must be installed;
● what hardware equipment must be present (eg CD drive,
scanner, DVD drive etc); and
● any other programs which must be already installed.
systems analyst Person who analyses a procedure to determine how a computer program
may be written to perform the task.
T
T Suffix for a tax code. This suffix does not indicate the allowances to
which a person is entitled, as do other suffixes. A T code may only be
changed by direct instruction from HMRC.
T+ Abbreviation sometimes used to indicate the number of days taken to

settle a transaction.
T1 status HMRC term for goods not in free circulation.
TA (1) Territorial Army.

(2) Training Agency.
TAAR Targeted Anti-Avoidance Rule.
table Chart of numbers, indices or similar laid out according to selection

criteria. Tax tables are produced for PAYE.
Table A Draft regulations for the management of most companies.
Table B Draft memorandum of association for a private limited company.
Table C Draft memorandum of association for a company limited by guarantee

and having no share capital.
Table D Draft memorandum of association for a company limited by guarantee

and having share capital.
Table E Draft memorandum of association for an unlimited company that has

share capital.
Table F Draft memorandum of association for a public limited company.

tabula in naufragio Latin: plank in the shipwreck. The term relates to the rights of
mortgagees of a ship that has sunk.
T account Historic method of drawing up an account. A large letter T is drawn.

The name of the account is written above the upper horizontal. The
debits are recorded on the left of the vertical line, and the credits on the
right. This may include any balance brought forward from a previous
account. The balance carried forward is whatever figure has to be
added to one side to make the totals the same.
tacit relocation Process under Scottish law whereby a tenant of agricultural property
can stay on if neither party terminates a lease and the tenant inherits the
interest in the property on the death of the previous holder.
Under Inheritance Tax Act 1984 s177, the value of this inheritance
is not subject to inheritance tax.
TACOS Terms and conditions of service.
tailings Residual powder after gold ore has been extracted from mined rock. It
is possible to extract gold from tailings. This is treated as winning
minerals.
tainted gift Gift made within six years of the offence which funded it (Proceeds of
Crime Act 2002 s77).
taka Currency of Bangladesh.
take-home pay Amount an employee actually receives. It represents net pay subject to
any further deductions, such as loan repayments.
take-over bid Attempt by a company to acquire another. The former company is

called the acquirer and the latter the target.
The expenses of such a bid are usually regarded as capital rather
than revenue, as explained in the Inspectors’ Manual at BIM38260.
take up Accept or utilise a financial arrangement, such as an offer to buy shares.
take up rate Number of people who accept an offer as a percentage of those eligible
to do so. The term is commonly used in connection with rights issues
and social security benefits.
takeover One company buying another.
takeover bid Offer by one company to buy another.
Takeover Code Code of practice which regulates takeovers.
Takeover Panel Body which once considered certain large takeovers to see if they were
in the public interest.
takeover target Company which is vulnerable to a takeover.
takings Receipts, particularly in a shop.
talking books for the blind

These are cassettes, tapes, CDs or other media where a book is read.
These items are zero-rated under Group 4 if provided by a charity for
the blind.
tallage Tax imposed between 1174 and 1268 by the king on the increasingly
wealthy boroughs.
The word tallage was first used in 1177. There was a massive
tallage in 1192 to ransom Richard I. In 1243, tallage was levied directly
on citizens rather than being compounded by the borough. This led to
open protest in London in 1255.
tally Record of how many things have been done. Sometimes the term means
to keep a record of amounts. The term is used for a simple process of
counting and recording.
The term originally related to a stick on which a notch was carved.
The stick was then split into two with the payer keeping one half with
the notch as a receipt for payment.
tally clerk Person whose job it is to count and record something, particularly
quantities of cargo.
tally sheet Blank form on which quantities are noted.
TAM Telephone answering machine.
tambala One hundredth of a kwacha, currency of Malawi.
tampon For VAT, this is reduced rated from 1 January 2001 under Value Added
Tax Act 1994 Sch 7A Group 8. The exact scope is given in VAT notice
701/18.
tangible asset Asset which has a physical form, such as a building, furniture, chattel or
vehicle.
tangible fixed assets A fixed asset (also called a non-current asset) which has a physical
existence.
tangible property Property that may be touched, that is property that has a physical
existence such as buildings, vehicles, plant and furniture. This excludes
intellectual property such as copyright and patents.
tanner Slang name for a sixpence.
TAP Total allocated to policy holders. This abbreviation is used in Income

and Corporation Taxes Act 1988 s444AJ(5) in relation to life assurance
business.
taper relief Tax relief under capital gains tax. It applied to gains that arose before 6
April 2008 and reduced the tax payable according to the length of
ownership of the asset. It was replaced by entrepreneur's relief.
TAPS Trader Account Payment System.
TARGET Cross-border Euro settlement system that links CHAPS in the UK with
equivalent systems in other EU states.
target company Company which another company wishes to take over.
target cost Cost which at which a business hopes it can provide a product or
service. The target cost is usually one which is significantly less than
the current cost but where it is believed some savings may be made.
targeted anti-avoidance rule (TAAR)

Provision of tax law designed to counter the exploitation of tax rules to
gain an unintended tax advantage. A TAAR usually operates by stating
the criteria against which a tax benefit is disallowed. An example is
Finance Act 2010 s25 for annual investment allowance.
targeting In marketing, the means by which advertisers attempt to reach a desired

audience through choice of category, choice of web site, choice of
demographic, geographic location, or whatever other criteria the
advertiser finds interesting.
In social security, a euphemism for means-testing.
tariff Any list of prices, such as for bank charges, in particular the
Interrelated Tariff of the United Kingdom for the purposes of
determining Customs duties.
tariff quota Form of EU preference under which limited amounts of specified goods
may be imported into the EU and admitted to free circulation at a
reduced or nil rate of Customs duty and Common Agricultural Policy
charges.
The quota may be expressed in terms of weight, volume, number or
value.
tart Colloquial term for someone who keeps changing banks or other
financial suppliers to benefit from special offers, such as serial
exploitation of interest-free periods on credit cards.
taste test For beer duty, when a person tastes beer from experimental brewing
without otherwise drinking it (Customs notice 226). Beer duty is not
payable for such a test.
TAWB Through air waybill.
tax Charge levied by government to fund public expenditure.

The word comes from the Latin taxo which means “I estimate”.
The element of tax is that nothing is received back directly. This
distinguishes a tax from a licence or fee, such as a television licence or
pensions levy or filing fee. However the distinction is not always clear
cut. National insurance, for example, provides a direct link to pension
and social security entitlement. Similarly fines are not seen as taxes.
Taxes are commonly distinguished between direct taxes charged on
earning, and indirect taxes charged on spending. It is also possible to
charge tax in other ways, such as a wealth tax.
Some taxes are charged by local authorities, particularly council tax
and business rates.
tax abatement Reduction of tax.
taxable amount This term has a specific meaning for capital gains tax, when it means
the amount of chargeable gain less losses and reliefs.
taxable benefit Term used in relation to taxation of an employment-related loan. The

provisions are given in Income Tax (Earnings and Pensions) Act 2003
s205.
taxable cheap loan Term used in relation to taxing an employment-related loan as set out
in Income Tax (Earnings and Pensions) Act 2003 s175(2).
taxable earnings Earnings which are subject to income tax. The statutory scope of this
definition is contained in Income Tax (Earnings and Pensions) Act
2003 s10(2).
taxable input tax For VAT, input tax incurred on goods and services which are wholly
incurred for making taxable supplies. This value includes the taxable
element of residual input tax from the partial exemption method.
taxable person For employment income, this is “the person to whose employment the
earnings relate” (Income Tax (Earnings and Pensions) Act 2003 s13(2)
or for taxable specific income, “the person in relation to whom the
income is... to count as employment income” (ibid s13(3)).
taxable person For VAT, an importer who is registered for VAT and reimports goods
in the course of his business (Value Added Tax Act 1994 s3).
taxable specific income Amount of a specific income which is taxable. The statutory scope of
this definition is given in Income Tax (Earnings and Pensions) Act
2003 s10(3).
taxable supply Supply of goods or services which is not exempt from VAT. It bears
VAT at the standard rate, reduced rate or zero rate.
It “is a supply of goods or services made in the United Kingdom
other than an exempt supply” (Value Added Tax Act 1994 s4(2)).
taxable turnover For VAT, total value of supplies which are taxable at the standard rate,
reduced rate or zero rate. Exempt supplies are not include.
taxable unit The person or group of people which is subject to tax.

In general this is an individual person or company or group or
companies. One of the few exceptions is council tax which is assessed
on a household. Until 1990, married couples were taxed as a unit.
Historically tax was assessed on an area, leaving it to a tax farmer to
allocate the tax within the individuals in that area.
tax accountant Person who offers tax advice to clients. Such a person need not be
qualified.
Under Taxes Management Act 1970 s20A, HMRC may require a
tax accountant to provide papers about a client if the tax accountant has
been convicted of a tax offence or paid a penalty for assisting in the
preparation of a false tax return (under Taxes Management Act 1970
s99).
There are further provisions for a tax adviser.
tax adjustment Changes made to a figure for tax purposes.

In particular, the term is used in Finance Act 1998 s42(1) and
Finance Act 2002 s64(4) to mean any change to accounts as a result of
a change in tax law, such as disallowance of a previously accepted
expense. The matter is discussed in the Inspectors’ Manual at
BIM34095.
tax advantage For capital gains, “means —

(a) relief or increased relief from tax,
(b) repayment or increased repayment of tax
(c) the avoidance or reduction of a charge to tax or an assessment to
tax, or
(d) the avoidance of a possible assessment to tax.
(Taxation of Chargeable Gains Act 1992 s16A(2)).
tax advantaged Description of a scheme which is subject to beneficial tax provisions.
tax adviser Person “appointed to give advice about the tax affairs of another person
(whether appointed directly by that person or by another tax adviser of
his)” (Taxes Management Act 1970 s20B(10).
In general, HMRC cannot require a tax adviser to produce papers
which the adviser owns and which relate to tax advice to a client.
tax and time calculator Calculator which has additional keys for time and tax functions. The
time functions allow it to calculate the time between two dates or times
of day. The tax calculator allows some buttons to be pre-programmed to
assist in tax calculations, such as calculating VAT.
tăxa pe valoarea adăugată

Romanian: value added tax.
tax appeal Formal process for contesting a tax demand.
tax assessment Calculation by the tax authority of how much tax they believe is
payable, as against a figure calculated by the taxpayer.
taxation Amount of tax payable in current year.
Taxation Weekly magazine on tax, produced since 1927. It is currently published

by Lexis Nexis.
taxation of costs Process by which disputed legal fees are settled by a costs judge or
taxing master of the court.
tax at source System which collects tax automatically, such as PAYE or deduction
from share dividends.
tax auditor Term occasionally used for a person who investigates tax liabilities.
tax avoidance Legal act of minimising tax liability within the law, as against the
illegal acts of tax evasion.
In practice, a distinction is often made between aggressive tax
avoidance (or artificial avoidance) and other forms. The former seek to
apply legislation in a manner that is not intended. HMRC will often
take a vigorous approach to countering such schemes, including
litigation.
Tax law contains hundreds of anti-avoidance provisions to prevent
tax being avoided other than as intended.
Avoidance schemes generally must be notified to HMRC under the
disclosure of tax avoidance schemes (DOTAS) provisions.
tax avoidance arrangements

In the context of related national insurance avoidance, “includes
arrangements which enable, or might be expected to enable, a person to
obtain an advantage in relation to any tax (within the meaning of Part 7
of the Finance Act 2004)” (Social Security Administration Act 1992
s132A(7)).
tax avoidance scheme Scheme designed to give effect to tax avoidance arrangements.
Such schemes must usually be disclosed to HMRC.
Tax Avoidance Scheme Regulations

The name for Statutory Instrument SI 2004 No 1864 as amended. These
require tax avoidance schemes to be notified to HMRC.
tax base The tax base is an assessment by each billing authority of the likely
yield of a Council Tax of £1, taking into account the number of
properties on which a tax can be levied. The Tax base counts properties
as Band D equivalents .For setting Council Tax, the tax base is based on
the District or Borough Council's number of Band D equivalent
properties within each local authority area, allowing for non-collection
of Council Tax and new properties.
tax bracket Band which attracts a particular tax rate, such as a band of income.
Tax Bulletin Publication produced by HMRC up to 2006. From 2007 it is replaced

by HM Revenue and Customs Briefs.
tax calculator Calculator which has buttons that can be preset for particular
calculations, such as calculating VAT on selling prices.
tax code Used by an employer to calculate how much income tax must be
deducted from wages under the PAYE scheme.
tax collector Person who collects taxes.
tax concession Strictly relaxation from tax rules in circumstances. Such concessions
are made by HMRC.
tax consultant Someone who advises people about their tax.
tax credit The amount which an ISA manager can reclaim from the Inland
Revenue in respect of share dividends received. This is 10% of the
amount received until April 2004, when it will no longer be available.
tax credit Means-tested social security benefits. (They have nothing to do with
tax, and are not credits.)
tax credit This term has two completely different meanings:

(1) The amount of income tax a shareholder is deemed to have paid on
receipt of a dividend. These provisions are contained in Income and
Corporation Taxes Act 1988 Chapter IV.
(2) A means-tested social security benefit.
tax credit functions Specific functions of HMRC as set out in Finance Act 1989 s182(2ZA)
in relation to disclosure of information.
tax date Date on which a transaction is regarded as having taken place. For
VAT, the term generally used is tax point.
tax deductible Description of an expense or similar item which may be deducted from
a figure which is subject to tax.
tax deduction card Original name of the P11 form when PAYE was first introduced.
tax deposit certificate Another name for a certificate of tax deposit.
tax dodge Colloquialism for any means of reducing a person’s liability for tax.
tax domicile Place which tax law considers to be a person’s natural home.
Taxes Act 1970 Income and Corporation Taxes Act 1970.
Taxes Act 1988 Income and Corporation Taxes Act 1988.
taxe sur la valeur ajoutée French for “value added tax”, a term that can appear on invoices from
Belgium and France. It was originally a separate French tax which was
the basis of VAT as adopted by the European Union.
tax evasion Illegal act of suppressing or falsifying tax information. This is

distinguished from tax avoidance that is legal, though this distinction is
not always made in practice.
tax exempt Exempt from taxation. The term usually applies to bodies exempt from
income tax and capital gains tax, such as embassies and certain
international organisations.
tax exempt cut-off Limit on tax exemption because of high income.
tax exempt organisation A non-profit or not-for-profit, charitable organisation which, because it

engages in charitable activities, does not have to pay taxes. An
organisation must submit evidence of its charitable work and fulfil
other requirements to receive tax-exempt status.
tax-exempt special savings account (TESSA)

Form of tax-advantage savings account allowed under Income and
Corporation Taxes Act 1988 s326A(1).
It was phased out from 1999 when it was replaced by the individual
savings account (ISA).
Tax Faculty A faculty of the Institute of Chartered Accountants in England and

Wales that is open to members and non-members.
tax farmer Historically a person responsible for collecting taxes in an area.
tax form Document which must be completed for the tax authorities.
tax-free Description of income or benefit which is not subject to tax.
tax functions Range of duties performed by HMRC as defined in Finance Act 1989
s182(2) in relation to disclosure of information.
tax-geared penalty Amount of a penalty that relates to the amount of tax. Most tax
penalties are now tax-geared, though the term is not widely used. The
term can be found in Taxes Management Act 1970 s97A.
tax harmonisation Provisions which are designed to introduce common features to two tax
systems. The term is applied to tax systems in different countries, such
as in different EU countries, or to different taxes which have developed
separately, such as income tax and national insurance.
tax haven Country or place where tax rates are low, and where businesses may be
registered to save tax.
Tax Health Plan Limited tax amnesty offered to doctors and other medical professionals.
On 11 January 2010, it was announced that if they voluntarily disclosed
any untaxed income by 31 March 2010, the tax penalty would be
reduced to 10%.
tax holiday Period when a business or person is excused from paying tax.
taxi fares Standard-rated for VAT. Although they are a form of passenger
transport, they are not capable of carrying at least 10 passengers as
required by Value Added Tax Act 1994 Sch 8 Group 8.
tax-free Description of item on which tax is not payable.

The term is particularly used for forms of income which are not
subject to income tax. Examples of tax-free income include gifts,
gambling wins, inheritances and many forms which are specifically
excluded.
tax incentive Provision in tax law which relieves the liability to tax in one area to
encourage people to do something.
tax information exchange agreement (TIEA)

Agreement between the UK and another country allowing tax
information to be shared between them.
taxing master Officer of the court who deals with disputes on legal fees. Such a
person is now called a costs judge.
taxing officer Person appointed by each House of Parliament to calculate the costs of
moving certain Bills (Parliamentary Costs Act 2006 s1).
tax inspector Government employee who administers tax returns.
tax intermediary Accountant or similar person who deals with a person’s tax affairs for
them.
tax invoice Invoice containing data as required by VAT law. A customer must
generally have a VAT invoice to be able to reclaim the VAT as input
tax.
tax law Body of law which covers taxation.
tax liability Liability to tax, particularly with regard to imposing VAT on supplies.
tax loophole Unintended provision in tax law which can be exploited as a means for
avoiding tax.
tax loss Loss made by a business which may be offset against taxable income,
either of the same trade for another period, or against income of another
trade.
tax month Period which runs from the 6th of one month to 5th of the next month.
It is widely used for PAYE.
tax morality Term coined by Inland Revenue chairman Sir Nick Montagu in 2002 to
suggest that avoidance of tax is immoral.
The term caused some surprise as taxation is entirely statute-based
with no concept of fairness or equity. There have been many cases
where the tax authorities have successfully prosecuted in cases widely
seen as unfair.
tax obligation Amount of tax owed by a person or business.
tax office Local office of HMRC which deals with a person or business’s tax
affairs.
tax on capital income Tax on the income from the sale of capital assets. It is generally taxed
as income.
tax on incomes Exceptional tax on incomes imposed between 1450 and 1452 to fund
war with France.
tax on moveables An early form of excise duty imposed from 1462 on various moveable
items, of which playing cards duty proved to be the most durable.
tax paid Description of goods where all necessary duties and taxes have been
paid and will not be refunded.
“All taxes due on the goods wherever purchased have been paid and
have not been, nor will be, refunded” (Customs notice 3).
tax payable Amount of tax which a person or organisation must pay.
taxpayers’ charter Document produced by Inland Revenue and Customs & Excise (as they
then were) in 1990 setting out the basic standards taxpayers could
expect from them. It gradually lost relevance, and was replaced by a
vaguer service commitment, which was itself formally withdrawn in
June 2008.
tax penalty Additional sum imposed for non-compliance with tax law.
tax period Period covered by a VAT return. This is usually three months, but can
be one month, one year, or sometimes other periods.
tax planning Process of organising the financial affairs of a person or business to

minimise their tax liability.
tax point Date which fixes the liability for tax, particularly VAT. This is
generally the earlier of the dates where the supplier raises an invoice
and the customer pays for the goods.
tax pool Record of income tax paid by the trustees of a discretionary trust plus
any tax deducted at source on income they received. This pool is
reduced by the tax credit on income distributed to the beneficiaries. If
the balance in the tax pool is less than the tax credit, the beneficiaries
must pay the balance to HMRC.
The 10% tax credit on dividends is not included in the pool.
Although the tax paid by the trustees is included in the pool. This is
usually 32.5% (42.5% less 10% tax credit).
tax presence For PAYE, the state of an employer being in the UK and therefore
obliged to operate PAYE.
tax pressure Financial difficulties faced by a person or business because of the

amount of tax imposed on them.
tax rates The various percentages announced by the government as being

applicable to taxable amounts.
Rates are applied on either a slice basis (eg income tax), where
slices of income are subject to different rates, or on a slab basis (such
as stamp duty land tax) where a single rate is applied to the whole
amount once a threshold has been reached.
tax rebate Refund of tax which has already been paid.

Under the PAYE system, tax rebates are automatically provided
during the tax year. This can arise when a person had little or no income
earlier in the tax year.
tax reduction Reduction in income tax given in addition to person allowances and
other reliefs for such things as Enterprise Investment Scheme and
maintenance payments (Income Tax Act 2007 s26).
tax relief Allowance which may be set against taxable income.
tax relief certificate “A certificate issued by the CDFI in respect of the investment which is
in the form specified by the Commissioners for Her Majesty’s Revenue
and Customs” (Income Tax Act 2007 s348(1) and Corporation Tax Act
2010 s229(1)).
This relates to eligibility for community investment tax relief.
tax relief grant Grant made by the government to a housing association to relieve tax
otherwise payable. The provisions are set out in Housing Act 1988 s54.
tax results for other parties Term used in Guidance Notes on bank payroll tax. Its context
requires a bank to consider the tax consequences of other parties so as
not to avoid tax contrary to the intentions of Parliament.
tax return Information which a taxpayer must complete regarding their liability to
pay tax.
tax revenue Amount of income the government receives from taxation.
tax schedules Traditionally income tax and corporation tax were collected in up to
six schedules indicated by the letters A to F according to the source of
the income.
These schedules were generally introduced in 1803 and finally
abolished for income tax in 2005, and for corporation tax in 2009.
In outline the tax schedules were:
● schedule A (1803-2005) land and buildings;
● schedule B (1803-1988) farming, woodlands;
● schedule C (1803-1996) public securities;
● schedule D (1803-2005) trading etc;
● schedule E (1803-2003) employment;
● schedule F (1965-2005) share dividends.
Schedules D and E were further divided into cases.
tax shelter Arrangements where investments may be made without paying tax that
would otherwise be due. Pension schemes are a common tax shelter.
tax shift When the liability to account for VAT moves from the supplier to the
customer, as applies under reverse charge accounting.
tax system Methods used by the government to impose and collect tax.
tax threshold Point at which a liability to pay tax arises.
tax treaty Agreement between the UK government and a foreign government that
deals with taxes which both countries may tax under their system. The
treaty contains provisions to avoid double taxation.
tax value Amount on which VAT is due. This is usually the price charged for the
supply, but there are some circumstances when market value has to be
substituted.
tax warehouse Warehouse authorised by HMRC for goods to be deposited before

payment of excise duty. There are some special provisions for premises
for storing oil.
tax week Period of seven days which starts on 6 April and every seventh day
therefore. It is used for PAYE.
As a year comprises 365 or 366 days, there are always one or two
days outside the 52 tax weeks. These are known as week 53 for which
special provisions apply.
For national insurance, “one of a series of successive periods in a
tax year beginning with the first day of that year and every seventh day
thereafter, the last day of a tax year (or, in the case of a tax year ending
in a leap year, the last two days) to be treated as a separate tax week”
(Social Security Contributions and Benefits Act 1992 s122(1)).
tax year Period which runs from 6 April to following 5 April (Income and
Corporation Taxes Act 1988 s2(2)).
Until the 12th century, the year started on 25 March, Lady Day. In
1752, Britain switched from the Julian to the Gregorian calendar which
led to 11 days being lost. These days were added to Lady Day to make
up the year, and 6 April has been the start of the tax year ever since.
For income tax, “a year for which income tax is charged” (Income
Tax Act 2007 s4(2)).
For VAT, a period of 12 months which is covered by VAT returns.
The taxpayer usually has the choice of this year ending on 31 March, 30
April or 31 May.
TB Tax Bulletin.
TBA To be advised.
TBM Trust for a bereaved minor.
TBTF Too big to fail.
TC Tax cases. This is the citation used in two series of tax cases:
(1) From 1875, it is the series of official cases published by HMSO.
The citation takes the form 65 TC 421 which means volume 65 of the
series, starting on page 421.
(2) From April 2003, this is also the citation for First Tier Tribunal
decisions on cases regarding all taxes. The citation takes the form of TC
followed by a five-digit number.
(3) Training and Competence sourcebook, published by the Financial
Services Authority.
TCEx Tariff Commune Express consignment note.
TCP/IP Transmission Control Protocol/Internet Protocol
TCSP Trust or company service provider
TDO Training Development Officer
TDP Trainer Development Programme.
tea Tea provided free or subsidised at work is not a taxable benefit (Income
tea duty Customs duty charged from 1600 until 20th century.
tea licence A licence charged between 1780 and 1869 to retailers of tea, in addition
to the tea duty introduced in 1660. The licence allowed the retailer also
to sell coffee, cocoa, chocolate and pepper.
TEC Training and enterprise council.
technical (1) In finance, description of those internal factors which influence a

market, such as volume of sales and market analysis, as against external
factors such as inflation and politics.
(2) Relating to a machine, process or procedure.
technical analysis In investing, the study of the price movements and volumes of
securities.
technical correction In investing, when a share price moves up or down because it is realised
that its previous price was too high or too low.
technical decline Fall in share prices for reasons explained by technical analysis.
technical provisions Term used in Pensions Act 2004 s222(2) to mean the amount required
on the basis of an actuarial calculation of the liabilities of a pension
scheme.
technical provisions Term used in Finance Act 2007 Sch 11 para 3(7) in relation to detailed
tax provisions for insurance businesses.
technical reserves In insurance, assets which an insurance company maintains to meet

claims.
technical support Term used by software providers for a telephone service (often at a
premium rate) which users can help for help in using the software.
technology “Means information (including information comprised in software) that

is capable of use in connection with:
(a) the development, production or use of any goods or software;
(b) the development of, or the carrying out of, an industrial or
commercial activity or an activity of any other kind whatsoever”
technology butler Person employed in some hotels to assist guests with computer-related
problems.
teddy bear hug A gentle bear hug.
teeming and lading Attempt to manipulate financial records to conceal something, such as a
fraud or a decline in sales. The method involves creating false records
in one period which are corrected in the next.
teenager Person aged between 13 and 19.
telecommuting Term sometimes used for homeworking, particularly when the person
uses equipment such as e-mails, telephones and webcams to
communicate with colleagues at a remote location.
telegram A message which could be sent by telex to a local post office who
could then hand-deliver it to any address.
The first telegram service in the UK started in 1845 though the
service did not become common until the 1910s. The service was
suspended in 1943 because of the war. In 1981, the telegram service
became part of British Telecom.
BT discontinued the telegram service on 31 July 2003. In the USA,
Western Union sent its last telegram in February 2006, having started
the service in 1851.
In 2003 TelegramsOnLine took over the BT service. Telegrams are
now only used for festive and fun occasions.
telegraph Early form of electronic messaging, used from 1835. Electrical signals
were sent down wires by railway lines to point to letters on a dial.
telegraphic transfer Transfer of money between bank accounts in accordance with a

telegraphed message.
Teleos European case of 2007 on the evidence needed to demonstrate that

goods have been exported. The case is R (on the application of Teleos
plc) v HMRC (C-409/04).
The case established that a supplier should not be unduly penalised
for relying on seemingly legitimate proof of export that later proved to
be false. HMRC clarified its interpretation of this case in Brief 61/07.
telephone banking Banking services which may be transacted by telephone without the
need to visit bank premises.
telephone betting Competition where the participant’s stake is paid by calling a premium
telephone number. As the payment is not to the competition organiser,
this is not regarded as a stake, and so no betting duty of any kind is
payable.
television entertainers The tax and national insurance positions for various people who appear
on television was considered in the case ITV Services Ltd. TC 836. As a
result of this case, HMRC issued Brief 10/11.
television licence Licence required to receive television signals. It collects funds that are
paid to the BBC to provide public subscription broadcasting, unlike
commercial television that relies on advertising. The licence is therefore
a hypothecated tax. Its evasion is a criminal offence.
The licence was introduced as a radio licence on 1 January 1927,
the first in the world. The television licence was first issued in 1946 at
£2. The higher rate for colour televisions was introduced in 1968, and
remains. The radio licence was abolished in 1971.
It is currently collected under Communications Act 2003.
teller (1) Person who counts the votes at an election.

(2) Historically one of four officers of the Exchequer who received all
money due to the king.
temporarily imported vehicle

For Customs, this is a vehicle that is brought over for use in the UK for
no more than six months. Such a vehicle is generally exempt from VAT
and Customs duty.
If the vehicle complies with the licensing and registration
requirements of its home country, it is generally excused from vehicle
excise duty also.
If the vehicle bears a registration plate that is not identifiable in the

UK, it may be necessary to obtain a temporary registration mark,
through the DVLA or RAC.
temporary absence A period during which a member of a group insurance scheme can be
away from work and continue to be covered by the insurance.
temporary accounts In bookkeeping, accounts that exist in the current accounting period
and have yet to be closed for inclusion in financial statements.
temporary deemed employee

When someone is sufficiently under the control of an employer to be
regarded as an employee, creating a vicarious liability for the
employer.
The term was used by the Court of Appeal in the case Hawley v
Luminar Leisure plc [2006]. The case concerned a door supervisor of
a night club who attacked a customer.
temporary duty suspension

Arrangement made by the European Union to allow manufacturing and
processing industries to compete with non-EU producers of similar
goods. Imported components or raw materials for further processing
have their import duties partially or completely suspended. It is usually
a condition that such goods are not available in sufficient quantities
within the EU.
temporary event notice Form of licence needed from local authority to sell alcohol at a local
function such as a church fete.
temporary event notice Notice which a local authority issues for events which require a short-
term licence, such as a beer tent at a fete (Licensing Act 2003 s100).
Such a notice is issued routinely subject to conditions and no objection
from the police.
temporary hard standing Area near a landfill site designed to allow landfill operations to take
place. Material so used is not subject to landfill tax.
temporary importation A reduced rate, often zero, of customs duty is payable for temporary
imports of certain defined items, such as material for an exhibition.
temporary non-resident Person who is resident for a tax year in which he returns to original
country and who was not resident for the previous year. Their capital
gains tax liability is set out in Taxation of Chargeable Gains Act 1992
s10A.
temporary site haulage road

Road constructed from waste material to give access to a landfill site.
Material so used is not subject to landfill tax.
temporary storage facility In relation to beer duty, this is premises within five kilometres of the
brewery of other registered premises where beer may be stored to meet
a seasonal demand, as explained in Customs notice 226.
temporary tax “A tax which has been imposed, or renewed or reimposed, for a limited
period not exceeding eighteen months, and was in force or imposed
during the previous financial year” (Provisional Collection of Taxes Act
1968 s2(2)).
temporary workplace In relation to travel in employment, “means a place which the employee
attends in the performance of the duties of the employment —
(a) for the purpose of performing a task of limited duration, or
(b) for some other temporary purpose”
This expression is further clarified in following sub-sections.
Travel to a temporary workplace is generally tax deductible for up
to 24 months.
tenancy Agreement by which one person pays to occupy property belonging to

another.
tenant Person who pays money to occupy property belonging to another,

known as the landlord.
tenant for life Person who holds an estate for life, and who has wide powers of the
estate under Settled Land Act 1925.
tenant for years Person who holds an estate for a stated term of years.
tenant from year to year Person who holds an agricultural estate that may be determined at half a
year’s notice by either side (Agricultural Holdings Act 1986).
tenant in common One of the two common means by which two or more people co-own
land and property. This includes property owned by a married couple or
civil partnership.
A tenant in common owns a separate share of the property which
may be left in the person’s will. This must be distinguished from a joint
tenancy.
tenant pur autre vie Tenant during the life of another person.
tenant right Rights of a tenant of an agricultural property to compensation on the

end of the tenancy in respect of unexhausted improvements on the
holding (Agricultural Holdings Act 1986).
tender (1) Offer to provide goods or services for a stated price, and often
subject to stated conditions.
(2) Offer money in the form of bank notes and coins for payment.
tender evaluation Procedure for considering tenders submitted for work. There are
various methods in use.
Automatically accepting the lowest tender is not advisable as there
may be other factors, such as reliability, adequacy of resources,
experience and charges for additional services which need to be

considered. A common method is to provide weighting of some form.
In such schemes the tender price typically represents around 65% of the
factors.
tenendum Latin: to be held. Clause in a conveyance which states that land is to be

held by the grantee.
tenge Currency of Kazakhstan.
tenner Colloquialism for a ten-pound note.
ten pence Silver coin minted from 1968 as a replacement for the florin worth two
shillings. Its diameter was reduced from 24mm to 18mm in 1990.
ten shilling note Bank note worth ten shillings (50p).

It was first minted by the Treasury in 1914 as a means of protecting
gold reserves at the start of the war. The first Bank of England note was
issued on 22 November 1928. It subsequently went through three
designs, all in a red-brown colour, until being demonetised on 20
November 1970 in favour of the 50p coin.
Tenterden’s Act Statute of Frauds Amendment Act 1828.
ten-year anniversary The tenth anniversary of the date on which a settlement was created.
This triggers a ten-yearly charge to inheritance tax for discretionary
trusts and some other trusts. The creation of the settlement is generally
when property is first settled. No anniversary can fall before 1 April
1983.
ten-yearly charge Inheritance tax charge imposed every ten years on a discretionary
trust, and (from 22 March 2006) on many other types of trust.
This is sometimes called the “ten-year charge” or periodic charge.
The charge is 30% of the lifetime rate of inheritance tax. As this is
20%, the ten-yearly charge is usually 6%. In effect, the exit charge is a
final ten-yearly charge.
The ten-year period is divided into 40 quarters. Property may be
excluded from the calculation for each whole quarter in which it was
not held by a trust.
TEP Letters after a person’s name that indicates full membership of the
Society of Trust and Estate Practitioners (STEP).
term (1) Condition in a contract.

(2) In relation to a capital instrument: “the period from the date of
issue of the capital instrument to the date at which it will expire, be
redeemed, or be cancelled.
“If either party has the option to require the instrument to be
redeemed or cancelled and, under the terms of the instrument, it is
uncertain whether such an option will be exercised, the term should be
taken to end on the earliest date at which the instrument would be
redeemed or cancelled on exercise of such an option.

“If either party has the right to extend the period of an instrument,
the term should not include the period of the extension if there is a
genuine commercial possibility that the period will not be extended”
(FRS 4 para 16).
(3) In insurance and investment, the period for which a policy or bond
is issued.
term account Money invested for a fixed period, after which it is repaid to the
original lender. It is another name for term deposit.
term deposit Money invested for a fixed period, after which it is repaid to the
original lender.
terminally ill Description of a person suffering from a physical condition from which
there is no likelihood of avoiding death. Such a person automatically
qualifies for the highest rate of the care component of the disability
living allowance and can be a factor in determining entitlement to the
mobility component of the same allowance.
term insurance Life insurance which only pays if the person dies before a certain date.
As there is no guarantee of payment, as there is for life assurance,
term insurance is often much less expensive. It is therefore often
recommended to younger people with heavy commitments where the
necessary cover can be provided at an affordable price.
terminal bonus Additional bonus which may be paid when a claim arises under a with-
profit policy, either at maturity or on death of the policyholder.
terminal date Date when something ends. The term is used for determining when
child benefit stops. It is the last day of February, May, August or
November after the child or young person either completes their
education or reaches their 20th birthday.
terminal loss period Either the period from the start of a trade’s final tax year and ending
with its cessation, or the last 12 months of the trade’s life (Income Tax
Act 2007 s90). There are special provisions for relieving a loss from
this period.
terminal trade loss relief The relief whereby a loss from a trade in its terminal loss period may
be carried back against profits of the previous three years.
The law is Income Tax Act 2007 s89 for individuals, and
Corporation Tax Act 2010 s37 for companies.
termination clause Provision in a contract which sets out how that contract may be ended.
terminus ad quem Latin: finishing point.
terminus a quo Latin: starting point.
term loan Loan of money for a fixed period.

termor Person who holds land for a term of years.
terms Provisions which regulate how a contract or other agreement shall be

administered.
term shares Shares offered for a fixed period. They are often offered by building
societies, usually at a higher rate than other products.
terms of audit appointment

Conditions under which an auditor is engaged (Companies Act 2006
s493).
terms of reference Areas which a person or committee is authorised to investigate or

otherwise deal with.
terms of sale Conditions which attach to a contract for the sale of goods or services.
term structure of interest rates

Structure where different interest rates are used as discount factors.
terra Latin: land.
terra regis Latin: land of the king.

In ancient times, this comprised unowned and confiscated land. It
provided an income to the king that was supplemented by taxation.
terre-tenant Latin: land holder.
territoriality Principle of international law that states should not seek to legislate
outside their territory, with some exceptions.
territorial limits Geographical area over which a parliament may legislate. For the UK it
comprises the land mass and 12 miles out to sea.
territorial waters Area of sea round a state over which that state has legal authority. It is
governed by a Geneva Convention of 1958, as amended. Territorial Sea
Act 1987 fixes this at 12 miles for the UK. Traditionally the limit was
three miles, the distance a cannon shot was supposed to be able to
cover.
terrorism Use of violence and fear as an instrument of political change. Not only
is this a crime, but it is an offence not to report evidence of this. This
overrides any duty of client confidentiality.
The tax authorities may disclose confidential information to
intelligence services under Anti-Terrorism, Crime and Security Act
2001 s19.
Payments to terrorists are disallowed as business expenditure as a
criminal payment. The matter is discussed in the Inspectors’ Manual at
BIM 43120.
TESSA Tax-Exempt Special Savings Accounts (TESSAs). These were five-

year savings accounts that did not incur tax charges on the interest paid.
It has not been possible to open a new TESSA account since April 1999
though TESSAs in existence before that date could continue to the end
of their five-year term.
Similar tax benefits are now offered by individual savings
accounts (ISAs).
testacy When someone had a valid will to dispose of property on death.
testament Traditionally a document which disposed of a person’s property other

than land on death. Property was disposed of in a will. Under current
law, both types of property are disposed of in a will.
testamentary Relating to wills and executorship.
testamentary capacity Ability to make a legal will. This broadly means that the testator must
be either at least 18 years old or in the armed forces, and must have
mental capacity.
A person has testamentary capacity if he or she understands:
• the nature of the document being signed
• the property which is being disposed
• that some people may have a claim on his property
• the manner in which the estate is to be distributed.
Where there is reason to believe that the testator’s mental capacity
may be challenged, it is a common practice to ask a doctor to be a
witness or to provide an accompanying letter.
testamentary disposition Freedom of an individual to leave property in his will as he wishes.
testamentary freedom Another name for testamentary disposition.
testamentary guardian Person appointed in a will to look after a testator’s child who is still
under 18.
testamentary intention The principle that the intention of the testator determines how a will is
to be interpreted. A will that was executed as a result of fraud, coercion
or undue influence can be set aside by a court.
testamentary trust Trust that is created by a will.
testate A person who has a valid will to dispose of property on death.
testator A person who has made a will disposing of property on death.
testatrix Female testator.
testatum Part of an indenture that begins “Now this indenture witnesseth...”
test case Case brought before the court to test a legal principle on behalf of other
claimants in a similar position.
testimonial Sports event, concert or other fund-raising activity for the benefit of a
person, such as on their retirement. As such money is considered to be a
personal gift, it does not attract tax.
testimonium Clause at the end of a deed or will which commences “In witness
whereof....”
testimonium clause Another name for testimonium.
testimony Statement of facts by a witness, often under oath.
Test in Live Facility provided in some on-line tax-filing facilities on HMRC

website. It allows a user to test the compatibility of their data and
software without making a real tax return.
test return Dummy tax return which may be sent to HMRC to ensure that the
Internet connection is working properly.
tetri One hundredth of a laria, currency of Georgia, formerly of USSR.
text Material expressed in words. Books and similar printed material is zero-
rated for VAT whereas text in the form of faxes, e-mails, microfiche
and similar is generally standard-rated (VAT notice 701/10).
textbooks In law, authoritative work that may be cited in court as evidence of how
to interpret a law.
TfL Transport for London.
thalweg German: valley way. The boundary of lands separated by a river as

being the centre of its navigable waters.
theatrical artist Actor or other entertainer who primarily works in theatres. The case
Madeley v HMRC SpC 547 [2006] established that this term also
applied to television presenters. The case concerned Richard and Judy
who presented a daytime television programme.
There are some special tax provisions for such artists. They are
generally taxed as employees unless they have reserved Schedule D
status. They are allowed to claim as a business expense payments to an
agent of up to 17.5% of earnings.
the Bar Term used in law to mean barristers collectively. Barristers qualify
when they are “called to the bar”. This was originally a physical bar in a
court beyond which only barristers could pass to address a court.
thebe One hundredth of a pula, currency of Botswana.
The City London, particularly as a financial centre.
The Fed Abbreviation for the United States Federal Reserve Bank, America’s
central bank and its equivalent to the Bank of England.
theft Dishonest appropriation of “property belonging to another with the

intention of permanently depriving the other of it” (Theft Act 1968 s1).
The term theft includes offences of larceny, robbery, burglary,
blackmail, obtaining goods by deception, receiving and handling stolen
property, unlawful abstraction of electricity, and related offences.
Theft Act 1978 added the offences of making off without payment.
Losses of cash or goods from theft are generally tax deductible,
unless made by a director or proprietor of the business. A leading case
on this latter point is Curtis v J & G Oldfield Ltd [1925] 9TC319. The
matter is discussed in the Inspectors’ Manual at BIM37810.
theftbote Old term for hush-money.
the I minus E basis In relation to taxation of insurance companies, “means the basis under
which a company carrying on life insurance business is charged to tax
on the relevant profits (within the meaning of section 88(3) of the
Finance Act 1989) of that business under Case I of Schedule D”
Thellusson The court case Thellusson v Woodford [1799] where the deceased left a
will typing up his estate for decades so that no living person could
derive any benefit. This led directly to the law on accumulations.
Thelluson Act Accumulations Act 1800.
thermal insulation For capital allowance purposes, is treated as an integral feature, which
The Times National newspaper that publishes law reports. The citation is [Name
of case] The Times [date of publication].
thin capitalisation Form of tax avoidance similar to transfer pricing.

Thin capitalisation works by transferring profit from a company
taxable in the UK to a company which is subject to a lower rate of tax
in another country. This is done when the company in the lower taxed
country charges interest, usually at a very high rate, to the UK
company. This has the effect of transferring profit from the UK
company to the other company and reducing the overall amount of tax
payable.
There are anti-avoidance provisions to counter such schemes. From
1 April 2004, these provisions broadly disallow the payment of interest
to a connected company to the extent that it exceeds the rate of interest
payable to a commercial lender.
third company For consortium relief, “a company that is not... a member of the same
group of companies as the trading company” (Corporation Tax Act
2010 s155(4)).
third country Country or territory outside the European Union.
third farthing Copper coin worth one third of a farthing or 1/12 of an old penny,
minted between 1827 and 1913. There were 2,880 to the pound.
third guinea Coin worth 7 shillings minted between 1797 and 1813.
third party Person who is not a party to a contract but who may be affected by it,
such as a passenger in car who makes a claim on the driver’s insurance
policy.
The law of privity of contract generally excludes a third party from
taking action under a contract, but there are many exceptions to this
rule. For example if C is a passenger in a car driven by A who has
insured it with B, C has a claim against B if A is injured in an accident.
third party debt order Court order requiring a third party, such as a bank, to pay money to
discharge a debt.
third party directions Directions given by a court to a person who was not an original party to
the proceedings but who has subsequently become a party.
third party entertainment When an employee is entertained in the course of employment by

someone other than the employer.
Such entertainment is generally exempt from tax up to £150 under
third party, fire and theft Motor insurance of third party insurance that also insures a car
against being stolen or damaged by fire.
third party funding Arrangement whereby an organisation is funded by another to provide a

service, such as when a local authority funds a charity to provide a
specific service.
Third party funding is subject to VAT, but grant funding is not
(VAT notice 701/1).
third party insurance Insurance to protect people who are not parties to the policy, and to
protect their property.
It is an offence to take a vehicle on a British road without such
insurance (Road Traffic Act 1988 s143(1)(a)).
Such insurance does not insure the driver or the vehicle itself.
third party notice Notice served by Pensions Regulator on a third party under Pensions
Act 2004 s14 to address a contravention of regulations.
third party proceedings Proceedings brought by a defendant against someone who is not
already a party to the legal action.
third quarter The seventh to ninth months of a particular year. The third quarter of a
calendar year runs from 1 July to 30 September.
thirteenth Direct tax imposed in 1207.
Thorn Baker Name given to the case HMRC v Thorn Baker Ltd [2008] which briefly
held that agency workers were entitled to statutory sick pay. The
government legislated to reverse this court ruling and restore the
position that an agency worker is only entitled to SSP after three
months. This revised law applies from 27 October 2008.
Thorneycroft, Peter English Conservative politician (1909-1994) who was Chancellor of the
Exchequer from 13 January 1957 to 6 January 1958 in the government
of Harold Macmillan. He resigned in protest at increased government
spending.
thou Engineering measure for one thousandth of an inch or 25.4µm.
threat Expressing an intention to do harm to someone. It is an element of

many crimes including blackmail, duress and sending distressing
letters.
threatening behaviour Crime of using threatening, abusive or insulting words or behaviour to

someone. It includes displaying material for the same purpose.
three certainties Term used to define a condition for setting up a valid express trust.
The three certainties are of words and intention, subject matter and
beneficiaries.
This condition was laid down in the leading case of Knight v Knight
[1840]. A lack of certainty can void a trust, with an exception for a
charitable trust.
three-fourteenths trust Educational trust commonly found in Church of England. It is based on

the old practice of allowing church school premises to be used by the
church on Sundays and Saturday mornings, which represents three of
the 14 half-days in a week.
three-line account (TLA) Simplified tax reporting requirement for small businesses. Such
businesses need only report their turnover, allowable expenses, and
profit or loss. They do not need to provide a breakdown of the expenses
they may choose to do so. The business must keep normal business
records showing such details.
For the 2009/10 tax year, the upper limit is the same as the VAT
registration threshold. Previously it was £30,000 for self-employment
and £15,000 for property income.
threepence coin Pre-decimal coin worth three old pence.

It was minted in silver from 1547 to 1937. It was replaced by a
brass 12-sided coin from 1937 to 1967.
three-tier system Traditional system for allocating cases in the Crown Courts.
Threlfall v Jones Leading tax case that established that accounting standards must be
followed for accounts on which tax computations are based. The full
name is Threlfall v Jones [1993] 66TC77.
threshold Point at which a provision comes into effect, such as the point at which
tax becomes payable or a benefit becomes receivable.
threshold agreement Contract which contains a provision triggered by a threshold. The

commonest example is a contract of employment which states that pay
will be automatically increased if the cost of living increases by more
than a state figure.
threshold amount Amount in respect of money-laundering by a deposit-taking body

(Proceeds of Crime Act 2002 s339A(2). The amount is £250 unless an
officer specifies a higher figure.
thrift In the USA, a private local bank or similar body which accepts and
pays interest on small deposits.
thrifting Economising, particularly in manufacture by saving small amounts in

many areas.
Thrifting was pioneered by Ford Motor Co and others in the 1950s.
It often proved to be a fool’s economy where the saving was at the
expense of quality.
through airway bill An airway bill where the final destination is not the airport of receipt
(AOR). The goods have arrived at the AOR to be routed on.
throughput accounting System which looks at how maximum returns can be obtained on
activities subject to bottlenecks.
throughput level Quantity of goods passing through a warehouse.
TI Temporary importation.
tidal waters Any part of the water that naturally ebbs and flows (Merchant Shipping
Act 1894).
tidying up Term used in tax law to mean provisions that make existing provisions
clearer without changing their substance. The term is not a
colloquialism.
For example, the term is used in Finance Act 2007 Sch 10 para 5 in
relation to provisions in Taxation of Chargeable Gains Act 1992.
TIEA Tax information exchange agreement.
tied cottage Accommodation (not necessarily a cottage) that is provided to an

employee as part of the job. In some cases, a tied cottage may be treated
as a taxable benefit in kind.
tied financial adviser Person who has been authorised by the relevant body as a financial
adviser, but who is only allowed to promote products of one company.
tied oil Oil which has been delivered as “conditionally relieved of duty”.
Such oil must be delivered to an individually approved distributor
for supply for eligible use, or to an individually approved user.
tights Single garment which covers the lower half of the body and provides a
stocking effect on the legs. Tights replaced stockings from the mid-
1960s when mini-skirts became popular.
An employer may reimburse an employee for laddered tights
without this constituting a taxable benefit-in-kind.
till Drawer or simple machine for keeping cash, particularly in a shop.

Most modern tills come with a cash register which allows sales to be
recorded.
tilla Gold coin issued by Afghanistan, that may be a gold investment coin
for VAT purposes.
till book Banking term for the ledger which was kept by each teller in a bank
branch recording details of payments received in and paid out. Such
books disappeared by the 1980s as computers were used.
timber Wood used for building. Its original legal use was restricted to mature
oak, ash and elm.
time In financial matters, time means the period before or after which
something happens, period which someone works, or the duration of
something (such as the life of a contract).
time and a half Rate sometimes paid for working overtime. It comprises the
employee’s normal hourly rate uplifted by one half.
time and a third Rate sometimes paid for working overtime. It comprises the
employee’s normal hourly rate uplifted by one third.
time and method Method of analysing the methods by which tasks are performed to see if
it is possible to find less expensive methods.
time and motion Method of analysing how tasks are performed to see if it is possible to
find less expensive ways.
time apportionment Apportionment of a rule, tax or other provision which applies to a

period that spans a date where there is a change. The apportionment is
usually based on the relative number of calendar days on each side of
the date.
time bargain Contract for the sale of stock at a certain price on a future day where the
seller does not hold the stock but intends to purchase it before the sale.
time calculator Calculator which has the additional function of being able to calculate
time such as between two dates or two times of the day.
timed collection Service offered by Royal Mail whereby mail is collected at a

predetermined time and day of the week. An additional charge is
usually made for this service. This service became available from April
2008.
time deposit When money is saved with a financial institution for a fixed period.
time immemorial From when the memory of man runneth not to the contrary.
The Statute of Westminster 1275 fixes this as being from 1189.
time-inconsistent addiction
Economic term for where someone suffers from addiction, and is
aware of its financial consequences but lacks sufficient willpower to
overcome the addiction.
time is of the essence Time is the most important consideration. This condition in a contract
can have the effect of voiding a contract if work is late.
time-keeping State of being at work on time and staying until the required hour.
The reliability of an employee in keeping to the hours he or she is
supposed to work.
time limit Deadline; maximum time allowed to perform a task.
time limitation Restricting the amount of tax available for something.
time off for dependants The right to take unpaid leave to look after a dependant (Employment
Rights Act 1996 s57A).
time off for public duties An employee has the right to unpaid leave to perform certain public
duties, such as magistrate or councillor. A full list is given in
Employment Rights Act 1996 s50.
time on one’s hands Being idle, having nothing to do.
time order Order issued by a court allowing a debtor more time to pay a debt.
Such an order may be requested only if the debt is regulated by
Consumer Credit Act 1974. This generally means that the debt was up
to £25,000 if taken out from 1 May 1998, or £15,000 if taken out
previously.
time policy Marine insurance policy that covers a ship for voyages during a specific
period only.
time provisions Clauses in a contract that determine when various obligations must be
performed.
time rate Rate of pay which is calculated as so much per hour or other measure of
time.
timeshare Form of licence over property where someone buys the right to occupy
a property, such as for the same week or two weeks every year. This is
widely used for holiday accommodation. A more substantial form is
shared ownership.
For local authority taxation, a timeshare property is always regarded
as business premises, and is subject to business rates rather than council
tax.
Times, The National newspaper. It carries law reports that may be cited as [Names
of parties] The Times [date of publication]. Past cases can be accessed
on its website on payment of a subscription.
time sheet Record of when an employee or worker starts and stops work, and
(sometimes) what the employee does.
A timesheet can be used to determine payment, such as for a
temporary worker, or how much to invoice clients, such as in a
professional body such as a firm of accountants or lawyers.
Time to Pay Scheme offered by the tax authorities to help a person pay arrears of
tax.
time work Basis used for determining whether the national minimum wage
(NMW) regulations have been followed. This is the commonest of the
four bases used.
Under the time work basis, the worker must be paid at least the
NMW multiplied by the number of hours worked in a pay reference
period.
For this purpose, hours at work include:
● time at work actually working;
● time spent at work when available for work but prevented
from doing so;
● training during normal working hours;
● travelling in the course of work (but not normal commuting);
and
● when on standby or on-call at or near the place of work and
must stay awake.
Hours at work do not include:
● rest breaks, including tea breaks;
● when the worker is on standby or on-call at home;
● when the worker is on standby or on-call anywhere, but is
allowed to sleep;
● normal commuting to and from work;
● training outside working hours.
time work Work paid according to time spent.
TIOPA Taxation (International and Other Provisions) Act 2010.
tip Gratuity or amount voluntarily provided for service. In the UK, tips are
traditional for waiters, taxi drivers, hairdressers and in a few other
areas.
tipping off Giving advance disclosure to a person of criminal proceedings.

For money laundering, this is a specific offence in Proceeds of
Crime Act 2002 s333A.
[Note that “tipping off” is the statutory term, and is not a
colloquialism.]
TIR Transports Internationaux Routiers
TiS Transactions in Securities. The term often refers to the legislation in

this area.
Titanic clause American term for a clause in a will that determines how an estate is to
be distributed if a beneficiary dies very soon after the testator. It is
named after the Ship that sank in 1912, in allusion to the fact that many
family members may die together in a common accident.
tithe Traditional offering of one tenth of one’s income, such as to a church.

The earliest taxes were compulsory tithes.
title A legal right or document proving legal right.
title deed The legal document that not only identifies the owner of a property but
also other details about the property and the land it is built upon. This
will be kept by the lender until your borrowing and interest on that
borrowing has been repaid.
title sponsor Business jargon for a business that will readily sponsor things to boost
its reputation or standing.
TLA Three-line account.
TLR Times Law Reports, as published from 1884 to 1952.
TMA Taxes Management Act 1970.
TNRB Transferable nil rate band, of inheritance tax.
tobacco Cured leaves of any plants of the Nicotania species. Tobacco has
attracted tobacco duty since 1565.
Tobacco products are also subject to VAT at the standard rate.
tobacco allowance Amount of tobacco products that an individual may personally import
from a non-EU country without having to pay any additional taxes.
From 1 January 2010, the allowance is basically 200 cigarettes or 50
cigars or 250 gram of tobacco.
tobacco duty Excise duty charged on tobacco.

Tobacco is classified into one of the four types for the purpose of
the duty:
● cigarettes;
● cigars;
● hand-rolling tobacco; and
● other tobacco.
The duty on cigarettes is a fixed percentage of the retail price plus a
fixed sum per 1,000 cigarettes. The fixed charge is increased if the
cigarette has a tar yield above 20mg.
Hand-rolling tobacco is tobacco which is suitable for making into
cigarettes and where at least 25% of the tobacco has a width of less than
0.6mm.
From 1 April 2001, all packets of cigarettes and hand-rolling
tobacco must have a fiscal mark to indicate that duty has been paid.
tobacco product “A product consisting wholly or partly of tobacco and intended to be

smoked, sniffed, sucked or chewed”. (Tobacco Advertising and
Promotion Act 2002 s1).
Tobar doctrine Doctrine that a government should only be recognised if it came to

power democratically. In practice, governments prefer the more
pragmatic Estrada doctrine.
TOC Table of contents.
toft Land on which a decayed building had stood.
TOGC Transfer of a going concern.
token Something which is used to represent something else, such as a printed

disc which represents an amount of money.
token amount Small amount which indicates value but not worth. Under English
contract law, a buyer must provide consideration. A business may
therefore be bought for a token amount of £1 to establish a legal
contract.
token charge Small charge, particularly which does not cover the cost of whatever is
supplied but which is made for another reason, such as to maintain the
right to make charges.
tokenism Personnel practice of deliberately employing a few workers from a

minority or disadvantaged group to demonstrate equality.
token payment Small payment whose main purpose is to acknowledge a debt, rather
than to reduce it. Someone with serious debt problems may pay £1 a
month to creditors to acknowledge that the debt is still owed. This
prevents the debt becoming statute-barred.
token rent Small payment of rent. It is usually paid merely to establish a legal right
than to cover the genuine cost.
tolerance For PAYE, an amount of underpayment that HMRC does not pursue.
This figure has been £50 for many years except for a period from
September 2010 to March 2011 when it was temporarily increased to
£300 to help clear a backlog of tax reconciliations.
toll Payment to use a service, such as for a bridge or tunnel. A toll usually
arises either to repay the capital cost of providing the service used, or as
the result of an ancient right.
toll call American term for a long-distance telephone call.
Tolley tax annuals Annual set of annuals for the main taxes and for tax-related topics,
published by Tolley Publishing Ltd, part of Lexis Nexis.
toll-free Description of something where no toll is charged, particularly where a

toll is usual or has recently been charged.
toll road Road where a toll is charged for its use.

From 6 April 1991, a toll road is specifically included in the
definition of industrial building. Privately financed road were included
from 6 April 1995.
Tolpuddle martyrs Six farm labourers who were deported for trade union activities in
1834. Tolpuddle is in Dorset.
Tomlin order Court order that gives legal effect to a compromise agreement between
the parties. The name comes from such a direction issued by Mr Justice
Tomlin in 1927.
TOMS Tour operator’s margin scheme (for VAT).
ton Imperial unit of weight. It is equal to 20 hundredweight or 2,240

pounds.
It is the equivalent of 1,016 kilograms, and is therefore about 1.6%
heavier than the metric tonne.
This ton is sometimes called the long ton to distinguish it from the
short ton of 2000 pounds used in the USA.
A further distinction is between the word tonne meaning a metric
ton equal to 1000 kilograms or 98.3% of a ton. Both words are
produced as “tun”.
ton mile Unit of measure used for charging freight to be carried on canals, as so
much per ton per mile.
tone at the top Term used in APB ES 1 to indicate by example and setting of internal
culture the ethical standards of an audit.
tonnage tax Optional method by which shipping companies may ring-fence their
profits from shipping activities. Such activities are then taxed according
to the tonnage of the ships and are not subject to corporation tax. For
example, tonnage tax is 60p a day for each 100 tones up to 1000 tons.
The ships are also not taxed on their chargeable gains or losses.
A company must elect to use tonnage tax. There are many
conditions that must be satisfied.
The law is in Finance Act 2000 Sch 22.
Guidance is given in the Tonnage Tax Manual, under reference
TTM.
tonne Unit of weight equal to 1000 kilograms. This is about 2204 pounds,
which is slightly less than the imperial ton which is 2240 pounds.
too big to fail (TBTF) Term coined for financial institutions whose collapse would lead to
serious national consequences and which therefore require government
backing when they get into difficulties.
The term was coined when Northern Rock reported difficulties in
late 2007.
too good to be true One of the hallmarks of a tax planning scheme of which taxpayers are
advised to be wary.
tools of trade Essentials to a person’s work which cannot be seized from a bankrupt.
toothbrush scheme VAT avoidance scheme which was ended on 1 December 1994.
Traders who make both taxable and exempt supplies are restricted
on the partial exemption rules on the amount of input tax they may
claim back unless their turnover was below the then limit of £600 a
month. So many wholly exempt traders made some nominal sales of
taxable products to come within the scope, and thus be able to claim
back all their input tax. The term comes from dentists who avoided
partial exemption by selling standard-rated toothbrushes.
The scheme was ended by imposing a second condition that the
taxable supplied must account for at least 50% of supplies.
The irony is that many dentists found that sales of toothbrushes and
other dental products were appreciated by patients and contributed
usefully to their profits.
top dog Master, or most important person. The term is often used derogatively
to mean a person who has appointed himself to this status.
top hat Description of something which applies to the highest levels of an

organisation only. The term is an allusion to the early 20th century
practice of important people wearing top hats rather than other hats.
top hat pension Pension scheme adapted for the most senior levels of an organisation.
top management Senior management of an organisation.
top-up trade credit insurance

Government facility introduced in the 2009 Budget to help restart the
trade credit insurance market which had largely shut down in the
economic crisis. The scheme offers a government pound for pound
matching for trade credit insurance provisions.
tort Wrong for which compensation may be sought in a civil court. A

common example is negligence.
tortfeasor Person who commits a tort.
tortuous Having the nature of a tort.
torture Crime of deliberately inflicting physical or mental pain on someone. It

is illegal under Criminal Justice Act 1988 s134.
total Figure derived from addition.
total absorption costing In management accounting, the method of absorption costing where
every overhead is considered in determining the price of the goods or
services offered.
total account Account which records totals taken from a ledger or prime book of
account, and does not record each transaction separately.
total assets Aggregate of fixed assets, current assets and other assets such as long-
term investments and goodwill.
total assets turnover ratio Accounting ratio which indicates how a business uses its assets. The
figure is calculated as sales divided by total assets.
total assets usage Sales divided by total assets.
total borrowing The total amount a person has actually borrowed on their account.
Total Borrowing = Agreed/Total Facility - Additional Borrowing.
total debtors account The account which records the total amounts owed by debtors. It is
calculated by adding the total for new debts and subtracting a total of
cash received against debts, rather than by ascertaining how much is
owed by each debtor.
total disability Inability to undertake either occupational duties or aspects of normal

day to day life. In an insurance policy providing cover against this
contingency the definition applying to that contract is normally spelled
out in detail. The exact definition may vary considerably between
policies.
total income Total of all income which is subject to income tax (Income Tax Act
2007 s23).
total intestacy When no property can pass on a person’s death under the terms of the
will, either because the person made no will, or the will is not valid. In
such a case, the property passes under the Administration of Estates Act
1925 and subsequent legislation as if the deceased was intestate.
total invoice value Total amount on an invoice, including all additions such as postage and
VAT.
totalisator For pool betting duty, “a machine or instrument used for pool betting
calculations, whether mechanically operated or not” (Customs notice
147).
total liabilities In accounting, current liabilities plus long-term liabilities
total loss When an insured item, particularly a ship, is lost in circumstances

where nothing is salvaged (Marine Insurance Act 1906 s68).
total overhead cost variance

In management accounting, the difference between the budgeted
overhead and the actual overhead. The variance is usually expressed as
a percentage, may be considered for each cost centre and overall, and
applies to both fixed and variable costs.
total pension input amount

The aggregation of the pension input amounts in respect of each
arrangement relating to an individual under a registered pension scheme
of which the individual is a member.
total pensions savings amount

Term used in connection with the abandoned high income excess relief
charge.
Total Quality Management (TQM)

This usually involves the introduction of continuous monitoring. It
refers to initiatives designed to improve the quality of products and
services to meet customer's requirements.
total recognised gains and losses

Total of all gains and losses of the reporting entity attributable to
shareholders recognised in a period (FRS 3).
total return The combination of capital growth and reinvested income at the end of
any given period. Total return performance figures are always stated on
an offer-to-bid price basis.
Tote "Tote" is short for Totalisator, a system introduced to Britain in 1929 to

offer pool betting on racecourses. It is dissolved by Horserace Betting
and Olympic Lottery Act 2004 s1. Its full name is Horserace Totalisator
Board.
toties quoties Latin: as often as something happens.

totting up Legal proceedings whereby minor offences are allocated points and a
penalty is only imposed when a specified total is reached. The
commonest example is being banned from driving on having 12 points
imposed.
toujours perdrix French: partridge every day. An expression that means “too much of a
good thing”.
Tour Operator A travel agent acting as principal, including those acting as undisclosed
agents; or a person providing, for the direct benefit of a traveller,
services of a kind enjoyed by travellers and commonly provided by tour
operators or travel agents.
Tour Operator’s Margin Scheme (TOMS)

Special VAT scheme which may be used by businesses which buy in
and resell travel, accommodation and related supplies.
touting Seeking business by approaching potential customers. For certain sports

tickets, this is a criminal offence. It is also an offence for an unlicensed
taxi driver.
towage Generally zero-rated under Value Added Tax Act 1994 Sch 8 Group 8.
town and country planning

Series of laws that require planning permission for certain
developments on land.
town-cramming Practice of trying to put too much buildings on the land available.
town gas Coal gas produced by a local authority until the gas industry was
nationalised in 1948.
TPD (1) Tobacco Products Duty, an excise duty chargeable on tobacco

products.
(2) Transvaal Provincial Division Reports, law reports published
TPS Report Document used in software engineering to describe the procedures and
processes for testing the system. The letters stand for Transaction
Processing System.
TPUK Trade Partners UK - was the division of British Trade International

(BTI) responsible for promoting UK exports. In October 2003, BTI was
renamed "UK Trade and Investment" and the Trade Partners UK
identity fell out of use.
TQ Tariff Quota - are a form of EC preference under which limited

amounts of specified goods may be admitted to free circulation at
reduced or nil rates of duty and/or CAP levy within a given period. The
limit may be expressed in units of weight, volume, quantity or value.
Once a quota has been exhausted, the commodity may still be imported,
but duty or levy must be charged at the non-quota rate.
TQM Total quality management.
TQSN Tariff Quota Serial Number.

This is the specific number given to each separate Tariff Quota to
allow claims to each quota to be readily identified.
tracing property Seeing what happens to property, as may be necessary in establishing

whether there has been a gift with reservation for inheritance tax.
tracked vehicle Road vehicle which is category H on the driving licence.
tracker fund In investing, fund which is designed to track an index, such as FT-SE
100 index.
tracking device Device which is attached to a car in a place not known even to its owner
and which can locate the car if stolen.
track record Record of how well a fund, person or organisation has performed. The
term comes from sport.
tractor A category of excepted vehicle that may use fuel on which

hydrocarbon oil duty has not been paid (such as red diesel).
The vehicle must be “designed and constructed primarily for use
otherwise than on roads. It must be used on public roads solely for:
(a) purposes relating to agriculture, horticulture or forestry,
(b) cutting verges bordering public roads, or
(c) cutting hedges or trees bordering public roads or bordering
verges which border public roads” (Customs notice 75).
trade Commercial activity. The term has never been exhaustively defined for
legal or tax purposes, but most applications follow a Royal Commission
report which identified six badges of trade. These involved
consideration of:
(a) subject matter of realisation;
(b) length of ownership;
(c) frequency of transactions;
(d) supplementary work;
(e) circumstances which were responsible for the realisation;
and
(f) motive.
For example, the sale of a person’s car is not a trade, even if he has
worked on it. However reselling cars can become a trade, particularly if
it happens frequently and there seems to be a pattern of trade.
Similarly VAT is only charged on trading activities, not on income
from other sources such as a hobby.
trade For tax, “includes every trade, manufacture, adventure or concern in the
nature of trade” (Taxes Management Act 1970 s118(1)).
tradeable asset Asset given to an employee by or on behalf of the employer. This

usually triggers a liability to income tax and national insurance.
trade agreement International agreement between countries over trading terms.
trade association “Organisation formed for the purpose of furthering the trade interests of
its members, or of persons represented by its members” (Companies
Act 2006 s375(2)).
Payments to such bodies are not regarded as political expenditure,
even if the trade association engages in political activity.
The VAT position is explained in VAT leaflet 701/5.
trade barrier Limit imposed by a government which restricts trade between that
country and other countries. The commonest example is a restriction on
imports.
trade bill Bill of exchange issued between two companies which trade with each
other. One company endorses the other’s bills.
trade body Another name for a trade association.
trade classification Four digit code which classifies the nature of different businesses. From
1990, such a code is allocated when a company registers at Companies
House. The code is also used for VAT purposes.
The first two digits indicated the Group of activity. For example 00
indicates agriculture, forestry and fishing. Trade classification 0011 is
livestock farming.
trade controls “In relation to any goods, means the prohibition or regulation of:
(a) their acquisition or disposal;
(b) their movement; or
(c) activities which facilitate or are otherwise connected with their
acquisition, disposal or movement (Export Control Act 2002 s4(2)).
trade counter Counter in a shop which is reserved for supplying businesses rather
than consumers.
trade credit Normal trading terms offered by a company to its customers, such as
where invoices are issued for payment at the end of the month.
trade creditors Persons who supply goods or services to a business in the normal
course of trade and allow a period of credit before payment must be
made.
trade cycle The trade cycle is the fluctuations in the rate of economic growth that
take place in the economy. These fluctuations appear to occur around
every five years and have probably occurred ever since economies have
occurred! It is the aim of all governments to try to dampen the effects of
the trade cycle and get more balanced long-term growth, but so far they
have had limited success. The peak of the trade cycle is usually referred
to as a boom, and the trough as a recession or depression.
trade date Date on which an organisation becomes committed to buy an asset.
trade debt Sum owed by one business to another from normal trading activities.
trade debtors Persons who buy goods or services from a business in the normal
course of trade and are allowed a period of credit before payment is
due.
trade deficit Difference between a country’s exports and its imports.
trade description Description of a product or service offered for sale. It is an offence for
this description to be false or misleading.
trade dispute Dispute between workers and their employer. Provided the dispute is
within a legally defined range of issues, the workers have protection
from being sued for tort.
Trade Disputes Act Law passed in 1927 which made sympathetic strikes illegal. The Act
was repealed in 1946, though sympathetic strikes have again been made
illegal.
traded option An option which may itself be bought and sold as a security.
traded services In management accounting, a service that has a zero budget and has to
generate sufficient income from the delivery of services to paying
customers to cover their total costs.
trade discount Reduction in price given to a customer in recognition of that customer’s

trade.
trade dispute “A dispute between employers and workers, or between workers and
workers, which is connected with one or more of the following matters:
(a) terms and conditions of employment, or the physical conditions
in which any workers are required to work;
(b) engagement or non-engagement, or termination or suspension of
employment or the duties of employment, of one or more workers;
(c) allocation of work or the duties of employment as between
workers or groups of workers;
(d) matters of discipline;
(e) the membership or non-membership of a trade union on the part
of a worker;
(f) facilities for officials of trade unions; and
(g) machinery for negotiation or consultation, and other procedures,
relating to any of the foregoing matters, including the recognition by
employers or employers’ associations of the right of a trade union to
represent workers in any such negotiations or consultation or in the
carrying out of such procedure”
(Trade Union and Labour Relations (Consolidation) Act 1992 s218 and
s244).
traded option Option that is a security in its own right, as against a traditional
option.
Trade Facility Warehouse Approval is restricted to the specific needs of an export shop. The
qualifying criteria of a general storage and distribution warehouse, is
not required for this type of warehouse.
trade fair Exhibition of goods and services relating to a particular trade.
trade fixture Fixture attached to a property by a tenant for the purpose of a trade. The
tenant may remove trade fixtures at any time during the tenancy.
trade gap Another term for trade deficit.
trade income relief Carry-forward trade loss relief plus terminal trade loss relief
trade in question Term used in Income Tax Act 2007 s294(5) in relation to VCT relief.
It refers to the trade of the company in which funds are invested,
and means either the trade itself or preparations for a trade. Such a trade
must not be in an area which is excluded from relief.
trade investments In the context of controlled foreign companies, “means securities any
profit on the sale of which would not be brought into account as a
trading receipt in computing the chargeable profits of an accounting
period in which that profit arose” (Income and Corporation Taxes Act
1988 Sch 25 para 11(5)).
trade journal Publication for those engaged in a particular trade.
trade-machinery Any machinery used in a factory or workshop as defined in Bills of Sale

Act 1878 s5.
trade mark Name, logo or similar which identifies the make or model of a product
(Trade Marks Act 1994).
trade mission Visit by a group of people to a country to discuss trade.
trade name Name which identifies the make or model of a product or service.
trade-off Negotiation where one liability is set against another. The plural is
trade-offs.
trade payables Amounts due to suppliers (trade creditors), also called accounts
payable.
trade price Price at which a business is prepared to sell its products or services to
someone in a particular trade or in business generally.
trade protection association

Organisation to protect the interests of its members who are trading
bodies. There are some special tax arrangements which are discussed in
the Inspectors’ Manual at BIM24805. See also Lochgelly principle.
trader Person who buys or sells items for profit in the course of a trade.
Trader Account Payment System

System which provides national information on excise traders’ accounts
and payment details.
trade receivables Amounts due from customers (trade debtors), also called accounts
receivable.
trade secret Knowledge used in a business which judges that public knowledge
would be harmful to its commercial interests. A business is generally
not required to disclose such a secret in any legal proceedings or tax
investigation.
trade surplus Amount by which a country’s exports exceeds its imports.
trade terms Terms of business under which two companies do business.
trade union An organisation which “consists wholly or mainly of workers of one or

more descriptions and whose principal purposes include the regulation
of relations between workers of that description or those descriptions
and employers or employers’ associations” or a body which comprises
such organisations (Trade Union and Labour Relations (Consolidation)
Act 1992 s1).
A trade union is not a corporate body but has a similar ability to
make contracts, to sue and to be sued (ibid s10(1)).
Their VAT liability is explained in VAT leaflet 701/5.
trade union activities Work undertaken by an official of a trade union in that capacity but not
including any industrial action (Trade Union and Labour Relations
(Consolidation) Act 1992 s170). The official has the right to paid leave
for such work under ibid s168.
trade union dues Subscription paid by a member of a trade union.

An employer may agree to collect these from wages and pass them
directly to the trade union. This arrangement is widely known as check-
off. An employer is not required to operate the system, and must cease
making deductions for any employee as soon as possible after the
employee notifies the employer.
The payment must be authorised in writing by the employee before
the first deduction is made. From 23 June 1998, the notification for
trade union dues is the same as for other authorised deductions for
wages.
For the period from 30 August 1993 to 22 June 1998, there were
additional provisions which had to be followed for check-off, such as
requiring the employee to renew the authorisation every year.

Some trade unions collect a political levy in addition to the normal
dues. This goes to a political party supported by the trade union, which
is almost always the Labour party. Under Trade Union and Labour
Relations (Consolidation) Act 1992 s86, an employee has the right not
to pay this political levy. An employee who believes that the political
levy is being deducted unlawfully may appeal to an employment
tribunal.
trade union register of members

A list of members which every trade union must compile and maintain
under Trade Union and Labour Relations (Consolidation) Act 1992 s24.
trade value at balance sheet (TVBS)

The value of an item as trading stock at the day the trader makes up his
balance sheet. This is widely used in the second-hand car trade.
For the purposes of income tax and corporation tax, TVBS may be
used to value cars accepted in part exchange.
trade value Value of an item as a trader’s stock. The term is widely used for
second-hand cars.
trade-weighted index Index of the value of a currency against a basket of currencies.
trading Commercial activity of buying and selling.
trading account Any account which shows the pattern of trading for a period. The most
common form is the profit and loss account.
In older forms of bookkeeping, a separate trading account was
prepared. The profit and loss account was credited with the gross profit
from the trading account.
trading certificate Document issued by Companies House to a public company under

A public company may not do any business nor borrow any money
until it has this certificate. There is no such restriction for private
companies.
trading company Company set up for a commercial purposes, as against a charity,

professional body, trade association or similar.
In the context of employee-controlled companies, means “a
company whose business consists wholly or mainly of the carrying on
of a trade or trades” (Income Tax Act 2007 s397(6)). The same
definition is used for distributions in Corporation Tax Act 2010 s185.
trading estate Area of land designated for the purpose of commercial activities.
trading financial assets Financial assets held for the purpose of producing a profit.
trading group “A group the business of whose members, when taken together,
consists wholly or mainly in the carrying on of a trade or trades”
trading group In the context of employee-controlled companies means “a group the

business of whose members taken together consists wholly or mainly of
the carrying on of a trade or trades (taking a group to consist of a
company with one or more 75% subsidiaries and those subsidiaries)”
trading income Term used for income tax purposes for the profits from a trade. Before
6 April 2005, this was known as Schedule D Case I.
The term is used in the Inspectors’ Manual from BIM40051. This
states that the term includes “most receipts in the hands of a person
carrying on a trade etc... from the disposal of trading stock, provision of
services etc”. In marginal cases, two questions should be asked:
• does the sum at issue arise from the trade at all?
• if it does, is it a capital or revenue item?
trading in financial asstes and financial liabilities

Buying, selling, issuing or holding financial assets and liabilities to take
advantage of short-term changes in market prices, or to facilitate
customer transactions (FRS 13).
trading interest Interest paid by a company on loans to fund its trading. Such interest is
an allowable tax deduction in the loan relationship rules of
Corporation Tax Act 2009 Part 5.
trading justice Term used in 18th century for people who sought the office of justice
of the peace (magistrate) primarily to advance their trading interests.
trading limit Maximum amount of liability which may be incurred by a trader.
trading loss Loss which a business sustains from its trading activities.
“Loss made in a trade in the surrender period” (Corporation Tax Act
2010 s100(1)). S100(2) goes on to exclude a loss made overseas and
some other reliefs.
trading partner Person, business or country with whom a person engages in trade.
trading profit Profit which a business earns from its trading activities.
trading requirement Requirement that a tax relief for investment in a company depends on
that company trading, particularly the condition for EIS relief set out in
trading stamp Special stamp issued by a shop according to the value of purchases
made. These are collected in books which may be redeemed for goods
or cash.
trading stock Stock and property used to make the goods or services of a business
trading test Test designed to determine whether an activity is taxable as a trade. The
term is particularly used in relation to illegal activities. It is discussed in
trading with the enemy Making a commercial arrangement with a person, public body or
commercial organisation based in a country with which the UK is at
war. It is a criminal offence under Trading with the Enemy Act 1939.
traditional option Right to acquire a share or security at a future date, usually at a price
already agreed. A traditional option is not itself a saleable security,
unlike the traded option.
traditional taxes Term for taxes that were levied without Parliamentary approval, even
though this has been required since Magna Carta 1215. The last two
such taxes were tunnage and poundage which were given statutory
recognition in 1658.
traffic offences Offences relating to driving vehicles.
trailer Vehicle without an engine which attaches behind another vehicle to

provide additional cartage. This may be towed by a car under certain
conditions.
A car driver who passed the test before 1 January 1997 may drive a
car towing a caravan provided their combined weight (MAM) does not
exceed 8.25 tonnes. From 1 January 1997, drivers must either have a
licence for category C or D vehicles to tow a caravan or trailer with a
weight of more than 750 kilograms.
There are also regulations regarding the construction and use of
trailers.
trainee Person who is being trained to do a job
train fares Zero-rated under Value Added Tax Act 1994 Sch 8 Group 8.
training Activities which are designed to make a person able to perform certain
duties or occupations. It differs from education in being related to
specific work.
Work-placed training may be exempt from the rules about taxable
benefits in kind under provisions in Income Tax (Earnings and
Pensions) Act 2003 from s250.
Training Agency (TA) Name briefly given to what was the Manpower Services Commission
in 1987 before it was wound up in 1990.
training and enterprise councils (TECs)

Local bodies established in 1989 in England and Wales to provide
training programmes previously offered by the Manpower Services
Commission. They ran programmes such as Youth Training Scheme
(YTS) and the first modern apprenticeships.
Between 1 April 1990 and 31 March 2000, a company could claim
tax relief for contributions to a TEC.
TECS were abolished in 2001 under Learning and Skills Act 2000.
Their functions were taken over by the Learning and Skills Council
and its Welsh equivalent. This was itself abolished in 2009 and its
functions transferred to Young Peoples Learning Agency.
training course Consideration needs to be given on:

• whether this is an allowable business expense; and
• whether this is a taxable benefit in kind for the employee.
The former is discussed in the Inspectors’ Manual at BIM42526.
training levy Sum which certain businesses must pay to a training board in their area
of business.
training materials “Includes stationery, books or other written material, audio or video
tapes, compact disks and floppy disks” (Income Tax (Earnings and
The provision of such materials as part of work-related training may
be exempt from tax.
training mode Term used in EPOS systems used by retailers to train check-out staff.
This allows the equipment to be used to check-out purchases in the
normal way but without entering the details as genuine sales.
training officer Person who oversees the training of staff within an organisation.
training-related asset Asset used in relation to work-related training, and whose provision by
an employer may be exempt from income tax (Income Tax (Earnings
tranche Series of instalments or amounts in relation to loans, payments and

similar.
transaction Any activity or accounting adjustment requiring an entry in the

financial records.
transaction at undervalue
The Pensions Regulator may make a restoration order under
Pensions Act 2004 s52.
transaction charge charge made by a bank for each transaction, in addition to any account
maintenance charge.
transaction costs Costs which are directly related to specific transactions, particularly
buying and selling assets. Such costs include delivery, installation,
instruction into use and commissions.
transaction date Date on which a transaction is regarded as taking place. This can be
important for determining the period in which it is taken into the
accounts and subject to any tax implications.
transaction in securities (TiS)

For tax purposes, transactions in securities are subject to Corporation
Tax Act 2010 ss682 to 687.
A transaction includes:
• the purchase, sale or exchange of securities;
• issue of new securities;
• applying or subscribing for new securities;
• altering the rights of securities.
It does not include the payment of dividends or other distributions,
nor the distribution of funds on liquidation.
transfer Moving something or someone from one place to another. The

commonest uses are when funds are moved between accounts and when
employees are moved between departments.
The term is also specifically used in Companies Act 2006 s776 to
mean a document that transfers ownership of shares. Such a document
usually requires payment of stamp duty.
transferability The extent to which a share or other security may be transferred to

another person. For company shares, this is regulated by Companies
Act 2006 s544.
transferable Able to be transferred.
transfer case File made of tough paper used for storage of bulk documents.
transfer controls “In relation to any technology, means the prohibition or regulation of its
transfer:
(a) by a person from a place within the United Kingdom to a person
or place outside the United Kingdom;
(b) by a person or from a place outside the United Kingdom to a
person who, or a place which, is also outside the United Kingdom (but
only where the transfer is by, or within the control of, a United
Kingdom person);
(c) by a person or from a place within the United Kingdom to a
person who, or a place which, is also within the United Kingdom (but
only where there is reason to believe that the technology may be used
outside the United Kingdom); or
(d) by a person or from a place outside the United Kingdom to a
person or place within the United Kingdom (but only where the transfer
is by, or within the control of, a United Kingdom person and there is
reason to believe that the technology may be used outside the United
Kingdom).
transfer date Date on which assets are transferred. This date can be important for
capital gains tax and inheritance tax in determining such matters as
period of ownership and the rate of tax payable.
transferee Person to whom property is transferred.
transfer fee Amount paid to secure the services of a sportsman in a team. Such fees
are particularly common in football.
The sums represent an intangible asset for the sports club. As such
the sum must be accounted for under the provisions of FRS10. For tax
purposes, the amount is regarded as any other capital asset. Before
1999, clubs were allowed to regard such expenditure as revenue. That
has now been outlawed. However, Finance Act 1996 s63 introduced a
transitional provision for transfer fees after 31 March 2002. The matter
transfer freight manifest

Removal authority for airfreight consignments which are to be
transferred from one transfer shed to another before going to their final
destination.
transfer journal Term for an ordinary journal to distinguish it from other books of
account which function as a journal.
transfer lump sum death benefit

A lump sum benefit paid from a money purchase arrangement for the
benefit of another member of the same pension scheme following the
death of a scheme member (or a dependant of such a member), who is
aged 75 or over, which meets the conditions of paragraph 19, Schedule
29 to the Finance Act 2004. Such a lump sum cannot be paid where
there is still a surviving dependant of the member.
transfer of a going concern (TOGC)

Disposal of a business as a business rather than a disposal of just its
assets.
In accounting, a TOGC is likely to be at a price greater than the
value of its net assets. The excess, which is derived from its ability to
trade, is known as goodwill.
In VAT, there is a special provision which ensues that no tax is
charged on a TOGC, though VAT is usually chargeable on a disposal of
assets.
In company law, directors may make special provision for
employees in a TOGC under Companies Act 2006 s247.
In employment law, the employees may be protected under Transfer
of Undertakings (Protection of Employment) Regulations 1981.
transfer of business assets Transfer of assets used by a business but which fall short of transferring
the entire business.
For capital gains tax, the tax treatment is given in Taxation of
transfer of economic benefits

In accounting, a requirement for an item to be regarded as a liability. In
most cases, the transfer of economic benefits simply means a duty to
pay money.
The event that triggered the duty to transfer must have already
happened.
transfer of property For capital gains tax of trusts, this is given a specific meaning in
Taxation of Chargeable Gains Act 1992 s68B(2).
transfer of residence Customs term for when a person relocates to the UK. Generally, goods
(including cars) that accompany a relocated person are free of duty,
subject to some conditions (Customs notice 3).
transfer of risk The point at which a risk legally passes from one person to another,
such as in the sale of goods.
transfer of shares The point at which legal title to a share passes to another person. For
private companies this may be subject to legal restriction.
The process involves a contract to sell, delivery of share certificate
(or electronic equivalent) and amendment in the company register. It is
at the last stage that the shares are transferred.
Note that a transfer requires action by the owner. In other cases,
such as on death of a shareholder, there is said to be a transmission of
shares.
transfer of unused nil-band

Provisions of Inheritance Tax Act 1984 s8A.
For deaths from 9 October 2007, a transfer may increase a
transferor’s nil band by up to 100% by claiming the proportion of nil
band unused by a previous spouse or civil partner on their death.
For example, a widow dies on 1 January 2011. Her husband had
died on 1 February 2008 when the rate of nil band was £300,000. Her
husband left £100,000 to their children and the balance to his wife.
This means that two-thirds of the husband’s nil band was unused.
At the time of the widow’s death, the nil band was £325,000. This
means that she may increase her nil band by the husband’s unused two-
thirds from £325,000 to £433,333.
It should be noted that this provision requires no action to be taken
on the first death. There is no limit on how long ago the partner died. If
the partner died before the introduction of inheritance tax in 1986, the
nil band for capital transfer tax or estate duty is used instead.
It should also be noted that the 100% maximum restricts the transfer
when the deceased has two or more former partners.
transfer of property Act of moving property from one owner to another.
transfer of value “A disposition made by a person (the transferor) as a result of which the
value of his estate immediately after the disposition is less than it would
be but for the disposition; and the amount by which it is less is the value
transferred by the transferor (Inheritance Tax Act 1984 s3(1)).
transfer on death Occasion on which property becomes subject to inheritance tax

(Inheritance Tax Act 1984 s4).
transfer on same day Inheritance tax provision set out in Inheritance Tax Act 1984 s266(2).
This is an exception to the general IHT rule that transfers are
considered in date order, and is also an exception to the general legal

rule that time is infinitely divisible. If transfers are made by the same
transferor on the same day, all those transfers are regarded as a single
transfer made on the same day. A delay of one day is sufficient to create
a second or supplementary transfer.
If one or more transfer is paid gross of tax, and one or more is paid
net of tax, the transferor may choose which to regard as having been
made first, so as to minimise the tax payable (Inheritance Tax Act 1984
s266(1)).
If the annual exemption limit is reached on the day of the transfer, it
is apportioned pro rata between the transfers (Inheritance Tax Act 1984
s19(3)(b)).
transferor Person who transfers property to another.
transferor by delivery Where the holder of a bill of exchange payable to bearer negotiates it by
delivery without indorsement (Bills of Exchange Act 1882 s58(1)).
transfer payments Transfer payments are payments for which no good or service is
exchanged. This includes things like benefits, pensions and lottery
payments. A significant proportion of government expenditure is on
transfer payments.
transfer pricing Pricing policy between two connected persons.

There are special tax provisions to avoid transfer pricing being used
to avoid tax. Suppose a company makes components in a low-tax
country. These are sold to a company in the same group in the UK
which assembles them into machines. As both companies are controlled
by the same board, it is a simple matter to inflate the prices at which the
components are sold to the UK company. Overall, the group makes the
same profit; it has simply transferred much of that profit to the
company in the low-tax country.
To counter this, HMRC may require the UK company to substitute
an arm’s length price for the transfer price.
transfer provision Enactment that allows payment from the National Insurance Fund to
be made to a money purchase contracted-out pension scheme (Social
Security Contributions (Transfer of Functions, Etc.) Act 1999 s21).
transferred charge Where a charge which should be paid by one person is passed to
another, such as when a person agrees to pay for a telephone call to
him.
transfer scheme arrangements

Term used in Income and Corporation Taxes Act 1988 s444AEA and
elsewhere in relation to the tax implications on a transfer of assets of a
life assurance business.
transfer transport “Transport by sea or air between the mainland of Great Britain and
Northern Ireland and the offshore installation ...” (Income Tax
Such transport is usually exempt from tax.
transfer value Instead of receiving a preserved pension when leaving an occupational

pension scheme, a member has the right to transfer its value to a
scheme operated by a new employer or a personal pension plan. The
transfer value is the amount that is transferred. (N.B. An occupational
pension scheme is not bound to accept a transfer value)
transhipment Moving goods from one vehicle to another to continue their carriage to
their final destination.
No duty is charged on transhipped goods, but Customs must be
satisfied that only transhipment is involved.
transit The movement of goods from one European Union (EU) Member State
to another without the need to 'enter' them to a customs procedure.
transitional addition In social security, an amount that may be added to employment

support allowance when the amount is less than the benefits
previously received by the claimant. All such additions cease in 2020
and may be reduced before then.
Transitional Assembly Assembly created in Northern Ireland before government was fully
devolved (Northern Ireland (St Andrews Agreement) Act 2006 s1(1)).
transitional provision Any provision which allows a new rule to be phased in to minimise its
impact.
Transitional provisions are widely encountered in tax law to
minimise a significantly larger tax burden which could fall on some
taxpayers on a change in the tax system.
transitional relief Informal term for the provisions of Inheritance Tax Act 1984 s7(4). A
potentially exempt transfer escapes inheritance tax if the transferor
lives for another seven years. It is fully taxed at the death rate if the
transferor dies within three years. Between those periods, relief is given
at 20%, 40%, 60% and 80% for deaths after three, four, five and six
years respectively.
transit procedure One of several Customs procedures which may be applied to goods
presented to Customs on being imported.
The procedure permits either external transit or internal transit.
External transit allows goods to move within the EU without being
subject to duties or other restrictions. This ends when the goods arrive
at their final destination. Internal transit allows the goods to pass
through a third country to a final destination in another EU state.
transit shed Place near an approved wharf where imported goods may be held
pending payment of customs duties.
There are also enhanced remote transit sheds away from ports and
airports, and which are subject to stricter security requirements.
translate Express words in another language, or amounts in another currency.

For the latter, it should be appreciated that translation simply means
restating an amount of one currency in another, without actually
changing the currency. If the currency is actually replaced by an
equivalent amount of currency, it is said to be exchanged.
translation exposure Risk that a financial position will be adversely affected by movements
between currency rates.
transmission In investment, a transfer of shares other than at the instruction of the

holder. The most common example is when shares are transmitted to
beneficiaries on the death of a shareholder.
transmission facilities For capital allowances, the sharing of such facilities by broadcasting
companies is addressed in Finance Act 1991 s78.
transparency Openness.
In tax, this means that transactions are what they appear to be.
In law, this means fairness in legislation and openness in trading.
transparent entity An entity that is resident in another EU state and has no ordinary share
capital or would otherwise not be treated as a company if it were
resident in the UK. As such it falls outside the scope of the Mergers
Directive.
The full definition is given in Taxation of Chargeable Gains Act
1992 s140L(1)(c).
transport Category of supplies which are zero-rated under Value Added Tax Act
1994 Sch 8 Group 8.
Not all transport services are zero-rated, so care needs to be taken to
ensure that a service is within the scope.
The main zero-rated categories are:
● public transport in a vehicle which can carry at least 10
passengers;
● international transport in a vehicle of any size.
This Group also zero-rates some vehicles, broadly:
● a ship weighing at least 15 tons and not being primarily for
recreation or pleasure;
● a lifeboat, houseboat or boat adapted for a disabled person, of any
size;
● hovercraft, on the same basis as ships except that there is no
weight condition;
● aircraft of at least 8000 kg which are not primarily for recreation
or pleasure.
Some services to ships and aircrafts are also zero-rated. These include
repairs to ships and aircrafts which are themselves zero-rated.
transportation In relation to removal expenses as a relocation expense, includes

packing and unpacking, temporary storage, detaching domestic fittings
and re-attaching them (Income Tax (Earnings and Pensions) Act 2003
s280(3)).
transport strike There is no taxable benefit in kind if an employer provides certain

assistance to employees to travel during a public strike (Income Tax
transport voucher “Ticket, pass or other document or token intended to enable a person to
obtain passenger transport services (whether or not in exchange for it)”
Transports Internationaux Routiers (TIR)

System where road haulers are given a carnet, which allows loaded
vehicles to cross national frontiers with minimum customs formalities.
transsexual Person who believes he belongs to the opposite sex to that in which the
birth was registered. A person retains their birth sex until given a
gender reassignment certificate.
travaux préparatoires French: preparatory work. Work undertaken before passing laws.
travel For income tax, expenses incurred in business travel are generally
deductible from taxable income. Expenses incurred in commuting to a
normal place of work are not. A leading case is Newsom v Robertson
[1952].
There are many exceptions to these general rules, and much case
law on how they apply in practice. Some of these matters are discussed
For employment income, travel in the performance of duties is
generally allowable (Income Tax (Earnings and Pensions) Act 2003
s337), but ordinary commuting is not (ibid s338).
travel and subsistence scheme

Alternative name for a travel scheme.
travel at start or finish of overseas employment

This is generally tax deductible (Income Tax (Earnings and Pensions)
Act 2003 s341).
travel between employments where duties performed abroad

This is generally tax deductible (Income Tax (Earnings and Pensions)
Act 2003 s342).
travel between group employments

Travel by a director or other employee between companies in the same
group. This is tax-deductible if relevant conditions are met (Income Tax
travel concession Any provision which allows a person to use public transport for less
than the full fare.
This particularly applies to free bus passes provided under
Concessionary Bus Travel Act 2007.
travel for necessary attendance

In employment, this is a tax-deductible expense unless it is ordinary
commuting (Income Tax (Earnings and Pensions) Act 2003 s338)
travel in performance of duties

In employment, this is a tax-deductible expense (Income Tax (Earnings
and Pensions) Act 2003 s337).
travel insurance Insurance against losses suffered while travelling.
traveller’s cheques Documents bought from a bank which may be exchanged in different
countries for a stated value in the local currency.
travelling expenses Expenses incurred while travelling, particularly by an employee while

travelling on business.
travel plan In tax, a salary sacrifice scheme whereby taxable earnings are replaced
by a tax-free or tax-advantaged benefit.
traverse In law, denial of an allegation.
treachery Conduct that assists an enemy. Such offences are now dealt with under
Official Secrets Act.
treason Criminal offence of conspiring against the state under Treason Act
1351, which remains in force though amended.
An auditor, tax adviser or anyone else who discovers evidence of
treason must report it. This overrides any duty of confidentiality.
Failure to report is itself an offence.
The last case of treason in Britain was in 1948.
treasurer Officer responsible for looking after funds in a non-commercial

organisation.
Treasury Government department responsible for the nation’s finances.
Treasury Bills Form of short-term government borrowing. When the government is a

little short of funds temporarily they will make a Treasury Bill issue.
The size of the issue depends on how much they need. The Bills are a
promise to pay (an IOU) and usually mature after 91 days. They are
offered to the money markets by a weekly tender.
treasury management Management of a business’s finances separately from the business’s

trade. Treasury functions include minimising finance charges, investing
surplus funds, borrowing cheaply and similar.
treasury products Financial product produced by the government for sale.
Treasury Secretary (1) In USA, the member of the government with overall responsibility
for the nation’s finances.
(2) In UK, a government minister who is second in charge to the

Chancellor of the Exchequer, and who is usually a Cabinet minister.
Treasury shares Shares in a company that the company itself acquires with a view to
resale. The legal provisions are set out in Companies Act 2006 Chapter
6 from s724.
Such shares do not represent a reduction of capital. The value of
Treasury shares may not exceed 10% of the nominal value of the issued
share capital of the company.
Treasury Solicitor Solicitor who:

• advises the Treasury on legal matters
• instructs parliamentary counsel on Bills
• appears for the Crown in civil proceedings
• acts as the Queen’s Proctor.
treaty Agreement between two states. Many double taxation agreements are
treaties.
Treaty of Rome International agreement signed on 25 March 1957 by six European

countries to create what is now the European Union.
Treaty on European Union

Proper name for Maastricht Treaty.
trespass Civil offence of interfering in the property of someone else.
TRG3 Part of the Tax Return Guide that gives advice on capital gains tax.
trial Hearing of a civil or criminal case before a proper court.
trial balance List of debit and credit balances taken from nominal ledger or
(occasionally) prime books of account. The final accounts are prepared
from the trial balance.
If every transaction has been recorded by equal and opposite debits
and credits, it follows that the total of all debits equals the total of all
credits.
A list which does not balance is therefore wrong. The converse is
not true, in that a list which does balance is not necessarily right. If a
transaction is completely omitted, or recorded the wrong way round, or
where one side is posted to the wrong account, the trial balance will still
balance.
The figures in the trial balance are then allocated either to the
balance sheet or profit and loss account to produce the financial
statements.
triangulation Where goods are moved directly from a supplier in one European
Union (EU) Member State to the final customer in another Member
State, on the instructions of an intermediate party located in a third
Member State. The VAT implications are set out in VAT notice 725.
tribunal Forum for resolving issues that do not require the formality and expense
of a court trial. Most tax issues are addressed before a tribunal.
tribunal of three Commissioners

Body that existed before 29 November 1999 to deal with national
insurance issues of special difficulty. They were constituted under
Social Security Administration Act 1992 s57. Such matters are now
heard by the first tier tribunal.
tributes Earliest form of taxation. Originally, they often took the form of
tributes to priests, usually in kind.
trigger figure Amount of household expenditure. If a Common Financial Statement

in a debt management plan includes a figure above this amount, an
explanation must be provided.
trigger In tax legislation, this means a set of circumstances which bring a tax
provision into effect.
In particular the term was used for anti-avoidance provisions which
applied when trading profits changed from previous year basis to
current year basis.
trinoda necessitas Latin: necessary service. The ancient duties to maintain highways, build
castles and repel invaders.
Triple assessment (1798) The precursor to income tax introduced the following year. This
used the individual’s taxable establishment as the basis of tax for three
years (hence the name), or up to five years. An individual could apply
for a lower assessment on the basis of actual income. This was 10% for
annual incomes above £200, with a sliding scale between £60 and £200,
and exemption below £60. The tax failed because of the unreliability in
determining individual bases.
triple guarantee Term used in June 2010 Budget in relation to the state pension. It
guarantees that the state pension will, from 2012, rise by the highest of
price inflation, wage inflation and 2.5%. Price inflation is measured by
CPI.
TRIPS Agreement on Trade Related Aspects of International Property Rights.
trivial commutation lump sum

(who is aged under 75) because their pension entitlements (under both
that scheme and other such schemes) are deemed trivial, and which
meets the conditions of paragraphs 7 to 9 of Schedule 29 to the Finance
Act 2004.
trivial commutation lump sum death benefit

A lump sum benefit paid to a dependant of a scheme member of a
registered pension scheme (who died before age 75) because that
dependant's entitlement under that scheme is deemed trivial, and which
meets the conditions of paragraph 20 of Schedule 29 to the Finance Act

2004.
trivial pension Pension of a small amount.

From 6 April 2006, if all pension funds held by an individual do not
exceed £15,000, they may be paid as a lump sum without any need to
buy an annuity at all. In such a case 25% of the lump sum is tax-free
and the balance is subject to income tax. The person must be aged
between 60 and 75, and all pension funds must be taken as a lump sum
within a 12-month period. Previously the whole of a pension fund could
only be taken as a lump sum if the value of the fund was less than £250.
trophy-money Eighteenth century tax. It comprised a duty of £4 a year to display the

drums, trophies and other military colours.
trover Old name for the offence now known as conversion of goods.
troy ounce Imperial measure of weight still used for jewels and precious metals.
The name comes from Troyes in France. It is abbreviated to “ozt”.
A troy ounce equals 31.1034768 grams. There are 12 troy ounces to
a troy pound, though this latter measure is outlawed.
A troy ounce comprises 20 pennyweight (dwt) and 240 grains.
truck Payment in kind made to workers. It is illegal.
Truck Acts Laws passed in 1831, 1887, 1896 and 1940 which outlawed the practice
of employers paying employees in truck tokens which could only be
spent in their own shops. The laws required workers to be paid in coins
of the realm. The Acts also disallowed unlawful deductions from
wages.
These laws were not finally repealed until 1986, though amended in
1960 by Payment of Wages Act. The law on unlawful deductions is
now found in Employment Rights Act 1996.
truck tokens Tokens for small amounts of money issued by companies and other
organisations in 18th and early 19th centuries. Partly this was to fill the
gap from a lack of low value coins. Employers soon realised the value
of paying workers in coins which could only be used in their own
shops. This practice was ended by the Truck Acts 1831 to 1940 which
required workers to be paid in coins of the realm.
true and fair The main criterion which accounts must legally meet in the UK and
Republic of Ireland.
The duty became part of UK company law in Companies Act 1948
s149. It was adopted by the European Union in the Fourth Council
Directive 78/660/EEC.
Statement of Principles for Financial Reporting says in para 10:
“The concept of a true and fair view lies at the heart of financial
reporting in the UK and the Republic of Ireland. It is the ultimate test
for financial statements and, as such, has a powerful, direct effect on
accounting practice. No matter how skilled the standard-setters and
law-makers are, it is the need to show a true and fair view that puts their
requirements into perspective.”
Points to note about “true and fair” include:
● its scope changes over time;
● it requires financial statements to contain information
“sufficient in quantity and quality to satisfy the reasonable expectation
of the readers to whom they are addressed” (Statements para 12).
The exact meaning of this expression was the subject of a legal
opinion from Martin Moore QC in 2008 in the light of recent
developments in accounting standards. He confirmed the centrality of
“true and fair” in accounting standards as set out in previous opinions
by Dame Mary Arden in 1993 and by Lord Hoffman and Arden in
1983.
true and fair view Requirement of UK company law for UK companies not using IASB
system.
true and fair view Requirement in Companies Act 2006 s393.
true bill Old term for something of which there is sufficient evidence.
The term comes from the practice of the criminal assize of
confirming that there was a true bill, which meant enough evidence to
hear a case.
true copy Exact copy. It is common practice for an accountant or lawyer to certify
a photocopy of a document as being a true copy to enable a person to
open a bank account or otherwise prove his identity.
true gravity The gravity of beer calculated in accordance with regulations produced
by the Commissioners. The true gravity is accepted as the gravity for
the purpose of calculating beer duty.
true odds In gambling, real odds of something happening as opposed to what the
bookmakers offer.
Trueblood Report The report whose proper title is Objectives of Financial Statements
published by the American Institute of Certified Public Accountants in
1971. It determined the conceptual framework on which future
American accounting standards were based.
trust (1) Arrangement whereby one person holds property for the benefit of
another.
A trust requires three parties:
• a settlor, who provides the trust property;
• trustees, who legally own that property; and
• beneficiaries, who are entitled to the beneficial interest of the
trust property.
It is possible for two (but not all three) parties to be the same. So a
trustee may also be a beneficiary, for example, though there are
additional ethical requirements in such cases.
A trust also requires trust property, which is money, property or
other assets.
An authoritative definition is “an equitable obligation, binding a
person (called a trustee) to deal with property (called trust property)
owned by him or a separate fund, distinct from his own private property
for the benefit of persons (called beneficiaries or, in old cases cestuis
que trust), of whom he may himself be one and any one of whom may
enforce the obligation: any act or neglect on the part of a trustee which
is not authorised or excused by the terms of the trust instrument, or by
law, is called a breach of trust.” (Law of Trusts and Trustees, by
Underhill and Layton).
HMRC gives “a simple definition from a legal viewpoint” in the
inspectors’ manual at TSEM1010:
“A trust is a disposition of property to a person (trustee) or persons
jointly (trustees) in whom the legal title then vests in the confidence
that the benefits will be applied to the advantage of one or more other
persons (beneficiaries) or some other object permitted by law.”
A more complex definition is: “‘A trust… is the relationship which
arises wherever a person called the trustee is compelled in Equity to
hold property, whether real or personal and whether by legal or
equitable title, for the benefit of some persons (of whom he may be
one…) or for some object permitted by law in such a way that the real
benefit of the property accrues, not to the trustee, but to the
beneficiaries or other objects of the trust’ (Law of Trusts, 9th edition –
Professor Keeton).
Capital gains tax implications are given in Taxation of Chargeable
Gains Act 1992 s65.
(2) In the USA, the word means a monopoly.
trust company In USA, an organisation which supervises the financial arrangements of

private trusts. It also acts as a private bank and provides a limited range
of other services to a small group of customers.
trust corporation Company set up primarily to act as a trustee. Such companies are often
subsidiaries of banks and insurance companies.
A trust corporation can act alone in areas which would otherwise
require two trustees, such as giving a valid receipt for selling land.
trust deed (1) A legal document which establishes and governs the operation of a
trust. Although not a legal requirement, a deed is usual for all but the
simplest trusts or those created otherwise (such as by a will).
(2) In Scotland, a voluntary arrangement for payment of creditors by an
insolvent person.
trustee Person who holds property in trust for the benefit of another.
In general, a trustee may be any adult aged 18 or over, or any other
form of legal person, such as a limited company. A trust corporation
often acts as a trustee.
There must be at least one trustee, but there is no upper limit. For
land, the minimum is two individual trustees though a trust corporation
may be a sole trustee. For a trust of land, the maximum is four trustees.
The duties of trustees are largely set out in Trustee Act 2000 in
addition to the trust document. This replaces the previous Trustee

Investments Act 1961 even for existing trusts.
The main provisions of the 2000 Act are that:
• trustees now have a statutory duty of care,
• trustees can in some case be remunerated,
• trustees have a statutory power to insure trust assets,
• trustees may settle debts or negotiates their terms,
• there are wide powers of delegation from trustees,
• previous restrictions on investments are relaxed.
trustee de son tort Person who interferes in a trust without authority. He can made liable as
if he were a trustee.
trustee in bankruptcy Insolvency practitioner who deals with the property of a bankrupt.
trustee insurance Insurance which protects the trustees or equivalent of a church against
them personally when the trustees were acting in good faith.
trustee powers The rights of trustees.

These are first laid down by law, particularly in Trustee Act 1925,
Trustee Investments Act 1961 and Trustee Act 2000. These basic
provisions are often extended or amplified in the trust deed.
trustee savings banks (TSBs)

British financial institutions which accepted deposits from poorer
people who could not open accounts with the main banks.
These banks were created from 1817. At that time, bank failures
were common when depositors lost all their funds held by the bank.
TSBs were strictly regulated in that they could only invest funds in
government bonds or deposits with the Bank of England.
To promote their use, interest on deposits was free of income tax up
to a limit.
Collectively, the TSBs were of equivalent size to the main banks,
but they did not compete as each served a particular area.
In 1975, all remaining TSBs were nationalised into one Trustee
Savings Bank. This merged with Lloyds Bank in 1995.
trustee’s return Statement which trustees are required to make under Taxes
Management Act 1970 s8A to HMRC to allow the trust’s tax liability to
be determined.
trustees’ expenses Expenses of members of a trust’s body. This figure must be separately
trusteeship Art, practice and law of being a trustee.
trust for a bereaved minor (TBM)

Trust where the beneficiary is bereaved and under 18.
New trusts from 22 March 2006 are not accumulation and
maintenance trusts, but generally come within the relevant property
regime. The TBM is an exception.
A TBM is created:
• under the will of the deceased parent of the minor,
• under a statutory trust arising on intestacy, or
• under the Criminal Injuries Compensation Scheme.
Such a trust qualifies as an 18-25 trust provided all the capital and
accumulated income passes outright to the beneficiary at the age of 18
or earlier. There is no inheritance tax charge if the assets are paid out
before the beneficiary is 18, and a reduced charge if aged between 18
and 25. The special gift relief of Taxation of Chargeable Gains Act
1992 s260 is available.
trust for ecclesiastical purposes

Special trust for a specified church-based purpose (such as maintaining
the churchyard) for which special legal provisions apply.
trust for saying masses Trust established to say masses for the deceased, particularly in the
Roman Catholic church.
As there is no personal beneficiary, this is a trust of imperfect
obligation unless the mass is public.
trust for the disabled A trust that is taxed as an interest in possession trust and not as a
discretionary trust. These provisions were introduced from 22 March
2006 when most IIP trusts became discretionary trusts.
trust fund Money that is owned by trustees for the benefit in beneficiaries.
Trust funds may be nominal trust funds or substantive trust
funds.
trust instrument Document by which a trust is created. This is most commonly a will or
a trust deed.
trust management expenses

These are generally allowabled under both trust law and tax law.
Guidance on tax law is discussed in the Inspectors’ Manual from
TSEM8000 to TSEM8790.
trust of imperfect obligation

Trust with no human beneficiary (such as maintaining a grave), which a
trustee may administer but cannot be compelled to do so.
trust of life assurance policies

A trust whose settled property is a life assurance policy. Such trusts are
often created to insure a life without the proceeds becoming part of the
insured person’s estate, to provide funds to pay inheritance tax, or (in
the form of single premium bonds) to defer tax liability to a time when
a lower rate is payable while allowing the settlor to receive funds.
From 22 March 2006, such a fund is regarded as a discretionary
fund.
trust or company service provider (TCSP)

Firm or person who provides the services of company formation,
directorship, registrar, business trustee, recruitment agency or personal

service company. Such a business may, from 1 April 2008, be required
to register with HMRC under laws on money laundering.
trust period Period for which a trust is allowed to exist. Charitable trusts may live
for ever. Other trusts have a maximum life of 80 years. A trust deed
may identify default beneficiaries who are entitled to the trust fund
when the trust ceases to exist.
trust property Property held by a trust. It is owned by the trustees for the benefit of
the beneficiaries.
trust rate Rate of income tax payable by certain trusts.
trusty system System used in prison labour whereby trusted prisoners were given
oversight of their fellow workers. The term particularly applies to the
system used in Mississippi from 1903 to 1971.
TTC Tax Type Code - numeric code identifying the type and rate of VAT
and Customs and Excise duties payable. See Tariff Volume 3 Appendix
C7 for more information.
TTP Time To Pay - an arrangement under which HM Customs and Excise

agrees to accept payment of an outstanding debt (for VAT, for
example) in instalments; or to allow a moratorium on payment. There is
no legal entitlement to time-to-pay: it must be applied for in writing and
each case is judged on its own merits.
tuition assistance Benefit in kind provided to an employee whereby the employer pays all
or some of the cost of the employee receiving tuition.
tunnage and poundage Two traditional taxes that were put on a statutory basis in 1658.
tunnel A tunnel is specifically included in the definition of industrial

building.
turkey For VAT purposes, turkeys for eating are zero-rated, but ornamental
turkeys are standard-rated. VAT notice 701/15 defines the former as
including Beltsville White, British White, Broadbreasted White,
Bronze, Norfolk Black, and derivatives and crossbreeds of these.
turn Difference between the rates for equivalent services. For example, if a
bank leads at 7% and pays interest at 3%, its turn is 4%.
TURN Trader’s Unique Reference Number.

This is used to identify an importer numerically. It is normally
based on the trader’s VAT registration number, with a three digit
extension.
turnover The sales of a business or other form of revenue from operations of the
business. Turnover is also called sales, revenue and similar. It is the
first item in a profit and loss account.
“In relation to a company, means the amounts derived from the
provision of goods and services falling within the company’s ordinary
activities, after deduction of:
(a) trade discounts,
(b) value added tax, and
(c) any other taxes based on the amounts so derived”
(Companies Act 2006 s539) in relation to audit.
Turnover is relevant is many areas of tax. These include:
• whether the business must register for VAT;
• whether it can claim some of the special provisions for small
and medium-sized enterprises;
• whether the business must pay corporation tax or VAT by
instalments.
For income tax and corporation tax purposes, turnover includes
irrecoverable VAT (such as on cars, personal expenditure and when the
business is not VAT-registered), but excludes recoverable VAT.
turnover tax Any tax which is calculated according to a business’s turnover.
turnpike trust Trust which creates a toll road.
TV licence Licence required under Communications Act 2003 s363 and

predecessor legislation to use a television. As this relates to a specific
service, it is not usually regarded as a tax.
TVBS Trade value at balance sheet.

The value of an item as trading stock at the day the trader makes up
his balance sheet. This is widely used in the second-hand car trade.
For the purposes of income tax and corporation tax, TVBS may be
used to value cars accepted in part exchange.
twenty pound note Legal tender bank note for £20 issued by the Bank of England.
The current version is Series F issued on 13 March 2007, and
depicting the economist Adam Smith.
The previous Series E note was issued on 22 June 1999 and
withdrawn on ..... It depicted the composer Sir Edward Elgar.
The Series D note was issued on 5 June 1991 and withdrawn on 16
March 2001. It depicted the scientist Michael Faraday.
Previous issues of “white” £20 notes were withdrawn on 31 May
1979.
The current £20 note has a purple square on it to assist those with
poor sight.
two-year discretionary trust

A discretionary trust that lasts for between three months and two
years to exploit the provisions of Inheritance Tax Act 1984 s144.
This disapplies the exit charge otherwise payable by a
discretionary trust, provided that there has been no interest in
possession. Any distribution made during this period is, in effect,

backdated to the date of death.
U
UAP Upper accruals point, for national insurance.
UB Unemployment benefit.
uberrimae fidei Latin: of utmost faith.

The term indicates exceptions to the general rule that a party to a
contract need not make any disclosure to the other party. An uberrimae
fidei contract may be voided if all relevant disclosures are not paid.
Such contracts include insurance, family settlement, partnership,
suretyship and allotment of shares.
ubi aliquid conceditur, conceditur et id sine quo res ipsa esse non potest
Latin: where anything is granted, that is also granted without which the
thing itself is not able to exist.
ubi eadem ratio ibi idem jus

Latin: like reasons make the law.
ubi jus ibi remedium Latin: where there is a remedy there is a right.
UBR Unified business rate.
UCITS Undertakings for collective investments in transferable securities.
UCR Unique Consignment Reference - a reference, allocated by the Customs

Freight Simplified Procedures (CFSP) authorised trader to each import
or export consignment, which can be used to trace the consignment
through all the trader's records.
UEL Upper earnings limit (for national insurance).
UITF Urgent Issues Task Force.
UITF abstract Statement from Urgent Issues Tax Force which has the force of an
accounting standard.
UK United Kingdom, England, Scotland, Wales, Northern Ireland,

(including The Isle of Man but not the Channel Islands or Gibraltar).
UK approval certificate In relation to taxation of company cars, this is defined in Income Tax
UK ASB system The accounting standards and company law applicable to corporate
reporting by UK companies that do not report under the IASB system.
UKBA United Kingdom Border Agency.
UK-based earnings Term used in Income Tax (Earnings and Pensions) Act 2003 s25 to
describe income which arises from UK employment by a person who
also has chargeable overseas earnings.
UK Border Agency (UKBA)

Body set up on 1 April 2008 to protect the UK from import of illicit
goods. Before 2008, this was undertaken by HMRC or Customs.
HMRC retains responsibility to taxes on imported goods.
UK financial instrument “Means a financial instrument that is admitted to trading on a market in

the United Kingdom” (Financial Services and Markets Act 2000
s131C(6)).
UK furnished holiday lettings business

Term used in Corporation Tax Act 2010 s65 in relation to a furnished
holiday lettings business conducted by a company.
UK-linked Tax term for a description of debt subject to tax provisions in Income
Tax (Earnings and Pensions) Act 2003 s33.
UK net debt In tax, a figure that is used in relation to worldwide debt cap as set out
in Taxation (International and Other Provisions) Act 2010 Part 7.
UK(NOR) Not ordinarily resident in the UK.
UKOITC United Kingdom Oil Industry Taxation Committee
UK permanent establishment
In context of loss relief for companies, “any permanent establishment
through which [a company] carries on a trade in the United Kingdom”
(Income and Corporation Taxes Act 1988 s403G(6)).
UK property business loss “A loss made in a UK property business in the surrender period”
UK related company Company that is UK-resident or trades in the UK through a permanent

establishment (Corporation Tax Act 2010 s134). The term is relevant
for consortium relief.
UK sector of the continental shelf

”The areas designated under section 1(7) of the Continental Shelf Act
1964” (Income Tax (Earnings and Pensions) Act 2003 s41(2)).
UK Transit A procedure for moving goods under customs control when import or
export formalities are carried out away from the place of importation or
exportation, and the movement does not involve another European

Union (EU) Member State. Also know as National Transit.
UK Uncut Tax protest movement in UK.
UL Upper limit.
ULSD Ultra Low Sulphur Diesel
ULSP Ultra Low Sulphur Petrol.
ultimate holding company Holding company which owns a company and all its other parent
companies. So if A owns B who owns C who owns D, A is the ultimate
holding company of B, C and D, each of whom must state this fact in
their published accounts.
ultima voluntas testatoris est perimplenda secondum veram intentionem suam

Latin: effect is to be given to the last will of a testator according to his
true intention.
ultra low sulphur diesel

A more environmentally-friendly replacement for Diesel Engine Road
Vehicles (DERV) with a much lower sulphur content.
ultra low sulphur diesel oil

“Means gas oil:
(a) the sulphur content of which does not exceed 0.005 per cent
by weight or is nil;
(b) the density of which does not exceed 835 kilograms per
cubic metre at a temperature of 15ºC; and
(c) of which not less than 95 per cent by volume distils at a
temperature not exceeding 345ºC” (Hydrocarbon Oil Duties Act 1979
s1(6)).
ultra low sulphur petrol Unleaded petrol of which: (a) the sulphur content does not exceed 0.005
per cent by weight or is nil; and (b) the aromatics content does not
exceed 35 per cent by volume.
ultra-mobile personal computer (UMPC)

Very small and light personal computer.
ulta-violet feature Security feature of Bank of England notes.

If a modern note is put under a light with a frequency around 365
nanometres, the value of the note will appear in red and green.
ultra vires Latin: beyond the power.

The term refers to an act in excess of the authority of the body and
which is therefore void.
umbrella contract Term used for a contract that covers more than one provision. A
common example is in the cleaning industry when an umbrella contract
covers the time when the worker is working and the time between
assignments.
umbrella scheme Authorised unit trust where participants’ contributions are put into
separate pools and where the participant may transfer between pools.
The capital gains tax implications are set out in Taxation of
UMGO Unmarked Gas Oil
UMKO Unmarked Kerosene
Umst Abbreviation of Umsatzsteuer.
Umsatzsteuer (Umst) German term for “value added tax”.
unable or virtually unable to walk

Term used in determining the amount of mobility component that may
be paid to a claimant for disability living allowance. Someone who
meets this condition qualifies for the higher rate of mobility component.
The claimant must be either unable to walk at all, or be very limited
in distance, speed or time for which the claimant can walk. The higher
rate may also be claimed where, although walking is possible, the
exertion in doing so is detrimental to the claimant’s health.
For speed and distance, the law sets no formal limits. In practice,
though, this can mean a maximum limit of 50 metres a speed of 60
metres per minute.
Someone who has no feet because both legs are missing from above
the ankle qualifies for the higher rate, even if they are able to walk
using prostheses.
unadjusted trial balance Trial balance which has not been adjusted to reflect the usual end-of-
year adjustments such as for depreciation, accruals, prepayments and
closing stock.
unallocated cash Entry on a statement recording money received from a customer which
has not been allocated against outstanding invoices.
unallocated precious metals

Term used for a special provision of VAT law. There is a supply if a
buyer has the right to call for delivery but has not been allocated any
particular metal. The scheme originally applied just to gold, silver,
platinum and palladium. From 1 December 1994, it also applies to
rhodium, ruthenium, osmium and iridium.
unallowable purpose test Provision in Corporation Tax Act 2010 s684 (as inserted by Finance
Act 2010) that may disallow tax relief for a transaction in securities.
unapportionable central overheads

Costs that do not relate to a single service or services, and so are held
centrally rather than in a cost centre.
unappropriated profits Profits which have yet to be allocated as dividends or retained profit.
unappropriated surplus Term used in Income and Corporation Taxes Act 1988 s444AL(3) in
relation to the taxation of mutual life assurance business.
unaudited Description of accounts which have yet to be audited. Such accounts

may be issued on a provisional basis provided it is stated that they are
not audited. Unaudited accounts may not be put to members of a
company or organisation for approval.
unauthorised Description of anything which has been done without the proper
authority.
unauthorised deduction In employment, any deduction from an employee’s pay which is not
authorised by the employee or by law. Under Employment Rights Act
1996 s13, such a deduction is unlawful even if the employee owes
money to the employer.
unauthorised employer payment

Payment by a registered pension scheme that is an occupational pension
scheme to or in respect of a sponsoring employer or a former
sponsoring employer which is not an authorised employer payment, or
anything which is treated as being an unauthorised payment to a
sponsoring employer or former sponsoring employer under Part 4 of
Finance Act 2004.
unauthorised licensable activities

Offence of carrying on a licensable activities without the necessary
licence (Licensing Act 2003 s136).
unauthorised member payment

Payment by a registered pension scheme to or in respect of a member or
a former member of that pension scheme that is not an authorised
member payment, or anything which is treated as being an unauthorised
payment to or in respect of a member or former member under Part 4 of
Finance Act 2004.
unauthorised overdraft Overdraft which the bank has not agreed in advance but is prepared to
allow, usually at a high interest rate and with hefty bank charges.
unauthorised payments charge

Tax due under Finance Act 2004 s208 on either unauthorised member
payments or unauthorised employer payments. The rate of tax is 40% of
the unauthorised payment.
unauthorised payments surcharge

Tax due under Finance Act 2004 s209 that is paid in addition to the
unauthorised payments charge.
The tax is due where total unauthorised payments go over a set limit
in a set period of time of no more than 12 months. The rate of tax is

15% of the unauthorised payments, giving a total tax charge of 55%.
unauthorised purchase When an employee or equivalent ostensibly buys goods or makes a

contract without authority.
unauthorised shares Term used in Income and Corporation Taxes Act 1988 Sch 10 para 6 in
relation to profit-sharing schemes.
unbalanced Not balanced. Description of accounts where the figures do not add up
as they should. This indicates an error.
An unbalanced figure may be accepted if:
● the difference is small;
● there is no reason to believe that the difference is from two
larger amounts;
● there is no reason to believe that the difference indicates a
failure to keep proper records; and
● the cost of finding the difference is disproportionate to the
amount involved.
unbanked Description of cash and cheques in someone’s possession waiting to be

paid into a bank account.
unborn widow Problem that once arose under the law for perpetuities.
A person may leave estate to a son then living, then to his wife (not
yet known), and then to their children. The wife may not even be born
at the time, and may outlive other beneficiaries by more than 21 years.
Before the law changed in 1964, such a bequest would be void.
uncalled Amount of share capital which the shareholder has yet to contribute. A
share may be sold for £2 payable in calls of 70p, 70p and 60p. If only
the first call has been paid, the uncalled balance is £1.30 per share.
uncalled share capital This term is defined in Companies Act 2006 s547 with the words “and
uncalled share capital is to be construed accordingly”. The rest of the
section defines called share capital. The presumption therefore is that
uncalled share capital is any share capital that does not come within the
statutory definition of called share capital.
uncle Relation. Either a parent’s brother or the husband of a parent’s sister.

Tax law sometimes regards uncles as within the scope of relations
for connected persons purposes. An example is dispositions for
inheritance tax.
uncleared cheque Cheque that has been issued but not cleared by the bank.
uncleared effects Payment made into your bank but which has yet to appear on the bank
statement.
uncommercial trade Trade which is not run on a commercial basis, such as a hobby. Losses
from such activity may not be offset against other profits (Income Tax
Act 2007 s66).
unconsolidated Accounts of individual companies within a group which have yet to be

put together as consolidated accounts.
unconsolidated subsidiary
Subsidiary company whose accounts have yet to be consolidated with
other group companies into consolidated accounts.
uncovered bear Someone short selling a security which he does not own in the
expectation of being able to buy it later at a lower price.
uncrystallised funds Funds held in respect of the member under a money purchase
arrangement that have not as yet been used to provide that member with
a benefit under the scheme (so have not crystallised), as defined in
paragraph 8(3) of Schedule 28 to the Finance Act 2004. These are
defined differently for cash balance arrangements. Here it is what funds
there would be if the member decided to draw benefits on a particular
date not the funds actually held in the cash balance arrangement at that
time..
uncrystallised funds lump sum death benefit

A lump sum benefit paid from a money purchase arrangement
following the death of the scheme member before the age of 75 (and
within two years of that date of death) from any uncrystallised funds the
member held in that arrangement at the point of death, and as defined in
paragraph 15, Schedule 29 to the Finance Act 2004.
UNCTAD United Nations Council on Trade and Development, an organisation

within the United Nations. It is primarily responsible for promoting the
integration of developing countries into the global economy in ways
that lead to sustainable development.
undated Description of anything which bears no date, such as a document whose

origin is not known or a financial instrument with no set date for
redemption or realisation.
undated bond Financial instrument which has no maturity date. Such a bond may
usually be redeemed at any time of the bearer’s choice.
unde nihil labet Latin: whence she has nothing. The term was mainly used before 1860
in respect of a widow’s rights to property.
undercapitalised Description of a business or venture which has insufficient capital. Such

a business may survive and eventually prosper but is likely to struggle
in its early years because of its problems of managing with insufficient
resources.
undercharge Charge less than the amount properly required.
under-hedged Description of a risk for which there is insufficient hedging. Where

there is a part of a risk transfer scheme, it may be caught by anti-
avoidance regulations in Finance Act 2010 s46 and Sch 16.
underlease Lease from a tenant to a subtenant.
underlying inflation Rate of inflation which ignores some identified factors. The term is
most commonly used to describe the retail prices index but excluding
mortgage repayments. This is known as RPIX.
under-resourced Lacking sufficient resources to perform a task properly.
underspend Spending less than was intended or permitted.
understandability Qualitative characteristic of financial statements, understandable by

users. It is one of the four qualities of accounting information required
by Statement of Principles.
understate Express a figure at less than its true amount. This may arise from
caution or from a desire to represent a result as being better than it
would otherwise appear.
undertaking (1) Any business or commercial operation. This term is favoured in

recent accounting standards.
An official definition is “a body corporate, a partnership or an
unincorporated association carrying on a trade or business with or
without a view to profit” (FRS 2 para 16).
(2) Promise given, particularly one which is legally binding.
(3) The business of funeral directors.
undertaking to make good any tax loss

Term used in Income Tax (Earnings and Pensions) Act 2003 s61C(5) in
relation to managed service companies whose meaning is obvious.
under the plough Description of farm land which is used to produce crops, including
fields which are currently fallow.
undervaluation Valuation of an asset at less than its true worth, such as when a bank
undervalues a property to justify a higher rate of mortgage interest.
undervalued (1) In accounts, description of an asset which is stated at less than its
full value.
(2) In human resources, description of a person who is (or who feels)
not properly appreciated.
underwrite Accept responsibility for something, particularly someone who agrees

to make up a loss if a venture raises insufficient money.
underwriter A technician trained in evaluating risks and determining rates and

coverage for them. The term derives from the practice at Lloyd's of
each person willing to accept a portion of the risk writing his name
under the description of the risk.
underwriting An agreement by a fund manager to buy any unsold new issue of shares
in exchange for a fee.
underwriting Where an insurance company takes into account known facts like your
age, sex and health, in order to assess the likelihood of you making a
claim on the policy. Your insurance premiums are calculated after
taking these factors into consideration.
underwriting bar The amount to which the benefits pertaining to a member of a group
insurance scheme may increase without the need for further
underwriting.
underwriting decision A decision made by insurance underwriters based on evidence supplied.

In group insurance, it is often used to refer to decisions pertaining to
individual members based on medical evidence.
underwriting fee Fee charged for the services of underwriting.
underwriting syndicate Group of people who combine to provide underwriting services.
underwriting year “Means the calendar year” (Finance Act 2007 Sch 11 para 3(9)).
undifferentiated income When income from more than source is regarded as coming from a
single source.
undischarged bankrupt Person who is bankrupt from which he has not yet been discharged. He
is under severe restrictions.
undistributable profit Net profit of a business which cannot be distributed as dividend or other
distribution.
undistributable reserve Fund held by a business which it may use for its business but which
cannot be distributed to shareholders. It is usually the same as a capital
reserve.
For net asset restriction, the term is defined in Companies Act
2006 s831(4).
undistributed profit Net profit which a company has decided not to distribute as dividends
to shareholders but to keep as retained profit.
UNDP United Nations Development Programme, a programme of United

Nations.
Its goals include the reduction of poverty, hunger, disease,
illiteracy, environmental degradation, and discrimination against
women.
undrinkable sediment This is produced in cask conditioned beer.

Customs notice 226 explains that beer duty is relieved on this
sediment. There is no set procedure for determining the amount, though
the supplier must satisfy Customs that the method used is fair. A
publican to whom such beer is sold must be notified of the quantity of
beer on which duty has been paid.
Customs do not accept that there is undrinkable sediment in
polypins, mini-pins or bottle-conditioned beer.
undue influence Persuading someone to make a contract in a manner which goes beyond
what is lawful.
unearned income Income which is regarded as not being derived from the efforts of the
recipient. In its later years, the term investment income was usually
preferred.
Historically such income was subject to income tax at a higher rate
until the abolition of investment income surcharge from 6 April 1984.
Since then much unearned income has become taxed at lower rates than
earned income. The distinction is now largely irrelevant.
Earned income included all forms of investment income, rent,
licence fees and royalties (unless the taxpayer created the work).
unearned premium That portion of a premium already received by the insurer for which
protection has not yet been provided.
UNECE United Nations Economic Commission for Europe - one of the regional
commissions of the United Nations. UNECE was established in 1947
and it currently has fifty-five member states. Its main goal is to
encourage greater economic co-operation between member states,
mainly through the development of conventions, regulations and
standards.
UNEDIFACT United Nations Electronic Data Interchange for Administration,

Commerce and Transport - more commonly know as Electronic Data
Interchange for Administration, Commerce and Transport (EDIFACT).
unemployment benefit (UB)

Old social security benefit, now replaced by jobseeker’s allowance.
It was introduced on 5 July 1948 when the rate for a man was £1 6s
(£1.30) a week.
UB was payable after three waiting days for up to 312 days in any
one period of interrupted employment. It was a requirement that the
claimant had paid sufficient class 1 national insurance.
unemployment compensation
US equivalent of jobseeker's allowance or unemployment benefit. The
compensation is paid under the US law of Social Security Act 1935.
Each state is responsible for its own programme subject to federal
guidelines.
unexhausted child trust fund business loss

Term defined in Finance Act 2007 Sch 7 para 83(3) in relation to
carrying forward unused non-pension business loans.
unexhausted individual savings account business loss

unexhausted life reinsurance business loss

unexhausted overseas life insurance business loss

unexpired cost Net book value of a fixed asset which has yet to be written off to the
profit and loss account as the expense of depreciation.
unfair competition Competition to a business which is on unfair terms, such as when a

competitor does not incur necessary costs of complying with the law.
unfair contract term A term in a contract which is unenforceable either because it seeks to
avoid liability for death, or because it is unreasonable. This provision
applies under Unfair Contract Terms Act 1977 but only where the term
appears in a standard contract issued by a business, and the customer is
a consumer.
unfair contract terms A printed term in a consumer contract which the business person seeks
to impose on the consumer.
Under Unfair Contract Terms Act 1977, such a provision is of no
effect if the contract term seeks to:
● avoid liability for death or personal injury (s2);
● avoid liability when the business is at fault (s3);
● unreasonably indemnify a third party (s4);
● restrict statutory liability for faulty goods (s5).
unfair dismissal dismissal of an employee for an improper reason.
unfair relationship New Consumer Credit Act test from 6 April 2007, whose non-
compliance can make an agreement unenforceable.
unfair relationship between creditors and debtors

Provisions of Consumer Credit Act 1974 s140A where a consumer
credit agreement contains terms unfair to the consumer.
unfavourable Description of a departure from a budgeted or forecast figure which is

to the financial disadvantage of the business.
unfavourable variance Variance from the budget which is to the financial detriment of the
business, such as lower sales or higher costs.
unfinished beer Beer that is not yet ready to drink but where beer duty may be payable
unified business rate (UBR)

(1990-today) A replacement for the rates as charged to businesses. The
main change was that the rate was set nationally by the government to
stop local authorities imposing punitive rates on businesses, who have
no vote, rather than on individuals. The government redistributes the
business revenue.
unified management “Unified management does not arise solely because one undertaking
manages another” (FRS 2 para 12). See managed on a unified basis.
unified tax System of income tax used from 1973. This replaced the previous
system of allowing some income to be tax-free with a less complicated
system of taxing all income above various allowances.
Uniform Certified Public Accountant Examination

Examination that must be passed to become a certified public
accountant in the USA.
An accountant qualified in another country may qualify by sitting
the international qualification examination.
uniform rate Term for basic rate of income tax used between 1894 and 1906.
unfunded debt Debt which requires no particular measures for its repayment. The term
is commonly used for short-term borrowing where the amount is
recoverable from an insurance claim.
ungeared Description of the capital of a business which has no borrowings.
unguaranteed residual value

Amount of residual value of a lease asset whose realisation is not
certain.
uniform Clothing of a colour and distinctiveness as to make the wearer’s

function readily identifiable. So uniforms are worn by police, nurses,
waitresses, shop assistants etc.
Provided the clothing is not everyday wardrobe items, its cost is
tax-deductible. The leading case is Mallalieu v Drummond [1983]
57TC330. The matter is explained in the Inspectors’ Manual at
BIM37910. The manual gives as examples a nurse’s uniform and
waiter’s tailed coat.
uniform accounting policies

Use of the same accounting policies by different businesses.
uniform business rate Another name for unified business rate. [check]
uniform resource identifier (URI)

In computing, a string of characters that identifies a name or resource
on the Internet. An example is the ISBN number used to identify
published books.
Uniform Simultaneous Death Act

A law enacted in some states of the USA to counter the law of
commorientes. The law was first passed in 1940.
The main provision of the will is that commorientes is disapplied
when two people die within 120 hours (five days) of each other. Either
commorientes or this Act may be disapplied by the will, such as in a
Titanic clause.
unilateral agreement Agreement made by one party who made an offer to anyone. This can
establish a valid contract, as was held in Carlill v Carbolic Smoke Ball
Co [1893].
unincorporated Description of a body which is not legally recognised as a separate

entity from its owners, such as unlimited company.
unincorporated association
Body formed by individuals where the individuals remain fully liable
for the debts of the body.
uninstall In computing, a facility for removing a piece of software from a

computer.
uninstalling Removing software from a computer.
union consultation Discussion between an employer and trade union, particularly as

required by Trade Union and Labour Relations (Consolidation) Act
1992 s188 when 20 or more members are to be made redundant.
union learning representative

A trade union official whose function is to identify and help meet the
learning needs of its members. Such an official has the right to paid
leave for his work under Trade Union and Labour Relations
(Consolidation) Act 1992 s168A.
union recognition Recognition of a particular trade union for the purposes of collective
bargaining by a particular employer. Such recognition is given by the
Central Arbitration Committee. The recognition may be compulsory
(imposed on employer) or voluntary (agreed with employer).
unique device identifier “An electronic equipment identifier which is unique to a mobile
wireless communications device” (Mobile Telephones (Re-
Programming) Act 2002 s1(2). It is an offence to change this identifier
or to possess equipment which can do so.
unique identifier Number engraved on back of photocard driving licences for security.
unique tax A one-off levy imposed in 1404.
unique tax reference (UTR)

Number allocated by HMRC to a taxpayer which should be quoted on
all correspondence and tax returns. It typically comprises two sets of

five-digit numbers.
unique users Unique users refers the number of distinct individuals, as determined by
unissued capital Capital which a company is authorised to issue but has not done so.
unissued stock Capital which a company is authorised to issue as stock (in the meaning
of equity capital) but has not done so.
unit (1) A single amount of an item, particularly one of an item offered for
sale.
(2) Premises or single entity which occupies it.
(3) Holding in a unit trust.
(4) Measure of extra pension added to state retirement pension under
the graduated pension scheme which ran between 1961 and 1975.
unit holder Person who holds a unit in something, such as a unit trust.
The term is used in Commonhold and Leasehold Reform Act 2002
s12 to mean someone who holds a commonhold unit.
unit cost Cost of making a single item.
unite Gold coin worth 20s minted between 1604 and 1612, worth 22s
between 1612 and 1619, and 20s again between 1625 and 1662.
United Kingdom Oil Industry Taxation Committee

A trade organisation representing the interests of the UK oil industry.
United Kingdom securities

“Any securities issued by or on behalf of Her Majesty’s Government in
the United Kingdom or the Government of Northern Ireland and any
securities of a body corporate incorporated in any part of the United
Kingdom” (Taxes Management Act 1970 s24(4)).
United Kingdom means Great Britain and Northern Ireland” (Interpretation Act 1978
Sch 1). This definition was created on 12 April 1927.
United Kingdom England, Wales, Scotland and Northern Ireland.
United Nations An international organisation that acts as a forum for discussion and
regulates international relations. Head offices are in Geneva and New
York.
United States Navy Exchange (USNX)
unit holder Person who holds units in a unit trust.
unit-linked endowment A fixed term savings plan with an element of life cover. Your savings
go into an underlying fund of investments like shares and the eventual
return you get depends on the performance of these investments.
unit-linked insurance Insurance which is linked to the performance of a unit trust.
unit load Any load, including groupage, which leaves the approved premises as a
single, identifiable unit intended for exportation.
unit price Price of a single item.
uniting of interests Term used in some international accounting standards for merger
accounting.
unit of account Defined unit of a medium of exchange. The commonest medium is

currency, where the unit of account is the denomination of the
currency, such as the pound or dollar.
unit of account (1) Currency or its equivalent which is used for accounting purposes.
(2) The type or size of packing in which the goods are sold, for example
packets of 20 cigarettes.
unit of production (1) Single item produced from a factory or similar.

(2) Method of calculating depreciation based on the number of
saleable items it is expected to produce during its estimated economic
life.
unit rated A Unit rate is often used in determining the premium for large (more
than 20 lives) group insurance schemes. In this basis of costing, the
Unit Rate is applied to the total benefits provided under the scheme.
The rate is determined with reference to banded membership data and
other underwriting adjustments. For group life insurance the rate is
usually expressed per £1000 of death benefit and for dependants
pensions per £100 of insured pension.
unit trust A trust set up as a pooled investment fund. The portfolio of investments
is unitised in order to allow investors to buy and sell units.
Chargeable Gains Act 1992 ss99-103A.
Unit trusts were subject to stamp duty before 16 March 1988.
unit trust investment duty (UTID)

Stamp duty that was abolished from 16 March 1988.
unit trust scheme manager

One of the following:
(a) a person who has permission under Part 4 of the Financial
Services and Markets Act 2000 to manage unit trust schemes authorised
under section 243 of that Act, or
(b) a firm which has permission under paragraph 4 of Schedule 4 to
the Financial Services and Markets Act 2000 (as a result of qualifying
for authorisation under paragraph of that Schedule; Treaty firms) to
manage unit trust schemes authorised under that section.
Unity Pools Football pools during the war where the various companies combined
for the duration.
universal agent Person who has been given authority to act as agent for another person
on all matters.
universal credit Name introduced by the government in 2010 as the replacement for a
raft of means-tested social security benefits.
universal dummy The code QQ999999 that must be used by a paying agent when
reporting savings income that does not have its own identification
reference number for the security involved. Use of this number will
lead to the paying agent being audited by HMRC.
universal service order Order which may be imposed by the Secretary of State under
Communications Act 2003 s65 regarding obligations on provider of
radio, telephone and similar services.
universal service provider (USP)

For postal services, Royal Mail. Its status as USP allows its services to
be exempt from VAT, though this was restricted from 31 January 2011.
UNIX Computer operating system, popular for running servers on the Internet.
unjust enrichment Concept in VAT under which a trader cannot claim back VAT if it
would “unjustly” enrich the trader, such as when claiming back output
tax on goods which are retrospectively held to be subject to a lower rate
of VAT, when that tax cannot be passed on to customers.
This provision was tested by Marks and Spencer in the Great
Teacakes Case, more properly known as Marks and Spencer plc v
Customs and Excise [2000] and subsequent years.
There is no converse concept of unjust impoverishment.
unjustifiably disciplined Any action taken by a trade union against a member for not taking part
in industrial action and similar as described under Trade Union and
Labour Relations (Consolidation) Act 1992 s65. The member has the
right not to be so disciplined under ibid s64.
unlawful Against the law. The term is sometimes distinguished from illegal in
that the former means that the action attracts no penalty.
unlawful deduction from wages

Deduction from wages for a reason which is not permitted.
Only these items may be legally deducted from wages:
● income tax and national insurance;
● contributions to an occupational pension scheme of which
the employee is a member;
● corrections of an overpayment on a previous payslip, subject
to conditions;
● attachments of earnings which been authorised by a court or
other authority;
● amounts which are authorised by the contract of

employment;
● amounts which the employee authorised before the
deduction was made; and
● retail deductions for shortfalls of stock or cash in the retail
trade.
It should be remembered that any other deduction is unlawful even
if the employee owes the money. An employee may take a claim to an
employment tribunal for an unlawful deduction.
In particular, an employer has no right of sight-off against wages
such as for such items as damage caused to company property or
amounts outstanding for purchases from the company.
unlawful dismissal Dismissal of an employee in an improper manner, such as not by giving

notice or warnings.
unleaded petrol Petrol which contains less than 0.013 grams of lead per litre. The limit
was 0.020 grams before 1 April 1990.
unlimited Not limited, particularly as for a company.
unlimited company A company where the liability of its members is not limited
unliquidated claim Claim for an amount which has yet to be determined or agreed.
unlisted company Limited liability company whose shares are not listed on any stock
exchange.
unlisted securities Shares and other securities which are no listed on a stock exchange.
unmarked gas oil Heavy oil of which not more than 50% by volume distils at a
temperature not exceeding 240 degrees C and of which more than 50%
by volume distils at a temperature not exceeding 340 degrees C.
Unmarked gas oil does not contain the prescribed markers quinizarin
and Solvent Red 24.
unmarked kerosene A heavy oil of which more than 50% by volume distils at a temperature
not exceeding 240 degrees C, but which does not contain the prescribed
marker coumarin. Unmarked kerosene is usually called AVTUR or
aviation turbine fuel, as it is used in aircraft engines.
unmarried couple For pension credit, “means a man and a woman who are not married to
each other but are living together as husband and wife other than in
prescribed circumstances” (State Pension Credit Act 2002 s17(1)).
unmeasured work One of the four bases for determining whether the national minimum
wage (NMW) regulations have been followed.
It applies only to those workers for whom none of the other bases is
appropriate. This happens when a person is engaged to complete a
project regardless of how long it takes.
Compliance with NMW regulations requires either a record of

hours actually worked to be kept and the NMW paid for those hours, or
for a daily average agreement.
A daily average agreement states the average number of hours the
worker is expected to work each day. This must be agreed in advance
with the worker in accordance with government guidelines.
uno flatu Latin: with one breath.
unpaid contributions National insurance contributions that have not been paid when they
should have been. The offences are dealt with in Social Security
Administration Act 1992 from s119.
unpaid expense Bad debt for which a trade had claimed tax relief when it ceased trading
(Income Tax Act 2007 s99(1)). Should the debt subsequently be paid it
is treated as a qualifying payment and becomes taxable.
unpaid invoices Invoices which the recipient has yet to pay.
unpaid seller A seller of goods who has provided the goods as required under the
contract and has either not been paid the whole price, or where payment
was made by a bill of exchange which has not been honoured (Sale of
Goods Act 1979 s38(1)).
Under s39 of the Act, an unpaid seller has the right of seller’s lien
on any goods still in the seller’s possession, a limited right of re-sale,
and the right to stop goods in transit. These are in addition to his right
to sue for payment.
unpaid work requirement

Element of a criminal sentence that an offender must perform unpaid
work (Criminal Justice Act 2003 s199).
unpressured Ethic of allowing counselling to proceed at its own natural pace.
unprofitable Description of an activity or business which cannot be run at a

reasonable profit.
unprotected trust deed In Scotland, a trust deed which is not registered and therefore does not
stop a creditor starting sequestration proceedings.
unqualified report Report by auditor or examiner which discloses no concerns.
unquoted company Company whose shares are not listed on a stock exchange.
In the contest of employee-controlled companies means “a company
none of whose shares is included in the official UK list” (Income Tax
Act 2007 s397(6)).
unquoted shares Shares which are not listed on a stock exchange.
unquoted status requirement

Requirement that entitlement to tax relief under the Enterprise
Investment Scheme depends on the company not being listed on a

stock exchange (Income Tax Act 2007 s143 and s184).
Similar provision for VCT relief (Income Tax Act 2007 s295).
Similar provision for share loss relief (Corporation Tax Act 2010
s85).
unrealisable gains Apparent increase in the value of an asset which cannot be turned into
cash.
unrealised Gains and losses representing changes in values of assets and liabilities
that are not realised through sale or use.
unrealised capital gain Investment or asset which has grown in value but has not been turned
into cash.
unredeemed pledge Pledge which a borrower has made but has not redeemed. An example
is when a personal item is pledged or pawned, and the person cannot
raise the cash to redeem the pledge to get it back.
unregistered Not on a central register. This commonly refers to the register of

companies or the VAT register.
unregistered friendly society

Such a body is exempt from tax under Income and Corporation Taxes
Act 1988 s459 provided its income does not exceed £160 a year and it
has claimed exemption.
unrelated expenses Term sometimes used to mean expenses incurred by a business for a
non-business purpose.
unrelieved general annuity business

Term used in Finance Act 1991 Sch 7 para 17 in relation to taxation of
annuity business.
unrelieved loss Loss where no tax relief has been obtained for the current tax year and
which therefore may be carried forward to future years (Income Tax
Act 2007 83(2)).
unremitted foreign securities income

Foreign securities income as defined by Income Tax (Earnings and
Pensions) Act 2003 s41A that has not been remitted to the UK.
Chargeable Gains Act 1992 s119B.
unrestricted fund Fund which a charity may use for any purpose, unlike designated
funds or restricted funds.
unrestricted income Income which a charity or other non-commercial body may use for any
purpose. There is no restriction imposed by the donor.
unsatisfactory goods Goods sold to a consumer that do not meet the statutory requirement of
being satisfactory.
unsecured creditor Person to whom money is owed under an unsecured loan.
unsecured creditors Those who have no claim against particular assets when a company is
wound up, but must take their turn for any share of what remains.
unsecured debt Debt which is not pre-preferential, preferential or secured. Most debt
comes into this category.
unsecured loan Loan which is not secured on any asset. If the loan is not paid, the
lender cannot seize any of the debtor’s property.
unsecured pension Payment of income withdrawals direct from a money purchase

arrangement, or income paid from a short-term annuity contract
purchased from such an arrangement, to the member of the arrangement
(who is aged under 75) and that meet the conditions laid down in
paragraph 6 and 8 to 10 of Schedule 28 to the Finance Act 2004.
unsecured pension fund Funds (whether sums or assets) held under a money purchase
arrangement that have been 'designated' to provide a scheme member
(who is aged under 75) with an unsecured pension, as identified in
paragraph 8 of Schedule 28 to the Finance Act 2004. Once sums or
assets have been 'designated' as part of an 'unsecured pension fund' any
capital growth or income generated from such sums or assets are
equally treated as being part of the 'unsecured pension fund'. Similarly
where assets are purchased at a later date from such funds, or 'sums'
generated by the sale of assets held in such funds, those replacement
assets or sums also fall as part of the 'unsecured pension fund' (as do
any future growth or income generated by those assets or sums).
unsecured pension fund lump sum death benefit

A lump sum benefit paid from a money purchase arrangement
following the death of the scheme member before the age of 75 from
any unsecured pension fund the member held in that arrangement at the
point of death, and as defined in paragraph 17, Schedule 29 to the
Finance Act 2004.
unsocial hours Hours when most people prefer not to work.

This typically includes nights, weekends and public holidays.
Working unsocial hours often attracts a premium.
unsolicited “Means, in relation to goods sent to any person, that they are sent
without any prior request made by him or on his behalf” (Unsolicited
Goods and Services Act 1971 s6(1)).
unsolicited participants In psychology and similar disciplines, people who are unaware that they
are taking part in an experiment.
unsubsidised Description of a price which represents the real cost of producing the
goods and services plus the supplier’s profit. No payment or subsidy
has come from the government or other source.
untraceable member A member of a registered pension scheme who cannot be traced prior to
their 75th birthday.
untrue declaration False declaration for Customs purposes. It is an offence for which
penalties are prescribed by Customs and Excise Management Act 1979
s167.
unused allowance Allowance which has not been wholly utilised. The term commonly
applies to tax allowances which have not been used in one tax year but
could be utilised in another year.
unused exemption Amount of relocation expenses available for offset of bridging loan
expenses, as explained in Income Tax (Earnings and Pensions) Act
2003 s288.
unused non-pension business loss

unused relief Relief against income tax which a person has not wholly utilised,
particularly the married couple's allowance for older taxpayers. Income
Tax Act 2007 s51 provides limited scope to transfer unused relief.
UPOV Convention International convention on plant variety rights. Customs may seize
goods that infringe these rights.
upfront fees One of the hallmarks of a tax planning scheme of which taxpayers are
advised to be wary.
upper accruals point (UAP)

Limit in class 1 national insurance, above which contributions cease
to count towards any entitlement.
The point is fixed at £770 a week, with no intention of changing it
so that the earnings band between the earnings threshold and UAP
will gradually reduce over the years.
upper earnings limit (UEL)

The maximum earnings on which National Insurance contributions are
payable by employees at the full rate. Above UEL, employees pay the
additional rate.
upper limit (UL) Term is particularly used for the limit at which the full rate of
corporation tax is payable. Details are given in Corporation Tax Act
2010 s24. This figure was introduced in 1973 at £40,000, and has been
£1.5 million since 1994.
Upper Tribunal Higher of the two levels of tribunals introduced from 2009.
The Upper Tribunal hears appeals from the first-tier tribunal, and
will also first hear more complex issues.
UR Repayment User - a person who has been individually authorised and

approved to reclaim the excise duty on duty-paid oil put to eligible use.
urban regeneration company

Body set up by the government to assist in urban regeneration.
Contributions to such companies are tax deductible under Income and
Corporation Taxes Act 1988 s79B.
Urgent Issues Tax Force Body which prepares accounting abstracts to deal with narrow
accounting issues, usually particularly topical ones.
URI Uniform resource identifier.
URTI Upper respiratory tract infection. Common abbreviation for sick notes
(HMRC leaflet E14).
US United States (of America).

This abbreviation is often used as an adjective, as in “US reports”. It
is also used to indicate US law reports.
usage Rate or amount by which a commodity is used.
usage method Method of calculating depreciation. It calculates the total amount of

use an asset is likely to get during its estimated useful life, and
calculates the depreciation as the proportion of that usage for the
period.
usage segmentation Dividing users of a product or service according to their usage of that
product or service. The classification is usually a simple one, such as
heavy, medium and light.
USB datastick Small device, usually about 7 cm long and 1 cm wide, with the standard
rectangular USB connector for computers. Such datasticks can now
hold many gigabytes of data. HMRC generally accepts data submitted
on a USB datastick. It should be realised that HMRC then destroys the
datastick rather than return it.
use class order In planning law, a category of development for which planning
permission may be given. Once permission for that category is given
any subsequent occupier of those premises may use those premises for
any activity within the use class order without needing to obtain any
further permission. For example, shops are A1 use. So a shop selling
sweets may become a clothes shop without needing any further
permission.
used solely as a dwelling Term used for capital gains tax with regard to a taxpayer’s home, or
part of a home. This removes that part from the scope of business
premises useful economic life Period over which a fixed asset is
expected to last and over which it is therefore depreciated.
use it or lose it Aphorism for budget lapsing.

It refers to the practice of removing any unused budget allocation. It
has the disadvantage of encouraging unnecessary spending.
use of the money raised requirement

Condition which must be satisfied in terms of the purposes of funds
raised by a share issue for investors in that issue to obtain tax relief,
such as for EIS relief under Income Tax Act 2007 s175, or for VCT
relief under s293. The requirement is broadly that at least 80% of the
funds must be used for the business.
user Someone who uses something.

In marketing, this refers to the ultimate customer of the product as
against the immediate customer.
In law and personnel, the term often means a user of illicit drugs.
Colloquially the term means someone who cultivates friendships
primarily for what can be got out of them.
user friendly Description of a computer program which can easily be used with little
instruction.
User ID An automatically-generated identity which is used together with a

password to log onto the Government Gateway or HM Customs and
Excise web sites.
user name Customer’s name or a nickname in a form recognised by a computer,

such as johnhiggins, johnsmith47 or madman. A customer may not use
a name already in use. The user name is usually entered with a
password.
user’s guide Book or other instructions supplied with a product, explaining how to
use it.
Usher Leading case on the remoteness test for allowability of expenditure.

The full name is Usher’s Wiltshire Brewery Ltd v Bruce [1914]
BIM37200.
USM Unlisted Securities Market.
USNX United States Navy Exchange, an organisation which operates shops

and other establishments supplying goods and services to United States
Navy personnel around the world. See also: Army and Air Force
Exchange Service.
USP Universal service provider.

[This abbreviation is also widely used in marketing to mean Unique
Selling Point.]
usury In Old Testament, (generally) the charging of interest on a loan to

relieve poverty. Today the word usually means extortionate interest.
uterine Born of the same mother but not of the same father.
UTI Urinary tract infection. Common abbreviation for sick notes (HMRC
leaflet E14).
UTID Unit trust investment duty
utilities Basic services provided to a household, such as gas, electricity, water

and telephone. Also, the companies that provide such services.
utilisation Process of making use of something.
utmost good faith The principle of insurance which requires a proposer to give all relevant
information to the insurer.
It is also known by the Latin name uberramei fidei.
UTR Unique tax reference.
ut res magis valeat quam pereat

Latin: it is better for a thing to have effect than to be made void.
This principle was set out in Roe v Tranmarr [1757].
UTR reminder Request to HMRC by a tax agent for the UTR of a client. HMRC
advises that this should normally be sought from the client. If,
exceptionally, that is not possible, HMRC will confirm the UTR to an
authorised agent, but not by telephone or fax.
utter In forgery, attempt to pass off something false as genuine.
utter barrister A barrister who is not a Queen’s Counsel.
UUS Company’s unappropriated surplus from 2003. The abbreviation is used

in Income and Corporation Taxes Act 1988 s444AK in relation to the
tax implications of mutual life assurance business.
UUT Unauthorised unit trust.
V
v Versus, against. Used in names of court cases such as Pepper v Hart to
separate the names of the parties.
V (1) Suffix for a tax code. This indicates that the taxpayer is entitled to
the married age allowance for someone born before 6 April 1935.
vacant possession Description of a building where there are no sitting tenants. Such a
building has a higher value than one where the are tenants.
vacation Process by which a tax assessment is reduced to zero.
vacation bank An employee’s allotment of annual leave.
vague Insufficiently detailed in description.

A vague clause can invalidate a contract or a legacy. Whether a
clause is too vague is ultimately for the courts to determine.
Vallambrosa Early case on whether expenditure is capital or revenue. The full name
is Vallambrosa Rubber Company Ltd v Farmer [1910] 5TC529. The
matter is discussed in the Inspectors’ Manual at BIM35305. This related
to the expenditure on the first five years of looking after rubber trees
before they are able to produce rubber.
Valor Ecclesiasticus Latin: church valuation.

Survey made by Henry VIII in 1535 on all churches in England,
Wales and parts of Ireland regarding their value. This was used to tax
them. One consequence of this was the chancel repair obligation that
still exists today.
valuation Process of ascribing a monetary value to an item.

For property, Carried out by a professional surveyor to establish
how much the property is worth and whether it is suitable to lend a
mortgage on. There are 3 types of valuation that can be done, a basic
valuation, homebuyers report or full structural survey.
Variable rate
A rate that can move up or down at any time. Usually linked to changes
in the Bank of England Base Rate.
valuation assumptions In pensions and other areas, assumptions about a person.

benefits and a date are assumptions if the person has not reached
such age (if any) as must have been reached to avoid any reduction in
the benefits on account of age, that the person reached that age on the
date, and that the person’s right to receive the benefits had not been
occasioned by physical or mental impairment.
valuation expenses The extent to which such expenses are tax-deductible is discussed in the
Such expenses are generally tax-deductible if made for stock-taking,
producing annual accounts or insurance claims. They are generally not
deductible for company reconstructions or probate.
value The worth ascribed to an asset, person or organisation. A value must

always be made on the basis of certain assumptions and circumstances.
value added Additional value which is acquired to an asset or service when it passes
from one person to another.
value added tax (VAT) Tax on the supply of goods and services.
It is imposed by Value Added Tax Act 1994 s1(1):
“(a) on the supply of goods or services in the United Kingdom
(including anything treated as such a supply),
(b) on the acquisition in the United Kingdom from other member States
of any goods, and
(c) on the importation of goods from places outside the member States”.
It was introduced in the UK on 1 April 1973 as a replacement for
purchase tax and selective employment tax.
The tax may only be charged by registered traders. Traders with
turnover above the registration threshold must register; other traders
may do so.
VAT is charged at the standard rate (currently 20%) unless the
supply is specifically zero-rated, reduced-rated or exempt.
value added statement Simple financial statement which explains how a business has acquired
its wealth. It is additional to all other financial statements.
value declaration Statement that may be required in relation to customs duty on imports
of a large value.
value in use “The present value of the future cash flows obtainable as a result of an
asset’s continued use, including those resulting from the ultimate
disposal of the asset” (FRS 7 para 2).
value market That part of the retail sector which sells the more expensive and
luxurious items.
The value market is vulnerable to adverse market conditions as
customers economise on luxuries first. Conversely, the value market is
the first to recover when economic conditions improve.
value proposition Collection of tangible and intangible benefits claimed for a product.
value-protected annuity An option which became available from 6 April 2006 for those with a
private pension.
This is a normal annuity but with the additional provision that if the
member dies before the age of 75 (or at any lower age chosen by the
member), a sum will be paid to the member’s estate so that the total
payments equal the value of the pension fund at retirement.
Suppose a man retired at 65 with a pension fund of £100,000 and
dies at 72 having received seven years’ pensions totalling £49,000. The
balance of £51,000 is paid to his estate, from which 35% income tax is
deductible.
valuer Person whose job is to ascribe values.
value received by the investor

When an investor receives any benefit from a company in which he has
invested and claimed EIS relief. This can result in some of the relief
being withdrawn under Income Tax Act 2007 s213 unless the amount is
a receipt of insignificant value.
value shifting One of several types of tax avoidance scheme that aims to shift value in
an asset to reduce the taxable gain on it. Provisions to counter such
schemes are given in Taxation of Chargeable Gains Act 1992 s29ff.
value to the business An idea used in deciding on a measure of current value.
van “A mechanically propelled road vehicle which:

(a) is a good vehicle, and
(b) has a design weight not exceeding 3,500 kilograms,
and which is not a motor cycle”
(Income Tax (Earnings and Pensions) Act 2003 s115(1) and s235(3)).
An employee who is provided with a van that may be used for
private journeys may be taxed on its notional value under Income Tax
Van den Berghs Leading case on whether payments are capital or revenue in nature. The
full name is Van den Berghs Ltd v Clark [1935] 19TC390. The matter
vanilla Simple and conservative, particularly in relation to financial products.

The term is an allusion to the common flavour of ice cream.
vanity publishing When an author pays for a publisher to publish his or her book.
For VAT, if the publisher sells the books to the author, the supply is
one of zero-rated books. If the publisher retains possession, it is
regarded as a mixed supply of zero-rated books and standard-rated
publishing (VAT notice 701/10).
Agreements have been reached with trade bodies on how to
apportion the supply. Details are given in VAT notice 700/57.
VaR Value at Risk, term used by the Financial Services Authority.
variable Description of a figure or amount which changes according to an

external factor.
variable cost Cost which varies according to the amount of production to which it
relates.
variable rate Rate which varies during a defined period, commonly an interest rate
which is linked to the base rate.
variance Difference between actual income or expenditure and the budgeted

figure.
variance accounting Another term for variance analysis.
variance analysis In management accounting, the study of where the actual figures differ
from budgeted figures.
variation Departure from what is expected.

In tax, any significant variation in income and expenditure patterns
may give rise to query from HMRC. It is advisable for taxpayers to
disclose particularly large or unusual variations on the tax return, such
as in the white space or in a covering letter.
variations of class rights Changes in the rights attaching to shares in a company. The legal
implications are set out in Companies Act 2006 ss630-640.
vastum Latin: waste.
VAT Value Added Tax
VAT 1 Form used to register a business for value added tax.
VAT 2 Form which must be completed by a partnership that wishes to register

for value added tax, in addition to form VAT 1.
VAT 20 Version of form VAT 1 written in Welsh.
VAT account A summary of the totals of output tax, input tax and net tax due for each
VAT period.
VAT and Duties Tribunal

An independent body that provided a method of dealing with disputes
concerning VAT, and both customs and excise duties. Its work has now
been taken over by tax tribunals.
VAT and excise penalty Penalty introduced from April 2010 for offences relating to VAT or
excise duty.
VAT charter Code of practice issued by Customs and Excise in 1992 regarding VAT.
VAT code Number which corresponds to a rate of VAT, such as 1 for standard-
rate, 2 for reduced rate etc. This number is entered against the product
code in an EPOS system so that the correct rate of VAT is charged
when the goods are checked out.
VAT declaration Statement at the end of a VAT return stating that the signatory
believes the information is correct.
VAT guide VAT notice 700 which provides general guidance on the operation of
VAT. The publication is available free from HMRC.
VAT inspection Visit by officers of HMRC to check on the correctness of VAT

returns.
VAT inspector Office of HMRC whose job is to check on the correctness of VAT
returns.
VAT invoice An invoice with a compulsory set of information given, by one VAT
registered person to another, when supplying standard rated goods or
services. VAT registered customers need a VAT invoice to reclaim, as
input tax, the VAT charged to them.
VAT invoice Invoice which shows VAT and meets the requirements of VAT
regulations.
VAT leaflet HMRC publication which gives guidance on a narrow area of VAT
which is too specialised for a VAT notice. They are numbered as
subsidiary to the VAT notice, in the form 700/9 (which deals with
transfers of a going concern). VAT leaflets are available free from
HMRC.
VAT notes Free HMRC leaflet which is automatically issued with VAT returns to
notify traders of recent changes in VAT law.
VAT notice HMRC publication which gives guidance on a broad area of VAT.
They have three-digit numbers starting with 7. The most important is
the VAT Guide, number 700. More detailed points are covered in VAT
leaflets. VAT notices are available free from HMRC.
VAT number Unique nine-digit number which identifies a business which is

registered for VAT. The number complies with an algorithm called the
rule of 97.
The VAT number must be quoted on all invoices, VAT returns and
correspondence about VAT.
VAT office Office of HMRC where a person is registered for VAT.
VAT Online An online service which will allow businesses to register for VAT,
amend their registration details and submit VAT Returns and payments
via the new HM Revenue & Customs website.
VAT Online Returns Service

A service where the customer can submit their VAT Returns
electronically.
VAT on-line service for agents

Service for agents who submit VAT returns for clients. The agent must
be registered with HMRC before being able to act. The agent need not
be VAT-registered himself or herself.
VAT package Term used for various European-wide changes in VAT law on 1
January 2010. These particularly relate to business-to-business supplies
being taxed in the country of consumption rather than the country of
supply.
VAT paid Description of a figure where the VAT due has already been paid.
VAT period Period for which a VAT return must be prepared. This is usually for
three months but can be for one month or one year.
VAT rate The rate at which VAT is charged on a supply.
VAT receivable Account for businesses which routinely reclaim VAT, usually because
their outputs are zero-rated.
VAT register List of all businesses registered for VAT.
VAT registration Process whereby a business is registered for VAT and given a
registration number.
VAT return reminder A VAT Return Reminder sent by email to inform customers (or clients,
if an Agent) that the VAT Online Return is due. This replaced the paper
VAT Return for VAT Online users.
VAT return A standard form completed at regular intervals by VAT registered

businesses, to declare VAT. It is signed and sent to HMRC.
VAT Returns for Agents Service A service for Agents allowing them to submit their client’s
VAT Returns online.
VAT schemes wizard HMRC-produced software that helps a registered VAT agent to decide
which VAT schemes are most appropriate for a client.
VAT-registered Description of a business which is registered with HMRC for the

purpose of charging value added tax (VAT).
VAT schemes wizard HMRC-produced software that helps a registered VAT agent to decide
which VAT schemes are most appropriate for a client.
V-C Vice-Chancellor.
V code Tax code for PAYE which has the suffix V.

This code is abolished from 6 April 2009. It applied to taxpayers
who were born before 6 April 1935 but who were not 75 by the end of
the tax year. As all taxpayers born by 5 April 1935 were 75 by the end
of the 2009/10, the V code is obsolete.
VCT Venture capital trust
VCT approval Approval by HMRC that a company is a venture capital trust (Income
Tax Act 2007 s259(2)).
VCT-in-liquidation The tax provisions for a venture capital trust in liquidation are set out in
Chapter 5 of Income Tax Act 2007, that is from s314. The term is fully
defined in s320.
VCU VAT Central Unit - responsible for sending out VAT Returns at regular
intervals to all registered businesses, receiving back the completed
returns and tax payments and for making repayments when they are
due.
VE Term used in Income and Corporation Taxes Act 1988 s444ABB for
calculating retained assets in determining profits for life assurance
companies. It is determined by figures entered on Form 14 completed
by such companies.
VED Vehicle excise duty.
vegetables These are usually zero-rated as food. Vegetable oils may also be zero-
rated “even if they are used as massage or cosmetic oils, provided they
are of a type and grade suitable for culinary purposes, and they do not
contain any substance, such as perfume, that would make them
unsuitable for culinary use” (VAT notice 701/14).
vehicle adaptation Change made to a vehicle, particularly one to allow a disabled person to
drive it.
Vehicle and Operator Services Agency (VOSA)
vehicle excise duty (VED) Tax charged for using a mechanical vehicle on a public road. VED is
paid in advance for 12 months or 4 months at a time. It is evidenced by
a circular tax disc which must be displayed on the vehicle’s
windscreen. Obtaining the tax disc is also a check that the vehicle is
insured and has a valid MOT certificate.
For vehicles first registered from 1 March 2001, VED is charged
according to the amount of carbon dioxide it emits. There were seven
bands indicated A to F, to which a seventh G was added from 23 March
2006. From 1 April 2009, there are 13 bands indicated by the letters A
to M. From 1 April 2010, there is a higher rate of VED for the first year
for the lowest four and highest six bands. This has been called the
showroom tax.
vehicle group Category of vehicle for some financial purpose. For example, in
determining AA running costs of cars, there are five vehicle groups
based on the original cost of the car.
vehicle identification number (VIN)
Unique number allocated by the Driver and Vehicle Licensing
Agency to every vehicle allowed to be on the road.
vehicle identity Defining characteristics of a vehicle. Repair does not change vehicle
identity but modifications or significant rebuild can. A change of
vehicle identity requires the vehicle to be re-registered.
vehicle identity check (VIC)

Scheme designed to prevent stolen or scrapped cars being resold.
vehicle registration Process of recording a vehicle with the central register run by the
Driver and Vehicle Licensing Authority. The registration is indicated
by the number plate. The registration to a particular individual is
shown in the registration certificate.
vehicle scrappage scheme Scheme which provides a sum to a person for scrapping an old car to
buy a new one.
In the UK, the scheme was introduced from 1 June 2009. It paid
£2,000 to anyone who scrapped a car at least ten years old and bought a
new one. Of this, £1,000 came from the government and the other
£1,000 had to come from the car dealer. The scheme was intended to
help the troubled car industry and to promote more environmentally-
friendly vehicles.
veil of incorporation Rule that a limited company has a separate legal identity from its
founder. This is a fundamental principle of company law. The case
commonly cited is Salomon v Salomon & Co [1897] which provides a
clear example of the principle already then well established. In some
cases, the court may be prepared to lift the veil of incorporation.
venditioni exponas Latin: that you expose for sale. An old writ that may be sought by a
sheriff who has seized goods that cannot be sold for the price expected.
vendor Seller, particularly of land.
venire de novo Writ issued by a court to a lower court requiring its erroneous verdict to
be vacated and for the matter to be retried.
ventilation For VAT, a supply of ventilation is treated as a supply of goods (Value

rated for other supplies. Details are given in VAT notice 701/19.
venture Commercial enterprise.
venture capital Money invested in a venture.
venture capital trust (VCT)

Form of tax-advantaged vehicle for investment in companies. It is
defined in Income Tax Act 2007 s259(1) as being not a close company
which is approved as a VCT by HMRC.
venture capital trust (VCT)

Tax-effective savings scheme of investing in unquoted companies. It
was introduced on 6 April 1995.

The scheme allows immediate tax relief equal to 30% of the sum
invested (this was 40% for 2004/05 to 2005/06, and 20% previously).
Also capital gains tax liabilities may be rolled over.
The shares must be held for five years (three years before 6 April
2006).
The VCT must be quoted on the Stock Exchange, invest at least
70% of its funds in unquoted companies, invest at least 30% of its funds
in new unquoted companies, and invest no more than 15% of its funds
in any one company. There are other conditions.
Capital gains tax law is contained in Taxation of Chargeable Gains
Act 1992 from s151A.
venue In law, a place where a trial or hearing is to take place. There are rules
about where the venue must be.
verba accipienda sunt speculum subjectam materiem

Latin: words are to be interpreted in accordance with the subject matter.
verba chartarum forties accipiuntur contra proferentem

Latin: the words of deeds are to be interpreted most strongly against
him who uses them.
verba cum effectu accipienda sunt

Latin: words are to be interpreted in such a way as to give them some
effect.
verba forties accipiuntur contra proferentum

Latin: words must be construed against those who use them.
verba generalia restringuntur ad habilitatem rei vel aptitudinem personae

Latin: general words are restricted to the nature of the subject matter or
the aptitude of the person.
verba intentioni, non e contra, debent inservire

Latin: words ought to be made subservient to the intent, and not the
other way round.
verba ita sunt intelligenda ut res magis valeat quam pereat

Latin: words are to be understood that the object may be carried out and
not fail.
verba relata hoc maxime operantur per referentiam ut in eis inesse videntur
Latin: words to which reference is made in an instrument have the same
operation as if they were inserted in the instrument referring to them.
verdict Answer of a jury on a question of fact.
vermouth Blended alcoholic liquor. If it has used the same name from before 4
May 1932, it is exempt from some provisions of Alcoholic Liquor
Duties Act 1979 s71(2)(b).
Vern Vernon’s Reports, Chancery law reports published from 1680 to 1719.
vertical communication Communication between different levels of staff, such as from senior to
junior staff.
vertical equity Principle that people with different incomes should pay different
amounts of tax.
vertical form Layout of a balance sheet which lists the assets and liabilities above
the funds which it represents, rather than beside them.
vertical integration Another term for backward integration.
Ves Jun Vesey’s junior Chancery Reports, law reports published from 1789 to
1817.
vested interest Special interest in keeping an existing state of affairs.
vesting Legal process by which ownership is transferred, such as in bankruptcy.
vesting assent Instrument whereby a personal representative vests land in a tenant for
life under Settled Land Act 1925 s117(1).
vestry Historically, the meeting of a parish to discuss matters of civil interest.

Such meetings are now largely replaced by various forms of local
council.
vexatious litigant Person who repeatedly brings legal actions. It is possible to get an order
against such a person who must then obtain permission from the court
before commencing any further legal actions.
VIC Vehicle identity check.
vicarious liability When one person is legally held liable for the actions of another.
An employer can be vicariously liable for actions of an employee,
an agent for a principal, and a parent for a child.
vice tax Colloquial name for a sumptuary tax on a product or service that is
seen as harmful or socially undesirable. Examples include excise duty
on alcohol and tobacco.
victim of theft Such a person has the right to object to his stolen property being sold
under a recovery order against a criminal (Proceeds of Crime Act 2002
s281).
vide Latin: see.
videlicet (viz) Latin: that is to say.
video evidence When evidence is presented in court by means of a pre-recorded

interview on video tape or similar (Criminal Justice Act 2003 s137).
video games machine For VAT purposes, this is regarded as an amusement machine (VAT
notice 701/13).
video games tax relief Relief due to be introduced in 2010 to provide similar tax relief for
British video games as for British films. The relief was scrapped on a
change of government.
VIES VAT Information and Exchange System - an intra European Union

(EU) system for providing information about sales made by traders
within the EU based on lists supplied by the traders to their own
authorities.
vi et armis Latin: with force and arms, a term used to mean trespass.
vigilantibus, non dormientibus, jura subveniunt

Latin: the laws give help to those who are watchful and not to those
who sleep.
VIN Vehicle identification number
vinegarisation Process of turning alcoholic drink to vinegar. It is one of the methods of

destruction of liquor and permits a refund of excise duty.
vinegar-maker Such a person is exempt from some of the legal restrictions of

manufacturing spirits without a licence (Alcoholic Liquor Duties Act
1979 s25).
vir et uxor censentur in lege una persona

Latin: husband and wife are considered one person in law.
virgin territory Colloquial term for an area where a business does not yet operate.
virtually to the exclusion of

Term used in inheritance tax in relation to gifts with reservation
(GWR) , where it is a condition that the gift is to the exclusion or
“virtually the entire exclusion” of benefit to the donor to avoid the
GWR provisions. HMRC has stated that this means that the benefit to
the donor is “small”.
Where a donor has given a house to a donee, HMRC accepts that
there is no GWR if the donor subsequently:
• stays with the donee for up to two weeks a year;
• stays at the house without the donee for up to one month a
year;
• makes purely social visits staying for one night;
• stays for a temporary reason, such as for medical care or
convalescence (of either donor or donee);
• stays for a domestic reason, such as baby-sitting;
• visits up to five times a year to use the library.
Other examples include using a donated motor car no more than

three times a month, or using donated land to ride a horse or exercise a
dog but not so as to restrict the donee’s use.
virual organisation Management term for an organisation structure seen from its
technology rather than people.
virtus post nummos Latin: virtue after money (quote from Horace).
virus Malicious program whose purpose is to damage computer data or

obstruct the operation of the computer.
Visegrad Countries A group of countries, comprising: Czech Republic; Hungary; Poland

and Slovakia.
vision print Photographic record of a document.

Vision prints are made of all paper VAT returns and may be
submitted as evidence when a paper copy is no longer available.
visiting forces A body, contingent or attachment of the armed forces of another

country, stationed in the UK on the invitation of the British
Government. They are generally exempt from UK income tax.
vis major Irresistible force such as earthquake. It is an excepted peril in a contract

of marine insurance.
viz Abbreviation of videlicet, Latin for “that is to say”.
VJ Voluntary jurisdiction.
VL32 Term used in Income and Corporation Taxes Act 1988 s444ABB in
relation life assurance companies. It refers to the figure entered in line
32 on Form 40 completed by such companies.
VLO Valuation Liaison Officer.
VLR Victorian Law Reports, published from 1875 to 1956.
VOA Valuation Office Agency.
vocation For income tax purposes, how “a person passes his or her life and
indicates a calling, although not necessarily one related to religion or
high-minded service to others. A bookmaker and a jockey have been
held to engage in vocations and authors, dramatists and professional
singers have all been dealt with by the Courts on the basis that they
carried on vocations.” (Inspectors’ Manual BIM14090).
void Of no legal effect. Such a contract is regarded as never having

happened. Any consideration provided must be returned.
voidable Agreement or other act which one party may choose to make void.
Until such an election has been made, the agreement remains legally
valid.
voidable marriage Marriage which could be declared invalid, usually because there has
been no consummation.
Such a declaration is regarded as an annulment which means that
the marriage is regarded as never having existed. However, for the
purposes of tax and benefits, the marriage is regarded as having existed
until the date of annulment.
void legacy Legacy that cannot legally be effected.
void marriage Marriage which is invalid because at least one of the partners was not
able to marry (such as being under age, already married or closely
related to the other person).
void period Period in which something did not happen, such as an unoccupied
rented property.
voiding key Provision in an EPOS system whereby a transaction can be cancelled

such as when a check-out operator makes a mistake while checking out
goods.
volatility The degree by which share prices in a particular stock market or sector
go up or down. Usually measured by the movement in a particular
index.
voldis Volume discount.
volenti non fit injuria Latin: that to which a man consents cannot be considered an injury.
This is the principle that a person may assent to injury or risk, but
not to their death.
Volstead Act In the USA, the National Prohibition Act that became the 18th
amendment to the US constitution. It prohibited liquor between 1920
and 1933 when repealed by the 21st amendment.
volume Quantity.
Volume Crime Not a technical term but normally refers to high incidence vehicle
crime, burglary and in some areas robbery.
volume discount Discount which is provided by a supplier to a customer who buys a

large quantity.
volume of output Number or amount of goods produced.
volume variance Variance between the actual quantity of goods produced and the
budgeted quantity.
voluntary Description of something done either out of free will or without

payment.
voluntary deduction from pay

A deduction from wages or salary which the employee has authorised.
Such deductions are often made to repay a loan, for trade union dues or
a subscription to a social club.
The authorisation must be made before the event which causes the
deductions. In the case Discount Tobacco & Confectionery Ltd v
Williamson [1993], the Employment Appeal Tribunal held that an
agreement to repay a deficiency of cash was unlawful deduction from
wages as the agreement was made after the deficiency arose. The
employer should bring proceedings in the county court.
An involuntary deduction is not permissible under Employment
Rights Act 1996. It should be noted that an employer may not deduct a
sum from wages just because the employee owes a sum to the
employer. An employee may appeal to the employment tribunal against
an unlawful deduction from wages, even if the sum is owed by the
employee to employer.
The authorisation must be genuinely voluntary. In the case Fairfield
Ltd v Skinner EAT [1992], the Employment Appeal Tribunal held that it
could look behind the ostensible reason to see if the authorisation really
was voluntary.
voluntary deregistration When a business choose to have its VAT registration cancelled. A
business must have a turnover below the deregistration threshold
which is different from the registration threshold.
voluntary disclosure A way of correcting errors discovered on a previous VAT Return.
voluntary liquidation Usually relates to an insolvent company and is started by a resolution of

its shareholders.
voluntary mutual Popular name for a mutual health insurer. Their tax treatment is
voluntary redundancy When an employee agrees to be made redundant from his work, usually
on the basis of a generous package.
voluntary registration When a person or business chooses to register, particularly when a

business registers for VAT even though its turnover is below the
registration threshold.
voluntary revision of accounts

In company law, procedure whereby the directors of a company may
issue accounts to replace those already published (Companies Act 2006
s454).
Such a revision is confined to correcting the accounts to the extent
that they did not previously comply with company law or accounting
standards.
voluntary scheme Pension or other benefit scheme in which the members choose the
extent and levels of benefits provided. These are normally schemes in
which members pay the contributions or premiums. For example, a
trade union or other affinity group may offer membership of a scheme
providing life assurance cover.
voluntary severance For public pensions, means “any other loss of office or employment”
that is not compulsory severance (Superannuation Act 2010 s3(6)(b)).
voluntary unemployment Voluntary unemployment exists when people have chosen not to work
because they do not feel that wages at the existing equilibrium are high
enough to justify them working. They may prefer instead to receive
benefits. Classical economists argued that any unemployment
remaining in the long-term would be voluntary as the economy would
automatically tend towards full-employment. The level of voluntary
unemployment is shown in the diagram below: The actual supply
represents those people who are willing to work at the existing wage,
whereas the potential is all those of working age who are available to
work. The distance shown by the arrow between the two represents
voluntary unemployment - those who have chosen not to work at the
equilibrium wage.
voluntary worker Someone who works for no payment, usually for a church, charity or
non-profit-making body.
There are some special provisions which relate to voluntary
workers.
They are not covered by Health and Safety at Work Act 1974,
which only applies to employees.
They do not have to be paid the national minimum wage (NMW).
They can be paid reimbursement of expenses. It should be noted that a
person cannot agree to be paid less than the NMW; they are either paid
the NMW or nothing.
voluntas testatoris est ambulatoria usque ad extremum vitae exitum

Latin: the will of a testator is ambulatory (changeable) down to the very
end of life.
volunteer Someone who agrees to work for an organisation without payment.

Such a person must be covered by public accident insurance, and may
be paid only genuine expenses.
volunteer reserve force “The Royal Navy Reserve, the Royal Marines Reserve, the Territorial
Army or the Royal Auxiliary Air Force” (Armed Forces Act 2006
s374).
VOSA Vehicle and Operator Services Agency.
voting rights in an undertaking

“Rights conferred on shareholders in respect of their shares, or, in the
case of an undertaking not having a share capital, on members, to vote
at general meetings of the undertaking on all, or substantially all,
matters. Schedule 10A [of Companies Act 1985] deals with the
attribution of voting rights in certain circumstances” (FRS 2 para 17).
voucher Any document which gives details of a financial transaction.
VR Victorian Reports, law reports published from 1870 to 1872, and from
1957.
VRN VAT Registration Number - a unique number allocated to a business on

registration for VAT.
VTL Abbreviation used in Income and Corporation Taxes Act 1988

s444ABB in relation to the taxation of life assurance companies. It
relates to the reserves on a transfer of business.
VVs Varicose veins. Common abbreviation for sick notes (HMRC leaflet
E14).
W
W Series of forms that must be used for excise duty purposes. For
example, form W21 is the quarterly distillery return.
W5000 Wilshire 5000, American share index.
wadiah Safe-keeping of valuables, as permitted under Islamic financing.
wafers For VAT purposes, wafers are zero-rated as food unless sold with ice
cream when they are standard-rated (VAT notice 701/14).
wager Promise to pay money on the outcome of an uncertain event.
wages This term includes wages and salaries and similar payments whatever
they are called. It also includes bonuses, commissions, holiday pay,
statutory sick pay, statutory maternity pay, statutory paternity pay,
statutory adoption pay, guarantee payments, payments made under
various employment laws, and payments made under an order for
reinstatement or re-engagement (Employment Rights Act 1996 s27(2)).
wages cost Cost of paying employees. This figure comprises the gross pay of
employees plus such direct costs as employers' national insurance,
employer’s contributions to occupational pension scheme and the cost
of providing benefits in kind. This cost if often the largest expense in an
organisation.
wages councils Bodies originally established by Trade Boards Act 1909 to ensure that
workers were not exploited by low wages. Their scope was
considerably extended in 1945. Their powers were restricted in 1986
before being abolished in 1993. Since 1999, the issue of law pay has
been addressed by the national minimum wage.
wages fund theory In economics, a theory that a country only has a finite amount of money
to pay wages, so the function of government is to determine an
equitable apportionment. This theory has long been discredited as it
ignores the ability of a worker to create wealth.
wages payable Account for the amount payable in wages and salaries. It is a credit
balance which is usually debited to zero when payment is made.
wages policy Policy an organisation adopts with regard to wages and salaries for its
employees.
waifs Stolen goods thrown away by a fleeing thief.
wait and see Term used for the new rules of perpetuities introduced in 1964.
Under the previous common law rules, a gift in a will to “the first of
my children to become a doctor” is void at common law (unless any
child was already a doctor at the time of the testator’s death). The
common law period was the lifetime of the settlor plus 21 years. It is
possible that a child would become a doctor after that period, or indeed
that no child would become a doctor. The 80-year rule introduced in
1964 allowed the opportunity to see if property could vest within the
stated period.
waiter Person who attends to customers in a restaurant. Originally the term

also meant a watchman or Customs officer, whose duties included
waiting for something to happen.
waiting day (WD) Day at the start of a period for which a social security benefit is not
payable. There are three waiting days for statutory sick pay and for
employment support allowance. This means that the benefit is
payable from the fourth day.
waiting list fee Fee payable to an organisation to go on a waiting list for membership.
For VAT, such a payment is exempt if:
• it is deducted from the first subscription or joining fee,
• the subscription is exempt from VAT, or
• it is refunded if the candidate is declined membership.
Otherwise the fee is regarded as part of the organisation’s income.
waiting period In connection with civil partnerships, means at least 15 days from when
a notice of proposed partnership is issued to when it may be registered
(Civil Partnership Act 2004 s11).
waive Unilaterally abandon a right or benefit.
waiver A unilateral abandonment of a right.

In insurance, it usually means an agreement by an insurer to
eliminate a specified pre-existing physical condition or specified
hazard.
waiver of debt Excusing a debt for reasons other than the financial position of the
debtor.
Such a waiver is not a bad debt and usually is not tax-deductible.
waiver of dividends Such a waiver in the 12 months before a dividend is declared means
that the dividend is not regarded as a transfer of value for inheritance
tax purposes (Inheritance Tax Act 1984 s15).
waiver of premium A provision that sets certain conditions under which an insurance policy
will be kept in full force by the company without the payment of
premiums.
waiver of remuneration When a director or employee decides not to accept payment due to him
or her for employment work done.
Amounts so waived are not included in the value of a person’s
estate for inheritance tax purposes (Inheritance Tax Act 1984 s14).
walking possession When a bailiff “seizes” goods but allows a person to retain use of them
until the debt is paid.
wall chart This item is not regarded as a map or chart for VAT purposes, and is
therefore not zero-rated under Value Added Tax Act 1994 Sch 8 Group
3. Further details are given in VAT notice 701/10.
wall panelling For tax, the case JD Wetherspoon plc v HMRC [2008] SpC 657 held
that wall panelling in a pub was not plant. This issue was debated at
length, implying that similar items could be held to be plant. The
deciding factor in this case was that the panelling was not exceptional.
Wall Street New York Stock Exchange, from the name of the road in Manhattan
where it is located.
walled garden Marketing term for area of services on interactive advertisements

transmitted on digital television. This area requires the viewer to take
some action, such as pressing the red button on the remote control.
WAN Wide Area Network.
waqf An inalienable religious endowment under Sharia law.

[It is also spelled wakf.]
wakf Alternative spelling of waqf.
war State of hostilities between two nations. Such a state has many legal
consequences.
war disablement pension For pension credit, this is defined in State Pension Credit Act 2002
s17(1).
ward of court Minor who is under the control of a court.
warehouse A place approved by HM Customs and Excise for the storage of goods
without the payment of certain duties or taxes which would normally be
due on those goods. The main types of warehouse are Customs
Warehouses; Excise Warehouses; and Customs and Excise
Warehouses.
warehouse capacity Amount of space available in a warehouse.
warehoused goods Goods placed under the customs warehousing arrangements.
warehouse receipt Document signed by a warehousekeeper certifying the ownership of

goods in the warehouse.
warehouse vat Spirits receiver that has been approved by HMRC as a place where
spirits may be stored as well as manufactured. If a vat is not so
approved, all spirits must be removed before a fresh manufacture starts.
warehousing fulfilment Service of providing warehouse and despatch services, as offered by

many businesses including Royal Mail.
warehousing system Arrangement agreed with HMRC or Customs which allows goods to be
stored in a warehouse before duty is paid.
war injury Payment may be made under Personal Injuries (Emergency Provisions)
Act 1939 s1.
war loan Government gilt issued to provide funds to pay for a war.
War Office Department of the civil service which became the Ministry of Defence
in 1964.
war pension State pension paid to the dependants of someone killed or injured on
military service.
warrant “An instrument that requires the issuer to issue shares (whether
contingently or not) and contains no obligation for the issuer to transfer
economic benefits” (FRS 4 para 17).
warrant (1) A security issued by a company, allowing you the right to acquire
ordinary shares.
(2) Order issued by a court requiring or allowing something.
warrant of attachment Warrant which allows goods to be seized.
warrant to cite In Scotland, an order for a debtor to attend court in sequestration

proceedings.
warrantee Person to whom a warranty is given.
warrantise Give a warranty.
warrantor Person who provides a warranty.
warranty Guarantee or promise. In contract law, a breach of warranty does not

usually allow the other party to claim specific performance nor to void
the contract, but usually does allow the party to claim damages.
warren In law, the right to kill rabbits and hares on a piece of land.
war service Service in the armed forces during war. Under various laws passed at
the time, such service usually counts as part of a person’s employment
for the purposes of building up a superannuation or pension entitlement.
war widow Woman whose husband was killed in a war.
war widow’s or widower’s pension

For pension credit, this is defined in State Pension Credit Act 2002
s17(1).
wash In finance, process of making money look different from what it was.
For spirits duty, “wort in which fermentation has begun. After
fermentation, the wash will form the raw material for the distillation
process” (Customs notice 39).
wash back “A vessel in which wort is collected and fermented into wash”
wash charger “A vessel in which wash is collected from the wash back for removal to
the still” (Customs notice 39).
wash-up Review of a meeting after it has finished.
waste In law, neglected land or deliberate damage to land and property.
waste-book Day book or journal in which financial transactions are recorded, prior
to their being entered in a real prime book of account.
wasted relief Term for unused relief in the context of a controlled foreign company.
The full definition is given in Income and Corporation Taxes Act 1988
Sch 26 para 4(4).
wasting asset Term for an asset which becomes exhausted in the course of use, such
as a mine, quarry or cemetery. In accounting terms, it is treated the
same as a fixed asset.
For capital gains tax, it has the most specific meaning of an asset
expected to be wholly consumed within 50 years (Taxation of
Chargeable Gains Act 1992 s44). This includes all vehicles, machines
and animals. Such an asset is exempt from the tax.
water For VAT, water is zero-rated when supplied to domestic premises under
Value Added Tax Act 1994 Sch 8 Group 2. It is standard-rated to
business premises from 1 July 1990.
The zero-rating extends to supplies of ice, steam, metered water,
and abstraction of non-potable water.
Zero-rating does not extend to distilled or deionised water, dry ice,
mineral and table water and infrastructure charges under Water Act
1989.
water bailiff Customs officer who inspects vessels as they reach or leave port.
watercourse Easement that allows for a flow of water over someone else’s land.
water gavel Rent paid for water or fishing rights.
watermark Image that can be seen on paper when held to the light.
Modern Bank of England notes use a watermark as a security
feature. A picture of the Queen can be seen.
water meter For VAT, costs relating to these meters are not within the scope of the
zero-rating for water (VAT notice 701/16). They may be zero-rated
when installed as part of a zero-rated construction.
water system For capital allowance purposes, is treated as an integral feature, which
waveson Floating wreckage or flotsam.
way-going crop Crop that is sown during one tenancy but cannot be harvested until after
the tenancy has expired. The first tenant often has the rights to the crop.
wayleave Right of way over someone else’s land for the purpose of moving
minerals.
WCA Work capability assessment.
WCO World Customs Organization - a multilateral body located in Brussels

through which participating countries seek to simplify and rationalize
customs procedures.
WD Waiting day.
WDA Writing down allowance.
WDM Worldwide Dispatch Manager, a postal service.
WDV Written down value.
wealth Money and assets which represent money. Wealth is the capitalisation
of productivity.
wealth tax Tax imposed on how much a person is worth. The UK has no such tax.
weapons Customs are likely to seize any offensive weapons carried by a traveller
to the UK.
wear and tear Cost of using a fixed asset, recognising that fixed assets such as
machinery suffer minuscule amounts of wearing out every time they are
used. This has a cumulative effect until the machinery is unusable. In
financial accounting this is reflected in depreciation.
wearing different hats Term used where one person performs different functions in a
transaction or arrangement, such as when a settler is also a beneficiary
in a trust.
Such arrangements are legal, except that if the boundaries are not
properly observed and there is no good reason for the different hats, it is
possible that the trust will be regarded as a sham.
Weber, Max Business adviser (1964-1920) who developed the concept of

permanence of organisations and of bureaucracy.
website Place where information can be accessed on the Internet.

Websites that are particularly useful for tax practitioners include:
• www.hmrc.gov.uk the website for HMRC. It provides all
tax notices and other publications, most tax forms, press releases,
inspectors’ manuals and much other tax information
• http://www.statutelaw.gov.uk/ the Statute Law database.
This gives Acts of Parliament going back to the 13th century as
currently amended. It does not always include up-to-date versions of
tax legislation. The database includes some recent notes of how
legislation has changed
• http://www.opsi.gov.uk/acts the website for Acts of
Parliament and statutory instruments as originally enacted. This
includes all Acts from 1988 and a selection from 1837
• www.bailii.org.uk the website of British and Irish Legal
Information Institute. This gives full case reports (not just of tax cases)
of all decisions made by the High Court from 2002, and from the Court
of Appeal and House of Lords (now Supreme Court) from 2001. It also
gives details of many tribunal decisions.
• http://www.tribunals.gov.uk/Tax/ the website of the First
Tier tax tribunals. This gives all decisions of the tribunals since their
formation in April 2009, and details of predecessor bodies from April
2003. This includes Special Commissioners’ decisions under the
reference SPC.
• http://www.hm-treasury.gov.uk/ the website of HM
Treasury. It includes Budget and pre-Budget Reports, and details on
economic policy.
• http://www.dwp.gov.uk/ the website of the Department of
Work and Pensions, which gives details of social security and pensions
• http://www.ifs.org.uk/ the website of the Institute of Fiscal

Studies gives independent commentary on tax and economic issues,
particularly regarding policy.
website invoice Invoice which is produced on a website rather than as a separate

document. This is legal for all purposes, including tax and VAT,
provided there is adequate security and recording.
wedding gift A wedding gift made by an employer to an employee is tax-free.

According to inspectors’ manual at EIM00600, such a gift does not
arise from the employment and therefore is not taxable as employment
income.
A gift made in respect of a marriage is exempt from inheritance tax
up to a limit. This is £5,000 per parent; £2,500 from a remoter ancestor;
and £1,000 from anyone else. These figures remain unchanged from
1986.
For Customs, wedding presents are generally not subject to duty
when imported into the UK following a wedding, as explained in
Customs notice 3. Such goods may arrive in the UK up to two months
before or four months after the wedding. If security is charged on such
goods, it is refunded on proof of marriage.
week Period of seven days. For purposes of statutory sick pay and statutory
maternity pay, it is seven days starting on a Sunday.
week 53 In the PAYE system, the odd days at the end of the tax year after week
52.
As 52 weeks of 7 days gives 364 days, but a year always has 365 or
366 days, a payday falling on 5 April or (on 4 April in a leap year) is
regarded as being in week 53, for which there are special PAYE
provisions.
week’s pay Figure set by the government from 1 February each year used to
calculate redundancy pay and which is also used to determine how
much of a person’s wages rank as a preferential debt if the employer
becomes insolvent.
wef With effect from.
weighted age Another term for adjusted age. This is broadly a person’s actual age
with extra years added (or sometimes subtracted) to reflect their health.
This is used to calculate rates for life assurance. For inheritance tax, this
can be relevant in valuing a discounted gift scheme.
weighting (1) When a figure is multiplied by a factor to reflect its importance.

Social Fund budgeting loans use weighting.
(2) In payroll, additional sum paid for a specific reason, such as for the
additional cost of living in London.
welcome page Home page on a website, including HMRC’s.
welfare advice Service that may be reduced-rated for VAT under Value Added Tax
Act 1994 Sch 7A Group 9, as explained in VAT leaflet 701/2. Note that
is advice that is reduced-rated; welfare services may be zero-rated.
Reduced-rated welfare advice is “advice or information that directly
relates to the:
• care or protection of children or young people or
• physical or mental welfare of elderly, sick, distressed or disabled
people” (VAT notice 701/2).
Advice that relates to a specific person (of any age) is usually zero-
rated as welfare services.
welfare services Such services may be exempt from VAT under Value Added Tax Act
1994 Sch 7 Group 9. Other services may be reduced-rated under Sch
7A Group 9. VAT leaflet 701/2 provides more details.
Further information in this discretionary is provided in the entries
for:
care, treatment or instruction
children’s services
routine domestic tasks
significant pain or discomfort
spiritual welfare
welfare advice
welfarism View that management should be concerned for the welfare of its
employees and not just see them as units of production.
Welsh Assembly Common name for National Assembly for Wales
Welsh company “Company as to which it is stated that its registered office is to be

situated in Wales” (Companies Act 2006 s88(1)). Such a company has
the right to issue documents and returns in Welsh rather than in English.
WERS Whisky Export Refund Scheme.
wet trade Term used in the hotel and pub business to indicate the amount of
income derived from the sale of drink, both alcoholic and non-
alcoholic. This distinguishes income from other sources such as from
food, cigarettes and amusement machines.
what I did on my holidays

Colloquial term for a style of instructions from a client that resembles a
school essay. It usually reports matters in tedious chronological detail,
much of which is not relevant. Advisers are often better advised to look
at the paperwork and ask clients questions.
Wheat Report Report produced in USA in 1972 on the principles and methods for
setting American accounting standards. It led to the formation of
FASB.
whereabouts unknown Description of someone whose current address is known. There is a

specific tax provision for paying agents of savings funds for such
people. If the agent made payment, details must be reported but with
“whereabouts unknown” as the payee’s address. If no payment was
made, there is nothing to report. If arrears of payment when the address
is subsequently discovered, the payment of all arrears is reported for the
period of payment.
Whimster Leading tax case. It established that the correct method for determining
taxable trading profits is by bringing into account the opening and
closing stock at lower of net cost and market value (the latter has now
been replaced by net realisable value). The full case name is Whimster
and Co v CIR [1925] 12TC813. It is usually now seen in combination
with Threlfall v Jones. The cases are discussed in Inspectors’ Manual
at BIM33110.
whisky Alcoholic drink classified as a spirit for purposes of alcoholic liquor

duty. A fuller description is given in Customs notice 39.
Traditionally, Irish whiskey is spelled with an E.
Whisky Export Refund Scheme

A system of refunds on EC cereals used in the manufacture of whisky
for export outside the EU. Details are given in Customs notice 39.
whisky money Term used in 1889 for an additional tax imposed on whisky to fund
technical colleges to train workers in craft subjects.
white-collar worker Someone who works in an office, unlike a blue-collar worker who
works in a factory.
white diesel Diesel oil that does not contain any colouring agent, indicating that
hydrocarbon oil duty has been paid.
white fiver Common name for Bank of England £5 notes issued before 1957. They
were printed on one side of white paper. The notes were withdrawn
from circulation on 13 March 1961, though the Bank of England will
still exchange them for value.
white knight Person or organisation which rescues a company in difficulty,

preventing it being taken over by someone considered less desirable.
White Paper Government document setting out is policies and proposals in a

particular area.
white space The generally used term for the “other information” box on a tax return.
Disclosure of information in the white space can prevent or restrict
HMRC’s right of discovery. It can also reduce any penalties.
Whit Monday The day after Whitsun. It was a public holiday until 1971.
Whitsunday The Christian festival of Pentecost when the Holy Spirit came to the
early church. It is celebrated seven weeks after Easter.
It was a public holiday until [c 1971] when replaced by Spring Bank
Holiday. It was an old Scottish term day (the equivalent of English

quarter days until 1991) for which purpose it was defined as 15 May.
whole life insurance A life insurance policy providing payment on death, whenever this
occurs. Premiums may be payable throughout life, or for a shorter
period.
whole of life insurance Another term for whole life insurance.
whole of market adviser Financial adviser who gives advice on financial products offered by
every company in the market.
whole or part of a business

In tax, term used in connection with a disposal that qualifies for
entrepreneurs’ relief from capital gains tax. This relief was introduced
from 1 April 2008. The term was also used for retirement relief that
was phased out in 1998.
wholesale Description of goods which are traded in bulk, such as to retailers.
wholesale and retail distribution

wholesale and retail distribution

Term used in Income Tax Act 2007 s304 in relation to an area of
activity for which it is not possible to claim the special tax provisions
for venture capital trusts.
wholesale banking Banking services provided by merchant banks and similar bodies, as
against retail banking.
wholesale dealer Person who buys in bulk to sell to retailers.
wholesale, distributive financial or service business

Term used in connection with controlled foreign companies.
The term is defined in Income and Corporation Taxes Act 1988 Sch
25 para 11(1).
wholesale price Price charged for goods bought wholesale, such as the price paid by a
shop when buying its stock.
wholesale price index Index showing inflation in prices charged for wholesale prices.
wholesaler Person who sells wholesale goods, such as when large quantities are
bought from manufacturers and sold to retailers such as shops. The
wholesaler is the traditional middle man.
wholly One of the conditions that must be met for trading expenditure to be
tax-deductible. The word relates to the amount of money. The purpose
of the payment is governed by the word exclusively.
wholly innocent misrepresentation

Where a party makes a statement which proves to be untrue but where
the misrepresentation was neither fraudulent nor negligent.
Under Misrepresentation Act 1967 s2(2), the other party has the
right to rescind the contract. Although the party has no right to claim
damages, the court has a discretion to award damages instead of
recission.
wholly or mainly In relation to VAT relief for a professional body, the term means 75%
or more (VAT notice 701/5).
wholly-owned subsidiary Subsidiary where 100% of the shares or control are owned by the parent
company.
wide area network A network technology that covers large geographic distances. Also
called long-haul networks, WANs usually operate at slower speeds and
have significantly higher delays than networks that operate over shorter
distances.
widget (1) For beer duty, “device inserted into cans and bottles which recreates
the effect of draught beer when it is poured” (Customs notice 226).
(2) In management accounting, an unspecified manufactured object.
widow Woman whose husband has died. Her marital status is the same as a
single person.
For the purpose of claiming benefits this means that the couple were
either legally married at the time of the husband’s death or their
marriage was considered valid under UK law. In Scotland (but not
elsewhere in the UK) a person may be considered a wife “by
cohabitation with habit and repute” even if there has not been a
marriage ceremony provided the reputation began before 4 May 2006
(Family Law (Scotland) Act 2006 s3).
widow’s bereavement allowance

Additional tax allowance available to widows in the tax year of
bereavement and the following tax year.
The allowance was available between 1980 and 2000 when it was
abolished. The allowance was not available to widowers.
widowed mother’s allowance

Weekly social security benefit payable to a widow whose husband died
before 9 April 2001 and who either had custody of a child or was
pregnant by her husband when he died.
For subsequent deaths, the allowance is replaced by widowed
parent’s allowance which is also payable to a widower.
widowed parent’s allowance

Weekly social security benefit. It cannot be paid at the same time as
bereavement allowance. In practice a person receives bereavement
allowance when their entitlement to widowed parent’s allowance ends.

The main conditions for receiving the allowance are:
● the claimant is under pensionable age;
● the partner either had sufficient national insurance record or
died from an industrial illness or disease;
● the claimant either has custody of a child or is pregnant by
the late husband.
This allowance was subject to an addition for dependent children
before 6 April 2003.
If a husband died before 9 April 2001, the widow may claim
widowed mother’s allowance which remains payable.
widower Man whose wife has died.

For the purpose of claiming benefits this means that the couple were
either legally married at the time of the wife’s death or their marriage
was considered valid under UK law.
In Scotland (but not elsewhere in the UK) a man may be considered
a husband “by cohabitation with habit and repute” even if there has not
been a marriage ceremony provided the reputation began before 4 May
2006 (Family Law (Scotland) Act 2006 s3).
wife’s earned income relief (WEIR)

Tax allowance which a married man could claim against his wife’s
earned income before 6 April 1990. The allowance belonged to the
husband, though there were circumstances when it would be given
directly to the wife.
wiggle room Flexibility to adjust something to the circumstances, such as adjusting a

price to what customers will pay.
wildcat strike Sudden stoppage of workers taken by the workers themselves and not
organised by a trade union.
Wilkinson case The case ex parte Wilkinson [2005] heard by the House of Lords. It
held that HMRC had exceeded its authority in many of the extra-
statutory concessions it had introduced. This had led to many of them
being replaced by legislation.
will Document which states what a person wishes to happen to his or her
property on their death.
Wilshire 5000 (W 5000) Stock index measuring the most widely traded companies in the USA.
The size of the index varies, but is currently around 4,100 companies. It
was started in 1974 by Wilshire Associates at 1404.6 represent the
companies’ market capitalisation of $1,404.6 billion. Each 1 point
variation represented an additional $1 billion of capitalisation. This has
now increased to about $1.2 billion.
win For mineral extraction, obtain by winning.
windfall Gain, income or other benefit which comes from no effort of the
recipient, such as inheriting money. The term comes from harvesting,
where it refers to fruit lying on the ground which may be collected
without the effort of picking it from the tree.
windfall clause Term common in an IVA which provides that any windfall, such as
inheritance or win, must be given to creditors.
windfall profit Profit where a significant element comes from factors unrelated to the
organisation’s efforts.
windfall tax Taxed charged in 1997 on the windfall profits made by the utility
companies when they were privatised.
winding up Process of ending a company’s existence.
winding-up lump sum Lump sum benefit paid to a member of an occupational pension scheme
because the scheme is being wound-up and their accrued benefits under
the scheme are deemed ‘trivial’, and which meets the conditions of
paragraph 10, Schedule 29 to the Finance Act 2004.
winding-up lump sum death benefit

Lump sum benefit paid to a dependant of a member of an occupational
pension scheme because the scheme is being wound-up and their
accrued benefits under the scheme are deemed 'trivial' , and which
meets the conditions of paragraph 21, Schedule 29 to the Finance Act
2004.
winding-up petition Petition presented to the court to wind up a company.
window dressing In financial accounting, any policy or other procedure adopted to make
the accounts present the business in a better life than would otherwise
be justified.
window tax A tax that was levied between 1696 and 1851.
wine Fermented juice of any fruit, except apples or pears. Before 15 March
1988, “wine” meant only fermented juice of grapes. Other fermented
juices were known as made-wine.
Wine is subject to excise duty on alcoholic liquor. The amount of
duty depends on its alcoholic strength. For wine with a strength above
5.5%, a higher rate is paid for sparkling wine.
The Act defines wine as “any liquor which is of a strength
exceeding 1.2% and which is obtained from the alcoholic fermentation
of fresh grapes or of the must of fresh grapes, whether or not the liquid
is fortified with spirits or flavoured with aromatic extracts” (Alcoholic
Liquor Duties Act 1979 s1(4).
wine duty Tax on wine, first introduced in 14th century. It is now an excise duty
imposed under Alcoholic Liquor Duties Act 1979.
winning In terms of trading in minerals, finding without mining, drilling or

quarrying, such as finding stones on the ground.
For tax purposes, it is regarded as exploitation of land, and is taxed
on the same basis as mining operations. A leading case is Golden
Horeshoe (New) Ltd v Thurgood [1933] 18TC280. The matter is
winter fuel payment Lump sum payment from Social Fund to people over 60 regardless of
their income or wealth.
WIP Work in progress.
withdrawal date Date from which HMRC withdraws approval of an occupational

pension scheme (Social Security Contributions and Benefits Act 1992
Sch 1 para 3B(7A)).
with profits Description of a life insurance policy where the holder is entitled to a
share of the insurance company’s profit.
Each year a bonus is added to the guaranteed sum insured to reflect
the company's profit. Usual practice is to 'smooth' such bonuses so that
a comparatively unsuccessful year will not necessarily lead to a lower
bonus but a succession of poor years will be reflected by a gradual
reduction of bonus rate (and conversely for a series of successful years).
with profits endowment A fixed term investment with life cover. The guaranteed sum insured is
increased by bonuses, representing a share of the profits of the life fund.
withdraw (1) In banking, process of taking money out of an account.

(2) Rescind an offer, or exclude oneself from negotiations.
withdrawal (1) Taking money out of an account.

(2) Rescinding an offer or excluding oneself from proceedings.
withdrawal rate In social security, the rate at which tax credits are reduced according to
the claimant’s net income. The rate increased from 39% to 41% on 6
April 2011.
withering on the vine Allowing the value of money to reduce over a long period through
inflation.
withholding tax American term for tax which is deducted at source from payments of
interest and dividends to non-US residents.
without prejudice Comment on a letter which generally stops it being shown to a judge. It
is used to conduct separate negotiations while a court case is
proceeding.
without profits Description of a life insurance policy where the holder is not entitled to
any share of the company’s profits.
The sum payable is only the amount guaranteed in the policy
however profitable the insurance company may be.
WLR Weekly Law Reports. Part of the citation of a court case included in
this official series of reports. These reports are one of the two main
official series; the other is the All England Reports.
WN Law Reports Weekly Notes, published from 1866 to 1952.
WN (NSW) Weekly Notes, New South Wales, Australian law reports published
from 1884 to 1970.
WOM adviser Whole of market adviser.
woman Female adult. There are several tax provisions.

For national insurance, between 1940 and 2020 women have been
able to receive the state retirement pension and stop paying national
insurance at a lower age than men. This age was 60 up to 2010, and is
being harmonised to 66 over the following ten years.
The exact scope of what constitutes a woman for these purposes
was considered in M. TC00638 [2010] that related to a person suffering
from gender dysphoria.
Until 1977, a married woman or widow could elect to pay a reduced
rate of national insurance and receive fewer benefits. That right has
been removed, but those who exercised may retain them.
Generally, the 20th century saw various changes in the law to
equalise the position for men and women. These include:
• 1975 equal pay, and outlawing sex discrimination
• 1990 separate taxation of husbands and wives.
woman’s contract Contract of employment where the employee is a woman (Equal Pay
Act 1970 s1(2)).
won (1) Currency of South Korea.

(2) Currency of different value of North Korea.
WOO Window of opportunity.
wood For VAT, wood sold as fuel may be reduced rated under Value Added
Tax Act 1994 Sch 7A Group 1 when supplied for domestic use. Further
details are given in VAT notice 701/19. The wood must be held out for
sale as fire wood.
Wood, Charles English Liberal politician (1800-1885) who was Chancellor of the
Exchequer from 6 July 1846 to 21 February 1852.
Wood, Sir Kingsley English Conservative politician (1881-1943) who was Chancellor of the
Exchequer from 12 May 1940 to 21 September 1943 under the coalition
government of Winston Churchill.
wool tax A tithe payable between 1339 and 1369, similar to that paid to the
church. It was levied to pay for the early years of the Hundred Years
War.
workaround Temporary provisions which allows a provision to be completed when

necessary information is not to hand. An example includes an all-
purpose code which may be used when the proper code is not known.
The dummy UTR for tax purposes is an example.
work capability assessment (WCA)

In social security, an assessment of how far a person is not able to work
and thus entitled to receive certain benefits.
The WCA was revised on 28 March 2011 under SI 2011 No 228.
worker General term which applies to anyone who works for someone else.
All employees are workers, but workers also includes staff provided
by an employment agency, homeworkers and outworkers, casual
labourers, piece-workers and commission-only workers, seconded staff
and staff on short-term contracts.
Some rights belong to all workers and not just employees. These
include the right to the national minimum wage, working time
regulations, discrimination and right not to have deductions from
wages.
Worker Registration Scheme

Scheme introduced between 1 May 2004 and 30 April 2011 that
required workers from the A8 accession states of the EU to be
registered as a condition for working in the EU. The Scheme expired on
30 April 2011.
work-focused health-related assessment

Assessment made of a person under Welfare Reform Act 2007 s11 with
a view to making a payment of employment support allowance.
work-focused interview Interview to determine entitlement to employment support allowance.

The law is contained in Welfare Reform Act 2007 s12.
work-focused interview for partner

Interview with a partner of a benefit claimant where both the claimant
and partner are under the age of 60, with a view to seeing if either could
support the other. Entitlement to benefit can depend on the partner
agreeing to attend such an interview (Social Security Administration
Act 1992 s2AA).
workhouse Place where the poor could find accommodation and work under harsh
conditions. They were provided from the 17th century until their final
abolition in 1930. Parishes were legally required to provide workhouses
from 1845.
workhouse test Condition imposed by Poor Law Amendment Act 1834 which stated
that poor relief could only be provided to those in a workhouse. This
provision was never implemented.
workhouse test Harsh test introduced in the mid-19th century with a view to
distinguishing needy poor from malingerers. Those who could not
support themselves were sent to the austere regime of the workhouse,
built to look like prisons.
work induced illness Illness that a person suffers as a consequence of their work. Some
illnesses may qualify the person for certain social security benefits.
The term is used in the Inspectors’ Manual at BIM37940 to explain
that medical expenditure for such illness is not generally allowable. A
leading case is Norman v Golder [1944] 26TC293.
working capital Finance provided to support the short-term assets of the business
(stocks and debtors) to the extent that these are not financed by short-
term creditors. It is calculated as current assets minus current liabilities.
working capital Readily realisable assets minus current liabilities.
working capital cycle Total of stock holding period plus customers collection period minus
suppliers payment period.
working capital ratio Current assets divided by current liabilities.

Most companies will seek a ratio between 1 and 3, though this
depends heavily on the nature of the business. Cash positive
businesses, such as supermarkets can prosper on ratios below 1.
working conditions General state in which an employee is expected to work.
working day “A day on which the employee is at work” (Income Tax (Earnings and
For tax tribunals, the term “means any day except a Saturday or
Sunday, Christmas Day, Good Friday or a bank holiday under section 1
of the Banking and Financial Dealings Act 1971” (The Tribunal
rule 12(3)).
EU council regulation 1182/71 defined a working day as “all days
[sic] other than public holidays, Sundays and Saturdays”.
working dog Sheep dog, guard dog, gun dog, racing greyhound or dog for the blind.
Specially formulated food for such dogs is zero-rated whereas dog food
for pets is generally standard-rated (VAT notice 701/15).
working hours “Any time when under [a worker’s] contract of employment, or their
contract personally to do work or perform services, he is required to be
at work” (Trade Union and Labour Relations (Consolidation) Act 1992
s246).
working life For purposes of an occupational pension scheme, “means the period
beginning with the tax year in which the person attains the age of 16
and ending with:
(a) the tax year before the one in which the person attains the age of
65 in the case of a man or 60 in the case of a woman, or
(b) if earlier, the tax year before the one in which the person dies”.
(Pensions Act 2004 s282).
Working Neighbours Pilot

Pilot scheme trialled from April 2004 to test the idea of in-work tax
credits.
working papers All documents used in the preparation of any financial statement, such
as final accounts or tax return. This may include handwritten notes or
calculations on plain paper.
All working papers must be kept with the documents to which they
relate.
The papers must be written clearly enough that an accountant, with
no prior knowledge of the financial statements, can understand the
working papers.
Every separate sheet of the working papers must have three
headings:
● the name of the person or business to whom it relates;
● the period of time to which it relates, such as identifying the
financial year;
● the nature of the details on the paper.
Accounting firms often require additional information, particularly
the name of the person preparing the paper and the date it is prepared.
working partner Partner in a business who is engaged in partnership activities, unlike a

sleeping partner.
working tax credit Means-tested social security benefit payable to someone in work on a
low income.
It is paid under Tax Credits Act 2002 Part 1.
Working Time Directive European Union directive 2003/88/EC issued on 22 June 2000 and
binding on all member states. It updates directive 93/104/EC of 1993.
Its main provisions are:
• daily rest of 11 hours in every 24-hour period (art 3)
• a rest period every six hours (art 4)
• a weekly rest period of 24 hours uninterrupted (art 5)
• a working week limited to 48 hours in seven days (art 6)
• at least four weeks’ holiday a year (art 7)
• maximum 8 hours of night work (art 8)
• additional provisions for night workers (arts 9-13).
There are some exceptions to these provisions.
The directive became effective under UK law from 1 October 1998
under SI 1998 No 1833. It should have become law from 23 November
1996.
Working Together Project started in 1999 by HMRC and representatives of taxpayers to

discuss matters of mutual interest. It is also the title of a newsletter
produced by HMRC for tax agents.
Working Together Steering Group (WTSG)

Body which replicates locally the work done by the National Working
Together Steering Group (NWTSG) in discussing tax issues with
HMRC.
work in progress (WIP) Value ascribed to items partly completed at the end of an accounting
period. Such items are more than stock but less than completed goods.
The value of work in progress is added to stock to give the figure for
closing stock.
An example of work in progress is when components have been
partly assembled or a partly-constructed building. Accounting standards
allow an appropriate element of labour to be added to the cost of
materials.
For major items of WIP, it is necessary to estimate the amount of
labour so far expended. Where there are many items of similar nature, it
may be sufficiently accurate to add half the labour cost required to
complete an item.
The tax implication is discussed in the Inspectors’ Manual at
BIM33020.
work of art For purposes of VAT:

(a) a painting, drawing or pastel executed by hand, other than
hand-painted or decorated manufactured articles;
(b) an original engraving, print or lithograph; or
(c) original sculpture or statuary in any medium.
Such a work attracts a special rate of VAT of 5% (2½% before 1
July 1998).
This arrangement also applies to antiques and collectors’ items.
For inheritance tax, a person’s estate excludes foreign works of art
that are in the UK “for one or more of the purposes of public display,
cleaning and restoration (and for no other purpose)” (Inheritance Tax
Act 1984 s5(1)(b)).
work permit “A permit indicating, in accordance with the immigration rules, that a
person named in it is eligible, though not a British citizen, for entry into
the United Kingdom for the purpose of taking employment”
workplace “In relation to an employment, means a place at which the employee’s

attendance is necessary in the performance of the duties of the
workplace ballot Ballot held by a trade union at the workers’ place of work, as required
by Trade Union and Labour Relations (Consolidation) Act 1992 s228.
workplace parking “Means —

(a) a parking space for a car or van,
(b) a motor cycle parking space, or
(c) facilities for parking a cycle other than a motor cycle”
(Income Tax (Earnings and Pensions) Act 2003 s237(3).

Provision of such parking by an employer is not usually a taxable
benefit in kind.
work-related activity Activity which a recipient of employment support allowance may be

required to undertake as a condition of receiving the allowance. The law
is contained in Welfare Reform Act 2007 s13.
work-related activity component

For employment support allowance, an addition to the basic
allowance that is payable during the main phase after the assessment
phase (usually of 13 weeks) has ended. The claimant must attend work-
focused interviews and other activities designed to return the claimant
to work.
work-related training Such training is a taxable benefit in kind unless within the scope of the
exemptions in Income Tax (Earnings and Pensions) Act 2003 from
s250.
works transport service “Means a service which is provided by means of a bus or a minibus for
conveying employees of one or more employers on qualifying
journeys” (Income Tax (Earnings and Pensions) Act 2003 s242(2)).
This usually means that an employee is not taxed on a benefit in
kind when the employer arranges transport to and from work in a
vehicle with at least nine seats.
workwear The clothing which a worker wears at work. The term is usually
restricted to overalls and similar protective clothing which incorporates
a logo for the company.
worldwide debt cap Tax provisions set out in Taxation (International and Other Provisions)
Act 2010 Part 7 and brought into effect from 1 January 2010. The
provisions can serve to restrict the amount of UK tax relief that may be
claimed by an international group of companies.
Worldwide Dispatch Manager (WDM)

Service provided by Parcelforce for customers who despatch many
parcels overseas. The documentation provided under this service may
be used as proof of removal to justify zero-rating supplied to another
EU member state. Further details are given in VAT notice 725.
worldwide gross debt Figure used in determining tax provisions of worldwide debt cap.
World Wide Web Information system on the Internet which allows documents to be
accessed from computers. Each participant is assigned a domain name
which typically starts www. and is followed by a stylised form of their
trading name.
worm Computer virus which works by clogging up a computer through

excessive duplication of data until there is no memory left.
wort “Any infusion, solution or mixture intended for fermentation as part of

the process of manufacturing spirits” (Customs notice 39).
WOWGR Warehousekeepers and Owners of Warehoused Goods Regulations

1999.
WPICC With-profits insurance capital component.
WR Weekly Reporter, series of law reports published from 1853 to 1906.
wrapper Financial Services Authority term for an arrangement for holding

investments. Examples include an individual savings account (ISA)
and personal equity plan (PEP).
write down In financial accounting, process by which the value of a fixed asset is
reduced. This is usually done routinely by depreciation or as a separate
event such as when items are stolen or lost in a fire.
write off Process for removing a balance from the accounts, such as when a
business accepts that a bad debt will not be paid.
writing “Includes typing, printing, lithography, photography and other modes of

representing or reproducing words in a visible form, and expressions
referring to writing are construed accordingly” (Interpretation Act 1978
Sch 1).
writing down allowance (WDA)

Form of capital allowance which reduces a trade’s liability for income
written down value (WDV)

Value of an asset after capital allowances have been deducted. Note
that this term differs from net book value which is the same original
value minus cumulative depreciation.
written premiums The total premiums on all policies written by an insurer during a
specified period of time.
written resolution In company law, a resolution of the members of a private company as

proposed by its directors or members where their views are obtained in
writing.
This procedure may be used to avoid the need to call a meeting. The
procedure for written resolutions is contained in Companies Act 2006
ss288-297.
A written resolution may not be used to remove a director or
auditor.
wrongful trading Offence of allowing a business to continue when it is obvious that it

cannot meet its liabilities.
If the business was set up with the intention of defrauding
customers and suppliers, the more serious offence of fraudulent
trading is committed.
WTO World Trade Organisation - an organisation dealing with the rules of

international trade. The WTO was established in 1995 and has its
headquarters in Switzerland. It acts as a forum for trade negotiations;
administers international trade agreements; and resolves international
trade disputes. In 2004, the WTO had 147 member states.
WTSG Working Together Steering Group
X
X Roman numeral for 10.
xa Abbreviation for ex all.
XD Ex-dividend. This is the interval between the announcement and

payment of the next dividend or, in the case of a unit trust, the income
distribution. Someone who invests during the interval between two
distributions and is not entitled to the dividend. With an income-paying
unit trust, the 'xd' date is usually about eight weeks before its
distribution date.
XML VAT Returns Service

Service offered by HMRC to tax agents with many VAT clients. The
service allows the agent to file many VAT returns and EC Sales Lists at
the same time
Y
Y Suffix for a tax code used for someone entitled to the age allowance for
a person born before 6 April 1935, but who is not entitled to the
addition for being married.
Yamaichi Leading Japanese company dealing in securities.
yard Imperial unit of length equal to 3 feet, 36 inches or 0.9144 metres.

There are 1,760 yards in a mile.
Y Bwrdd Ystadegau Welsh: Statistics Board.
Y&CC Younge & Collyer’s Company Cases, series of law reports published
from 1841 to 1843.
year Unit of time based on how long the earth takes to revolve round the sun.
This is 365.24219 days. For convenience, the year is divided into 365
days except for leap years which have 366 days. These are every fourth
year, except that (since 1752) a year ending 00 is only a leap year if it
divides by 400, so 2000 was a leap year but 1900 was not.
The year is divided into 12 months of between 28 and 31 days. It is
also divided into 52 weeks and 1 day (2 days in a leap year) to
accommodate which there are special week 53 provisions for PAYE.
The calendar is defined in Calendar (New Style) Act 1750.
The term calendar year is used for the period from 1 January to 31
December when a distinction needs to be made from other types of year
such as the financial year, tax year or academic year.
year of assessment Year whose income or profit is subject to income tax or corporation tax.
year of departure Last tax year of assessment before a temporary non-resident leaves
the UK (Taxation of Chargeable Gains Act 1992 s10A(8)).
year of return Tax year in which a temporary non-resident leaves the UK (Taxation
of Chargeable Gains Act 1992 s10A(1)).
year to date (YTD) Amount which represents a cumulative total from the start of a defined
year. It is used in payroll to calculate PAYE.
years of discretion Age at which a boy or girl is regarded as being capable of making
moral judgments.
yeast Micro-organisms that are used to ferment sugar into alcohol. The
commonest species used for this purpose is Saccharomyces cerevisiae.
yen Currency of Japan.
yield Return seen as a percentage on the investment.
yogurt For VAT, this is zero-rated as food except when sold to be eaten while
frozen (VAT notice 701/14).
Young People’s Learning Agency (YPLA)

Body formed in April 2010 to provide further education and
apprenticeships for people aged between 16 and 19.
It is established by Apprenticeships, Skills, Children and Learning
Act 2009. It replaced the Learning Skills Council which replaced
training and enterprise councils which replaced the Manpower
Services Commission.
Young Review Review conducted by government actuary Andrew Young into lost
pensions. The government accepted his review, which led to the
Financial Assistance Scheme.
youth rate Another name for the reduced rate of national minimum wage for
workers aged between 18 and 21.
Youth Training Scheme (YTS)

Training scheme introduced in 1983 to provide one year’s job training
for school leavers aged 16 or 17. It was extended to two years in 1986.
Participating employers had to provide 13 weeks of training in work
and social skills, and provide a certificate.
In 1989, it was renamed Youth Training and made the
responsibility of Training and Enterprise Councils (TECs). These
functions are now undertaken by the Learning and Skills Council and
equivalent bodies. These were themselves replaced in 2010 by Young
People’s Learning Agency (YPLA).
YPLA Young People’s Learning Agency.
YTD Year to date.
YTS Youth Training Scheme.
yuan Unit of currency in China.
Z
zero-based budget Budget where all expenditure starts at zero and must justify itself afresh
each year, rather than just uplifting last year’s figure.
zero-basing Management policy of keeping to one’s core activities. It is also known

as sticking to your knitting. The opposite can be called buy a cow.
zero-carbon goods vehicle Goods vehicle that emits no carbon dioxide. Such a vehicle attracts an
enhanced capital allowance from April 2010 for five years.
zero-carbon home Dwelling which provides no net carbon dioxide. Such a dwelling is
entitled to stamp duty land tax relief from 1 October 2007 to 30
September 2012 under Finance Act 2003 s58B as inserted by Finance
Act 2007 s19.
zero-coupon bond In investing, a bond which pays no interest, but which is sold at a
discount allowing a capital gain to be made when it is redeemed.
zero duration gap Duration gap of zero, that is when the life of assets and the life of
liabilities are the same.
zero-emission Description of car that does not emit carbon dioxide under any
circumstances. Under Finance Act 2010 ss58-59, the provision of such
a car to an employee between 2010/11 and 2014/15 is a benefit of nil
for income tax purposes.
zero inflation State when there is no inflation in the economy.
Zero Rate Certificate A certificate that a customer gives to a supplier to enable the supplier to
zero-rate the construction of a building, a supply of land, or a supply of
fuel and power. Only allowed in specific circumstances.
zero-rated Subject to VAT at a rate of 0%.

Note that zero-rated supplies are still taxable. Unliked exempt
supplies, it is possible to claim input tax in respect of zero-rated
supplies.
zero-rated schedule Value Added Tax Act 1994 Schedule 8. This lists 16 Groups of supply
which are zero-rated:
1 Food 9 Caravans and houseboats
2 Sewerage and water 10 Gold
3 Books etc 11 Bank notes
4 Talking books etc 12 Drugs, medicines etc
5 Construction 13 Imports and exports
6 Protected buildings 14 Tax-free shops
7 International services 15 Charities etc
8 Transport 16 Clothing and footwear
The exact scope of each Group must be carefully considered before
zero-rating an item. For example, most imports and clothing are
standard-rated despite the terminology used above.
zero-sum game Situation where there is no scope for enlarging a market or opportunity,
so one person can only gain if someone else loses.
zillmerising “Method known by that name for modifying the net premium reserve
method of valuing a long-term insurance contract by increasing that
part of the future premiums for which credit is taken so as to allow for
initial expenses” (FSA glossary).
Z list Total of transactions that can be produced from most modern forms of
till. These are widely used in tax investigations.
zombie project Business jargon for a project that comes back to life after it was
supposedly killed.
zone Area which has been designated for a particular purpose.
zymurgy Science of fermentation.
Numbers
2 and 20 Typically fee for a manager of a hedge fund. He receives 2% of the
fund’s net assets each year and a performance fee of 20% of its profit.
The managers do not share any loss.
10-K The form which an American public company must complete to file its
accounts with the New York Stock Exchange.
10-Q The form which an American public company must file each quarter to
the New York Stock Exchange.
15% holding limit condition

The condition is broadly that, the holding does not represent more
than 15% of the investor’s investments. This condition is further
explained in s277.
18-25 trust Type of trust for beneficiaries who are under 25 and where at least one
parent has died (Inheritance Tax Act 1984 s71D). Its operation is
similar to the accumulation and maintenance trust (AMT) which it
replaced on 22 March 2006.
Finance Act 2006 Sch 20 severely restricted the scope of existing
AMTs, making many of them discretionary trusts which have a less
advantageous tax regime. Transitional provisions allow an existing
AMT which meets the new conditions to become an age 18-25 trust
provided no change is made and the change was made by 5 April 2008.
The maximum exit charge for an 18-25 trust is 4.2%. This
represents the maximum seven-year period equivalent of the maximum
6% charge that applies for a ten-year period.
For these purposes a change is made when the class of
beneficiaries changes, not when there is a change within the class. So
an 18-25 trust for the benefit of grandchildren has a change if the scope
is amended to include grandchildren’s partners. There is no change if
the class remains the same but another grandchild is born.
30% eligible shares condition

The condition is that “at least 30% by value of the company’s
qualifying holdings has been or will be represented throughout the
relevant period by holdings of relevant shares”.
40 per cent test A test used to identify who controls a controlled foreign company.
The test is set out in Income and Corporation Taxes Act 1988 s755D.
41G (Trust) Form used to notify HMRC that a trust has been created.
64-8 Form used to register as a tax agent with HMRC.
70% qualifying holdings condition

The condition is that “at least 70% by value of the company’s
investments has been or will be represented throughout the relevant
period by shares or securities included in the qualifying holdings of the
company”.
80-20 rule Another name for the Pareto principle.
90% equity holding Condition for merger relief. The exact terms are set out in Companies
Act 2006 s613.
90% subsidiary Defined in Income Tax Act 2007 s301 as a subsidiary where the holder
is entitled to at least 90% of the profits available for distribution.
91-day rule Another name for the substantial and habitual visits rule that is used
to establish ordinary residence.
125% mortgage Mortgage which offers 125% of the value of a property. The lender
would regard the additional 25% as likely to be secured by inevitable
property value increases and the additional value of improvements
funded from the additional loan. Such mortgages were offered by
Northern Rock before it was nationalised.
1982 holding Holding of shares acquired before 1982 which are subject to special
provisions for capital gains tax under Taxation of Capital Gains Act
1992 s109.

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Leach’s tax dictionary as at 15 June 2011, page 1

LEACH’S TAX DICTIONARY: Free use

Any comments or suggestions on content will be welcome.

Robert Leach FCCA ACA FCIPP

Leach’s Tax Dictionary: preface

They also produce extra-statutory concessions in the form C16.

A1 form Form issued from 1 May 2010 to UK workers travelling to other EU

A8 Abbreviation for eight of the accession states that joined the EU in

AA (1) Annual allowance.

AAD Accompanying Administrative Document

AAG Anti-Avoidance Group, a department of HM Revenue and Customs.

costs. Standing charges relate to costs of ownership of a car rather to

AAT Association of Accounting Technicians

abandonment In law, the relinquishing of any right, claim or property, including

abattoir Place for slaughtering animals.

ABCP Asset-backed commercial paper.

ABCP internal assessment approach

ABDP Abbreviation used in Income and Corporation Taxes Act 1988

Aberfan Welsh mining village where a tragedy on 21 October 1966 led to

ab initio Latin: from the beginning.

ab intestato Latin: from an intestate.

abnormal Opposite to “normal”. A financial transaction which is abnormal may

abortion In law, the deliberate ending of a pregnancy.

abortive acquisition benefits and expenses

abortive expenditure Expenditure incurred in the unsuccessful acquisition of an asset.

abrasion Loss of weight of coins from wear and tear.

absence from employment

absente reo Latin: the defendant being absent.

abse re Abbreviation of absente reo, Latin: the defendant being absent.

absolute assignment Assignment of an entire debt free of conditions but including an

absolute entitlement to income

absolute interest in residue

absorption costing In management accounting, a costing method that includes all

absque hoc Latin: but for this.

abstraction Process of obtaining water.

abus de droit French: abuse of right.

abusive practice For VAT, an abusive practice exists if:

abv Alcohol by volume.

ACA Designatory letters denoting an associate member of the Institute of

academic Person engaged in research or teaching at a university or similar place

academy Educational establishment, particularly one established under

academy financial assistance

academy order Order made by the government to allow a school to become an

ACAS Advisory, Conciliation and Arbitration Service.

ACAT Association of Church Accountants and Treasurers.

ACCA (1) Association of Chartered Certified Accountants. Previously the

accelerated cost recovery system (ACRS)

acceptable distribution policy

accident Unforeseen event which happens by chance or design. The term is

accident insurance Commercial arrangement whereby an insurer will pay a sum to

accommodation offset Value which may be attributed to employer-provided accommodation

calculated at a daily rate. Previously there was also an hourly rate.

Accompanying Administrative Document (AAD)

account (1) Category of income or expenditure, asset or liability, or any other

account activity Term used on bank statements to summarise transactions.

accountancy The work or study of an accountant. The practice of an accountant is

accountancy bodies Professional associations for accountants.

otherwise. Conventions have now been superseded by accounting

accountancy fees Fees paid for accountancy work.

accountancy service provider (ASP)

accountancy services Services of an accountant or accounting firm. Such a service is a supply

accountant Person who is qualified or experienced in accountancy. There is no

Accountant and Controller General (A&CG)