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

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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

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

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

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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 3

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-

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

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

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
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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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 5

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

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.

(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
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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

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.

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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

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
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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

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

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.
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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.
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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
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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

day centre Place where elderly or disadvantaged people may meet for any of a
range of social, recreational, educational, medical and similar
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

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.
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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.

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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

dealer Person who trades for a living. The term has also acquired some
specific meanings in particular circumstances.
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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

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

Dean of Faculty In Scotland, the barrister who presides over the Faculty of

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

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
[There have also been Dearing Reports in 1997 and 2001 on
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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.

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
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.
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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


debate Ordered argument which follows a structure designed to reach a


close family Close members of the family of an individual are those family
members, or members of the same household, who may be expected
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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

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
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.
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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

debit card Payment card which allows money to be paid directly from a bank

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

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


debrief Gather information about a persons experience about a mission,

exercise or event.

debt Definition
Amount of money owed to someone else.

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 20

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 21

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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 22


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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 23

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
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

debt security Financial instrument used to borrow funds, and on which interest is

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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 24

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 25

tenth member of a defeated army.

decision act Option available to a decision maker, such as to buy, sell or hold a

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
(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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 26

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
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


declining balance method Another name for the reducing balance method used to calculate
The value of the asset reduces each year according to the residual
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 27

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


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

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


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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 28

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
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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 29

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
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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 30

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
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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 31

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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 32

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)).
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 33

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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 34

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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 35

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 36

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

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

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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 37

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

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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 38

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.)
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 39

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]

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 40

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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 41

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 42

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

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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 43

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

deodand An item of property that should be given to God.

Before 1846, English law prescribed certain chattels as

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 44

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
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;
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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 45

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

dependants unsecured pension

Payments of income withdrawals direct from a money purchase
arrangement, or income paid from a dependants' short-term annuity
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 46

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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 47

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

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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 48

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 49

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

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

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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 50

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

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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 51

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


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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 52

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 53

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

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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 54

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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 55

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

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

detersion Process of cleaning.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 56

detest In old documents, this term means to witness against, rather than to

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


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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 57

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

Deuxime Bureau French: Second Department. French Department of Military


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

development assistance Assistance provided by the British government to any person or body
with a view to reducing poverty in another country (International
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 58

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

Devils advocate Person who argues a case solely as a means of testing its veracity.
The term originated in the Church.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 59

devils Colloquialism for Counsel of the Treasury, answerable to the


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).
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 60

diarchy Government by two people. The Northern Ireland Executive is a


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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 61

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
However, a VAT tribunal zero-rated a dietary supplement in
what it described as a borderline case in Arthro Vite Ltd [1996] VTD

Dieu et mon droit French: God and my right. Royal motto, first used by Richard I in

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

difference on consolidation
Difference between fair value of the payment for a subsidiary and
the fair value of net assets acquired, more commonly called

difference option An option which pays the difference between the prices of two

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 62

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 63

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
of plant and machinery (Capital Allowances Act 2001 s22(1) List B).

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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 64

[murder] (Homicide Act 1957 s2).

diminishing balance Another name for reducing balance, a method of calculating


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.
The income tax provisions are given in Income Tax Act 2007

diminution of value Reduction in value, particularly of an estate in respect of inheritance

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)).
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 65

diocese Area of a country that is administered by a bishop in the Church of

England or (using different boundaries) in the Roman Catholic

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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 66

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
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
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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 67

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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 68

directors employment In relation to a person who is employed as a director, means that

employment (Income Tax (Earnings and Pensions) Act 2003

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
Companies Act 2006 s420.

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
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

(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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 69

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 70

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

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-
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 71

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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 72

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
DLA has two components, a mobility component and a care
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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 73

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
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)
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 74

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

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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 75


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

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


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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 76

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
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
The taxpayer may disclose his own tax affairs freely.

In insurance, the duty of any person applying for an insurance policy
to tell the insurer all relevant information affecting the risk.

In investing, the duty of an intermediary to inform his client if
commission is being paid (and, if so, how much) in respect of the
business being placed.

disclosure Revealing or making known a fact. Disclosure is a significant

element in accounting and tax reporting.

disclosure of services provided by auditor

Detail of any services other than auditing provided by an auditor to a
company. These must be disclosed by the company under
Companies Act 2006 s494.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 77

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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 78

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

discounted value Different between the market value of a share and its lower market

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 79

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
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


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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 80

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

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,
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 81

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

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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 82

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

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


disinvest Reduce investment, such as by selling shares or not replacing a fixed


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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 83

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
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
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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 84

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
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.

dispone In Scots law, process by which one persons property is made over to

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-

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
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).
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 85

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

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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 86

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

dispossess Remove from possession.

disproportionate Out of proportion, such as when a penalty is too great for the

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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 87

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
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

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
The regulations implement European Directive 97/7/EC of 20
May 1997.
The regulations deal with consumer sales by mail order or
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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 88

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


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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 89

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

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 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 Service 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).

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).
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 90

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

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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 91

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
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:
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
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

diversification Portfolio policy that seeks to reduce risk by spreading investments

over a suitably wide range.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 92

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).

An amount returned to the holders of certain types of policy, by the
insurance company, out of its earnings

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
Income Tax Act 2007 s19.

dividend irrelevance Theory that dividends are irrelevant in determining the value of a
company. To the extent that profits are not distributed, they are
retained and are therefore reflected in the share value.

dividend maintenance Policy of paying the same dividend even though a companys profits

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 93

dividend policy Policy followed by directors when determining the size of the

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
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.

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 94

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

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


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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 95

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
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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 96

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 97

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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 98

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

dollar Currency of the USA, indicated by the symbol $. It also refers to a

different currency of other countries such as Australia, Bermuda and

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)).
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 99

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
(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
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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 100

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 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

dominant trading strategy

Portfolio that costs the same as another but which is structured
always to outperform the other.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 101

domination Relationship where one person, body or activity determines all


dominical Belonging to the lord, particularly referring to Jesus in Christian


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


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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 102

DORA Defence of the Realm Act 1914. It imposed severe wartime


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.

Produce twice as much money, such as in terms of turnover, profit or
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 103

Perform two roles, particularly in the performing arts. This

includes acting two parts in a play or playing two instruments in an

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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 104

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 105

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

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

double jeopardy Legal principle that a person should not be punished twice for one
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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 106

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
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
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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 107

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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 108

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

down-at-heel Description of someone with a shabby appearance, literally with the

backs of their shoes pressed down through excessive and careless

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
(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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 109

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
of plant and machinery (Capital Allowances Act 2001 s22(1) List B).

drains Trading income

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).

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)).
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 110

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
(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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 111

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 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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 112

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
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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 113

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

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
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.

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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 114

A list of the codes is given in the Inspectors Manual at


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

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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 115

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


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

dual motive transaction Transaction undertaken for more than one objective. This can
determine whether a transaction is trading, as explained in the
Inspectors Manual at BIM20410.

dual pricing Description of product or service to which different prices are

charged depending on the market in which it is sold.

dual purpose expenditure Spending which is for both business and personal use. Such items
have several specific tax provisions.
Where expenditure is incurred on such items, the whole
expenditure is usually disallowed as it does not meet the
exclusively requirement to be tax-deductible. The is discussed in
the Inspectors Manual at BIM37007. A leading case is Mallalieu v

dual residence State of being resident in more than one country at a time.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 116

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
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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 117

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

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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 118

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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 119

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

Companies Act 2006 s498.

duty (1) Tax on goods.

(2) Responsibility of a job or office.
There are two main types of duty collected by HM Customs and
Excise: one is 'import duty', which is duty charged on goods
imported into the European Union (EU); and the other is 'excise
duty', which is a UK tax on certain types of goods, such as alcohol or

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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 120

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
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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 121

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 122

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
in Scotland, between 58,001 and 80,000 in 1993.
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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 123

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

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
(Corporation Tax Act 2010 s12(3)).

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
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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 124

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

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

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
(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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 125

(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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 126

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
(Income Tax (Earnings and Pensions) Act 2003 s335).

earnings factor (EF) Figure used to determine eligibility for contributory social security
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

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
(Income Tax (Earnings and Pensions) Act 2003 s227(2)).

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 127

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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 128

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

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
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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 129

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 130

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 131

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

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
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

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).
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 132

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.

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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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 134

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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 135

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

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
award are free of income tax (Income Tax (Earnings and Pensions)
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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 136

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
(Corporation Tax Act 2010 s112).

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 137

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.
Corporation tax provisions are given in Corporation Tax Act
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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 138

eg Exempli gratia, Latin for for example.

EG (1) Enforcement Guide, published by the Financial Services

(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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 139

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


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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 140

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 141

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

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

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:
ownership interest
contributions from owners
distribution to owners.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 142

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


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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 143

ELM Electronic Money sourcebook, published by the Financial Services


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
of plant and machinery (Capital Allowances Act 2001 s22(1) List B).

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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 144


emergency card Original name for the PAYE procedure now known as emergency

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
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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 145

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
inheritance tax glossary).

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 146

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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 147

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


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

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
Pensions) Act 2003 s346.

employee involvement Human resources term for any arrangement whereby employees may
provide input into how the organisation is run.

employee loyalty Sense of commitment which staff feel toward their employer.

employee numbers 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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 148

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
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

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).
The capital gains tax provisions are given in Taxation of
Chargeable Gains Act 1992 from s239.

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 149

an EAP leads to savings of up to 14.

employer Person who engages someone to work for him in an employment


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

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).
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 150

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

employers PAYE reference

In relation to an employer, means the combination of the
employers employer reference and the Inland Revenue office
(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.
(Income Tax (Earnings and Pensions) Act 2003 s4(1)).

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).
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 151

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

(Income Tax (Earnings and Pensions) Act 2003 s275).
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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 152

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

employment income provided through third parties

Tax avoidance scheme, in effect outlawed by Finance Act 2011 Sch

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
(Income Tax (Earnings and Pensions) Act 2003 s201(2)).

employment-related loan Loan made to an employee or to a relative of the employee and

which is either interest-free or where interest is charged at less than a
commercial rate. It is taxable as a benefit in kind unless the loan is
for less than 5,000.
A full definition is given in Income Tax (Earnings and Pensions)
Act 2003 s174(2).
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 153

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 154

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
(Income Tax (Earnings and Pensions) Act 2003 s322(1)).

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 (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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 155

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 156

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 157

(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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 158

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


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-

(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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 159

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

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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 160

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

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

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

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).
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 161

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.

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.

VAT flat rate scheme

Under the VAT flat rate scheme, the appropriate percentage is:

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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 162

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
(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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 163

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 164

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
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

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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 165

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 166

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

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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 167

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
(Income Tax (Earnings and Pensions) Act 2003 s172(1)).

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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 168

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

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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 169

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

equity finance Funding for a business by selling shares in it, as against debt

equity-for-debt exception Term used in Corporation Tax Act 2009 s361C for loan

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


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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 170

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
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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 171


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
(Corporation Tax Act 2010 s114).

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

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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 172

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

Companies House launched such a free service on 14 July 2011.

ERISA Employee Retirement Income Security Act 1974, an American


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

(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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 173

ESC (1) Extra-statutory concession

(2) European Social Chapter [or Charter]
(3) Employer-supported childcare

escalation Process by which a figure increases by a predetermined amount.

The term is commonly used for pensions. Escalation may mean
that a pension being paid increases each year by 3% regardless of the
rate of inflation.
If the pension is linked to the actual rate of inflation in any way,
it is said to be index-linked.

escalation clause Clause in a contract allowing for regular increases, such as in prices.
The clause usually states how these increases are to be calculated,
such as by reference to a prices index.

escalation of commitment In banking, increasing the financial assistance offered to a business

or person in difficulties. This is also called creeping commitment.
Such a policy is risky as it increases the amount the bank or other
body may lose should the business or person still become insolvent.

escalator clause American term for escalation clause.

escalators For capital allowance purposes, is treated as an integral feature,

which 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).

escape clause Clause in a contract which allows one of the parties to be released
from his obligations if a stated eventuality occurs.

ESCB European System of Central Banks.

escort officer Civilian who is so designated by a chief officer of police under

Police Reform Act 2002 s38(2).

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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 174

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

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

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).
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 175

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
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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 176

administration, disposing of the body, paying legacies, ascertaining

and distributing the residue, and paying inheritance tax.

estate agent VAT flat rate scheme

Under the VAT flat rate scheme, the appropriate percentage is:

From Percentage
4 January 2011 12%
1 January 2010 10.5%
1 December 2008 9.5%
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
For tax, estimates properly allowed for accounting are accepted.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 177

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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 178

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

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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 179

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
The currency was introduced in the form of bank notes and coins
on 1 January 2002, having previously existed as an accounting
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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 180

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 181

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

European Accounting Association (EAA)

Organisation formed in 1977 for teachers and researchers of

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 182

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
(Corporation Tax Act 2009 s17).

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 183

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 184

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

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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 185

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 (EPO website)

European Patent Office (EPO)

European body based in Germany that provides patents covering

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 186

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

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


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

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

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 187

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
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
the supplier, and the consignor if different
the customer
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 188

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

examination Interrogation of a witness in court.

Examination by the witnesss own counsel is called
Examination by the opposing counsel is called cross-
Further examination by own counsel is called re-examination.

examination-in-chief Initial examination of a witness by the witnesss own counsel in


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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 189

ex ante Before the event. The term often describes a budget prepared before
the budgeted activity commences.

ex capitalisation With all rights of capitalisation being given to the current

shareholder and not to any purchaser of the shares.

excepted asset For inheritance tax, an asset on which business relief is not
available because it is not used wholly or mainly for the purposes of
a business throughout two years before a transfer (HMRC
inheritance tax glossary).

excepted charity Church that need not submit accounts to the Charity Commissioners.

excepted 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
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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 190

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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 191

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

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

exchange control Government restrictions on converting its currency to other

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.
Corporation tax provisions are given in Corporation Tax Act
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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 192

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
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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 193

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
Management Act 1979 s1(1)).

excluded activities Term used in Income Tax Act 2007 s303 in relation to activities for
which it is not possible to claim the special tax provisions for
venture capital trusts.

excluded activities Trading activities which exclude a company from a scheme. Certain
activities exclude the special tax reliefs under Enterprise Investment
Scheme and VCT, for example. The list for VCT is given in Income
Tax Act 2007 s303.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 194

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

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
(PAYE Regulations SI 2003 No 2682 reg 4(2)).

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 195

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
(PAYE Regulations SI 2003 No 2682 reg 4(2)).

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
(Income Tax (Earnings and Pensions) Act 2003 s47(2)).

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 196

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

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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 197

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

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

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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 198

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

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

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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 199

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
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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 200

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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 201

exempt persons Importers who are not registered for VAT or registered taxable
persons who are reimporting goods other than in the course of their

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

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
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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 202

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

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

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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 203

existing director In company law, a person who is a director of the company

immediately before [the accounts] meeting (Companies Act 2006
All such directors have a duty to ensure that resolutions about
directors remuneration are put to shareholders at the accounts

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

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

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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 204

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

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

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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 205

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 206

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

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
(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
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


expense ratio The ratio of an insurance companys operating expenses to its


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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 207

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

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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 208

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 209

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 210

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
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

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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 211

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

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


extended credit Allowing a customer a longer time to pay.

extended period A period that has been allowed to proceed beyond its normal closing
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 212

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 213

external investigation Investigation by an overseas body into whether someone has

obtained property by criminal activity (Proceeds of Crime Act 2002

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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 214

extortion Payment of extortion is not a deductible expense as it is a criminal


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

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
(PAYE Regulations SI 2003 No 2682 reg 31(4)).

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 215

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 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
in England, between 120,001 and 160,000 in 1993;
in Wales, between 135,001 and 191,000 from 1 April 2005,
and between 90,001 and 120,000 before;
in Scotland, between 80,001 and 106,000 in 1993.
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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 216

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.
(3) Old Roman numeral for 40.
(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-

FABs Flavoured alcoholic beverages, more commonly known as alco-


face amount Another term for face value.

face value Value of a bond, security, note, coin or other item as stated on the
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 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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 217

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

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

factory gate price Actual cost of manufacturing goods before profit is added.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 218

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

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
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
(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:
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 219

(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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 220

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
(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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 221

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
Corporation Taxes Act 1988 s431(2)).

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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 222

fallback position Tax provision that applies when the usual tax provision cannot be
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
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)).
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 223

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

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

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 224

family entertainment centre

Premises (other than an adult gaming centre) wholly or mainly used
for making gaming machines available for use (Gambling Act 2005

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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 225

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
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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 226

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

VAT flat rate scheme

Under the VAT flat rate scheme, the appropriate percentage is

From Percentage
4 January 2011 6.5%
1 January 2010 6%
1 December 2008 5.5%
1 January 2004 6%

There are separate rates for agricultural services, and forestry and

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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 227

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 228

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

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


FCA Fellow of the Institute of Chartered Accountants in England and


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
(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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 229

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
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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 230

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.]
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 231

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 232

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:
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 233

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
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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 234

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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 235

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
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
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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 236

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

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

From Percentage
4 January 2011 13%
1 January 2010 11.5%
1 December 2008 9.5%
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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 237

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


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
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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 238

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

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
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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 239

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
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


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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 240

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

financial adaptability The ability of the company to respond to unexpected needs or


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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 241

Financial Services Authority.

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
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
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
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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 242


financial benefit share The amount that may be paid tax-free to an employee in respect of a
The benefit share is the greater of:
half the first years benefit, and
10% of the first five years benefit
(Income Tax (Earnings and Pensions) Act 2003 s322(5)).

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

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
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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 243

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

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
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

financial position State of a persons or businesss finances. This usually involves

looking at current assets and liabilities, and current income and

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 244

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
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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 245

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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 246

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 247

the Inspectors Manual at BIM42515.

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
that is not affected by the provisions of s21 (buildings) or s22
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 248

(structures). This means that its eligibility for capital allowance

depends on the nature and purpose of the 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-

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 249

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

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

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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 250

(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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 251

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
(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
(Income Tax (Trading and Other Income) Act 2005 s12) or
corporation tax (Corporation Tax Act 2009 s39).

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 252

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
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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 253

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

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
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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 254

deduction is usually in respect of uniforms and tools.

fixed deposit Investment in the form of a deposit which pays a fixed rate of

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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 255


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.
A full definition is given in Income Tax (Earnings and Pensions)
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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 256

(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

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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 257

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
(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-

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 258

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
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

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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 259

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 260


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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 261


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

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

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

flotation Process of floating a company, usually by allowing investors to buy

its shares.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 262

The extent to which flotation costs are tax-deductible is

discussed in the Inspectors Manual at BIM38240.

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 263

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

font Size and style of a type face.

The standard size is the point where 72-point refers to type one
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 264

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:

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
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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 265

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

footballer A footballer may retire on a personal pension at the age of 35,

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
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
This was part of a package of pool betting duty reforms that
included reducing the duty from 42% to 40% (Finance Act 1990
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 266

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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 267

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

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
Corporation Taxes Act 1988 s431(2)).

foreign business assets In relation to an insurance company, means assets, other than
linked assets, which either
(a) are shown in the records of the company as being primarily
attributable to liabilities of the 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
(Income and Corporation Taxes Act 1988 s431(2)).

foreign company Company incorporated outside the UK but having a place of business
in the UK.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 268

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

foreign currency account Bank account in a currency other than that normally used by the
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.
The capital gains tax provisions are given in Taxation of
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

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).
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 269

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
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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 270

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

foreign trade Trade with other countries, as against domestic trade in ones own

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)).
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 271

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


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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 272

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

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
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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 273

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
(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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 274

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)
(Income Tax (Earnings and Pensions) Act 2003 s563).

former employment The employment which the former employee has ceased to hold
(Income Tax (Earnings and Pensions) Act 2003 s563).

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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 275

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

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


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

forward delivery Delivery for an agreed future date, particularly under a contract.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 276

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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 277

they are beneficially held by a person whose residence is outside the


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

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

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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 278

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 279

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

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).
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 280

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

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
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

fraudulent misrepresentation
Misrepresentation which a person makes knowingly, or without
believing it to be true, or who is reckless or careless as to whether
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 281

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 282

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
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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 283

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


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

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

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 284

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)
(PAYE Regulations SI 2003 No 2682 reg 2(1)).

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

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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 285

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
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 286

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.

Leachs Tax Dictionary as at 19 January 2012. D-I. Page 287

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

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.
Leachs Tax Dictionary as at 19 January 2012. D-I. Page 288

(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


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

frontier Any place where goods are still to be notified formally to HM

Customs and Excise by placing them under a nominated customs

front money In gambling, facility agreed in advance between the player