Annex 1: Minor Changes in the Law Change 22: Trading income etc: allow all FISMA levies and costs: sections 92, 104 and 1246 and Schedule 1 Trading income
Section 76A of ICTA allows a deduction for “any sum expended … in paying a levy”. “Levy” is defined in section 76A(2) by listing the sorts of payment that may be required under FISMA.
	The first sort of payment relates to the legal assistance scheme in connection with hearings before the Financial Services and Markets Tribunal (see sections 134 to 136 of FISMA).
	The second sort of payment relates to the Financial Services Compensation Scheme. A levy in connection with this scheme may be made on an “authorised person” (see section 31 of FISMA) by the “scheme manager” (see section 212 of FISMA). The power to do this is in section 213(3)(b) of FISMA.
	The third sort of payment relates to the ombudsman scheme (see sections 225 to 234 of FISMA). The expenses of the scheme are funded by payments required from authorised persons by the Financial Services Authority under section 234 of FISMA.
	The fourth sort of payment relates to the ombudsman’s “compulsory jurisdiction” (see section 226 of FISMA). Under paragraph 15 of Schedule 17 to FISMA the scheme operator may require a respondent (defined in section 226(1) to mean the person complained of) to pay a fee.
	The fifth sort of payment relates to the ombudsman’s “voluntary jurisdiction” (see section 227 of FISMA). Under paragraph 18 of Schedule 17 to FISMA the scheme operator sets “standard terms” for dealing with complaints dealt with under the voluntary jurisdiction. Paragraph 18(3) of Schedule 17 allows the standard terms to require the making of payments to the scheme operator (paragraph (a)) and to include the award of costs (paragraph (b)).
The first four sorts of payment may be described as contributions towards the costs of running the schemes that are set up by FISMA. And, within the fifth sort of payment, the payments to the scheme operator also have the character of a contribution to running costs (in that case, of the voluntary jurisdiction).
It is clear that the contributions to running costs are allowable. But the position of “costs” is unclear. Section 76A(2)(e) excludes payments “other than an award which is not an award of costs under costs rules”. “Costs rules” are defined in subsection (6) as rules made under section 230 of FISMA (which are not relevant to the voluntary jurisdiction) and rules contained in the “standard terms” for the voluntary jurisdiction. The standard terms published by the Financial Standards Authority do not distinguish between:
	the levies to be paid on the same basis as those for the compulsory jurisdiction; and
	the costs that may be awarded against a respondent.