Leach's Tax Dictionary

Leachs Tax Dictionary as at 19 January 2012. D-I.
Page 1
Leachs Tax Dictionary: Preface

______________________________________________________________________________
This tax dictionary is currently provided free by Robert Leach, chartered accountant, author and
lecturer. Although long, it is recognised that it is still not complete or comprehensive, and so will
be routinely expanded over time. It is the intention that this dictionary will eventually be
published as a book or become part of a subscription service. Comments on the dictionary are
welcome.
The tax dictionary lists terms that may be encountered by a tax practitioner. In its present form
the dictionary is continually being enlarged and expanded, particularly to reflect recent changes
in law. The latest date is indicated in the header on each page.
For some terms that are very specialist or particularly complex, the dictionary entry is restricted
to indicating the area of tax where the term is used and where the statutory provisions may be
found.
For a few terms, the entry is followed by a box containing a quotation from a case or other
authoritative source, where it is believed that this will add to the understanding of the term.
Terms for all taxes levied in the UK are included. The dictionary also includes a few notes on
taxes levied in other countries. These mainly relate to Europe and the USA.
Adjacent disciplines
Because tax does not exist in isolation, the dictionary includes terms from adjacent disciplines
where this could assist the tax practitioner.
Because tax computations must comply with accounting standards, most financial accounting
and some management accounting terms are included.
Many terms have also been included relevant to banking, computing, human resources,
insurance, investment, legal tender, national minimum wage, pensions and social security.
Many legal terms have been included, particularly for agency law, company law, Customs law,
employment law and insolvency law. These are in addition to general legal terms, including
Latin expressions.
Where relevant, some terms have been included from commercial law, criminal law, family law,
property law and other branches of law.
Where it may assist tax practitioners, a few terms have been included from remoter disciplines,
such as advocacy, business management, economics, mathematics, politics, psychology,
statistics, and weights and measures.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 2
Ordinary terms
In addition to defining tax terms, the dictionary lists many ordinary words, such as car and
water, to state specific tax provisions that apply.
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.
General scope
The book does not list court cases, with a few limited exceptions where cases have assumed such
importance in tax that their names may be regarded as tax vocabulary.
Equally the book does not generally list individuals, companies or publications. Again
exceptions are made where the name has become widely noted. Brief notes are included on all
recent Chancellors of the Exchequer.
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.
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 in understanding that entry.
Terms printed in italics refer to parts of the entry which the author wishes to emphasise to the
reader.
All bold and italic type is editorial unless stated otherwise.
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 in this matter.
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.
Where an entry becomes long because of many tax provisions, it is broken up under sub-
headings.
Sometimes notes on the correct use of the word are added to the end of an entry.
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.
Conversely, irrelevant parts of a quote are indicated by an ellipsis ... .
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].
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.
Concluding remarks
Finally, it has to be said that the author can accept no responsibility for any error contained in
this book. Comments about any additions, clarifications or corrections are welcome.
I have enjoyed compiling this dictionary. I hope that this dictionary will prove useful to my
fellow tax practitioners.
Robert Leach FCCA ACA FCIPP
Epsom.
D
d (Old) penny. The letter is an abbreviation of denarius. It was used
before decimal currency was adopted in 1971.
D Tax code
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 employees
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.
National insurance
National insurance contribution letter for an employee contracted out
in a COSRS pension scheme.
Council tax
For council tax, the average value of property, thus:
in England, between 68,001 and 88,000 in 1993;
in Wales, between 73,001 and 100,000 from 1 April 2005, and
between 51,001 and 66,000 before;
in Scotland, between 45,001 and 58,000 in 1993.
Company cars
The P11D code for (from 6 April 2011) all company cars that use
diesel. Before 6 April 2011, the code only applied to cars that met
Euro IV Standard. Those that did not had the code L.
Other
(1) Roman numeral for 500.
(2) Dunlop, Scottish law reports from 1838 to 1862.
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 traders 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.
dakkenrast Obscure term for the feeling of being embarrassed on the loss of
assets.
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.
dam For capital allowances, this is specifically excluded from the scope
of plant and machinery (Capital Allowances Act 2001 s22(1) List B).
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.
dancer A dancer may retire on a personal pension at the age of 35, provided:
the person had the right by 5 April 2006,
the right was unqualified in that it needed no other person
to consent,
the right was set out in the governing documentation of the
pension scheme by 10 December 2003.
(SI 2005 No 3451, as explained in the Inspectors Manual at
RPSM03106035).
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.
Da z pidan 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-gathering powers In relation to tax, the right of HMRC to gather information.

These powers appear throughout tax legislation, including
Finance Act 2011 Sch 23.
data highway Link which connects computers so they may all share the same data.
data-holder Person who holds data that HMRC may order to be provided
(Finance Act 2011 Sch 23 para 1(4)).
data-holder notice Notice to a data-holder requiring production of data (Finance Act

2011 Sch 23 para 1(5)).
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 General

Processes performed by a computer with regard to data.
VAT flat rate scheme

Under the VAT flat rate scheme, the appropriate percentage is:
From Percentage
4 January 2011 14.5%
1 January 2010 13%
1 December 2008 11.5%
1 January 2004 13%
data protection Right of individuals not to have personal information improperly

disclosed. These rights are set out in Data Protection Act 1998 and
Regulation of Investigatory Powers Act 2000.
HMRC is bound by these Acts under Commissioners for
Revenue and Customs Act 2005 s22.
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 centre Place where elderly or disadvantaged people may meet for any of a
range of social, recreational, educational, medical and similar
services.
A charitable day centre that provides surgical or medical
services may be eligible to receive zero-rated charity funded
equipment (VAT notice 701/6).
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 servants 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.
days 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.

DDA Disability Discrimination Act 1995.
DDA-compliant Description of a premises, equipment or business that complies with

its obligations under the Disability Discrimination Act 1995.
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.]
DDC Deemed disposal consideration, abbreviation used in Taxation of

Chargeable Gains Act 1992 s195B.
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 ships position at sea.
deads part In Scots law, part of a mans 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 Person who trades for a living. The term has also acquired some
specific meanings in particular circumstances.
dealers in securities The Corporation Tax Act 2009 implications for such dealers is given
in Corporation Tax Act 2009 from s128.
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
businesss 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 others 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 Definition
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.
Executorship
On death, a persons property passes to a personal representative
who is responsible for paying any outstanding debts of the deceased,
arranging the funeral and distributing the deceaseds 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.
Income tax
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
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.
Capital gains tax

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 bond Colloquial name used for life settlement fund.
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 reporting entity (FRS 8 para 2.1).
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.
Provisions about reporting charges in relation to debentures are
set out in Companies Act 2006 from s863.
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 grce French: with good grace.
Debrett Directory of the peerage first published in 1784 by John Field

Debrett.
debrief Gather information about a persons experience about a mission,

exercise or event.
debt Definition
Amount of money owed to someone else.
Accounting
That part of a companys 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).
A debt that an organisation does not expect to be paid and has
therefore written off is a bad debt. Relief for income tax or
corporation tax is given automatically. Relief for VAT must be
claimed, unless cash accounting is used.
A general provision for debts overall, is a provision. This does
not qualify for any tax relief.
Capital gains tax

The capital gains tax provisions are given in Taxation of Chargeable
Gains Act 1992 from s251.
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 companys 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 businesss 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 businesss invoicing.
debt-for-debt exception Provision in Corporation Tax Act 2009 s361B with regard to loan
relationship.
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 funded Description of business or activity which is funded by borrowings

rather than any form of equity capital.
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 peoples 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.
debtor quasi-repo Arrangement designed to copy a debtor repo. For corporation tax, it
is defined in Corporation Tax Act 2009 s548. Its tax provisions are
set out from s549.
debtor repo Its definition for corporation tax provisions is set out in Corporation
Tax Act 2009 s547.
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 companys debts to its capital (including loan capital).
debt recovery Formal process of recovering from debt.
debt released A liability for a debt which the creditor has released.
For companies, the release of a debt is taxed as trading income
(Corporation Tax Act 2009 s94).
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 businesss 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 companys
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.
debts that die with you Term sometimes used to describe debts that are extinguished on the
debtors death.
These include capital gains tax and debts under an individual
voluntary agreement. Such debts are also excluded from estate
assets for the purposes of inheritance tax.
debt to society In sociology, the concept that a person owes something to society,
such as compensation for bad behaviour.
Someone who commits a criminal offence is sometimes said to
have paid his debt to society after serving a sentence. This is a
curious analogy, as, far from paying anything, the sentence has
imposed further burdens and expenses on society.
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.
DECC Department for Energy and Climate Change.
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.
decidophobia Fear of making decisions.
decile In statistics, values that fall into ten equal parts. So the highest decile
are the values that fall in the highest tenth.
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.
decision act Option available to a decision maker, such as to buy, sell or hold a
security.
decision alternatives The choices in a decision act.
decision table Tabulation of alternative decisions and their outcomes, as an aid to

the decision-making process.
decision tree Diagrammatic representation of decisions and their outcomes.
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 (1) A declaration made in the appropriate form to Customs indicating

the intention of the declarant to declare goods to the export or import
procedure.
(2) 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 persons
knowledge and belief. Such forms are required on tax returns and
similar formal documents.
declaration by another act

Any act made in connection with temporary admission of goods
and which therefore avoids the need to pay Customs duty on import.
A common example is simply walking through the green
nothing to declare channel with the goods.
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.
Declaration Unique Consignment Reference (DUCR)

The means by which Customs and the exporter may identify goods
to their records. The DUCR must be used for all electronic
declarations to Customs.
The reference number comprises up to 35 characters, split into
four parts. The reference is based on the World Customs
Organisation Standard.
The first part is the year in which the DUCR was allocated.
The second part is the country code in which it was allocated.
This is GB for the UK.
The third part is the identity of the trader. This is the EORI
number.
The fourth part, following a hyphen, is a unique series of
characters for each consignment.
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 payment Term used in Income Tax (Earnings and Pensions) Act 2003 s558 in
relation to payments from an employee towards a liability incurred
by the employer.
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. By extension,

the term means amounts that may be subtracted from taxable
income.
Corporation tax provisions are given in Corporation Tax Act
2009 from s196.
(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 persons 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.
deductions working sheet For PAYE, means

(a) any form of record in which are to be kept the matters
required by these Regulations in connection with an employees
relevant payments, and
(b) ... the form issued by [HMRC] for the purposes of keeping
[records for simplified deduction scheme and direct collection]
(PAYE regulations SI 2003 No 2682 reg 2(1)).
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 (Miscellaneous 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 effects of the will.
deed of waiver Formal document waiving a financial entitlement, such as to profits,

salary or dividend.
They are sometimes encountered in tax avoidance schemes.

An example where such a deed was ineffective is MJP Services
Ltd [2011] UKUT 100(TCC).
deed poll Deed made by one party, not necessarily to change a persons name.
deeds fee A charge made by lenders when someone repays the mortgage to
release the deeds of the property. It is 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 contractor Under Construction Industry Scheme, a person who does not carry
on the business of construction operations, but who may have to
operate the scheme under the provisions of Finance Act 2004
s59(1)(b)-(k).
The most significant category is someone whose average annual
expenditure on construction over three years exceeds 1 million.
Such a business need not register if the construction is for the
businesss own purposes, such as a supermarket company building a
new store (Construction Industry Scheme Regulations SI 2005 No
2045 reg 22).
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.
The company itself may claim tax relief under Corporation Tax
Act 2009 s139.
deemed manufactured payments

Term used in Taxation of Chargeable Gains Act 1992 s261F.
deemed release Release that is assumed under Finance Act 2010 s44 and Sch 15 in
relation to impaired debt between connected parties.
The term also has a special meaning for loan relationship, as
explained in Corporation Tax Act 2009 s358(3).
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
persons 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 Another term of deep discount in relation to a security.
deep-gain security Security which is either issued at a deep discount, or which is

redeemed at a large premium.
deeply discounted securities

Tax provisions in relation to connected companies and close
companies are given in Corporation Tax Act 2009 from s406.
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 investees auditors.
deep poverty Relative poverty where someone is living on less than 40% of
median earnings.
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 persons 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 persons 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.
The scheme avoids the need to pay duty on every importation.
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 award terms Term used in relation to disguised remuneration (Income Tax
(Earnings and Pensions) Act 2003 s554J (1)(c)).
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 grant terms Term used in relation to disguised remuneration (Income Tax
(Earnings and Pensions) Act 2003 s554L(1)(c)).
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
companys 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 remuneration terms

Term used in connection with disguised remuneration (Income Tax
(Earnings and Pensions) Act 2003 s554H(1)(b)).
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 benefits A pension scheme where the amount received in retirement is fixed.
The term is defined in Finance Act 2004 s152(7).
defined benefit scheme Pension scheme where the pension is based on the employees
salary. It is also known as a final salary scheme.
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.
degeneracy In mathematics, a situation where there is no straightforward method

to determine which of two variable should next enter the analysis.
De G M & G De Gex, Macnaghten & Gordons 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.
It has been held that a Delaware corporation is not fiscally
transparent for UK tax purposes in HMRC v George Anson [2011]
UKUT B21.
delayed remittances Tax term for income remitted overseas which is delayed for factors
outside the taxpayers control, such as restriction by the foreign
government. Relief may be available for such remittances under
Income Tax (Earnings and Pensions) Act 2003 s35.
delegation The right of the Commissioners of HMRC to delegate functions to

officers is contained in Commissioners for Revenue and Customs
Act 2005 s14.
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.
Delphi In statistics, a qualitative forecasting process that combines

individual judgments into a consensus, such as by asking many
people to rank taste between 1 and 5.
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.

The capital gains implications are given in Taxation of
Chargeable Gains Act 1992 from s192.
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 Costs may qualify as part of the capital allowance for plant and
machinery under Capital Allowances Act 2001 s26.
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.
demutualised mortgage banks

Ten former building societies that demutualised and became banks.
Two became insolvent (Northern Rock, and Bradford & Bingley).
All the others have been taken over.
denar Currency of Macedonia.
Denarii St Petri Latin: St Peters 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: Gods 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
(Customs notice 39).
dental treatment Certain social security claimants may receive financial assistance for
this as a health benefit. Such treatment is free for everyone in
Scotland.
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 Social security benefits received by a dependant.
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 Finance Act 2004 Sch 28 para 17.
dependants drawdown pension

The tax provisions are given in Finance Act 2004 s167.
The term is defined in Finance Act 2004 Sch 28.
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 Schedule 28 to the Finance Act 2004.
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)).
dependent variable In statistics, a variable who value is determined by other variables.

For example turnover depends on price and quantity sold.
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.

The capital gains tax provisions are given in Taxation of
Chargeable Gains Act 1992 s151L.
The income tax provisions are given in Income Tax Act 2007
s564E.
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 banks 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 Trusts

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 arms length bargain is not a depreciatory transaction.
Chargeable gains
Transfer between group companies of shares or securities whose
value has been materially reduced, as set out in Taxation of
Chargeable Gains Act 1992 s176. This law is amended by Finance
Act 2011 Sch 9 para 3.
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.
deprival value The value of an asset to a business, expressed as the amount by

which the business would be worse off without the asset.
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 rgle 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 pensioners 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 contract Their corporation tax implications are given in Corporation Tax Act
2009 from s570. A definition is given in s576.
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.
derrire 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.
dsagrment 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.
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.
design In commerce, this means a trade mark or similar design that is

registered.
A company may be able to claim tax relief on connected
expenses (Corporation Tax Act 2009 s90).
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 persons 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 currency of a UK resident investment company

This is the currency which the company elects as its designated
currency (Corporation Tax Act 2010 s9A(1)).
designated educational establishment

In relation to company gifts to such a body, the term is defined in
Corporation Tax Act 2009 s106(1).
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.
designed or adapated In relation to VAT on gaming machines, includes a reference to a

machine in which anything has been done as a result of which it can
reasonably be expected to be used for that purpose (Value Added
Tax Act 1994 s23(6)(c).
The section continues that adapted includes a reference to
software being installed.
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 persons 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 persons 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.
dtente (Relaxation of strained relations between two countries. The term

comes from French.
dtenu 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.
determination of code Process by which HMRC allocates a tax code to an employee for
PAYE purposes (PAYE Regulations SI 2003 No 2682 from reg 13).
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 persons 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 elses property. It

is now replaced by Torts (Interference with Goods) Act 1977.
Detonation Resistance Test Certificate (DRT)

Certificate that states that an imported product such as fertiliser does
not contain materials that could detonate. Such a certificate can be a
requirement to obtaining Customs clearance.
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 Terminbrse 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.]
Deuxime 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,
from 1 = $2.80 to 1 = $2.40 on 19 November 1967.
The pound now floats freely against other currencies.
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. There are also specific provisions in
Companies Act 2006 s844.
developing countries A term generally used to describe countries that have a low national
income. (HM Treasury glossary).
development area Part of the country where the government provided particular
assistance.
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 capital Funds allocated to let a business expand.
development cost In accounting, cost of turning applied research into products. There
is a limited authority to capitalise such expenditure. Otherwise it
must be written off as an expense in the profit and loss account.
There are specific provisions in Companies Act 2006 s844.
development gains tax Tax charged between 17 December 1973 and 31 July 1976 on the
gain when selling any land other than a persons 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.
Devils advocate Person who argues a case solely as a means of testing its veracity.
The term originated in the Church.
devils Colloquialism 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.
devolved administrations Collective term for the Scottish Parliament, Welsh Assembly and
Northern Ireland Assembly.
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.
DHCP In computing, dynamic host configuration protocol.

This is an automatic configuration protocol used on IP networks
on the Internet.
DHP Discretionary housing payment.
diabetic food For VAT, diabetic food generally follows the same treatment as the
mainstream equivalent (VAT notice 701/14).
diabetes This condition comes within the scope of chronically sick or

disabled, which allows certain supplies to a sufferer to be zero-
rated, as explained in VAT notice 701/7.
diagnosis Identification of the course of an illness and, by extension, of any

other type of problem.
It should be noted that problems are diagnosed; people are not.
The plan of what to do about the problem is a prognosis.
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 Kennys 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 cars list price is
multiplied.
diesel car Car which is propelled solely by diesel (Income Tax (Earnings and
Pensions) Act 2003 s141(3)).
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.
However, a VAT tribunal zero-rated a dietary supplement in
what it described as a borderline case in Arthro Vite Ltd [1996] VTD
14836.
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 users identity and can
establish the users authority to perform a particular task.
digital computer Computer where data is handled digitally. All computers from the
1980s onwards have been digital.
Digital Copyright Exchange

Body proposed in a BIS paper published on 2 August 2011. It would
allow copyrights be freely bought and sold.
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 customers 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.
dike For capital allowances, this is specifically excluded from the scope
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
(Inspectors Manual at BIM 43521).
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.
The capital gains tax implications are given in Taxation of
Chargeable Gains Act 1992 s151K.
s564D.
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.
Diners Club A brand of charge card. It is not possible to use this card to pay tax.
Diocesan Board of Finance (DBF)

Body corporate that exists in each diocese of the Church of England
to administer its financial matters. The term is defined in
Endowments and Glebe Measure 1976.
Such a body is restricted in being regarded as a charity (Charities
Act 2011 s10(2)(b)).
diocese Area of a country that is administered by a bishop in the Church of

England or (using different boundaries) in the Roman Catholic
church.
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 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).
diram One hundredth of a somoni, currency of Tajkistan.
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 companys
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 debit may be used to pay tax owed under self-assessment,
either as payments on the due dates of 31 January and 31 July, or for
monthly or weekly payments under the Budget Payment Plan.
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 equality law.
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 directors 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.
directors 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 explanatory report

Report that must be issued by directors of merging companies in
respect of a proposed merger (Companies Act 2006 s906). The
contents are set out in s908.
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 deceaseds bank account.
Guidance on this is given in HMRCs 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.
Legally, the trader is still regarded as the declarant.
directrix 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 persons 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.
direktr 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 Definition
A physical or mental impairment which has a substantial and long-
term adverse effect on [a persons] ability to carry out normal day-

to-day activities (Disability Discrimination Act 1995 s1(1)).
Tax provisions
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.
Company cars
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 persons allowance
for income tax
for council tax, a house adapted to accommodate a
disabled person is taxed at one lower band.
VAT on charity funded equipment

For VAT on charity funded equipment, the term means a physical
or mental impairment that has a substantial and long-term adverse
effect on a persons ability to carry out day-to-day activities.
Frail elderly people who are not disabled, or people whose
mobility is temporarily impaired by short-term illness or injury are
not chronically sick or disabled for the purposes of this VAT relief
(VAT notice 701/6).
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 persons disability
(Disability Discrimination Act 1995 s55(1)).
Disability Discrimination Act 1995

Law that seeks to relieve discrimination against disabled workers. Its
provisions were introduced in stages.

From 1 October 2004, service providers must make reasonable
adjustments to their premises to accommodate the disabled. Such
adjustments may be physical (installing a ramp or hearing loop), or
procedural (allowing a disabled employee to work on a ground floor,
serving a customer at the door).
For tax, guidance has been provided on whether adjustments are
capital or revenue.
Examples of capital expenditure include a permanent ramp,
widening a doorway, installing a lift or hoist, alterations to floor
levels, moving a wall.
Examples of revenue expenditure include large print documents,
staff training, notices, minor adjustments (such as lowering a door
handle), replacing handrails, redesignating parking bays.
disability equipment Equipment to comply with the Disability Discrimination Act 1995.
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
Benefits Act 1992 s71.
This benefit is not subject to income tax (Income Tax (Earnings
and Pensions) Act 2003 s677).
disability pension A pension received for a disability sustained in military service or

during war may be exempt from income tax under Income Tax
(Earnings and Pensions) Act 2003 s641.
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 persons 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 persons 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 (Earnings and Pensions) Act 2003 s171(4).
disabled persons 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.
disablement pension Pension paid to someone whose employment has ended because of a
disability suffered at work or during war. Such a payment may be
exempt from income tax under Income Tax (Earnings and Pensions)
Act 2003 s644.
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 groups 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 Accounting
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 information required by Statement of Principles.
Tax information
HMRC is restricted in disclosing a taxpayers information under the
duties of confidentiality as set out in various laws, particularly
Commissioners for Revenue and Customs Act 2005 s18.
In general, HMRC may only disclose personal tax information
to:
the taxpayer
someone appointed by the taxpayer, such as an agent
in court and tribunal proceedings
to the Revenue and Customs Prosecution Office
to certain other statutory bodies, such as the police, in
defined circumstances, and
to the tax authorities of other countries in defined
circumstances.
The taxpayer may disclose his own tax affairs freely.
Insurance
In insurance, the duty of any person applying for an insurance policy
to tell the insurer all relevant information affecting the risk.
Investment
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
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, particularly on the price for which
goods or services provided.
For most tax and accounting purposes, a discount simply reduces
the turnover or sales figure. It is thus a reduction of gross profit.
For VAT purposes, VAT notice 700 distinguishes between three
types of discount.
For an unconditional discount, VAT is charged on the
discounted amount.
For a discount for prompt payment, VAT is normally charged
on the discounted amount, even if the customer pays later or
otherwise does not take the discount. If the customer pays by
instalments, VAT is charged on the amount actually paid.
For a contingent discount (usually that the customer buys more
goods), VAT is charged on the amount paid. If a discount is
subsequently given, a credit note with VAT may be issued.
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 donors 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). It
is discussed in the Inspectors Manual at BIM 44180.
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 for prompt payment

Discount that may be claimed by a customer who pays an invoice
promptly.
VAT notice 700 states that VAT is charged on the discounted
price, even if the customer does not pay promptly or does not
otherwise take the discount.
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.
discrete data In statistics, information counted in steps, as against continuous

data that are counted in ranges.
Numbers of people employed in departments are discrete data,
their heights are continuous data.
discretion Exercise of a choice, such as how trust funds are to be used.
discretionary account Clients 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.

The term is particularly used for social security benefits from the
Social Fund.
It is also used in relation to payments by trustees (Income Tax
Act 2007 s493).
discretionary reduction Reduction in council tax that a local authority may choose to provide
for domestic property that has been empty for up to six months.
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.
discriminant analysis In statistics, method of predicting into which group an item will fall
(such as successful or unsuccessful). Credit scoring is an example.
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.
disease control order Order requiring an animal or animals to be slaughtered to contain a

disease.
For the herd basis, the tax implications are given in Corporation
Tax Act 2009 s115 and 124.
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.
This is now in Corporation Tax Act 2009 from s486A.
dishonest conduct notice Notice that HMRC would be able to serve on a tax agent suspected
of engaging in dishonest conduct, according to a consultation
document issued in July 2011.
The notice would have to be authorised by a senior officer of
HMRC. The agent could appeal to a tribunal.
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.
dishwasher This is listed in Capital Allowances Act 2001 s23 List C as an item
that is not affected by the provisions of s21 (buildings) or s22
(structures). This means that its eligibility for capital allowance
depends on the nature and purpose of the item.
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 5-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 years 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 (Income Tax (Earnings and Pensions) Act 2003 s65(4)).
dispenser Person who dispenses, particularly a pharmacist.
displaced person Person who has been displaced by war or similar disruption.
display equipment This is listed in Capital Allowances Act 2001 s23 List C as an item
dispone In Scots law, process by which one persons 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.
disposable property In relation to income tax and settlements, the term is defined in
Income Tax Act 2007 s468.
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.
disposal-related investment
Investment that is a disposal-related obligation. The term is fully
defined in Income Tax Act 2007 s439(6).
disposal-related liability Liability of a charity that arises from a disposal-related obligation

(Income Tax Act 2007 s440).
disposal-related obligation
Disposal of an asset to a charity subject to certain conditions
imposed on the charity. The tax implications are given in Income
Tax Act 2007 s439.
disposed property In relation to income tax and settlements, the term is defined in
Income Tax Act 2007 s471(2).
disposition The disposal of any part of a persons 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 arms length
price.
disposition of land There are restrictions on such disposition by charities as set out in
Charities Act 2011 from s117.
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.
disqualifying event Event that has the effect of removing a tax advantage.
An example is given in Income Tax (Earnings and Pensions) Act
2003 s533 in relation to enterprise management incentive.
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 distribution 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.
Dissosticus Species of fish that includes Patagonian toothfish, Chilean seabass

and Antarctic toothfish.
The importation of such fish requires a Catch document as a
condition of obtaining Customs clearance.
distance selling Any arrangement whereby a consumer makes a purchase away from
the sellers 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 suppliers state. So
a UK supplier providing goods to an individual in France must
charge UK VAT on the sale.
Also if the customers 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)

Consumer Protection (Distance Selling) Regulations SI 2000 No
2334.
The regulations implement European Directive 97/7/EC of 20
May 1997.
The regulations deal with consumer sales by mail order or
Internet.
The main provisions are:
the consumer has a seven-day cooling-off period to change
his or her mind
the supplier is obliged to provide a written record (failure
to do so extends the cooling-off period to three months)
the consumer has the right to full reimbursement on
cancellation as permitted
the goods should normally be supplied within 30 days
the consumer is protected for fraudulent use of a credit
card.
There are some exceptions, such as for food and leisure services.
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.
distant water trawlermen Before 6 April 2006 (when the normal pension retirement age was
60), such a person was allowed to retire on a full pension at the age
of 55.
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).
distillers 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.
distillers 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 distillers 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.
Distinguished Conduct Medal

Award for bravery. Payments of pension or annuity in respect of the
award are free of income tax (Income Tax (Earnings and Pensions)
Act 2003 s638).
Distinguished Flying Cross

Act 2003 s638).
Distinguished Flying Medal

Act 2003 s638).
Distinguished Service Medal

Act 2003 s638).
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 companys 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.
A company must be able to justify a distribution from its
accounts (Companies Act 2006 from s836).
distribution cost Expenditure relating to warehousing, packing and delivery of goods.

distribution in kind When a dividend or equivalent payment to a companys members is

made by providing an asset rather than cash. This is legal but most
rare.
The asset must be valued and comply with the rules for a cash
dividend (Companies Act 2006 s845).
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.
districting Practice of companies supplying products or (more usually) services

only in a defined area.
Such arrangements were common among utility companies
before nationalisation in the 1940s.
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.
diver Continental shelf

The taxation of divers working on the Continental Shelf is set out in
Income Tax (Trading and Other Income) Act 2005 s15.
Early retirement on full pension

A diver may retire on a personal pension at the age of 40, provided:
to consent,
RPSM03106035).
The regulations specify that this applies to saturation, deep sea
and free swimming diving.
diverge Move further apart. The term has a more specific meaning than to
differ.
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 Companies
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).
Insurance
An amount returned to the holders of certain types of policy, by the
insurance company, out of its earnings
Mathematics
A number to be divided by another number (the divisor) to give an
answer (the quotient).
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
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 companys 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 stripping Arrangement where the value of an investee company is materially

reduced by the payment of a dividend. The provisions for chargeable
gains are set out in Taxation of Chargeable Gains Act 1992 s177.
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.
diving board This is listed in Capital Allowances Act 2001 s23 List C as an item
diving supervisor The taxation of diving supervisors working on the Continental Shelf
is given in Income Tax (Trading and Other Income) Act 2005 s15.
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 Franois Divisia.
division Mathematics
Mathematical process of determining how many times one number
may be multiplied to become another number, so 12 may be divided

by 4 to be 3.
In this example, 12 is the dividend, 4 is the divisor and 3 is the
quotient.
Company law
In company law, either a discreet part of a company, or the process
of splitting a company into parties. The law for the latter is given in
Companies Act 2006 from s919.
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. In 12 4 = 3, the divisor is

4.
divorce The legal process which ends a marriage even though both parties
are still alive. A person who is divorced is called a divorcee.
Taxation of Chargeable Gains Act 1992 s225B gives details on
the consequences of divorce for private residence relief.
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.
DMBM HMRC Inspectors Manual on debt management and banking.
DNS Domain name system.

In computing, the hierarchical naming system for any resource
connected to the Internet or to a private network.
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.
dobra Currency of Sao Tome and Principe.
dock Loading ships

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.
Profits from this, when run as a trade, are subject to income tax
(Income Tax (Trading and Other Income) Act 2005 s12) or
corporation tax (Corporation Tax Act 2009 s39).
For capital allowances, this is specifically excluded from the
scope of plant and machinery (Capital Allowances Act 2001 s22(1)
List B).
Other meanings
(1) Cut, remove, reduce, such as to subtract from wages.
(2) 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
barristers fee.
doctor (Dr) (1) Medical practitioner.

(2) Holder of a doctorate awarded by a university.
(3) Adjust to give a false outcome, such as in amending equipment
or figures.
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 in the Inspectors Manual at BIM24655.
doctrine of incorporation In international law, the legal principle that international laws are
automatically incorporated into every countrys 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 countrys 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 (1) Domestic pet.

A dog may be imported into the UK under the Pet Passport
Scheme without the need for quarantine.
(2) 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 Countrys 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 employees family or household
(Income Tax (Earnings and Pensions) Act 2003 s280(3)).
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 households 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 persons domicile is established by operation of law.
This applied when a woman married; her domicile of origin was
replaced by her husbands 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 (1) Where one company, person, product or policy is so powerful

that it dictates to others.
(2) In game theory, elimination of all pay-offs where there are better
alternatives until a matrix is reduced to 2 x 2.
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 Semaynes 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
donors 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.
dong Currency of Vietnam.
donor Individual or organisation that makes a grant. Also called a grantor.
donor unknown or disclaiming

Term used in Charities Act 2011 s63 in relation to the cy-prs rules
for charities.
door Part of a building (Capital Allowances Act 2001 s21(3) List A).
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.
The equivalent provisions for charities are given in Charities Act
2011 from s107.
dormant bank account Another name for a dormant account.
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 General
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.
Accounting
Produce twice as much money, such as in terms of turnover, profit or
winnings.
Perform two roles, particularly in the performing arts. This

includes acting two parts in a play or playing two instruments in an
orchestra
Coin.
Coin worth of an old penny, once issued in Guernsey.
double allowance Being able to claim two capital allowances for one asset. It is
prohibited by Capital Allowances Act 2001 s7.
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 bottom In charting, a graph that shows a security or index hitting the same
low twice. It is assumed that it will then gain value.
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 dip recession Recession during recovery from a recent recession, such as when
government action is too severe. It was feared that government
action in 2010 would lead to a double dip recession.
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 jeopardy Legal principle that a person should not be punished twice for one
offence.
There is no overriding legal principle to this effect, though it is
evident in many specific legal provisions.
An example for tax purposes is Finance Act 2011 Sch 23 para
42.
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 relief Claiming a tax relief twice.

This is generally disallowed by specific provision in legislation.
An example is Capital Allowances Act 2001 s52A.
double relief for interest Being able to claim tax relief for an interest payment twice. There
are provisions in Income Tax (Trading and Other Income) Act 2005
s52 to prevent this.
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 tax charge Situation where the same profit or gain is taxed twice.
In particular, the term applies when a company sells an asset and
the shareholder extracts the proceeds. The company is taxed on the
chargeable gain from selling the asset, and the shareholder is taxed
when he extracts that profit by a dividend or liquidation. For this
reason, normal capital gains tax planning often includes keeping
valuable assets outside the company.
Double tax charge can arise in other situations, such as when a
person pays income tax on their earnings which are then subject to
inheritance tax on death.
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
employees normal hourly rate.
double top In charting, a graph showing a security or index hitting the same
high twice. It is assumed that it will then lose value.
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.
The matter is discussed in the Inspectors Manual at BIM 42701.
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 (Income Tax (Trading and Other Income) Act 2005 s35).
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
sons 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 husbands
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 Da z pidan 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.
drainage ditch For capital allowances, this is specifically excluded from the scope
drains Trading income

Profits from this, when run as a trade, are subject to income tax
Capital allowance
Part of a building (Capital Allowances Act 2001 s21(3) List A).
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 customers 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%.
drawdown pension year Year in which a person draws down from his pension fund. The tax
provisions are set out in Finance Act 2004 Sch 28.
Before 6 April 2012, such a year was known as the unsecured
pension year.
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.
dredging Removing silt and similar operations to harbour, estuary or

waterway to improve the navigation for ships.
This attracts a writing down allowance under Capital Allowances
Act 2001 s484.
Between 17 January 1966 and 31 March 1986, dredging also
attracted a 15% first year allowance.
drengage Ancient form of land tenure.
dress code Business management

In business management, the standards of dress that staff are
expected to follow. These became less formal and more casual
during the 20th century.
A typical dress code has these main elements:
protective clothing must always be worn as required,
a uniform must be worn when necessary to identify a staff
person to the public,
staff who represent the employer to the public should be
dressed smartly,
other staff should not dress in a manner which is
distracting (such as not in a gorilla suit or bikini).
Categories
Categories of dress are subjective, but are usually divided into about
five categories:
formal (dinner jackets, ball gowns, robes)
business (suits)
smart casual (trousers and top, no tie, but well tailored)
casual (T-shirts or sweatshirts, with trousers or skirt )
streetwear (anything else).
Tax implications
Consideration of dress code may be relevant in determining tax relief
for uniforms and corporate clothing.
dress-down Friday In business management, the provision that staff may dress more
casually on a Friday and not follow the usual dress code. The idea is
to generate a less formal and sometimes more creative and
motivating attitude on a weekly basis.
Such a provision dates back to Aloha, Hawaii in 1947, but
became common during the 1990s.
It is also known as Aloha Friday or casual day.
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.
DRT Detonation Resistance Test Certificate.
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 dock This is listed in Capital Allowances Act 2001 s23 List C as an item
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).
D series Series of codes used by the HMRC SAFE computer system to record
disclosure scheme charges and distraint costs incurred by a taxpayer.
A list of the codes is given in the Inspectors Manual at

DMBM115020.
DSMEG Duty Suspended Movements of Excise Goods - the Excise Duty

Points (Regulations 2001).
DSP Director of Service Prosecutions.
DSR Debt service ratio.
DTB Deutsche Terminbrse.
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.
DTTP Double taxation treaty passport.

DU Duodenal ulcer. Common abbreviation for sick notes (HMRC leaflet

E14).
dual In statistics, the underlying value of a resource, such as the

additional profits that may be gaining by adding one unit of a
constrained resource.
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.
dual-headed Description of a company group structure where there are two

companies acting as a parent company.
Such a structure is most unusual, but is mentioned in the
Inspectors Manual at BIM 44295.
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
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.
dual use Description of goods that may be used for military or non-military
purposes. Such goods usually require an export licence to be sold
outside the UK, even to another EU member state.
dubitante Latin: doubting.
ducat For VAT, gold investment coin issued by Austria and listed in VAT
notice 701/12A.
duck 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, Peking and derivatives and
crossbreeds of these.
DUCR Declaration Unique Consignment Reference.
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.
due to Some grammarians insist that this expression may only precede a
noun and that a phrase must be preceded by owing to.
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 Tomlins 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 partnerships
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.
Durbin-Watson coefficient of serial correlation

In statistics, a measure of serial correlation. The coefficient falls in
the range of 0 to 4. The close it is to 2, the more random are the
residuals.
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)).
A slightly different definition is used in Value Added Tax Act
1994 s18(6).
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

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 banding For excise duty, the various bands of alcoholic strength that
determine how much duty is paid on wine and made-wine.
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.
This is set out in Value Added Tax Act 1994 s18(6).
duty relief procedure Procedure that allows a low rate or nil rate of Customs duty to be
paid for imported goods in certain circumstances, such as temporary
import or re-importations.
duty representative A person authorised and registered by HMRC 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).
For stamp duty land tax when more than one dwelling is taxed, a
definition is given in Finance Act 2004 Sch 22 para 7.
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 In mathematics, a base used for natural logarithms. The number
cannot be precisely stated, but approximates to 2.7182818.
E Council tax
For council tax, the band immediately above the average band. It
applies for properties with these values:
in England, between 88,001 and 120,000 in 1993
in Wales, between 100,001 and 135,000 from 1 April 2005,
and 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.
National insurance
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.
Company cars
From 6 April 2011, the P11D code for company cars that have
electric engines or otherwise have zero carbon dioxide emissions.
Before 6 April 2011, the code referred to electric cars only.
Other meanings
(1) Symbol on a calculator denoting an error.
(2) Old Roman numeral for 250.
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 Blackburns Reports, law reports of the Queens 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 (1) Environment Agency.

(2) 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
Earl of Oxfords 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 employers 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 step Term used in relation to national insurance and disguised

remuneration.
This broadly exempts from class 1 national insurance payments
made between 9 December 2010 and 5 April 2011 (Social Security
(Contributions) (Amendment No 5) Regulations 2011.
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 deferred remuneration

Term used in relation to disguised remuneration (Income Tax
(Earnings and Pensions) Act 2003 s554H(5)).
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.
earmarking Allocating an asset, particularly for an employee under disguised

remuneration. The tax provisions are set out in Income Tax
(Earnings and Pensions) Act 2003 s554Z18.
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 businesss 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 Tax (Earnings and Pensions) Act 2003 s335).
earnings charged on remittance

Income from employment that becomes taxable when remitted
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
Contributions and Benefits Act 1992 s5(1)).
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 persons 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 claimants 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 shares 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

businesss 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.
The capital gains tax implications are given in Taxation of
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) Enhanced capital allowance

(2) European Court of Auditors.
(3) 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)

Regulations SI 2002 No 1775.
ecce signum Latin: behold the proof.
ecclesiastical charity Term defined in Local Government Act 1894.
ecclesiastical corporation Any corporation in the Church of England, whether sole or

aggregate, which is established for a spiritual purpose (Charities
Act 2011 s10(3)).

The section explains to what such a corporation may be regarded
as a charity.
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)
ECON Employers contracting-out number.
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 countrys financial and commercial situation.
economic employer Term used to mean the person who funds the payment of salary or
wages to a worker, as against the legal employer who arranges the
payment.
The term is particularly used to interpret arrangements where a
person is employed by an overseas body on behalf of a UK body.
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
companys 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 countrys 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 countrys economic system from which outcomes may be
determined for different scenarios.
Economic Operator (EO) Person who is registered with Customs or the equivalent authority in
another EU member state.
Economic Operator Registration Identification (EORI)

A number assigned by Customs or the equivalent authority in
another EU member state. The number is valid throughout the EU.
The number is used for Customs purpose.
In the UK, an EORI comprises the letters GB, followed by the
VAT number (of nine digits), followed by a further three digits,
usually 000.
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 profits and losses

In relation to index-linked gilt-edged securities, the term is defined
in Corporation Tax Act 2009 s400B.
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.
ECS Employer Compliance System.
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 Tax definition

A body in England and Wales that is
(a) a local authority ...
(b) an education institution... maintained by a local authority,
(c) an independent school... , or
(d) an institution within the further education sector, or the
higher education sector...
(Income Tax (Trading and Other Income) Act 2005 s71(1)
Section 71(2) gives similar definitions for Scotland.
Corporation Tax Act 2009 s71 gives the same definition for
corporation tax.
These definitions apply in relation to employees seconded to
such establishments.
National insurance definition

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.
Edward Medal Award for bravery. Payments of pension or annuity in respect of the
Act 2003 s638).
Edwards v Bairstow Leading case setting out the limited grounds on which a court may
overturn a Tax Tribunals 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 Tribunals 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 furnished holiday lettings business

Means an overseas property business so far as it consists of the
commercial letting of furnished holiday accommodation on one or
more EEA states (Corporation Tax Act 2009 s748(5)).
Such a business may be taxed as a trade (Taxation (International
and Other Provisions) Act 2010 s127ZA and Corporation Tax Act
2009 s748).
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, means

(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 demand Actual sales demand for a product.
effective duration The duration of a lease for tax purposes.

This is normally the stated term of the lease. It is extended if the
tenant has the unilateral right to extend it, and it is shortened if the
landlord has the unilateral right to terminate it early.
2009 s243.
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 investors 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).
Eider River in Denmark.

Anyone sailing their own craft to a port north of this river may
take duty-free stores on board (Customs notice 8).
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 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 (Capital Allowances Act
2001 s33A).
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 import declaration

Electronic form of the single administrative document used to
determine liability for Customs duty.
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 Returns Storage System (ERSS)

HMRC computer system used for storing on-line tax returns.
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.
elephant test The ability to recognise something without needing (or even being
able) to define it. It is also stated as one knows when one sees it.
The expression comes from the observation that everyone knows
what an elephant is though most people would have a problem
writing a definition.
The term has been used in tax cases, such as in relation to
whether a property is a farm in the case Golding [2011] TC 1211.
eligibility Meeting the requirements for some right or duty.
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 article For excise purposes, alcoholic ingredient used for such purposes as
cooking for which duty relief may be claimed. Further details are
given in Customs leaflet 41.
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.
ELPS Equity Life Payment Scheme.
ELS Electronic lodgement service.
elusen Welsh: charity (Charities Act 2011 s194(2)).
elusennol Welsh: charitable (Charities Act 2011 s194(2)).
EMA European Monetary Agreement.
e-mail Electronic mail.

A means of sending text or files to other computers via an
internet connection.
embankment For capital allowances, this is specifically excluded from the scope
embarras de richesse French: embarrassment of riches.
embedded derivative When a financial derivative is part of a contract, including one for
another financial derivative.
The tax position for loan relationships with embedded
derivatives is given in Corporation Tax Act 2009 from s415.
The tax position for hybrid derivatives with embedded
derivatives is given in Corporation Tax Act 2009 from s584.
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.]
emissions trading Trading in emission standards.

Various tax and other implications are set out in Finance Act
2007 s16.
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 persons position.
employ Engage someone for paid work where there is a master and servant
relationship.
employ 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
Management Act 1970 s15(13)).
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 contributions

Term used in Income Tax (Trading and Other Income) Act 2005 s39
in relation to employee benefit scheme.
employee benefit package A transaction made under such a package is not caught by the
disguised remuneration rules (Income Tax (Earnings and Pensions)
Act 2003 s554G).
employee benefit scheme Scheme designed to benefit employees (Income Tax (Trading and
Other Income) Act 2005 from s38).
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).
A full definition is given in Income Tax (Earnings and Pensions)
Act 2003 s550.
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-controlled Description of a company.

In relation to employment-related securities, there are special
tax provisions in Income Tax (Earnings and Pensions) Act 2003
s421H.
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

Insurance policy arranged by an employer to indemnify claims
against an employee.
This may be tax deductible under Income Tax (Earnings and
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 These 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.
employees code Tax code of an employee under the PAYE system.

A full definition is given in PAYE Regulations SI 2003 No 2682
reg 8.
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.
The capital gains provisions are given in Taxation of Chargeable
Gains Act 1992 from s227.
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 Compliance System

Part of HMRC SAFE computer system (Inspectors Manual at
DMBM115040).
employer diary In computing, a facility provided by HMRCs employer CD-ROM

which gives key dates that 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 (Income Tax (Earnings and Pensions) Act
2003 s393A).
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.
employer reference For PAYE, means the combination of letters, numbers or both used
by the Inland Revenue to identify an employer for the purposes of
these Regulations (PAYE regulations SI 2003 No 2682 reg 2(1)).
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).
employers 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.
employers national insurance (ENI)

Name commonly given to secondary class 1 national insurance.
It is the amount that the employer pays from their own funds, as
against the primary class 1 which is deducted from the employees
pay.
employers PAYE reference

In relation to an employer, means the combination of the
employers employer reference and the Inland Revenue office
number
(PAYE Regulations SI 2003 No 2682 reg 2(1)).
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.
employing company Company that may claim tax relief for employee share schemes, as
explained in the Inspectors Manual at BIM 44300.
employment State of working for another person.

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.
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 employees 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 income provided through third parties

Tax avoidance scheme, in effect outlawed by Finance Act 2011 Sch
2.
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 annuities
Term used in Income Tax (Earnings and Pensions) Act 2003 s609
which discusses their tax treatment.
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 employees 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.
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 status indicator (ESI)

Program on the HMRC website designed to assist taxpayers in
determining whether they are an employee or self-employed.
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.
empowerment Strategy aimed to give people more control and responsibility for
their work
EMPS Handbook Guide for energy market participants, published by the

Financial Services Authority.
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 taxpayers 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
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-use relief Form of Customs relief for certain imported goods provided they are
put to the stated use within an agreed time limit.
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
Majestys forces or against any force co-operating with any of Her
Majestys 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-efficiency elements in a property are ignored when
determining its value for council tax
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, or by Corporation Tax Act 2009 s251.
Such an asset may qualify for a first year allowance under
Capital Allowances Act 2001 s45A. The allowance was first
introduced on 1 April 2000.
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).
English NHS charity NHS charity in England, as defined in Charities Act 2011 s149(7).
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.
Englishmans castle Poetic term for an English home, so-called because a bailiff does not
have the right to break into it when closed.
enhanced capital allowance (ECA)

Particularly high rate of capital allowance allowed for
environmentally friendly assets.
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.

ensonens Term for the part of the brain that was once believed to respond to
financial information.
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 testators 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
from Sch 5, previously Finance Act 2000 Sch 14] (Inspectors
Manual at BIM 44001).
The tax provisions are set out in Income Tax (Earnings and
Pensions) Act 2003 from s527.
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 National insurance

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.
Expenses
Agency fees paid by entertainers are allowable (Income Tax
(Earnings and Pensions) Act 2003 s352).
The provision for an overseas entertainer is set out in Income
Tax (Trading and Other Income) Act 2005 s13.

From Percentage
4 January 2011 12.5%
1 January 2010 11%
1 December 2008 9.5%
1 January 2004 11%
entertainment (1) In accounting, expenses of looking after people, particularly

customers.
The term includes hospitality of any kind (Income Tax
(Trading and Other Income) Act 2005 s45(4)(b)). There are some
exceptions set out in ibid s46.
In general, the cost of entertaining customers and others is
generally not tax-deductible (Income Tax (Trading and Other
Income) Act 2005 s45).

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.
Entertainment includes hospitality of any kind (ibid
s356(3)(a)).
(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

persons belief that he was God.
entire contract Contract where each sides 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 OGrady [1932] 17TC93. The matter is discussed in
the Inspectors Manual at BIM35330.
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 companys 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.]
entries of satisfaction and release

In company law, statements entered into the register of charges that
the debt for which the charge was given has been paid, or the debt
has otherwise been released (Companies Act 2006 s872).
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 persons eligibility... for entry into the United
Kingdom (Immigration Act 1971 s33).
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.
entry processing unit (EPU)

Customs area situated at major ports and airports. It has now been
replaced by the National Clearance Hub.
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 mre 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.
Environment Agency controls

Movement of waste across a frontier may require notification or
consent. Customs clearance cannot be obtained without it.
environmental audit Review of an organisations impact on the environment. This covers

such areas as energy usage, recycling and transport plans for
employees.
environmentally beneficial plant or machinery

The capital allowance provisions are given in Capital Allowances
Act 2001 s45H.
EO Economic Operator.
EOE European Options Exchange.
eo instanti Latin: at that instant
eo nomine Latin: in that name.

EOQ Economic order quantity.
EORI Economic Operator Registration Identification.
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.
EPB Economic Prosperity Board.
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. It
is now replaced by the National Clearance Hub.
(2) European Payments Union.
EPW Externally provided worker.
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 womans 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.
equilateral curve In geometry, a curved edge of a circular shape so designed that it is

always at a constant diameter to its opposite apex.
The British 20p and 50p have seven equilateral curves.
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 Lloyds 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
Oxfords Case [1615]).
Equity is governed by the maxims of equity.
(4) General principles of fairness.
Such principles do not apply to tax law where only the actual
words matter (Attorney-General v LCC [1900] 4 TC 265).
equity accounting Method of accounting used in reports in the balance sheet of the
parent or groups 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-for-debt exception Term used in Corporation Tax Act 2009 s361C for loan
relationship.
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 companys 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 Life Payment Scheme (ELPS)

Scheme introduced by Equitable Life (Payments) Act 2010 whereby
the government provided compensation to policy holders from the
demise of the mutual insurance company Equity Life.
Such payments are free of income tax and national insurance.
Guidance is provided in HMRC Brief 26/11.
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 investors share of the
investment undertakings results and that records the investment in
the consolidated balance sheet at the investors share of the
investment undertakings 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 persons 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
persons 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 Companys 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 partys payment is related to
a share index, and the other partys 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 amount for the new animal

Term used in Corporation Tax Act 2009 in relation to the herd basis
following the compulsory slaughter of animals.
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.
e-recruitment Recruitment of staff on-line.
ERG Efficiency and Reform Group.
ergophobia Fear of work.

eReminder Automatically generated e-mail system to remind a person to do

something.
Companies House launched such a free service on 14 July 2011.
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.
ERSS Electronic Returns Storage System.
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,

not the usual 20% for plant and machinery (Capital Allowances Act
2001 s33A).
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

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.

It was also the currency of Portugal before it adopted the euro.
ESD European Savings Directive.
ESI Employment status indicator.
eskimo Where an eskimo (Inuit) kills a seal in a traditional hunt to provide

sustenance, the state authority may issue a seal attestation. This
document allows the seal or its products to obtain Customs
clearance.
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.
ESS Export Safety and Security.
ESSA Employee and Share Schemes Act 2002.
essence For excise duty, the term means a food essence. This is usually
exempt from duty even if it contains alcohol. Further guidance is
given in Customs leaflet 41.
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 persons 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 persons 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 persons 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 persons 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 persons 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 agent VAT flat rate scheme

From Percentage
4 January 2011 12%
1 January 2010 10.5%
1 January 2004 11%
estate assets Assets owned by an estate on a persons death. Their value is the
amount on which inheritance tax is calculated.
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.
estate spreading Practice of dividing an estate between members of a family as a

means of reducing the overall tax liability.
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 Approximation based on some facts, so more than a guess.

An estimate may be used in a tax return if the actual figure is not
available. The estimate must be identified with reasons why the
actual figure is not available. An adjustment must be made once the
actual figure is known.
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 Mobilires.
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.
Europasches Patentamt German: European Patent Office
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 Commission Licence

Licence needed for certain products that could pose a risk to the
environment, such as ozone-depleting gases and fluorinated
greenhouse gases. Such a licence may be needed to get Customs
clearance for importation.
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 co-operative society (SCE)

Body formed under EU Council Regulation 1435/2003 article 7.
It is UK-resident for corporation tax if registered in the UK
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 cross-border merger

Corporation tax provisions are given in Corporation Tax Act 2009
from s431.
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 others 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 Patent Register Register held by European Patent Office of all European patents.
The register was formally known as Register Plus.
The European Patent Register is the place where the European
Patent Office stores all the publicly available information it has on
European patent applications as they pass through the grant
procedure. It is a free internet service accessible via the quick link
www.epo.org/register (EPO website)
European Patent Office (EPO)

European body based in Germany that provides patents covering
Europe.
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.
EUTT Exempt unauthorised unit trust.
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 Definition
Documents, testimony and other means by which facts are adduced.
The courts have developed many rules of what constitutes acceptable
evidence.
The acceptability of evidence is broadly a two-stage process:
whether the evidence is relevant, and whether there is any reason to
exclude it.
Rules of 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.
HMRC documents
A document that appears to have been issued or signed by statutory
authority of the Commissioners of HMRC shall be so treated, and is
admissible in legal proceedings (Commissioners for Revenue and
Customs Act 2005 s24).
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.
EVPI Expected value of perfect information.
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 witnesss 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 witnesss own counsel in

court.
examination of individual or group accounts

Term used in Charities Act 2011 s154(3).
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
excepted charity Church that need not submit accounts to the Charity Commissioners.
excepted deductions Deductions that an employer may make from the pay of an employee
(Employment Rights Act 1996 s14).
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.
exceptional circumstances Term used in extra-statutory concession A19 in relation to when the
state will give up tax notified within 12 months of end of the relevant
tax year.
The interpretation of these circumstances was considered by the
tax tribunal in the case Clarke TC 1164.
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 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.
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 finance and IP income

In relation to controlled foreign companies, a term that is used in
Income and Corporation Taxes Act 1988 s751AB(7).
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 businesss
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.
exchange gains and losses Gains and losses that arise from differences in exchange rates, rather
than from trading.
2009 from s328.
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 assurance officer Employee of HMRC who deals with businesses that deal in excised
goods, namely hydrocarbon oils, alcoholo, tobacco, and betting and
gaming.
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 distillers warehouse (Customs and Excise
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
(Earnings and Pensions) Act 2003 s202).
excluded business expenses

For PAYE, payments that an employer may legally make to an
employee without having to deduct income tax. A full definition is
given in PAYE Regulations SI 2003 No 2682 reg 5.
excluded decision Decision of the Upper Tribunal for which there is no right of appeal
to the Court of Appeal (Tribunals, Courts and Enforcement Act 2007
s13(8)).
excluded notional payments

For PAYE, certain payments made by using credit-tokens or
vouchers. The term is fully defined in PAYE Regulations SI 2003
No 2682 reg 4(2).
excluded pecuniary liabilities

For PAYE, means payments made to a person other than an
employee to meet the employees liability to that other person, but
which are not made
(a) in fulfilment (in whole or in part) of the employees right to a
sum of money, nor
(b) as, or as part of, any scheme or arrangement the purpose, or
one of the main purposes of which is to avoid the making of a
relevant payment
excluded property Property whose transfer cannot give rise to a liability under
inheritance tax (Inheritance Tax Act 1984 s3(2) and 6).
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 moneys worth.
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 relocation expenses

For PAYE, means payments in respect of removal expenses as
defined by section 272 of [Income Tax (Earnings and Pensions) Act
2003] ... if, and to the extent that they are payments of net PAYE
income
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 artists model, or
(b) services provided wholly
(i) in the workers own home, or
(ii) at other premises which are neither controlled or
managed by the client nor prescribed by the nature of the services
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 retailers 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 purchaser.
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 persons estate in Scotland by

being named in the will.
executorship Discipline of dealing with the estates of those who have died.
executors 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 persons 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 because the supply qualifies for
exemption.
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 beneficiarys 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 charity A charity that is relieved of some accounting requirements.

The law is contained in Charities Act 2011 s22 and Sch 3.
exempt department Certain government departments that were allowed to buy goods free
of purchase tax, provided they indemnified the supplier.
exempt deposit rights In relation to income by a charitable trust, means

(a) a right to receive, with or without interest, a principal
amount stated in, or determined in accordance with, the current terms
of issue of an eligible debt security, where in accordance with those

terms the issue of uncertificated units of the eligible debt security
corresponds to the issue of a certificate of deposit,
(b) a right to receive the principal amount stated in a certificate
of deposit, with or without interest, and
(c) an uncertificated right to receive a principal amount, with or
without interest, as a result of a deposit of money
(Income Tax Act 2007 s534(4).
exempt distribution Type of distribution between companies in a group which has a

special tax treatment under Income and Corporation Taxes Act 1988
s213.
In relation to value shifting, the term is defined in Taxation of
Chargeable Gains Act 1992 s31(7).
exempt dwelling Residence that is not liable for council tax, such as vacant dwellings
(subject to time limits and conditions).
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 beneficarys
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.
The law on exemption is given in Value Added Tax Act 1994
s31. The schedules of exempt supplies is given in ibid Sch 9.
exemption certificate Document that indicates that something qualifies for exemption from
a provision.
An example is a certificate that may be issued by the Health and
Safety Executive in relation to the importation of fertiliser. This
certificate may be needed to obtain Customs clearance.
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 condition For the purposes of amending EU treaties, an amendment that does
not come within the scope of European Union Act 2011 s4 (ibid
s2(3)).
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 rate card Card provided to a married woman to show that she had made a
valid election to pay the reduced rate of class 1 national insurance.
Such an election cannot be made from 1977, but existing
elections can remain valid. From 1974, these records were
computerised.
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.
exempt unauthorised unit trust (EUUT)

Unauthorised unit trust all of whose investors are wholly exempt
from capital gains tax or chargeable gains.
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 facie absolute disposition

Form of charge on a company that may be registered in Scotland. It
is addressed in Companies Act 2006 s881.
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 date In relation to share incentive plan, the date from which shares cease
to be part of the plan (Income Tax (Earnings and Pensions) Act 2003
s506(1)).
exit event Term used in relation to shares used in disguised remuneration

(Income Tax (Earnings and Pensions) Act 2003 s554I(6)).
exit strategy Means by which an investor or proprietor of a business plans to sell

his or her interest in the business.
Tax is a significant factor in determining the strategy.
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 ones 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, expatriate 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 In statistics, average outcome if an event is repeated enough.

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 peoples 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 pay-off In statistics, the average outcome if a decision could be repeated

enough times.
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 value of perfect information (EVPI)

In statistics, the additional profit that would have been earned if the
business had been able to predict the future accurately and correctly.
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.
In relation to charities, Income Tax Act 2007 s545 states that the
term does not include investment, making loans or repaying loans.
expense Cost of a business which relates to being in business rather than to

the cost of the products or services supplied.
Income Tax (Trading and Other Income) Act 2005 s27 states that
an expenses refers to an item brought into account, and does not
necessarily mean that any money has been paid.
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 companys 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.
experts report Report produced by an expert for a particular purpose.

An example is such a report produced for a merger of public
companies (Companies Act 2006 s909).
exports seconded to European Union bodies

Such experts benefit from a tax exemption in Income Tax (Earnings
and Pensions) Act 2003 s304A from 1 January 2011.
expert system Software which applies an experts 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)).
exploration work For chargeable gains in oil industry, means work carried out for the
purpose of searching for oil anywhere in that area (Taxation of
Chargeable Gains Act 1992 s196(6)).
explosives Customs may seize any explosives brought into the country.
exponential In mathematics, a rate of increase that is itself increasing.
exponential distribution In statistics, a model that reflects constant growth over time. For
example, if a customer on average must queue for 20 minutes,
exponential distribution can establish that 22% of customers must
queue for at least 30 minutes.
exponential smoothing In statistics, a simple way of projecting a trend using historic data.
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
customers 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.
A company may be able to claim tax relief for payments to this
body (Corporation Tax Act 2009 s91).
export declaration Declaration made in connection with the export of goods.

Either a full or a simplified export declaration may be made.
export department Part of a company which deals with sending goods overseas.
export house Company which specialises in arranging export of goods.
export licence Licence required for the export of certain goods, mainly military,
para-military and dual use goods. The licence is issued by
Department for Business, Innovation and Skills. The licence is
required to any other state, even another member of the EU.
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 ones 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 that attach to the
share.
ex-spouse For pensions, 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 A period that has been allowed to proceed beyond its normal closing
date.
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 organisations 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).
externally provided worker (EPW)

In relation to research and development tax credits, means staff who
are not employees.
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 solar shading For capital allowances, this may qualify as a feature integral to a
building (Capital Allowances Act 2001 s33A).
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 resolution Resolution which requires a vote of at least 75%.
extra pay day For PAYE, means the last day in a tax year on which a main
relevant payment is due to be made to the employee if
(a) the employees main relevant payments are made weekly or
at greater intervals which results in the number of pay days varying
from tax year to tax year (solely because of the number of days in a
calendar year), and
(b) the day falls in a short payment period
extrapolation In mathematics, determining a result from other results. An example

is to calculate a number that is not in a table by reference to two
numbers that are.
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 couponing Practice of spending considerable time following up special offers

and bulk buying to reduce household expenditure by a large amount.
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.
extrinsic evidence Evidence taken from outside sources to clarify a document.

The term is used in Administration of Justice Act 1982 s21 in
relation to establishing the testators intentions in a will.
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).
Eye tests are a health benefit for which certain social security
claimants may get assistance.
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 Council tax
For council tax, the sixth band of property values, for these property
values:
and between 90,001 and 120,000 before;
A band F property is subject to council tax at 13/9 of the rate for an
average band D property.
National insurance
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.
Law reports
(1) Federal Reporter, series of US law reports.
(2) Fraser, series of Scottish law reports issued from 1898 to 1906.
(4) Degree of temperature on the Fahrenheit scale.
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.
face-value vouchers There are special VAT provisions set out in Value Added Tax Act
1994 Sch 10A.
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 commerce, 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.
factor analysis In statistics, process of simplifying complex problems into a

manageable problem by consolidating many variables into one.
factor cost In economics, measure of value of goods at the point of delivery

before taxes are added and any subsidies deducted.
factorial A series of multiplications of the number with all integers below

down to 1. A factorial is indicated by an exclamation mark after the
number, so 5! means factorial of 5, which is 5 x 4 x 3 x 2 x 1 which
is 120. Factorials are used in some mathematical formulae.
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 HMRCs 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 stores 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.
Profits from running fairs (or the rights to do so) are taxed as if it
were a trade (Income Tax (Trading and Other Income) Act 2005
s12).
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 arms 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.
fairness Acting in a proper, honest and even-handed manner.

Tax law generally is not bound by any concept of fairness, as tax is
charged and administered according to the letter of the law. Fairness
can become relevant in the administration of tax procedures.
In such context, judicial guidance has been given.
~
What does fairness require in the present case? My Lords, I

think it unnecessary to refer by name or to quote from, any of
the often-cited authorities in which the courts have explained
what is essentially an intuitive judgment. They are far too well
known. From them, I derive that
(1) where an Act of Parliament confers an administrative
power there is a presumption that it will be exercised in a
manner which is fair in all the circumstances.
(2) The standards of fairness are not immutable. They may
change with the passage of time, both in the general and in their
application to decisions of a particular type.
(3) The principles of fairness are not to be applied by rote
identically in every situation. What fairness demands is
dependent on the context of the decision, and this is to be taken
into account in all its aspects.
(4) An essential feature of this context is the statute which
creates the discretion, as regards both its language and the shape
of the legal and administrative system within which the decision
is taken
(5) Fairness will very often require that a person who may
be adversely affected by the decision will have an opportunity
to make representations on his own behalf either before the
decision is taken with a view to producing a favourable result;
or after it is taken, with a view to procuring its modification; or
both.
(6) Since the person affected usually cannot make
worthwhile representations without knowing what factors may
weigh against his interests fairness will very often require that
he is informed of the gist of the case which he has to answer.
Lord Mustill in R v Secretary of State for the Home Office ex

parte Doody [1994] IAC 531 at 560D.
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 Accounting

The amount at which an asset or liability could be exchanged in an
armed lengths transaction between informed and willing parties,
other than in a forced or liquidation sale (FRS 7 para 2).
Futures contract
The theoretical price at which a futures contract should trade to be
equivalent to the purchase price of the underlying instrument.
Insurance companies
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
Loan relationship
For loan relationship, the term is defined in Corporation Tax Act
2009 s313.
fair value accounting For loan relationship, the term is defined in Corporation Tax Act
2009 s313.
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 information required by Statement of Principles.
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.
families and friends Term used by HMRC for informal tax agents, such as where an
individual is assisted by someone more knowledgeable in tax affairs
than the taxpayer but who is not a tax professional.
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 planning Provision of contraception and other arrangements that permit sexual
activities without the risk of pregnancy.
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.
fanner Alternative name for a person to whom Customs farmed out the
collection of Customs duties in 13th century.
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 USAs $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 Land, buildings and other assets used for the trade of farming.
As there are many tax reliefs for farming (particularly
agricultural property relief for inheritance tax), it can be a matter
of importance whether a property is a farm.
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.
farming Trade
This is a trade for tax purposes, except where the farming is
conducted other than as a trade (Income Tax (Trading and Other
Income) Act 2005 s9).
Similar principles apply to corporation tax (Corporation Tax Act
2009 s36).
Tax collection
Old method historically used to collect taxes by delegating the task
to local people. It led to widespread corruption and was abolished.
Value added tax

There are special provisions set out in Value Added Tax Act 1994
s54.

Under the VAT flat rate scheme, the appropriate percentage is
generally:
From Percentage
4 January 2011 6.5%
1 January 2010 6%
1 January 2004 6%
There are separate rates for agricultural services, and forestry and
fishing.
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
between 1684 and 1692.
FAS Flexible Accounting System.
FASB Financial Accounting Standards Board
facsimile copy Another term for a fax.

Faster Payments Service (FPS)

Facility provided by banks whereby money is transferred between
accounts within hours rather than days.
HMRC cannot make or receive payments under FPS.
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.
FCPE Finance company partial exemption.
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.
F-distribution In statistics, a distribution of the ratio of two independent variables.
FE Further education.
feal and divot In Scotland, the right to cut turf or peat.

feasible region In mathematics, the collection of all possible solutions from which
the optimal solution is selected.
Fed discount rate Rate of interest charged by the US Federal Reserve to the banks in
return for collateral.
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 income tax Tax charged in the USA by the Federal Government. Most states
impose an additional state tax.
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 (FIT) Amount paid for microgeneration of electricity, such as when
business or residential premises sell on surplus electricity produced
from solar panels or wind turbines. It was established in April 2010.
fee-farm Tenure where land is held in fee simple.
feel of the paper One of the Bank of Englands 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 ones 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.
FERA Food and Environment Research Agency.
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.
ferret Domestic animal. A ferret may be imported into the UK under the
Pet Passport Scheme without the need for quarantine.
ferry Profits from running this are taxed as if it were a trade (Income Tax
(Trading and Other Income) Act 2005 s12).
fertiliser The import of large consignments of fertiliser with a high

ammonium nitrate content may need either an Exemption Certificate
or a Detonation Resistance Test Certificate as a condition of
obtaining Customs clearance.
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.
Fgas Fluorinated greenhouse gases.
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.
fianc Man to whom a woman is engaged to be married. The equivalent

term for a woman is fiance.
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.
Fibonacci sequence In mathematics, a series of numbers where one is the sum of the
previous two. So the series starts 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89,
144 etc. The sequence is found in nature, and have been used in
several algorithms and computer programs.
The sequence is named after the Italian mathematician who
discovered it in 1202.
FICN Fake Indian currency note.
FICO score Most widely used form of credit scoring used in the USA, and used
by the main credit reference agencies.
It considers a person creditworthiness under these elements:
35%: payment history

30%: use of credit
15%: length of credit history
10%: types of credit used
10%: recent searches for credit.
The score is given out of 1000, usually in the range of 300 to
850. The median score is 723. About 60% are in the range 650 to
799.
A sub-prime mortgage is one given to someone with a FICO
score below 620.
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.
FID Foreign income dividend.
fiddle Colloquial term for any improper financial adjustment, particularly

to a persons advantage.
fiddlers fare Old colloquialism for meat, drink and money.
fiddlers 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 bodys 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 depicting 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.
file (1) Means of storing documents, either of paper or in computer form.

(2) As a verb, submit, such as submitting accounts or tax returns to
the appropriate authority.
file access notice Notice that HMRC would be able to serve on a tax agent on whom a
dishonest conduct notice has been served, and where any appeal
against the notice has been dismissed. These proposals are contained
in a consultation document on dishonest tax agents, issued in July
2011.
The file access notice would allow HMRC access to the agents
working papers.
file wrapper In computing, part of a website that gives access to all documents
relating to a particular subject area.
FILEX Fellow of the Institute of Legal Executives.
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.
film production VAT flat rate scheme

Under the VAT flat rate scheme, the appropriate percentage is
generally:
From Percentage
4 January 2011 13%
1 January 2010 11.5%
1 January 2004 10.5%
fils One hundredth of a riyal, currency of Yemen.
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 years 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 persons final salary figure.
final exercise date Term used in relation to disguised remuneration (Income Tax
(Earnings and Pensions) Act 2003 s554L1(14)).
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.
finalisation Status of an entry or submission after which no further amendment

can be made.
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 Definition

Occupational pension scheme where the pension is based on the
employees 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.
Length of service
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
Legal limits
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 members salary (ie four-ninths of final salary);
a tax-free lump sum no greater than 1 times final
salary:
death in service benefit of four times salary.
Definition of final 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.
final withholding tax From 2013, an amount deducted by Swiss banks on payments to UK
taxpayers under an agreement between the UK and Swiss authorities
made in 2011.
The rates are 40% for dividend income, 48% for other income,
and 27% from capital gains. These are marginally below the UK
rates to reflect the fact that the tax is paid in advance.
A UK taxpayer who wishes to avoid this tax may authorise the
Swiss banks to disclose details to HRMC.
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.
Since 1861 it has been the practice to include all the years tax
changes in a single Bill. Previously, each tax was the subject of a
separate Bill. In 1860 the House of Lords rejected the Paper Duty
Repeal Bill, so all the financial measures, including that one were
put into a single Bill for the Lord to accept or reject in whole.
Although this constitutional arrangement passed with the Parliament
Act 1911, the practice continues.
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 company partial exemption (FCPE)

Provision in proposed new regime for taxing controlled foreign
companies.
The proposal is that such a company pays UK corporation tax on
one quarter of its profits.
finance controller An accountant whose task is to manage the companys 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 lessees 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 advantage Term used in relation to tainted charity donations (Income Tax Act
2007 s809ZL and Corporation Tax Act 2010 s939E).
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 years benefit, and
10% of the first five years benefit
financial calendar List of significant dates in a businesss 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 exclusion Inability of disadvantaged individuals to open a bank account, obtain

a credit card, and otherwise use normal financial facilities.
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 businesss 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 inclusion Ability of individuals to open a bank account, obtain a credit card,
and otherwise use normal financial facilities.
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 and
Corporation Tax Act 2009 s502.
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 persons or businesss 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
finger buffet For VAT , an issue arises as to whether a supply is zero-rated food or
standard-rated catering.
A leading case for catering is P J and L J Lawson (t/a Country
Fayre) [1996] VATTR 14903.
A finger buffet was held to be catering even when the customer
collected it in Wendys Kitchen [1995] VATTR 15531.
finings Substances that may be added to brewed liquor near the end of the
production process to remove organic matter and thus improve the
drinks 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 (Earnings and Pensions) Act 2003 s341(8)).
finite population correlation factor (FPCF)

In statistics, an adjustment to reflect the inaccuracy of using a small
population size.
Finland Member of the European Union, for which purpose the land
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.
fire alarm This is listed in Capital Allowances Act 2001 s23 List C as an item

fire and rescue services The promotion of their efficiency is a purpose for which a charity
may be formed.
The term means services provided by fire and rescue authorities
under Part 2 of the Fire and Rescue Services Act 2004 (Charities
Act 2011 s3(2)(f)).
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 extinguisher principle The perceived observation that buying a fire extinguisher makes it
less likely that you will suffer a fire.
By extension, the principle says that making provisions for
dealing with a dispute or other problem will itself make such dispute
or problem less likely.
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.
fireman Before 6 April 2006 (when the normal pension retirement age was
60), a part-time fireman was allowed to retire on a full pension at the
age of 55.
fire safety equipment Part of a building (Capital Allowances Act 2001 s21(3) List A).
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 1994 Sch 7A Group 1 when supplied for domestic use. Further
details 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 hand Original. The term is used for information gained directly and not
from someone else, or for new goods.
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 slice Part of an amount of income considered first for some tax purpose.
The term is used in Income Tax Act 2007 s491 in relation to trust
income.
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
(Tribunals, Courts and Enforcement Act 2007 s3).

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.
Details are given in Capital Allowances Act 2001 from s52.
fiscal Referring to either tax policy or government revenue.
fiscal dividend Tendency for tax revenues to increase automatically without any
change of policy, such as additional income tax revenue from routine
pay increases.
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.
fiscally warehoused goods

Goods in a fiscal warehouse. The tax provisions are in Value Added
Tax Act 1994 s18B.
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 warehouse For VAT and other taxes, means such place in the United Kingdom
in the occupation or under the control of the fiscal warehousekeeper,
not being retail premises, as he shall notify to the Commissioners in
writing, and such place shall become a fiscal warehouse on receipt
by the Commissioners of that notification or on the date stated in it
as the date from which it is to have effect, whichever is the later, and
... shall remain a fiscal warehouse so long as it is in the occupation or
under the control of the fiscal warehousekeeper or until he shall
notify the Commissioners in writing that it is to cease to be a fiscal
warehouse
(Value Added Tax Act 1994 s18A(3)).
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.
fisherman Before 6 April 2006 (when the normal pension retirement age was
60), an inshore fisherman was allowed to retire on a full pension at
the age of 55.
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.
fishing rights Profits from this, when run as a trade, are subject to income tax
FISMA Financial Services and Markets Act 2000.

The abbreviation is used as the substantive term in Corporation
Tax Act 2009 s92, which allows a company tax relief for any levy or
award of costs made under this Act.
The tax implications of repayments are given in ibid s104.
FIT (1) Feed-in tariffs.

(2) 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 allowance For employee expenses, a figure set by the Treasury which an
employee in that occupation may claim against taxable income
without having to prove expenditure (Income Tax (Earnings and
Pensions) Act 2003 from s366).
The matter is discussed in the Inspectors Manual at EIM31623.
The list of allowances is given at EP2260.
This was originally given by extra-statutory concession A1.
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 volatilize 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 employees car. The table was based on engine size.
From 6 April 2002, this is replaced by the present scheme of
mileage allowances.
fixed protection For pensions, arrangement whereby existing pension provision are
protected when they have already exceeded the lower lifetime
allowance introduced in 2011. Such an application must have been
made by 5 April 2012.
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 employers
customers at the time.
Act 2003 s177.
fixed-rate preference shares

In determining eligibility to claim tax relief for a venture capital
trust, a persons 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 Items which are attached to buildings, such as windows and doors.
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 for the disabled Items permanently attached to a building to make occupation easier
for a disabled person. Examples include lifts, hoists and special sinks
and toilets.
Such fixtures are excluded from the propertys valuation for
council tax.
flag day Day when a charity may raise funds and offer small paper flags or
similar symbols to be displayed on the donors 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 over a shop From 11 May 2001, this may qualify for its own capital allowance
if relevant conditions are met.
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 Contributions and Benefits Act 1992 s122(1)).
This relates to the proposals to replace State Second Pension
with a flat rate of benefit unrelated to earnings.
flat-rate scheme VAT scheme for small traders where VAT is accounted for by
reference to a percentage of total output, generally ignoring input tax
completely.
The law is Value Added Tax Act 1994 s26B.
flat tax Tax levied at a single rate regardless of a persons 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).
They are generally also exempt from excise duty even if they
contain alcohol. Further guidance is given in Customs notice 41.
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 tenancy Secure tenancy for up to 2 years which has been so designated
under the provisions of Housing Act 1985 s107A.
flexible trust Another name for a flexible power of appointment trust.
flexible working A change in an employees 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 companys 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 Finance
The lowest permitted level of something, such as a minimum level of
grant that the government has determined a local authority will
receive.
Building
A floor is regarded as part of a building (Capital Allowances Act
2001 s21(3) List A).
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

flow chart Diagrammatic representation of an activity, such as decision making

or a process. HMRC publishes these in several areas to assist
taxpayers in making the correct decision.
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.
fluorinated greenhouse gas

Product which may need a European Commission Licence to import.
Such a licence is a condition of obtaining Customs clearance.
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 sellers 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 legislation.
FOIA Freedom of Information Act 2000
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.
follow-on TESSA A type of TESSA that could be taken out from 1 January 1996 to put
in the funds of a mature TESSA (the first of which were issued for
five years from 1 January 1991).
They have been superceded by ISAs from 6 April 1999.
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 Value added tax

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.
Income tax and corporation tax

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.
The law is set out in Income Tax (Trading and Other Income)
Act 2005 s57A.
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 and Environment Research Agency (FERA)

Agency that may authorise the import of plants and plant products
that are otherwise prohibited from entering the UK.
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.
food mile Mile travelled by an item of food. It is used as a measure of the fuel
so used.
food stamp Welfare voucher exchangeable for food, issued by US government.
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 fools 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 mans foot.
(2) American term for sub-total at the bottom of a column of
figures.
footballer A footballer may retire on a personal pension at the age of 35,

provided:
to consent,
RPSM03106035).
This relaxation of pension rules does not apply to Football
League players.
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 42% 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 banking group Term used for the bank levy (Finance Act 2011 Sch 19 para 10).
foreign benefits Social security benefit, or equivalent, paid from outside the UK.
The general rule is that it is taxed according to the provisions of
its UK equivalent (Income Tax (Earnings and Pensions) Act 2003
from s678).
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
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 companys 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.
(Income and Corporation Taxes Act 1988 s431(2)).
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.
Chargeable Gains Act 1992 s252A.
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 pension Pension paid by someone outside the UK (Income Tax (Earnings and
Pensions) Act 2003 s573).
foreign residence condition

Term used in Income Tax (Earnings and Pensions) Act 2003 s647 in
relation to income of non-resident taxpayers.
foreign rights Legal entitlement relating to a foreign country, such as the right to
sell a product there.
foreign service In relation to pensions on termination of employment, the term is

defined in Income Tax (Earnings and Pensions) Act 2003 ss413-414.
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 Pensions) Act 2003 s299.
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 specific employment income

Term used in Income Tax (Earnings and Pensions) Act 2003
s809Z7(4).
foreign trade Trade with other countries, as against domestic trade in ones own
country.
foreign travel order Order restricting a persons 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 widows or widowers 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.
Forestry Commission Inspection Document

Document issued by the Forestry Commission in relation to certain
timber and forestry products. Such a certificate may be needed to
obtain Customs clearance for importation.
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.
forfeited deposit Part payment made by a customer in respect of goods and services
which the customer then cancels, and where the agreement is that the
payment is not refunded to the customer.
For VAT purposes, this is treated as a cancellation charge.
There is no VAT charged on the deposit as there is no supply. If,
exceptionally, VAT has already been charged, this may be reclaimed
(VAT notice 700).
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.
forfeiture rule Rule in Forfeiture Act 1982. This prevents someone from benefitting
from their own crime, such as inheriting from someone they have
murdered.
The law is amended by Estates of Deceased Persons (Forfeiture
Rule and Law of Succession) Act 2011.
This Act
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.
forged indorsement For a bill of exchange, the implications are given in Bills of
Exchange Act 1882 s60.
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 employee An individual who has ceased to hold an employment (Income Tax
(Earnings and Pensions) Act 2003 s562(1)).
former employer Means

(a) the person under whom the former employee held the
former employment,
(b) the person for the time being carrying on the whole or any
part of the business or other undertaking for the purposes of which
the former employee held the former employment,
(c) a person who is for the time being subject to any of the
liabilities with respect to that business or other undertaking of the
person mentioned in paragraph (a), and
(d) a person who is connected with a person falling within
paragraph (a), (b) or (c)
former employment The employment which the former employee has ceased to hold
former Inland Revenue matters

Matters that were administered by Inland Revenue and have now
been transferred to HMRC on its formation in 2005. These matters
are listed in Commissioners for Revenue and Customs Act 2005 Sch
1.
former miner Such a person may receive free coal, free smokeless fuel or an
allowance in respect of such coal or fuel.
Under Income Tax (Earnings and Pensions) Act 2003 s646 such
provision is free of income tax on the same basis as a miner.
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 husbands surname.
former officer, tribunal or body

Term used in Social Security Act 1998 s27(7) in relation to past
decisions about social security.
former spouse In relation to pensions, a person who may acquire accrued pension
rights under a pension share (CA 84 Stakeholders Pension Scheme
Manual, published by HMRC).
forte de mieux French: for want of better.
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.
The tax implications are discussed in the Inspectors Manual at
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 persons 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 national insurance 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.
FOTRA security For loan relationship, term used in Corporation Tax Act 2009 s404.
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.

fourth year claim Claim made by a taxpayer seeking to establish status as being not
ordinarily resident for a fourth consecutive year. In practice, such a
claim is almost always doomed to failure.
fox As a verb, an old colloquialism meaning to cheat.
FPA Arithmos Forologikou Mitroou, Greek for value added tax.
FPC Financial Planning Certificate.
FPCF Finite population correction factor.
FPCS Fixed profit car scheme.
FPO Fast Parcel Operator.
FPS Faster Payments Service.
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 and 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.
fragment identifier In computing, a short string of characters that refers to a resource

that is subordinate to a primary resource. It is indicated by the # hash
sign in the URL.
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 franchisors 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
(Fraud Act 2006 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 ones 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 UK law regarding land

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.
US law regarding insolvency

Payment made by a bankrupt person or business in a period up to
three months before the insolvency. The period is two years before
the insolvency under federal law, though states may impose a longer
period.
Payments made in the last three months are called preference
payments. Payments made earlier in the period are fraudulent
conveyance. Recovery of such conveyance usually requires a court
hearing.
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 preference In US insolvency law, when a bankrupt person or business pays

some creditors in preference to others.
Federal law regards payments of two years before insolvency as
fraudulent preference, though individual states may extend that
period. Payments in the three months before insolvency are called
preference payments and are recovered under a fairly simple
procedure. Earlier payments are called fraudulent conveyance and
often involve court action.
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 companys long-term business over its liabilities
of that business plus relevant money debts and shareholders excess
assets (Income and Corporation Taxes Act 1988 s431(2)).
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.
freedom of information Right of an individual to know information held by a public

authority. The right is contained in Freedom of Information Act
2000.
HMRCs responsibilities under this Act are set out in
Commissioners for Revenue and Customs Act 2005 s23.
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 Information Act (FOIA)

Statute of 2000 that provides the citizen with a right to obtain
information from any public body unless specifically excluded.
freedom of testation Right of a person to write he or she wishes in a will.
free float Percentage of a public companys shares that are available for the
public to buy, as against shares held by the company itself such as in
a company trust or directors holdings.
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 Expression that denotes an amount after tax has been paid. This
usually requires the amount to be grossed up.
For example, a person subject to 20% income tax who is to be
paid 100 free of tax, would have the sum grossed up by 25% to
125, on which 20% is 25 tax, so he receives 100.
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.
Means the appropriate amount, established from an employees
code (where not used on the cumulative basis) and the tax tables, to
be subtracted from relevant payments to arrive at taxable payments
(and accordingly represents an appropriate part of reliefs allowed
against those payments)
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 schools Free Schools are all-ability state-funded schools set up in response
to what local people say they want and need in order to improve
education for children in their community (Department of
Education website).
The first such schools opened in September 2011.
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 Pensions

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.
Court order
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. The VAT provisions are given in Value Added Tax Act 1994
s17.
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 sen aller 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.
frequency How often something happens.

The frequency of a type of transaction, such as selling a car, can
indicate the existence of a trade.
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.
fridge Abbreviation of refrigerator.

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.
friggatriskaidekaphobia Fear of Friday the 13th, according to Wikipedia.

[The term has little to do with tax, but seems a fun word to include!]
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 2011 includes 1 July 2011, whereas after 1
July 2011 means from 2 July 2011.
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 2011.
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.
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-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.
front money In gambling, facility agreed in advance between the player and the
gambling establishment to establish the players credit.
front running A form of insider dealing that may be practised by large

stockbrokers and other investment bodies.
It involves looking at the deals going through to see how they
will influence the markets, and then first putting through ones own
deals that will benefit from those of clients.
frozen Accounting
Description of an amount which is not allowed to increase or
decrease.
VAT on food
For VAT on food, frozen simply means below zero degrees
Centigrade. The product does not have to be solid.
This decision was made in Meschias Frozen Foods. Ch D [2000]
STC 1. The product (frozen yogurt) was supplied at between -1C and
-5C but did not solidify because of its high viscosity.
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
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.
FRY Final relevant year.
F&S Fox and Smiths 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.
F test In statistics, a test to compare variance in two samples. For example,

has an increase in interest rates affected business A over business B.
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.
FTT First tier tribunal.
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 duties Term used in tax law for the excise duties on hydrocarbon oils when
used as road fuel. The law is Hydrocarbon Oil Duties Act 1979.
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 for private use VAT provisions when an employer pays for the employees private
fuel on which the employer has recovered input tax (Value Added
Tax Act 1994 s56).
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
150C (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 persons 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 export declaration Detailed declaration made in respect of exported goods. The
declaration is made electronically to Customs under the National
Export System.
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 tax benefit Term used in relation to group mismatch schemes (Corporation
Tax Act 2010 s938G(3)).
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 organisations 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 actuarial value
of the funds 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.
A fund-raising event by a charity is exempt from VAT under
Value Added Tax Act 1994 Sch 9 Group 12.
The same definition exempts such proceeds from income tax
under Income Tax Act 2007 s529.
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 (Taxation of Chargeable Gains Act 1992 s61).
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

persons 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
Corporation Tax Act 2010 s65. The tax provisions are given in
Corporation Tax Act 2009 from s264.
If provided by an individual, it has some of the benefits of a trade
in terms of loss relief.
furnished holiday lettings business

For capital allowances. it is defined as a UK property business
which consists in, or so far as it consists in, the commercial letting of
furnished holiday accommodation (Capital Allowances Act 2001

s17(1)). The laws are tightened from 6 April 2012 undee Finance Act
2011 Sch 14.
The position for capital gains tax is given in Taxation of
Chargeable Gains Act 1992 s241.
furnished letting Property which may be rented with furniture provided.

2009 from s248.
furnishings This is listed in Capital Allowances Act 2001 s23 List C as an item
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.
furniture This is listed in Capital Allowances Act 2001 s23 List C as an item
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 See futures.

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.
For employment income, the term is defined in Income Tax
(Earnings and Pensions) Act 2003 s420(3).
For corporation tax, the term is defined in Corporation Tax Act
2009 s581.
futures contract Contract for the purchase of commodities at a future date.
futures exchange Market, such as LIFFE, where futures contracts may be traded.
future value The value of an existing item at a future date.
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.
FZ Free zone.
G
G Council tax
For council tax, the second highest band of property values (except
for Wales). The band applies to these property values:
and between 120,001 and 240,000 before;
A band G property pays council tax at a rate of 1 the rate of an
National insurance
Contribution letter for a woman eligible to pay reduced rate
contributions and who is in a money purchase occupational pension
scheme. This letter changes to B on 6 April 2012.
Company cars
Before 6 April 2011, P11D code for company cars that run on E85
fuel. From 6 April 2011, these are code A.
Other meanings
(1) In science, the constant of gravitation pull.
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 Actuarys Department.
GAD tables The Government Actuarys 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.
gallery May be able to have VAT refunded under Value Added Tax Act
1994 s33A.
galley sixpence Small silver coin brought from Genoa by wine merchants and used at
Galley Quay in London during 15th century.
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 Definition
Staking a sum of money on an uncertain outcome on the basis that a
larger sum may be won or the stake is lost.
The same definition applies to insurance, the difference being
that insurance removes an existing risk whereas gambling creates a
new risk. Many financial products can be used equally as insurance
or gambling.
Sometimes a distinction is made between gambling and betting.
The former is a wager on a chance event, such as the throw of a dice.
Betting is a wager on a future event, such as the result of a horse
race.
Law
In law, the term means gambling, betting and participating in a
lottery (Gambling Act 2005 s3).
A wager cannot be subject of a legally binding contract.
Tax
Gambling is not a trade (Graham v Green [1925] 9TC309).
However being a bookmaker can be a trade (Partridge v
Mallandaine [1886] 18QBD276).
Value added tax

For VAT on gaming machine takings, gaming means:
(a) playing a game of chance for a prize, or
(b) betting
(Value Added Tax Act 1994 s23(6)).
There are separate provisions for gaming machines.
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 Law

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)).
Value added tax

For VAT on gaming machines, the term includes
(i) a game that involves both an element of chance and an
element of skill, and
(ii) a game of chance that can be eliminated by superlative skill,
and
(iii) a game that is presented as having an element of chance,
but does not include a sport
(Value Added Tax Act 1994 s23(6)(f).
game strategy In statistics, an analysis for competitive situations, such as in pricing

policy. It assumes that all participants act rationally.
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 Definition

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.
Value added tax

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).
Provisions on how much VAT is payable are given in Value
Added Tax Act 1994 s23.
The term includes AWP machines, crane grabs and pinball
machines.
gandermonth Old term for the month after childbirth when the husband does not
know what to do. The term comes from the supposed habits of
ganders.
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 Government Accounting Service.
gas oil Means heavy oil of which not more than 50 per cent by volume
distils at a temperature not exceeding 240C and of which more than
50 per cent by volume distils at a temperature not exceeding 340C
(Hydrocarbon Oil Duties Act 1979 s1(5)).
gas refuelling station This may qualify for a first year allowance (Capital Allowances Act
2001 s45E).
gas system This is listed in Capital Allowances Act 2001 s23 List C as an item
gas works Profits from this, when run as a trade are subject to income tax
gate Part of a building (Capital Allowances Act 2001 s21(3) List A).
gate money Money paid for admission to a place or event, particularly in

referring to the total collected by the organisers.
gate-post bargain Old term for a deal where the purchase money had to be placed on a
gate post before the goods left the field.
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.
gateway test Test proposed by HMRC at the first meeting of the IR35 Forum on
6 May 2011. It would be similar to the employment status
indicator in assisting taxpayers to establish whether they are within
the scope of the IR35 rules.
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

(Customs notice 39).
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 mans properly to all his sons equally. It was abolished
by Law of Property Act 1922 and Administration of Estates Act
1925.
gay Modern accepted term for a homosexual.
GAYE Give As You Earn.
gazette Official publication which prints statutory notices and other formal
statements. The first was published in Venice in 1536.
With a capital G, the word means The London Gazette which
from since 1665 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 car Car with a manual gear box as opposed to having automatic
transmission.
Geared cars tend to be of lower cost and have better fuel
consumption. Accordingly there is a measure of tax relief if a

disabled employee has an automatic car because he or she cannot
drive a geared car.
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 beer duty Duty charged on beer with an alcoholic strength between 2.8% and
7.5% (Alcoholic Liquor Duties Act 1979 s36).
Beer outside this range of strengths is subject to a different rate
of duty from 1 October 2011.
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 (Earnings and Pensions) Act 2003 s7(3).
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 exclusion Provision that excludes an item from a particular tax treatment by
reference to a general provision. An example is given in Capital
Allowances Act 2001 s46.
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 issue Old legal term for a plea of not guilty.
general ledger Ledger which records a organisations 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 elses 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 and
Corporation Tax Act 2009 s56).
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 exemption (GPE)

Provision in the proposed new regime for controlled foreign
companies.
It provides an exemption from the UK corporation tax charge
where it can be demonstrated that profits have not been artificially
diverted from the UK.
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.
For a limited liability company such statements 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 Exchanges 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.
generating income from land

Means exploiting an estate, interest or right in or over land as a
source of income or other receipts (Corporation Tax Act 2009
s207(1)).
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.
gentlemans agreement Understanding that is binding in honour only, and is not usually
legally binding as a contract.
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 womens 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.
geometric mean Average calculated by multiplying numbers together and taking the
root equal to how many numbers have been multiplied.
The geometric mean of 2, 3 and 7 is thus the cube root of 2 x 3 x
7, or 342, which equals 3.476 (rounded). Note that the arithmetic
mean would simply add them and divide by 3, giving 4.
The FT-SE 100 index is a geometric mean. They are regarded as
a better indication of trends than arithmetic means.
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 Peoples
Budget of 1909.
George Cross Award for bravery. Payments of pension or annuity in respect of the
Act 2003 s638).
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.
German enemy property Its post-war distribution is addressed by Distribution of German

Enemy Property Acts 1949 and 1952.
Germany Member of the European Union, for which purpose the island of
Heligoland and Bsingen 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 General
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.
Deduction from trading profits

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.

(Income Tax (Trading and Other Income) Act 2005 s47).
Previous limits were:
From Amount
1 April 2001 50
6 April 1985 10
6 April 1971 2
6 April 1965 1
~
Capital gains tax
For capital gains tax, a gift is a disposal.
The disposal proceeds are usually zero, so there is a capital loss.
If the recipient pays capital gains tax, this amount may be deducted
from any inheritance tax payable (Inheritance Tax Act 1984 s165).
Inheritance tax
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)).
Value added tax

For VAT, gifts are supplies. They may be taxable if their value is
above a de minimis figure of 50. From 2012, this applies per
supply. Further guidance on gifts is given in VAT notice 700.
Income tax
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.
Donations to charity
A gift may be made tax-free to charity under Gift Aid.
Stamp duty
Some gifts were subject to stamp duty until 1985.
Gift Aid Scheme which allows tax to be reclaimed on donations.

The 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
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.
Gill and Gill Court case of 2003 that led to a significant reduction in the use of
civil CIF procedures for investigating suspected tax fraud, and led
to changes in practice. Its citation is R v Gill and Gill [2003] STC
1229, [2003] EWCA Crim 2256, [2003] 4 All ER 681.
Gill and Gill was a clothing partnership run by two brothers. In
1995, Inland Revenue interviewed them under the Hansard
procedure then in operation. The brothers denied omissions from
their trading figure. They were charged with cheating the public
revenue. At their trial, Inland Revenue used material from these
interviews. The brothers were convicted and imprisoned. They
appealed on the grounds that the Hansard evidence was inadmissible.
The Court of Appeal held that the brothers should have been
cautioned and the interviews recorded. However, the failure to do so
did not provide grounds for overturning the convictions as there was
still procedural fairness.
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.
gillie Scottish term for a young person who attends a huntsman.
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).
gilt strip For loan relationship, the term is defined in Corporation Tax Act
2009 s403. The tax provisions are given in s401.
gin Alcoholic drink classified as a spirit for alcoholic liquor duty.
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.
girl Female person under the age of 14.

For national insurance, the term meant someone under 21.
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 persons 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.
glasshouse This is listed in Capital Allowances Act 2001 s23 List C as an item

glebe Land traditionally owned by the church to provide an income to

support the rector or vicar.
A diocesan board of finance cannot be regarded as a charity in
respect of administering such land (Charities Act 2011 s10(2)(b)).
global account Aggregate accounts that must be produced by the Council of

Lloyds.
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
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.
goal Objective of a person or organisation when identified as a single

achievement.
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 entitys
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 General
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.
Value added tax

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.
There is a duty for customers to account for VAT on supplies of
gold (Value Added Tax Act 1994 s55).
goldbricker Colloquialism for an employee who presents himself as more

valuable than he really is.
gold-bricking American term for a worker who gets his colleagues to do the work.
The term comes from a swindle worked during the Gold Rush.
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 companys 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 Interpretation of Acts of Parliament

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].
Economic principle of Gordon Brown

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 at least 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.
golden shower Slang for a bribe.
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 countrys 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. Great Britain adopted the
standard between 1821 and 1914, and between 1925 and 1931
The UK permanently left the gold standard in 1931.
Most countries were on the gold standard between 1894 and

1914.
In the USA, the gold standard was the basis of coinage under
their Coinage Act 1873. The USA abandoned the gold standard in
1933.
golf club Whether one is a mutual trade is discussed in the Inspectors Manual
at BIM24350.
golfer A golfer may retire on a personal pension at the age of 40, provided:
to consent,
RPSM03106035).
Gombeen man Irish term for a money-lender.
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 Gmez
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 When acting from honest motives. It can be relevant in particular
circumstances, particularly:
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).
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.
Good Friday Friday before Easter Day that commemorates the crucifixion of
Jesus Christ. It is a bank holiday.
The word Good means holy.
goodness of fit In statistics, a comparison of the expected distribution of samples

with the actual results to see how far it conformed to expectations. It
can be used in such areas as to see if a pattern of daily sales is
normally distributed.
goods Definition
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
Value added tax

For VAT, a distinction is often made between goods and services.
This affects such matters as:
the period for which input tax may be claimed on pre-
registration purchases, and
the place of supply rules for intra-EU trade.
goods and chattels Moveable personal possessions.

[The term is an example of lawyers 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 first destination For VAT, the place mentioned on the consignment note or any
other document by means of which the goods are imported into the
United Kingdom, or in the absence of such documentation means the
place of the first transfer of cargo in the United Kingdom
(Value Added Tax Act 1994 s21(2)).
goods imported for private purposes

It is not possible to claim VAT input tax for such goods (Value
Added Tax Act 1994 s27).
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 Definition
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.
~
The accounting requirements for goodwill reflect the view that
goodwill arising on an acquisition is neither an asset like other
assets nor an immediate loss in value. Rather, it forms the
bridge between the cost of an investment shown as an asset in
the acquirers own financial statements and the values attributed
to the acquired assets and liabilities in the consolidated financial
statements.
FRS 10 from para c.
Tax
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.
From 1 April 2002, tax relief may be obtained for purchased
goodwill. This is usually 4% a year.
HMRCs guidance on goodwill changed in September 2008.

Previously goodwill was classified as personal, inherent or free.
Under a Practice Note issued on 30 January 2009, HMRC now
considers that goodwill should be separated from other intangible
assets. The Note sets out how this should be done. This is
particularly significant when an existing business is incorporated by
its current owner.
There is also guidance in Tax Bulletin 76.
goodwill ~
What is goodwill? It is a thing very easy to describe, very
difficult to define. It is the benefit and advantage of the good
name, reputation and connection of a business. It is the
attractive force which brings in customs. It is the one thing
which distinguishes an old established business from a new
business at its first start.
IRC v Muller & Co Margarine Ltd [1901] AC 217 HL
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.
goose egg American slang for zero.
goose fair Fair held around Michaelmas in many English towns. Historically
they were primarily for the sale of geese.
goose-trap Old colloquialism for a swindle.
Goschen, George English Liberal politician (1831-1907) who was Chancellor of the
Exchequer from 14 January 1887 to 11 August 1892.
gospel of wealth Teaching that the prime aim of man is to create wealth. This does not
accord with the Christian gospel.
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 Actuarys Department (GAD)

Body that provides actuarial analysis to the public sector from the
public sector.
Our claim is to be a highly valued principal provider of actuarial
analysis and advice to all parts of the UK Government and other
relevant UK and overseas public bodies (GAD website).
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 stroke Australian slang for taking a long time to do a job.
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).
gown and town Relationship between a university and its local town.
GP General practitioner, a local doctor who sees patients.
GPE General purpose exemption.
GPP Group Personal Pension.
grace (1) Favour shown, such as allowing an extended time period.

(2) State of mind which promotes kindness.
grace and favour Residence provided free by the Crown to a notable person.
grace days Three days sometime added to the date of a commercial bill of
exchange. Such a bill is held not to have been dishonoured if paid by
the third day.
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.
grade A lawyer In terms of calculating fee income, solicitors are often categorised as
A, B or C broadly as:
A more than eight years post-qualification experience,
B between four and years experience,
C less than four years experience.
The amount of fee is a matter of commercial negotiation between
the solicitor and client. Disputes can be resolved by the court.
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 Crenulations around the edge of a coin.
grand total Final total from adding sub-totals.
grange Granary or monastery farm where grain was stored, and from which
rates and taxes and kind were sometimes paid.
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 collaged 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 deceaseds 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.
grant date Term used in relation to disguised remuneration (Income Tax

(Earnings and Pensions) Act 2003 s554L(1)(c)).
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 deceaseds 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.
grasshopper Traditional sign for goldsmiths and bankers. It comes from the crest
of Thomas Gresham (1519-79) who founded the Royal Exchange. It
was the logo for Martins Bank.
grasskeep Alternative name for a grazing licence.
grass widow Old term for an unmarried mother.
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 arms length sale, the transaction cannot come within the
scope of the tax.
gratuity Definition
Money given to someone in appreciation for their services but which
is not legally required, such as a tip.
Income tax and national insurance

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.
Inheritance tax
A gratuitous gift can come within the scope of inheritance tax.
gravel pit Profits from a quarry run as a trade are subject to income tax
graveyard shift Colloquialism for a work shift that spanned midnight. The term was
coined by munition workers in the second world war.
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 20C (Alcoholic Liquor
Duties Act 1979 s3(1)(a)).
Grays Inn One of the four inns of court.
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.
grease Slang term for money, especially a bribe.
grease the wheels Make things run smoothly, usually by provision of further funds.
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 seal Chief seal used by the monarch on formal documents.
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.
Greek gift Treacherous gift, named after the Trojan Horse.
green The term has come to mean environmentally-friendly.
Green Belt Stretch of countryside around a city, particularly London, where

special provisions exist to restrict building development.
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 light Permission to proceed, from traffic lights.
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 companys report which deals with environmental matters.
greenback Colloquialism for the US dollar, so called because of its prime

colour. The term has been used since such notes were introduced in
1862.
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.
green wax Historically an estreat (certified extract from an official record) was
issued under the seal of the Court of Exchequer using green wax.
Gregorian calendar Calendar devised by Pope Gregory XIII to correct anomalies in the
previous Julian calendar. In 1752 this was adopted in the UK under
the Calendar (New Style) Act 1750 which is still in force.
Gregory Peck American actor (1916-2003). His name is cockney rhyming slang for
cheque.
gremlins Imaginary gnomes that are frequently blamed for malfunctioning of

machinery or systems.
Greshams law Maxim that bad money drives out good money.
It was stated by Sir Thomas Gresham to Elizabeth I in 1558.
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).
During the war, the term was used for an unofficial market in
rationed goods that was considered less serious than the black
market.
grey-sourcing Finding staff from retired or elderly people.
grizzly screen Machine for crushing boulders into useable aggregate.

The extent to which such a machine is used can be relevant for
determining liability to aggregates tax.
groat Silver coin worth 4p (four old pence before decimalisation in 1971).
The coins are still made for Maundy money.
grog Colloquialism for spirits. The term originally meant rum diluted
with water.
grogging Extracting spirits from the wood of casks. It is illegal under

Alcoholic Liquor Duties Act 1979 s34.
grog ration Ration of free rum provided to naval ratings between 1740 and 1970.
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 amount In relation to wages, means the total amount of those wages before
deductions of whatever nature (Employment Rights Act 1996
s27(4)).
In relation to manufactured dividends, the term is defined in
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 investors 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 persons 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 purchasers 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).
Further tax provision is made in Finance Act 2007 s38 and Sch 7.
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 authoritys 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.
groszy One hundredth of a zloty, currency of Poland.
ground hog day American celebration on 2 February (which is also Candlemas in the
church calendar). It is believed that the ground hog emerges from
hibernation on this day.
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 Definition
Economic entity formed by parent and one or more subsidiaries.
Official definitions include:
Parent undertaking and its subsidiary undertakings
(Companies Act 2006 s474).
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.
Group relief
In taxation, a loss made by one company in a group may be offset
against the profits of another under group relief.
Value added tax

For VAT, a group may make a group registration (Value Added
Tax Act 1994 from s43).
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 accounting period For loan relationship, the term means

(a) any accounting period of the member company beginning on
or after 1 October 2002, or
(b) any accounting period of a group member which
(i) begins on or after that date, and
(ii) corresponds to such an accounting period of the member
company
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 prepared as if they were one company.
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 mismatch scheme Tax avoidance scheme that seeks to exploit differences in the way
that loans are accounted for in different countries.
An example is that company A takes an interest-bearing loan
from group company B in another country, where As accounting
treatment accrues the finance cost of the loan but B does not.
The anti-avoidance tax provisions are contained in Corporation
Tax Act 2010 from s938A.
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 groups 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 prepared as if they were one company.
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
(Inspectors Manual at BIM 44001).
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.
Growing Places Fund Government fund announced on 18 September 2011 to unblock

stalled local infrastructure projects and stimulate further private
sector investment (Autumn Statement 2011).
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.
grub stake Arrangement whereby someone provides a gold prospector with

tools in return for a share of his finds.
grubstreet Old colloquialism for needy authors and writers.

The term comes from an old road in Cripplegate, London where
such people lived. The road was renamed Milton Street in 1830.
GSP Generalised System of Preferences
GST Goods and Services Tax.
GTCE General Teaching Council for England.
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 elses 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 pensioners 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 cheque Cheque whose honouring is guaranteed by use of a cheque

guarantee card, as indicated by a number written on the back. Such
cards were withdrawn from 1 July 2011.
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.
The minimum pension which a salary-related occupational
pension scheme must pay a member in respect of contracted out
contributions paid between April 1978 and April 1997, as a
condition of contracting out ((CA 84 Stakeholders Pension Scheme
Manual, published by HMRC).
GMP was replaced as a condition by the reference scheme test
from April 1997.
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 elses 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.
guardians 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.
guillotine motion Motion moved in Parliament or other forum restricting the time
available to debate a matter.
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 popular
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.
gun money Coinage issued in Ireland in 1689 and 1690 made from old cannon
and other metal objects.
gun-runner Person who smuggles guns into a country.
Guthrum Fine quality of silver, from the silversmiths of 13th and 14th
centuries.
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.
gyp joint American slang for an overpriced business establishment.
H
H Council tax
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
and 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
Tax code
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 childrens tax credit.
Company cars
The P11D code for company cars with hybrid electric engines.
Tax forms
Before PAYE was introduced in 1943, tax forms were designated H,
with H1 as the main tax return and H13 as the assessment.
Other meanings
(1) National insurance contribution letter that was once used for
ocean-going mariners.
habeas corpus Latin: have the body.

A writ which requires a person who holds 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.
hack Person whose services are freely offered for hire. The term originally
referred to a horse so offered.
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.
halala One hundredth of a Saudi riyal, currency of Saudi Arabia.
halru One hundredth of a koruna, currency of Hungary.
half-brother/ sister Man or woman with whom you have only one parent in common.
The legal term is brother [or sister] of the half blood.
Under the laws of intestacy, half-brothers and half-sisters inherit
if there are no (full) brothers and sisters. They rank after spouse,
children and parents, grandchildren and remoter issue, but before
grandparents.
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-timer Person engaged to work for half the usual hours.
halfway house Compromise between two extreme positions. The term originally
meant an inn about halfway between two towns.
half year Either the first or last six months of a particular year. Listed
companies must publish audited accounts every half year.
hallmark Tax avoidance

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.
Precious metals
Mark left by an assayer on objects made of a precious metal.
This traditionally has up to five parts:
the standard mark,
the assay office (this is the original meaning of hall
mark)
date letter,
duty mark (now rare)
makers mark.
The standard marks are a crown for gold, lion for silver in
England, thistle for silver in Scotland, crowned harp for silver in
Ireland.
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.
Hallstroms Australian tax case on whether expenditure was capital or revenue.

The case related to opposing an extension of another companys
patent. The full name of the case is Hallstroms Proprietary Ltd v
The Federal Commissioner of Taxation 72CLR634. The case is
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.
hammered Traditional method of indicating that a stockbroking firm cannot

meet its debts. The announcement is preceded by a hammer blow on
the table.
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.
hand (1) Man who does odd jobs, particularly on a farm or estate.
(2) Unit of measure of a horses height.
handling Charge made for handling goods in relation to packing, invoicing

and otherwise preparing them for delivery.
handset Telephone or other instrument which is used by a persons hands

while performing another task, such as speaking.
handshake Computer-generated message confirming receipt of data.

The presence of such a handshake in the HMRC on-line filing
system was a significant factor in the case Law Costing [2011] TC
1140.
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.
hanging card Ace of spades.

The presence of this card meant that a pack of cards was subject
to excise duty. This was ornamentally embossed to prevent forgery
(a tradition that survives the duty). The punishment for forging this
card was hanging.
hang up ones 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.
Handard procedure Procedure once used to obtain information from a taxpayer suspected
of fraud. Its main provision was that voluntary disclosure avoided
the risk of criminal prosecution. The last procedure was set out in
Hansard by then Chancellor of the Exchequer John Major in 1990.
This procedure was replaced by Code of Practice 9 in 2005.
The Hansard procedure was originally introduced in 1923 and
proved valuable in securing co-operation from taxpayers by
providing an immunity from criminal prosecution if the taxpayer
made a full disclosure and accepted civil penalties.
The procedure was discredited by the notorious case R v W
[1998] when a taxpayer was prosecuted by the Crown Prosecution
Service having agreed assurances from Inland Revenue.
This was followed by Gill and Gill [2003] where Inland
Revenue used the Hansard procedure but did not follow the
requirements of the Police and Criminal Evidence Act 1984.
hansom Light two-wheeled cab invented in 1834 and used until the early 20th
century.
hao One tenth of a dong, currency of Vietnam.
haraam Forbidden under Islamic finance, particularly the payment of

interest.
haram Alternative spelling of haraam.
harbour For capital allowances, this is specifically excluded from the scope
harbour authorities Provisions relating to chargeable gains are given in Taxation of

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 cash Colloquialism for money in bank notes or coins, rather than cheques
or promises.
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.
hard standing For capital allowances, this is specifically excluded from the scope
hardware Tangible computer equipment, as against the software which

comprises the programs, operating systems, data and suchlike.
Hare Hares 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).
harp Colloquialism for a deal subject to many conditions, in allusions to

many strings attached.
Harvard Senior university in USA, established in Massachusetts in 1636.
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.
hateful tax Term used by Dr Johnson in 17th century for excise duty.
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.
Haussmannization Demolition of entire districts and rebuilding. The term comes from
Baron Haussman (1809-91) who remodelled Paris between 1835 and
1870.
HAWB House Air Waybill.
haybote The right of a tenant to take wood for repairing hedges and fences.
hazard Risk or danger.

For merchant shipping, the term has a specific meaning in
Wrecks Convention article 5.
hazing Colloquialism for various initiation rituals on joining an

organisation. Many such rituals are illegal under current British law
as assault or harassment.
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.
It was taken over by Lloyds TSB which was renamed Lloyds
Group.
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 and s644A.
health and misfortune insurance

From 6 April 1996, payments from such policies are generally tax-
free provided:
they do no more than compensate the policy holder for lost
income;
the benefits have not been taken into account in computing
trading profits;
the premiums have not attracted tax relief; and
the payments only continue during a period of misfortune
(such as while sick or unemployed).
health benefits Social security assistance with health charges that are otherwise
chargeable. These include prescriptions, eye tests, dental work and
fares to hospital. Such benefits are usually provided on a passported
basis to claimants of other benefits.
health certificate Certificate that may be required for certain imported foods and food
products. Customs clearance cannot be obtained without the
certificate.
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.
health visitor Before 6 April 2006 (when the normal pension retirement age was
60), a female health visitor was allowed to retire on a full pension at
the age of 55. Male health visitors could not retire early on a full
pension.
Healthy Start Scheme to provide food and vitamins to new mothers on low
incomes.
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.
Heather v PE Consulting Group Ltd

A leading case on case law schemes for employees, ref 48 TC 293.
It is discussed in the Inspectors Manual at BIM 44155.
heating For capital allowance purposes, is treated as an integral feature,

not the usual 20% for plant and machinery.
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. It usually makes

use of futures or options.
hedging arrangements Tax provisions in Income and Corporation Taxes Act 1988 s209B.
hedging relationship In relation to open-ended investment companies, the term is

defined in Corporation Tax Act 2009 s496.
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 Mnnystr an Heid Mnnystr 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 anothers property or title, provided only
that he lives beyond the others 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.
heir presumptive Person who will succeed to anothers property or title, provided that
he or she both outlives the other, and that no-one with a better claim
is born before the other dies.
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.
hepatitis C Disease of the blood.

In January 2011, payments to people who contracted the disease
from contaminated blood were entitled to a compensation payment.
From 18 May 2011, such payments are exempt from income tax
under SI 2011 No 1157.
herbal products For VAT, there have been several cases to determine whether the
product qualifies for zero-rating as food.
The case Ayurveda Ltd [1988] VTD 3860 held that a herbal fruit
concentrate was zero-rated but tablets were not.
Herbal tea was zero-rated in Dr X Hua [1995] VTD 13811.
herd In relation to herd basis, includes a flock and any other collection
of animals (however named (Corporation Tax Act 2009
s110(1)(b)).
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. The law is
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.
hereditary excise Old system where excise duties were given to the monarch. This was
replaced in 1787 by the Civil List which is still in use.
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.
heritage body A body or charity that maintains historic buildings. A definition for
income tax is given in Income Tax Act 2007 s507(2).
heritage direction Direction given under Inheritance Tax Act 1984 Sch 4 para 1.
heritage maintenance property

Any property in respect of which a heritage direction is in effect
(Income Tax Act 2007 s507(2)).
heritage maintenance settlement

Settlement which comprises heritage property (Income Tax Act
2007 s507(2)).
Her Majestys Revenue and Customs

The term that collectively refers to the Commissioners and officers
of Revenue and Customs (Commissioners for Revenue and Customs
Act 2005 s4).
heuristic Description of a problem-solving method that uses creative thinking

rather than logic.
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 companys 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.
hide of land Area of between 60 and 120 acres that was considered sufficient to
support a family in feudal times.
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 means

(a) in relation to England and Wales, Her Majestys High Court
of Justice in England;
(b) in relation to Northern Ireland, Her Majestys 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 code Tax code that requires an employer to deduct tax at the higher or
additional rate of income tax (PAYE Regulations SI 2003 No 2682
reg 32).
The codes are currently D0 and D1.
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 credit 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.
For HMRC purposes, such a person is one worth more than 20
million.
High Net Worth Unit (HNWU)

Part of HMRC that deals with high net worth individuals.
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 product Plant or plant-based product that is subject to special clearance
procedures before being able to obtain Customs clearance.
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 seas All area of ocean not regarded as belonging to a particular country
under international law.
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.
Hilary Term Former legal term that ran from 13 January (St Hilarys Day) to the
Wednesday before Easter.
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) Definition

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.
Legal control
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.
Value added tax

For VAT, goods supplied on hire purchase bear the same VAT as if
sold directly (VAT notice 700).
histogram Graph where the relative sizes of items are reflected in the area that
represents it.
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 Housing investment trust.
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 Millers Reports, law reports from 1862 to 1865.
HMCE HM Customs and Excise, now part of HMRC.

HMIT HM Inspector of Taxes.
HMO House in multiple occupation.
HMRC HM Revenue and Customs. Her Majestys 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
HMRCs 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 countrys 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.

HNWU High Net Worth Unit.
hoard Store goods or cash, typically for a long time as a precaution against
future need.
hoarstone Stone marking the boundary of an estate.
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.
hock Pawn or pledge goods for money.
hock cart The last cart load of harvest.
HODA Hydrocarbon Oil Duties Act 1979.
Hogmanay In Scotland, the last day of the year.
hogshead Barrel used to contain liquor. Its size varies from 46 to 65 gallons
depending on the drink.
hoist This is listed in Capital Allowances Act 2001 s23 List C as an item
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 Exchange Act 1882 s29(1)).
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 Majestys
birthday (Customs and Excise Management Act 1979 s1(1)).
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.
holy week The week before Easter.
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 counties Counties near London. They originally comprised Kent, Surrey,
Essex and Middlesex. Now it is usual also to include
Buckinghamshire, Berkshire, Hertfordshire and Sussex. (Middlesex
is now part of Greater London.)
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 purchasing agreement

In relation to capital gains tax and private residence relief, means an
agreement
(a) made with the employer or a person operating under an
agreement with the employer (the purchaser),
(b) which includes a term entitling the individual to receive a
share of any such profit as is mentioned in subsection (2)(a)
(Taxation of Chargeable Gains Act 1992 s225C(3)).
home service insurance Insurance policy that provides cover for home repairs, such as an
emergency plumber or electrician.
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.
homophobia Fear or hatred of homosexuals.

In itself, this is not illegal, but discrimination or certain other
manifestations may contravene equality laws.
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)).
hooch American slang for illicit liquor.
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.
horn player Before 6 April 2006 (when the normal pension retirement age was
of 55.
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).
horsepower Unit of power roughly equal to that of a horse. It is widely used for
vehicles and other machinery.
It is now defined as the power needed to lift 33,000 pounds by
one foot in one minute (which James Watt calculated was the power
of 1 horses).
Horserace Betting Levy System

Scheme of the Horserace Totalisator Board that was abolished by
Horserace Betting and Olympic Lottery Act 2004.
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.
Section 18 of the Act deals with the tax consequences.
horse trading Colloquialism for hard bargaining.
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.
~
Bona fide hospitality and promotional, or other business
expenditure which seeks to improve the image of a commercial
organisation, better to present its products and services, or
establish cordial relations, is recognised as an established and
important part of doing business.
Ministry of Justice guidance 2011
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.
host rock Indigenous (and largely worthless) rock to which ore or other
useable mineral is attached.
The presence of host rock can be relevant in determining liability
to aggregates tax.
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.
hotel Trading business that provides licences for short-term room hire.
A hotel is a trade related property.
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 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).
hot IPO Colloquialism for an initial public offering (IPO) where the
demand is greater than the supply.
hot pie For the VAT, a supply is zero-rated as food if the pie was only hot
either because it had not cooled down from baking, or to create a
pleasant smell to attract customers. It is only standard-rated as hot
take-away food if designed to be eaten hot. John Pimblett & Sons
Ltd. CA [1987] STC 358.
hot spot In computing, location where Internet access is available.
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.
hour Unit of time comprising 60 minutes or 3,600 seconds. There are 24

hours in a day, 168 in a week, and 8,760 in a 365-day year.
The hour is a common unit for determining wage rates.
hourly rate Rate per hour, particularly of pay or hire charge.
house (1) Unit of accommodation, usually one which stands on its own
land.
A building or part of a building consisting of one or more
dwellings (Housing Act 2004 s99).
(2) Term referring to the institution of a company, as in on the
house or house policy.
house agent Estate agent who specialises in selling houses.
house air waybill A forwarding agents 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 between 6 April 1920 and 5 April
1988 when a taxpayer engaged the services of a housekeeper.
The rates were:
From Amount
6 April 1973 100
6 April 1953 60
6 April 1931 50
6 April 1924 60
6 April 1920 45
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 Members Fund Act
1939 s1 to provide for widows, widowers and orphans of past or
previous members.
The tax treatment of payments from the fund is set out in Income
Tax (Earnings and Pensions) Act 2003 ss619-622.
House of Lords One of the Houses of Parliament which has limited powers compared
to the House of Commons. It debates the Finance Bills and other
money bills but cannot reject them (Parliament Act 1911 s1).
It was also the highest court in the land, until this function was
taken over by the Supreme Court from 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 generally exempt from
inheritance tax (Inheritance Tax Act 1984 s24A) and capital gains
tax (Taxation of Chargeable Gains Act 1992 s259).
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
housing investment trust (HIT)

From 29 April 1996, such trusts are taxed as investment trusts.
Housing Revenue Account subsidy

This is abolished by Localism Act 2011 Sch 15.
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.
HRM Human resource management.
hryvna Currency of Ukraine.
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.
HST High speed transmission.
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.
Hurwicz criterion In statistics, a method for incorporating judgment into a decision

under uncertainty.
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.
The term is defined in Finance Act 2004 s152(8).
hybrid derivative Financial instrument instruments that comprises more than one
derivative.
Corporation Tax Act 2009 from s584 deals with hybrid
derivatives with embedded derivatives.
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 structure Trading arrangement using two types of business entity. A simple
example is where a sole trader starts a parallel trade using a limited
company until the last period of the sole trader is covered by the
overlap relief.
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 1C, or
(b) gaseous at a temperature of 15C 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 employees
productivity but whose absence reduces productivity. The amount of
pay is a hygiene factor.
hyperinflation Definition
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.
Accounting
Accounting for hyperinflation is now regulated by FRS 24.
This broadly requires that all amounts, including comparatives,
are restated using the measuring unit current at the latest balance
sheet date.
This replaces UITF 9 which allowed two other methods.
Extreme example
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
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.
Cause
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.
Consequences
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.
hypothesis test In statistics, an approach to test a theory.
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 2 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).
IBAN International bank account number.
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.
iceberg home Home where more than half the space is below ground.
ice cream For VAT, this is standard-rated as it is specifically excluded from the
scope of zero-rated food.
ice hockey player An ice hockey player may retire on a personal pension at the age of
35, provided:
to consent,
RPSM03106035).
ICG Individual capital guidance.
ICN (1) Intrastat Combined Nomenclature

(2) International consignment note
ICO Information Commissioners Office.
ICOBS Insurance: New Conduct of Business sourcebook, published by the

icon In computing, a small picture symbol to indicate a program or file.

This can be accessed by double-clicking it.
ICR (1) Intelligent character recognition, in computing.

(2) Industrial Cases Reports, series of law reports from 1972.
ICSID International Centre for Settlement of Investment Disputes.
ICT Immediately chargeable transfer.
ICTA Income and Corporation Taxes Act 1988 (or 1970).
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; FRS 10 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
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 discussed in the Inspectors Manual at BIM42130.
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.
id est Latin: that is.
idiot In law, a person who is never capable of rational action, as against a

lunatic who has lucid periods. The term is now considered
pejorative.
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 Id est, Latin: that is.

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 quis que 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.
IIA Institute of Internal Auditors.
IIB Industrial injuries benefit.
IIP Interest in possession.
ajar Form of leasing that is acceptable under Islamic financing.
ILA Individual learning account.
ILEX Institute of Legal Executives.

ill a invented lhistoire 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 (Income and Corporation Taxes Act 1988 s431(2)).
[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)

Form of trust that is advantaged for inheritance tax. It 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.
A reduction in the recoverable amount of a fixed asset or
goodwill below its carrying value (FRS 10 para 2).
impairment loss Means a debit in respect of the impairment of a financial asset

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 Russian gold coin of 18th century worth ten roubles.
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.
Impersonaton of a Commissioner or officer of HMRC is an
offence under Commissioners for Revenue and Customs Act 2005
s30.
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.
importation Action of importing goods.
importation of goods The entry of goods from a place (or places) outside the European
Union territory.
import ban Government order prohibiting items from being imported.
import duties Customs duties imposed on goods imported from (now) outside the
European Union.
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.

The present system of import duties largely dates from 1932.
Many were reduced in 1947.
Duties on EFTA goods were abolished in 1966, with some
exceptions for agricultural and fish products. Under European law,
import duties may not be charged on goods from another member
state.
import duty General term for Customs duties and similar charges such as
Common Agricultural Policy Charges, and Anti-Dumping Duty.
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 (Customs and Excise Management Act 1979 s1(1)).
import-export Business which moves goods between the UK and other countries.
import levy Tax on imports from outside the EU into the EU.
import preference Arrangement between the EU and a non-EU state allowing products
from the latter state to be imported into the EU at a lower or nil rate
of Customs duty.
Import Preference Scheme

Scheme that operates import preference.
There are two types: autonomous and reciprocal.
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 value Value of goods for the purposes of determining the amount of
Customs duty payable.
The value is the CIF value, that is including carriage, insurance
and freight. To this is added certain other costs of purchase, such as
commission, royalties and licence fees. This is known as the
transaction value.
If this method is not possible, such as when the goods are
imported on loan, the value is determined by a hierarchy of methods,
as set out in Customs notice 252.
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.
impose Issue an order which 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.
imputed costs In management accounting, an estimate of the cost of taking an

alternative action as a means of decision making. For example,
premises could be leased as an alternative to being used.
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 gross 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.
The payment is subject to income tax (Income Tax (Earnings and
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 employees pay as a means of encouraging continued

or improved work.
incentive payment General

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.
Pensions
Incentive payments are payable to members of:
occupational pension schemes which became contracted out
for the first time between 1 January 1986 and 5 April 1993. Scheme
members received a 2% incentive as part of their minimum
contributions for tax years 1988/89 to 1992/93 inclusive
appropriate personal pension schemes. Scheme members
received a 2% incentive as part of their minimum contributions for
tax years 1987/88 to 1992/93 inclusive (CA 84 Stakeholders
Pension Scheme Manual, published by HMRC).
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 costs of obtaining finance

Incidental costs incurred in obtaining a loan or from issuing loan
stock.
Such costs may be tax deductible under Income Tax (Trading
and Other Income) Act 2005 s58.
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 employees 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)).
included amount Term used in Income Tax (Earnings and Pensions) Act 2003 s369 in
relation to earnings representing benefits to employees.
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
income Money a person receives from all sources.
income accounts American term for accounts that record a companys 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 persons income does not increase by more than figure
during the year, a persons 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 persons 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 persons income to another,

usually for an ulterior motive. Common motives are to save tax or to
make the donor eligible for a benefit.
income spreading Practice of sharing income with others (particularly a spouse) to

reduce overall tax by using the others personal allowances and
lower rate bandwidths.
Where this is done from a business owned by the true earner, the
payment may be disallowed as not wholly and exclusively incurred
for the business as required by Corporation Tax Act 2009 s54 or
Income Tax (Trading and Other Income) Act 2005
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.
The payment is subject to income tax (Income Tax (Earnings and
Pensions) Act 2003 s660(1)) though s665 makes it exempt unless it
is paid to a member of a couple involved in a trade dispute.
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 Definition

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.
~
Income tax, if I may be pardoned for saying so, is a tax on
income. It is not meant to be a tax on anything else. It is one
tax, not a collection of taxes essentially distinct.
Lord Macnaghten in Attorney-General v LCC [1900] 4 TC 265.
Scope of income
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
employees 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.
Overview
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.
Personal allowance
Almost all taxpayers are entitled to a personal allowance. They may
have other items which may deductible from their taxable income.
Rates
From 6 April 2011, there are only three rates of income tax, a basic
rate of 20%, a higher rate of 40%, and an additional rate of 50%.
Historically there have often been three or more rates.
There are some special rates of income tax, such as for
savings and dividends on shares.
Collection
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.
The term is also used in Income Tax Act 2007 s572A(3) in
relation to manufactured dividends.
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 tax relief Term used in relation to tainted charity donations (Income Tax
Act 2007 s809ZAM(4)).
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.
income stream transfer In relation to loan relationship, the term is defined in

Corporation Tax Act 2009 s486F(2)).
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.
incorporated society Friendly society that has become incorporated (Taxation of

Chargeable Gains Act 1992 s217A).
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
indebtedness State of owing money to others
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.
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).
The rights of charity trustees to take out such insurance is given
in Charities Act 2011 from s189.
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 auditors 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).
independence requirement
Requirement for certain office holders to have no connection with a
party in any proceedings where such connection could appear to
compromise the judgment of the office holder.

Such a requirement is traditionally required of auditors, experts,
valuers and witnesses. A specific example is Companies Act 2006
s936 in relation to experts and valuers.
To the extent that such an office holder is not wholly
independent, either the person cannot act in such a capacity, or the
relevant details must be disclosed by the office holder.
independent Not under the control, authority or significant influence of another

party.
In statistics, the term refers to a variable that is unaffected by any
other variable.
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 (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.
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 group of persons

Term used by HMRC in its June 2011 consultation document about
cost sharing for VAT.
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
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 Relations (Consolidation) Act 1992 s5).
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-linked Description of an investment or other financial instrument whose

value is automatically adjusted in accordance with a published index.
index-linked capital return

In relation to index-linked gilt-edged securities, the term is defined
in Corporation Tax Act 2009 s410A(7).
index-linked gilt-edged securities

Any gilt-edged securities under which the amounts of the payments
are determined wholly or partly by reference to an index of prices
published by the Statistics Board (Corporation Tax Act 2009 s399
2009 from s398.
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.
index number Number taken from an index.

Often an index number is half a fraction. For example if the RPI
was 114 when an asset was acquired and 131 when sold, the
acquisition cost may be multiplied by 131/114 to determine how
much of the proceeds represents profits as against inflation.
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.
India Payments of a pension made under Pensions (India, Pakistan and

Burma) Act 1955 may be exempt from income tax under Income
Tax (Earnings and Pensions) Act 2003 s654.
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 companys 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.
individual Term sometimes used to mean a natural person.

individual investment plan for children

The tax provisions are set out in Income Tax (Trading and Other
Income) Act 2005 from s694.
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.
induction (1) In statistics, estimating a population parameter from sample

data.
(2) In human resources, process of integrating a new worker into an
organisation.
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.
indulgence Remission from punishment by God for sin committed. At some

periods these have been sold.
industrial action Any form of organised protest by workers. They include a work-to-
rule and strikes.
An employer may not pay any refunds of tax due under the
PAYE system during such action
A period of such action is excluded from the reckoning of
continuous service, which can affect employment rights.
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 mens 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.
The taxation of their dividends is set out in Corporation Tax Act
2009 s132.
Their payments are taxed under Corporation Tax Act 2009 from
s499.
industrial arbitration tribunal

Tribunal which arbitrates in industrial disputes.
industrial building Building that attracted a capital allowance until 6 April 2011.
industrial development grants

The tax implications are given in Corporation Tax Act 2009 s102.
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 payable 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.
inequality (1) In mathematics, the state of two numbers or other items not being
the same. The symbol for this is .
(2) In human resources, when a person is not treated with equal
fairness to others.
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.
infeasible Description of a mathematical or other problem that has no problems

because of a conflict of constraints. For example you must travel
200 miles in two hours and not break the 70 mph speed limit.
inference In statistics, a method of decision-making on imperfect data. The

alternatives are deduction and induction.
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.
informant Person who secretly provides information about another person to a

law enforcement authority.
The right of HMRC to pay a reward for such information is
given in Commissioners for Revenue and Customs Act 2005 s26.
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-sharing arrangements
In company law, arrangements made in respect of a special register
allowing authorised persons to share and make use of information
about registered charges on companies (Companies Act 2006 s893).
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.
inheritance tax undertaking

In relation to capital gains tax on works of art, means an
undertaking under Chapter 11 of Part II or section 30 of [Inheritance
Tax Act 1984] (Taxation of Chargeable Gains Act 1992 s258(9)).
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
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.
For tax, the term applies to a period for which one tax provision
(usually beneficial) applies. An example is given in Income Tax
(Earnings and Pensions) Act 2003 s534 in relation to enterprise
management incentive.
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 navigation Profits from this, when run as a trade, are subject to income tax
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.
Many extant tax provisions still refer to Inland Revenue.
Inland Revenue Commissioner

Member of the Board of Inland Revenue. They are now replaced by
Commissioners of HM Revenue and Customs.
Inland Revenue office In relation to an employer, means the office of the Inland Revenue
from which codes are normally issued to the employer (PAYE
Regulations SI 2003 No 2682 reg 2(1)).
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 customers 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.
Under Value Added Tax Act 1994 s24(1), input tax is:
(a) VAT on the supply to him [registered taxpayer] of any
goods or services;
(b) VAT on the acquisition by him from another member
state
of any goods, and
(c) VAT paid or payable by him on the importation of any
goods from a place outside the member states,
being (in each case) goods or services used or to be used for the
purpose of any business carried on or to be carried on by him.
Following sub-sections provide further details.
inputs Goods or services which have been acquired by a business. The VAT
on inputs is input tax and may be offset against a traders 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 coroners 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.
INR So much of the basic profits for that period as do not consist of ring
fence profits, for corporation tax (Finance Act 2007 s3).
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.
inshore fisherman Before 6 April 2006 (when the normal pension retirement age was
of 55.
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 Definition
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.
Company insolvency
(1) A company is deemed unable to pay debts-
(a) if a creditor to whom the company is indebted in a sum
exceeding 750 then due has served on the company, by leaving at
the company\'s registered office, a written demand requiring the
company to pay the sum so due and the company has for 3 weeks
thereafter neglected to pay the sum or to secure or compound for it to
the reasonable satisfaction of the creditor, or
(b) the execution or other process issued on a judgement, decree
or order of any court in favour of a creditor of the company is
returned unsatisfied in whole or in part, or
(c) if it is proved to the satisfaction of the court that the company
is unable to pay its debts as they fall due.
(2) A Company is also deemed unable to pay its debts if it is proved
to the satisfaction of the court that the value of the company\'s assets
is less than the amount of its liabilities, taking into account its
contingent and prospective liabilities.
(Insolvency Act 1986 s123)
Capital gains tax

Capital gains tax implications are explained in Taxation of
Charities
Relevant provisions are given in Charities Act 2011 from s113.
insolvency law Branch of law which deals with insolvency.
insolvency practitioner Accountant who specialises in insolvency work, usually a qualified

accountant. The practitioners 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 The Treasury may order the police to conduct an investigation into
HMRC under Commissioners for Revenue and Customs Act 2005
s27.
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 in defined circumstances.
instalment option property

HMRC term for property for which the instalment option has been
exercised.
Instalment Payments Regulations

Corporation Tax (Instalment Payments) Regulations SI 1998 No
3175.
instalment sale Sale for which payment is made in instalments.
instant access In banking, description of accounts where the customer may draw
money immediately without losing interest.
in statu pupillari Latin: under guardianship.

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.
Institute of Internal Auditors (IIA)

Body established in 1941 as an international professional association
for internal auditors. It provides certification, education, research
and technical guidance.
Institute of Legal Executives (ILEX)

ILEX is the professional body representing around 22,000 qualified
and trainee legal executives, and is recognised by the Ministry of
Justice as one of the three core routes to becoming a qualified
lawyer (ILEX website).
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 a 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 elses life or someone elses 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 elses 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 12%. There are detailed provisions in Income and
Corporation Taxes Act 1988 on how to tax insurance companies.
insurance activities Term used in relation to the bank levy, for which purposes it is
defined in Finance Act 2011 Sch 19 para 13(4)).
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.

Their specific corporation tax provisions are given in
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.
The tax implications for sums recovered under a policy are set
out in Corporation Tax Act 2009 s103.
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 (Income and Corporation Taxes Act 1988 s431(2)).
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.
insured items service Means a service of conveying postal packets from one place to
another by post which, in the event of the theft or loss of or damage
to the packets, provides for the payment of an amount up to the value
of the packets as declared by the sender (Postal Services Act 2011
s32(1)).
insurer Insurance company.
Insurers Infrastructure Investment Forum

Body proposed in Autumn Statement 2011.
The Government will set up an InsurersInfrastructure Investment
Forum with the Association of British Insurers to explore ways
toensure that the capital markets continue to provide an efficient and
attractive source of debt finance for infrastructure projects. This will
include addressing the impact of potential regulatory changes in the
insurance sector. (Autumn Statement 2011).
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.
Non-financial fixed assets that do not have a physical substance
but are identifiable and are controlled by the entity through custody
or legal rights (FRS 10 para 2).
The accounting treatment follows that for an intangible item. the
tax treatment follows that for an intangible fixed asset.
intangible fixed asset (IFA)

Intangible asset which is accounted for as a fixed asset, though
strictly recognised as an intangible item in the accounts.
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 item Item that has the nature of an intangible fixed asset.
~
An intangible item may meet the definition of an asset when
access to future economic benefits that it represents is
controlled by the reporting entity, either through custody or
legal protection. However intangible assets fall into a spectrum
ranging from those that can readily be identified and measured
separately from goodwill to those that are essentially very
similar to goodwill. The basis principles set out for initial
recognition, amortisation and impairment of intangible assets
that are similar in nature to goodwill are therefore closely
aligned with those set out for goodwill.
FRS 10. Summary para c.
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.
integer Whole number, with no decimal or faction. So 47 is an integer, 3

and 4.7 are not.
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
(Capital Allowances Act 2001 from s33A).
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.
Expenditure cannot be offset against profits subject to
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.
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.
For income tax in relation to shares in a research institution
spin-out company, the term is defined in Income Tax (Earnings and
Intellectual Property Office (IPO)

Part of the Department for Business, Innovation and Skills that deals
with patents and other forms of intellectual property.
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.
intercept In co-ordinate geometry, the point where two lines intersect on a

graph. This usually indicates an optimal solution to what is being
plotted.
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 (1) Sum of money paid in relation to a principal, such as a charge

for borrowing money under a loan. This is further explained in
interest on principal.
(2) Rights over property which are less than full ownership. This
definition is further explained in interest in property.
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 (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.
interested person For council tax, a person who is liable to jointly liable, to pay the tax
and who therefore has the right to ask for a property to be revalued.
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 companys 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 others ability to grant it.
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 As 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 Cs life; the house passes to D
on Cs 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 property Rights or interest that a person may have in property that fall short of
ownership.
This includes interest in a companys shares, interest in a
settlement, and interest in possession.
For securities provided as part of employment income, interest
is defined as an interest in them [securities] less than full beneficial
ownership and includes an interest in proceeds of their sale, but does
not include a right to acquire them (Income Tax (Earnings and
interest in shares Another term for interest in a companys 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 principal Sum paid to borrow money, known as interest payable, or received
for lending or depositing money, known as interest receivable.
Interest is always treated as a revenue item and never as capital
(Income Tax (Trading and Other Income) Act 2005 s29).
interest on tax Additional charge automatically imposed when 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.
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.
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.

The extent to which they may be used to justify a dividend is set
out in Companies Act 2006 s838.
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 years 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 workers 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 set out in Value Added Tax Act 1994 s14, and
explained in VAT notice 725.
internal audit Audit by the companys 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). This can be done using the
=IRR function in Microsoft Excel.
The IRR can be determined as 7.714% thus:
Start Cashflow Balance Interest Final

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 Account Number (IBAN)

Extended bank account number used for payments between banks in
different countries. For such payments, the sort code is replaced by
the SWIFT Bank Identifier Code (BIC).
For payments to HMRC, the IBANs are:
Shipley: GB05CITI08321012001020
Cumbernauld: GB74CITI08321012001039.
In both cases, the SWIFT BIC is CITIGB2L.
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 Any currency designed to be used by more than one state.
Some domestic currencies are already so used, such as US dollar,
pound and CFA franc.
Invented international currencies include the euro and special
drawing rights.
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 Securities Markets Association (ISMA)

Zurich-based organisation that operates in more than 40 countries. It
acts as a forum for addressing issues relating to international
securities, now including Eurobond dealers and managers in
international security markets. Before January 1992, it was called the
Association of International Bond Dealers.
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 trade assurance officer

Employee of HMRC, based at an inland office, who visits taxpayers
premises to check record and goods in relation to importing and
exporting.
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.

It is possible to pay tax using Internet banking.
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.
interquartile range Range of numbers after eliminating the top 25% and the bottom
25%.
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.
interval data In statistics, data that can be grouped by magnitude, such as age
ranges.
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
persons 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.
intra-group recharge When a company in a group is charged for a supply paid by another
group company. The term is used in the Inspectors Manual at BIM
44030 in relation to employee share schemes.
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 individuals observation and recording of his or

her own perceptions, thoughts and feelings.
Inuit Eskimo.
Where an Inuit kills a seal as part of a traditional hunt for
sustenance, the state authority may issue a seal attestation. This
allows the seal, or products from it, to obtain Customs clearance.
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 carers 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

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

One of the five forms of alternative finance arrangement.
Chargeable Gains Act 1992 s151N.
s564G.
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 entity Term used for the bank levy. It is defind in Finance Act 2011 Sch 19
pars 12(9)).
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 life insurance contract

The term is defined in Corporation Tax Act 2009 s561.
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 plan for children

The tax implications are given in Income Tax (Trading and Other
Income) Act 2005 s695A.
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 companys
investment properties are first disclosed.
investment trust Company that invests in other companies. Investors buy shares in
the investment trust, which is legally not a trust at all.
Specific corporation tax provisions are given in Corporation Tax
Act 2009 s395. A definition is given in Corporation Tax Act 2010
s1158.
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 Definition
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.
Process
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.
Ledgers
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.
Value added tax

There are legal requirements for VAT invoices. These are relaxed for
amounts below 250, and further relaxed for amounts below 25.
invoice clerk Employee whose job involves processing invoices in the accounts
department.
invoice discounting Form of secured lending against a businesss 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.

involved in research For employment income from shares in a spin-out company, the
term is defined in Income Tax (Earnings and Pensions) Act 2003
s458.
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 (1) Intellectual property.

(2) Inward processing.
IPA Individual pension account.

[This is also the abbreviation for Indian Pale Ale.]
IPDI Immediate post-death interest.
IP drawback Arrangement whereby Customs duties are paid when goods are
imported for inward processing, and the duties are repaid when the
goods are re-exported.
IPO (1) Intellectual Property Office.

(2) Initial public offering, of shares.
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 suspension Arrangement whereby Customs duties are suspended when goods are
imported for inward processing. The duty liability is discharged
when the goods are re-exported.
IP&T Butterworths Intellectual Property and Technology Cases, a series of

law reports first published in 1999.
IR (1) Inland Revenue.

(2) Insolvency Rules.
(3) For corporation tax, so much of the basic profits for that period
as consist of ring fence profits (Finance Act 2007 s3).
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 companys 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.
IR35 Forum Body established comprising representatives of HMRC and parties

affected by the IR35 regulations. Its object is to find ways to make
IR35 operate more effectively. Their first meeting was on 6 May
2011.
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.
ironworks Profits from a quarry run as a trade are subject to income tax
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.
ISMA International Securities and Markets Association.
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 discussed in the Inspectors Manual at BIM20230.
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 dItalia, the Italian waters of Lake Lugano,
and Lvigno.
IT consultancy Under the VAT flat rate scheme, the appropriate percentage is:
From Percentage
4 January 2011 14.5%
1 January 2010 13%
1 December 2008 11.5%
1 January 2004 13%
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).
itemized deductions In USA, a list of personal expenses as set out in the IRS code which
a taxpayer may claim as an alternative to the standard deduction.
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.
The matter is discussed in the Inspectors Manual at BIM37670.
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.

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Leachs Tax Dictionary as at 19 January 2012. D-I.

Leachs Tax Dictionary: Preface

All bold and italic type is editorial unless stated otherwise.

D/A Documents against acceptance.

Dail Eireann Lower house of parliament in the Republic of Ireland.

daily average agreement Agreement between an employer and a worker engaged in

daily grind Monotony of routines in life.

daimyo bond In Japan, bearer bond issued by supranational bodies.

dais Part of a building which is raised to make it easier for a person

daisy chain (1) Series of transactions created to produce an allusion of trading

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.

damnosa haereditas Latin: an inheritance of debts.

damnum absque injuria Latin: loss without wrong.

damnum sentit dominus Latin: the lord suffers the damage.

damnum sine injuria esse potest

DAN Deferment Approval Number - a unique reference number issued to

Danegeld An ancient tax levied to appease or fight the Danes.

danger money Additional money paid to someone in respect of the dangerous

Da z pidan hodnoty (DPH)

DAS Pipeline Duty Adjustment Statement - issued by a pipeline operator

DAS Debt Arrangement Scheme.

database Data organised to make retrievals easy. The commonest database

data capture Process of obtaining information which may be stored as data on a

data et accepta Latin: expenditures and receipts.

data-gathering powers In relation to tax, the right of HMRC to gather information.

data-holder notice Notice to a data-holder requiring production of data (Finance Act

data mining In computing, an application of artificial intelligence to solve

data processing General

VAT flat rate scheme

data protection Right of individuals not to have personal information improperly

date Means of recording a particular day. It is traditionally expressed as

dated security Security that has a fixed redemption date.

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

date of registration When a person or business was registered. This is particularly

date on which the financial statements are approved

Davek na dodano vrednost (DDV)

Dax Abbreviation of Deutsche Aktienindex, a share index on the

day (1) Period of 24 hours.

day off Day on which a person is not expected to work.

day order Instruction to a stockbroker to buy or sell on a specific day.

day-release Arrangement whereby an employee is allowed to attend a college for

days grace Additional days from a stated deadline in which no penalty is

day-shift Hours of work during normal daylight hours.

days convention Simplification of interest rate calculations by assuming a fixed

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

DB Defined benefit (pension scheme).

DB scheme Defined-benefit pension scheme.

DC Defined contribution (pension scheme).

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.

DDA Disability Discrimination Act 1995.

DDA-compliant Description of a premises, equipment or business that complies with

DDC Deemed disposal consideration, abbreviation used in Taxation of

DDV Davek na dodano vrednost, Slovenian for value added tax.

Leach's Tax Dictionary

Leach's Tax Dictionary