SCHEDULE 22 Capital allowances for freeport tax sites
Section 114
PART 1 First-year allowance for plant and machinery
1 Part 2 of CAA 2001 (plant and machinery allowances) is amended as follows.
2 In section 39 (first-year allowances available for certain types of qualifying expenditure only), at the end insert—
section 45O | expenditure on plant and machinery for use in freeport tax sites.
3 After section 45N insert—
Expenditure on plant and machinery for use in freeport tax sites
45O (1) Expenditure incurred by a company on the provision of plant or machinery is first-year qualifying expenditure if conditions A to E are met.
(2) Condition A is that the plant or machinery is for use primarily in an area which, at the time the expenditure is incurred, is a freeport tax site.
(3) Condition B is that the plant or machinery is unused and is not second-hand.
(4) Condition C is that the expenditure is incurred for the purposes of a qualifying activity within section 15(1)(a) or (f).
(5) Condition D is that the expenditure is incurred on or before 30 September 2026.
(6) Condition E is that the company is within the charge to corporation tax.
(7) This section is subject to—
regulations under section 45P,
section 45Q (exclusion of plant or machinery partly for use outside freeport tax sites),
section 45R (effect of plant or machinery subsequently being primarily for use outside freeport tax sites), and
section 46 (general exclusions).
Power to amend conditions
45P (1) The Treasury may by regulations change the conditions that must be met in order for expenditure to be first-year qualifying expenditure under section 45O (whether by adding, removing or altering conditions).
(2) Regulations under this section may not remove the requirement for the plant or machinery to be for use primarily in an area which, at the time the expenditure is incurred, is a freeport tax site.
(3) Regulations under this section may, among other things—
(a) make provision by reference to the expenditure, the plant or machinery, the company that incurred the expenditure or a person who is or has been connected with that company;
(b) impose conditions relating to accounts or other records;
(c) impose other conditions requiring a person to take steps specified in the regulations;
(d) make different provision for different purposes;
(e) include incidental, supplementary, consequential, transitional or transitory provision.
(4) Regulations under this section—
(a) may amend, repeal or otherwise modify section 45O and other provisions of this Part, and
(b) where made under subsection (3)(e), may amend, repeal or otherwise modify other provisions of this Act or provisions of another Act.
Exclusion of plant or machinery partly for use outside freeport tax sites
45Q (1) This section applies if—
(a) at the time when expenditure on plant or machinery is incurred, the company incurring it intends the plant or machinery to be used partly in an area which is not a freeport tax site, and
(b) the main purpose, or one of the main purposes, for which a person is party to the relevant arrangements is the obtaining of a first-year allowance, or a greater first-year allowance, in respect of the part of the expenditure that is attributable to that intended use in an area which is not a freeport tax site (the “non-freeport part” of the expenditure).
(2) The non-freeport part of the expenditure is not first-year qualifying expenditure under section 45O.
(3) For the purposes of this section, the non-freeport part of the expenditure is to be determined on a just and reasonable basis.
(4) In this section, “the relevant arrangements” means—
(a) the transaction under which the expenditure on the plant or machinery is incurred, and
(b) any scheme or arrangements of which that transaction forms part.
Effect of plant or machinery subsequently being primarily for use outside freeport tax sites
45R (1) Expenditure on the provision of plant or machinery is to be treated as never having been first-year qualifying expenditure under section 45O if, at any relevant time—
(a) the primary use to which the plant or machinery is put is other than in an area which, at the time the expenditure was incurred, was a freeport tax site, or
(b) the plant or machinery is held for use otherwise than primarily in an area which was a freeport tax site at that time.
(2) “Relevant time” means a time within the relevant period when the plant or machinery is owned by—
(a) the company that incurred the expenditure, or
(b) a person who is, or at any time in that period has been, connected with that company.
(3) “The relevant period” means the period of 5 years beginning with—
(a) the day on which the plant or machinery in question is first brought into use for the purposes of a qualifying activity carried on by the company, or
(b) if earlier, the day on which it is first held for such use.
(4) All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (1).
(5) If a person who has made a return becomes aware that, after making it, anything in it has become incorrect because of the operation of this section, that person must give notice to an officer of Revenue and Customs specifying how the return needs to be amended.
(6) The notice must be given within 3 months beginning with the day on which the person first became aware that anything in the return had become incorrect because of the operation of this section.
4 In section 46(1) (general exclusions applying to first-year qualifying expenditure), at the end insert—
section 45O | (expenditure on plant and machinery for use in freeport tax sites).
5 In section 52(3) (amount of first-year allowances), in the Table, at the end insert—
Expenditure qualifying under section 45O (expenditure on plant and machinery for use in freeport tax sites) | 100%
.
PART 2 Structures and buildings allowances
6 Part 2A of CAA 2001 (structures and buildings allowances) is amended as follows.
7 (1) Section 270AA (structures and buildings allowances) is amended as follows.
(2) In subsection (2)(b)(ii), for “the period of 33 1/3 years” substitute “ the period of the length specified in subsection (2A), ”.
(3) After that subsection insert—
(2A) The length of the period referred to in subsection (2)(b)(ii) is—
(a) in the case of freeport qualifying expenditure, 10 years, and
(b) in the case of other qualifying expenditure, 33 1/3 years.
(4) In subsection (5), for “3% of the qualifying expenditure” substitute
—
(a) in the case of freeport qualifying expenditure, 10% of the expenditure, and
(b) in the case of other qualifying expenditure, 3% of the expenditure.
(5) In subsection (6), after “section—” insert—
“freeport qualifying expenditure” has the meaning given by section 270BNA;
.
8 In section 270BJ (expenditure on renovation, conversion or incidental repairs), after subsection (2) insert—
(2A) For the purposes of subsection (1), in relation to a building or structure that has been brought into use at a time when the area in which the building or structure is situated was not a freeport tax site, section 270BNA(2) and (7) have effect as if the renovation or conversion of, or repairs to, part of the building or structure were the construction of that part for the first time.
9 In section 270BK(3) (preparation of sites), for “and 270AB” substitute “ , 270AB and 270BNA(2) and (7) ”.
10 After section 270BN insert—
CHAPTER 2A Freeport qualifying expenditure
Meaning of “freeport qualifying expenditure”
270BNA (1) In this Part, qualifying expenditure incurred on the construction or acquisition of a building or structure is “freeport qualifying expenditure” if conditions A to E are met.
(2) Condition A is that construction of the building or structure begins at a time when the area in which the building or structure is situated is a freeport tax site.
(3) Condition B is that the building or structure is first brought into qualifying use by the person entitled to the allowance under this Part—
(a) at a time when the area in which the building or structure is situated is a freeport tax site, and
(b) on or before 30 September 2026.
(4) Condition C is that the qualifying expenditure is incurred—
(a) at a time when the area in which the building or structure is situated is a freeport tax site, and
(b) on or before 30 September 2026.
(5) Condition D is that the person who incurs the qualifying expenditure is within the charge to income tax or corporation tax when it is incurred.
(6) Condition E is that an allowance statement—
(a) made for the purposes of section 270IA by the person who incurred the qualifying expenditure, and
(b) relied on for the purposes of the first valid claim for an allowance under this Part in respect of that expenditure,
states that the person wants the expenditure to be freeport qualifying expenditure.
(7) For the purposes of subsection (2), the construction of a building or structure is treated as beginning when the first contract for works to be carried out in the course of the construction of that particular building or structure (whether or not the contract also relates to the construction of other buildings or structures) is entered into.
(8) This section is subject to regulations under section 270BNC.
Apportionment
270BNB (1) Subsection (2) applies if, on the later of—
(a) the day on which the building or structure is first brought into non-residential use, and
(b) the day on which the qualifying expenditure is incurred,
a building or structure is situated only partly in an area that is a freeport tax site.
(2) Only so much of the qualifying expenditure as, on a just and reasonable apportionment, is attributable to the part situated in the freeport tax site is to be treated as freeport qualifying expenditure.
(3) Subsection (4) applies if a building or structure is first brought into qualifying use by the person entitled to the allowance under this Part partly on or before 30 September 2026 and partly after that date.
(4) Only so much of the qualifying expenditure as, on a just and reasonable apportionment, is attributable to the part first brought into qualifying use by that person on or before that date is to be treated as freeport qualifying expenditure.
Power to amend meaning of “freeport qualifying expenditure”
270BNC (1) The Treasury may by regulations change the conditions that must be met in order for qualifying expenditure to be “freeport qualifying expenditure” for the purposes of this Part (whether by adding, removing or altering conditions).
(2) Regulations under this section—
(a) may not remove the requirement for the building or structure to be situated in an area that is a freeport tax site, but
(b) may alter the time when that requirement must be satisfied.
(3) Regulations under this section may, among other things—
(a) make provision by reference to the expenditure, the building or structure, the person who incurred the expenditure or a person who is or has been connected with that person;
(b) impose conditions relating to accounts or other records;
(c) impose other conditions requiring a person to take steps specified in the regulations;
(d) make different provision for different purposes;
(e) include incidental, supplementary, consequential, transitional or transitory provision.
(4) Regulations under this section—
(a) may amend, repeal or otherwise modify section 270BNA and other provisions of this Part, and
(b) where made under subsection (3)(e), may amend, repeal or otherwise modify other provisions of this Act or provisions of another Act.
11 (1) Section 270EB (multiple uses) is amended as follows.
(2) In subsection (2), for “3%” substitute “ the relevant percentage ”.
(3) After subsection (3) insert—
(3A) For the purposes of subsection (2), “the relevant percentage” means the percentage specified in section 270AA(5).
12 In section 270IA(4) (evidence of qualifying expenditure etc), after subsection (4) insert—
(5) Where the qualifying expenditure described in subsection (4)(b) consists of or includes freeport qualifying expenditure (as defined in section 270BNA), a statement is not an allowance statement unless it states the amount of the freeport qualifying expenditure.
PART 3 Related amendments
TMA 1970
13 In section 98 of TMA 1970 (penalty for failure to provide information etc), in the second column of the Table, in the entry relating to CAA 2001, after “45G(4) and (5),” insert “ 45R(5) and (6), ”.
CAA 2001
14 CAA 2001 is amended as follows.
15 (1) Section 3 (claims for capital allowances) is amended as follows.
(2) After subsection (2) insert—
(2ZZA) Any claim for a first-year allowance under section 45O (expenditure on plant and machinery for use in freeport tax sites) must include, or be accompanied by, such information as Her Majesty's Revenue and Customs may require.
(3) In subsection (2ZA)—
(a) after “allowances)” insert
—
(a)
, and
(b) at the end insert
, and
(b) where it relates to freeport qualifying expenditure (as defined in section 270BNA), must include, or be accompanied by, such information as Her Majesty's Revenue and Customs may require.
16 (1) Section 570B (orders and regulations) is amended as follows.
(2) In subsection (3), for “70YJ” substitute “ 45P, 70YJ or 270BNC ”.
(3) After that subsection insert—
(4) An instrument containing regulations under section 45P or 270BNC must be laid before the House of Commons after being made.
(5) If the regulations are not approved by the House of Commons before the end of the period of 28 days beginning with the day on which they are made, they cease to have effect at the end of that period (if they have not already ceased to have effect under subsection (6)).
(6) If, on any day during that period of 28 days, the House of Commons, in proceedings on a motion that (or to the effect that) the regulations be approved, comes to a decision rejecting the regulations, they shall cease to have effect at the end of that day.
(7) In reckoning any such period of 28 days, no account is to be taken of any time during which—
(a) Parliament is prorogued or dissolved, or
(b) the House of Commons is adjourned for more than four days.
(8) Where regulations cease to have effect under subsection (6), their ceasing to have effect is without prejudice to anything done in reliance on them.
17 After section 573 insert—
Freeport tax sites
573A In this Act, “freeport tax site” means an area for the time being designated under section 113 of the Finance Act 2021.
18 In Part 2 of Schedule 1 to CAA 2001 (defined expressions), at the appropriate place insert—
freeport tax site | section 573A
.
SCHEDULE 23 Relief from stamp duty land tax for freeport tax sites
Section 115
1 Part 4 of FA 2003 (stamp duty land tax) is amended as follows.
2 After section 61 insert—
Relief for freeport tax sites
61A (1) Schedule 6C provides for relief in the case of transactions relating to land in a freeport tax site.
(2) In that Schedule—
(a) Part 1 contains definitions,
(b) Part 2 makes provision about the relief,
(c) Part 3 makes provision about the withdrawal of the relief,
(d) Part 4 makes provision about cases involving alternative finance arrangements, and
(e) Part 5 confers power to change the cases in which the relief is available.
(3) Relief under that Schedule is available only in relation to a land transaction with an effective date falling on or before 30 September 2026.
(4) Any relief under that Schedule must be claimed in a land transaction return or an amendment of such a return.
(5) A claim for relief under that Schedule must—
(a) be made on or before 14 October 2027, and
(b) include, or be accompanied by, such information as HMRC may require.
(6) In this section and Schedule 6C, “freeport tax site” means an area for the time being designated under section 113 of the Finance Act 2021.
3 In section 81 (further return where relief withdrawn)—
(a) in subsection (1A) (as substituted by Schedule 17 to this Act), after paragraph (a) insert—
(aa) Part 3 of Schedule 6C (relief for freeport tax sites), other than in a case to which paragraph 11 of that Schedule (alternative finance arrangements) applies,
,
(b) in subsection (1B), after paragraph (ea) (inserted by Schedule 17 to this Act) insert—
(eb) in the case of relief under Schedule 6C (relief for freeport tax sites), the last day in the control period on which the qualifying freeport land is used exclusively in a qualifying manner;
, and
(c) after subsection (4) insert—
(4A) Terms used in paragraph (eb) of subsection (1B) which are defined for the purposes of Schedule 6C have the same meaning in that paragraph as they have in that Schedule.
(4B) Paragraph 10 of Schedule 6C applies for the purposes of subsection (1B)(eb) as it applies for the purposes of paragraph 8 of that Schedule.
4 In section 81ZA (alternative finance arrangements: return where relief withdrawn)—
(a) in subsection (1), after “arrangements)” insert “ or under Part 3 of Schedule 6C (relief for freeport tax sites) in a case to which paragraph 11 of that Schedule (alternative finance arrangements) applies ”,
(b) in subsection (3) (as substituted by Schedule 17 to this Act), at the end insert—
(c) where the relief was given under Part 2 of Schedule 6C, the last day in the control period on which the qualifying freeport land is used exclusively in a qualifying manner.
, and
(c) after subsection (6) insert—
(6A) Terms used in paragraph (c) of subsection (3) which are defined for the purposes of Schedule 6C have the same meaning in that paragraph as they have in that Schedule (as modified by paragraph 11 of that Schedule).
(6B) Paragraph 10 of Schedule 6C (as modified by paragraph 11 of that Schedule) applies for the purposes of subsection (3)(c) as it applies for the purposes of paragraph 8 of that Schedule.
5 In section 85(3) (liability for tax), after “arrangements)” insert “ or under Part 3 of Schedule 6C (relief for freeport tax sites) in a case to which paragraph 11 of that Schedule (alternative finance arrangements) applies ”.”
6 In section 86 (payment of tax)—
(a) in subsection (2), after paragraph (za) insert—
(zb) Part 3 of Schedule 6C (relief for freeport tax sites), other than in a case to which paragraph 11 of that Schedule (alternative finance arrangements) applies,
, and
(b) in subsection (2A), after “arrangements)” insert “ or under Part 3 of Schedule 6C (relief for freeport tax sites) in a case to which paragraph 11 of that Schedule (alternative finance arrangements) applies ”.
7 In section 87(3) (interest on unpaid tax), after paragraph (aza) insert—
(azaa) in the case of an amount payable because relief is withdrawn under Part 3 of Schedule 6C (relief for freeport tax sites), other than in a case to which paragraph 11 of that Schedule (alternative finance arrangements) applies, the date which is the relevant date for the purposes of section 81(1A);
(azab) in the case of an amount payable because relief is withdrawn under Part 3 of Schedule 6C (relief for freeport tax sites) in a case to which paragraph 11 of that Schedule (alternative finance arrangements) applies, the date which is the date of the disqualifying event for the purposes of section 81ZA (see subsection (3) of that section);
.
8 After Schedule 6B insert—
SCHEDULE 6C
Stamp duty land tax: relief for freeport tax sites
Section 61A
PART 1 Qualifying freeport land
Transaction land
1 In this Schedule, “transaction land”, in relation to a land transaction, means land a chargeable interest in which is the subject matter of the transaction.
Qualifying freeport land
2 For the purposes of this Schedule, transaction land is “qualifying freeport land” if, on the effective date of the transaction—
(a) it is situated in a freeport tax site, and
(b) the purchaser intends it to be used exclusively in a qualifying manner.
Use of land in a qualifying manner
3 (1) For the purposes of this Schedule, transaction land is used in a qualifying manner if—
(a) it is used by the purchaser or a connected person in the course of a commercial trade or profession,
(b) it is developed or redeveloped by the purchaser or a connected person for use (by any person) in the course of a commercial trade or profession,
(c) it is exploited by the purchaser or a connected person, in the course of a commercial trade or profession, as a source of rents or other receipts (other than excluded rents), or
(d) it is used in two or more of the ways described in paragraphs (a) to (c).
(2) But land is not used in a qualifying manner to the extent that it is—
(a) used as a dwelling or as the garden or grounds of a dwelling,
(b) developed or redeveloped to become residential property,
(c) exploited as a source of rents or other receipts payable by a person using the land as a dwelling or as the garden or grounds of a dwelling, or
(d) held (as stock of the business) for resale without development or redevelopment.
(3) For the purposes of this paragraph, use of land in the course of a commercial trade or profession includes use of land for a purpose that is ancillary to the use of other land which—
(a) is situated in a freeport tax site, and
(b) is being used, or developed or redeveloped, in the course of a commercial trade or profession.
(4) The references in sub-paragraph (2) to land used as the garden or grounds of a dwelling include a building or structure on the land.
(5) The references in this paragraph to doing something in the course of a commercial trade or profession include doing something in the course of a property rental business.
(6) In this paragraph—
“commercial”, in relation to a trade or profession, means carried on—
on a commercial basis, and
with a view to profit;
“excluded rents” has the same meaning as in section 133 of the Finance Act 2013;
“property rental business” means a property business as defined in Chapter 2 of Part 3 of the Income Tax (Trading and Other Income) Act 2005.
Connected persons
4 (1) In this Schedule, “connected person” means a person who is connected with the purchaser.
(2) Section 1122 of the Corporation Tax Act 2010 (connected persons) has effect for the purposes of this paragraph.
PART 2 The relief
Exemption
5 (1) This paragraph applies to a land transaction if at least 90% of the chargeable consideration for the transaction is attributable to qualifying freeport land.
(2) The transaction is exempt from charge.
Other relief
6 (1) This paragraph applies to a land transaction if the proportion of the chargeable consideration for the transaction that is attributable to qualifying freeport land (“the relevant proportion”) is less than 90% but at least 10%.
(2) The tax chargeable in respect of the transaction is reduced by the relevant proportion.
Attributing chargeable consideration to land
7 (1) For the purposes of this Schedule, the consideration attributable to qualifying freeport land must be determined on a just and reasonable basis.
(2) Sub-paragraphs (3) and (4) apply if less than 100% of the chargeable consideration attributable to transaction land situated in a freeport tax site (“the freeport consideration”) is attributable to land that satisfies the condition in paragraph 2(b).
(3) If at least 90% of the freeport consideration is attributable to land that satisfies the condition in paragraph 2(b) then, for the purposes of this Schedule, all of the freeport consideration is to be treated as being attributable to qualifying freeport land.
(4) If less than 10% of the freeport consideration is attributable to land that satisfies the condition in paragraph 2(b) then, for the purposes of this Schedule, all of the freeport consideration is to be treated as not being attributable to qualifying freeport land.
PART 3 Withdrawal of relief
Withdrawal of relief
8 (1) This paragraph applies where relief under Part 2 of this Schedule has been allowed in respect of a land transaction.
(2) The relief is withdrawn if, at any time during the control period, the qualifying freeport land is not used exclusively in a qualifying manner.
(3) But the relief is not withdrawn where, because of a change in circumstances that is unforeseen and beyond the purchaser's control, it is not reasonable to expect the qualifying freeport land to be used exclusively in a qualifying manner at that time.
(4) Where, at a time during the control period, the use of all or part of the qualifying freeport land in a qualifying manner has not yet begun, that land, or that part of the land, is to be treated as being used exclusively in a qualifying manner if reasonable steps are being taken to ensure that it is used in that manner.
(5) Where, at a time during the control period, the use of all or part of the qualifying freeport land in a qualifying manner has ceased, that land, or that part of the land, is to be treated as being used exclusively in a qualifying manner if reasonable steps are being taken—
(a) to ensure that it is used in that manner, or
(b) to dispose of all chargeable interests in that land, or that part of the land, that are held by the purchaser and connected persons in a timely manner.
The control period
9 (1) In this Schedule, “the control period”, in relation to a land transaction, means the shorter of—
(a) the period of three years beginning with the effective date of that transaction, and
(b) the period beginning with the effective date of that transaction and ending with the effective date of the final transaction.
(2) For the purposes of this paragraph, a land transaction is “the final transaction” if, immediately after the effective date of the transaction, neither the purchaser nor a connected person holds a chargeable interest in the qualifying freeport land (whether as a result of that transaction alone or as a result of that transaction and other land transactions).
Disposal of interest in part of qualifying freeport land during control period
10 (1) This paragraph applies where the purchaser ceases to hold a chargeable interest in part of the qualifying freeport land during the control period.
(2) The references in paragraphs 8 and 9 to the qualifying freeport land are to be treated as references only to the part of the qualifying freeport land in relation to which the purchaser still holds a chargeable interest (whether the chargeable interest acquired in the land transaction in respect of which relief was allowed under Part 2 of this Schedule or another chargeable interest).
PART 4 Alternative finance arrangements
Cases involving alternative finance arrangements
11 (1) This paragraph applies where either of the following applies—
(a) section 71A (land sold to financial institution and leased to person), or
(b) section 73 (land sold to financial institution and re-sold to person).
(2) This paragraph applies for the purposes of determining—
(a) whether relief is available under Part 2 of this Schedule for the first transaction, and
(b) whether relief allowed for the first transaction is withdrawn under Part 3 of this Schedule.
(3) For those purposes this Schedule has effect as if—
(a) references to the purchaser were references to the relevant person, and
(b) the reference in paragraph 3(2)(d) to land held (as stock of the business) for resale without development or redevelopment were a reference to land held in that manner by the relevant person.
(4) The first transaction does not qualify for relief under Part 2 of this Schedule except where it does so by virtue of this paragraph.
(5) In this paragraph—
“the first transaction” has the same meaning as in section 71A or 73 (as appropriate);
“the relevant person” means the person, other than the financial institution, who entered into the arrangements mentioned in section 71A(1) or 73(1) (as appropriate).
PART 5 Power to change when relief is available
Power to change the cases in which relief is available
12 (1) The Treasury may by regulations—
(a) amend the meaning of “qualifying freeport land”,
(b) add other conditions that must be met in order for relief to be available under this Schedule, and
(c) amend or remove conditions added under paragraph (b).
(2) Regulations under this paragraph may not remove the requirement for land to be situated in a freeport tax site.
(3) Regulations under this paragraph may, among other things—
(a) make provision by reference to the land, the land transaction, the purchaser or connected persons;
(b) impose conditions relating to accounts or other records;
(c) impose other conditions requiring a person to take steps specified in the regulations.
(4) Regulations under this paragraph—
(a) may amend, repeal or otherwise modify provisions of this Schedule, and
(b) where made in reliance on section 114(6)(c), may amend, repeal or otherwise modify other provisions of this Act.
Approval of regulations
13 (1) An instrument containing regulations under paragraph 12 must be laid before the House of Commons after being made.
(2) If the regulations are not approved by the House of Commons before the end of the period of 28 days beginning with the day on which they are made, they cease to have effect at the end of that period (if they have not already ceased to have effect under sub-paragraph (3)).
(3) If, on any day during that period of 28 days, the House of Commons, in proceedings on a motion that (or to the effect that) the regulations be approved, comes to a decision rejecting the regulations, they shall cease to have effect at the end of that day.
(4) In reckoning any such period of 28 days, no account is to be taken of any time during which—
(a) Parliament is prorogued or dissolved, or
(b) the House of Commons is adjourned for more than four days.
(5) Where regulations cease to have effect under sub-paragraph (3), their ceasing to have effect is without prejudice to anything done in reliance on them.
SCHEDULE 24 Penalties for failure to make returns etc
Section 116
PART 1 Introduction
Introduction
1 (1) This Schedule provides for a person who fails to make a return to be liable to penalty points and penalties.
(2) This Part of this Schedule—
(a) identifies groups of returns, and the returns falling within each group, and
(b) makes provision about the interpretation of this Schedule.
(3) Part 2 of this Schedule provides for a person to be liable to penalty points, and penalties, in respect of each group of returns.
(4) Part 3 of this Schedule makes supplementary provision.
Returns
2 (1) The Table identifies, for each item listed in column 1 of the Table, one or more groups of returns (according to the frequency with which returns are required to be made).
Item | Tax | Groups of returns
Column A (groups of annual etc returns) | Column B (groups of quarterly etc returns) | Column C (groups of monthly etc returns)
1 | Income tax or capital gains tax (persons other than trustees or partnerships) | This group applies where there is no requirement to provide information under regulations under paragraph 7 of Schedule A1 to TMA 1970. return, accounts, statements or documents required under section 8 of TMA 1970 ... | This group applies where there is a requirement to provide information under regulations under paragraph 7 of Schedule A1 to TMA 1970. return, accounts, statements or documents required under section 8 of TMA 1970 ... ... Information required to be provided under regulations under paragraph 7 of Schedule A1 to TMA 1970 | -
2 | Income tax or capital gains tax (trustees) | This group applies where there is no requirement to provide information under regulations under paragraph 7 of Schedule A1 to TMA 1970. return, accounts, statements or documents required under section 8A of TMA 1970 ... | This group applies where there is a requirement to provide information under regulations under paragraph 7 of Schedule A1 to TMA 1970. return, accounts, statements or documents required under section 8A of TMA 1970 ... ... Information required to be provided under regulations under paragraph 7 of Schedule A1 to TMA 1970 | -
3 | Income tax or corporation tax (partnerships) | This group applies where there is no requirement to provide information under regulations under paragraph 7 of Schedule A1 to TMA 1970. return, accounts, statements or documents required under section 12AA(2) or (3) of TMA 1970 ... | This group applies where there is a requirement to provide information under regulations under paragraph 7 of Schedule A1 to TMA 1970. Return under regulations under paragraph 10 of Schedule A1 to TMA 1970 Information required to be provided under regulations under paragraph 7 of Schedule A1 to TMA 1970 | -
4 | Value added tax | (1) Return under regulation 50 of the Value Added Tax Regulations 1995 (S.I. 1995/2518) for a current accounting year (2) Return under regulation 25(1)(c) of those regulations for a period which is more than 20 weeks, and is the period for which returns are (or are to be) usually made by the person in question | (1) Return under regulation 25(1) of the Value Added Tax Regulations 1995 (S.I. 1995/2518), other than a return under regulation 25(1)(a), (b) or (c) (2) Return under regulation 25(1)(c) of those regulations for a period which is more than 8 weeks but not more than 20 weeks, and is the period for which returns are (or are to be) usually made by the person in question | (1) Return under regulation 25(1)(a) of the Value Added Tax Regulations 1995 (S.I. 1995/2518) (2) Return under regulation 25(1)(c) of those regulations for a period which is not more than 8 weeks, and is the period for which returns are (or are to be) usually made, or a period for which returns are (or are to be) regularly made, by the person in question
5 | Vaping products duty | Vaping products duty return under regulations under section 45 of TCTA 2018.
6 | Carbon border adjustment mechanism | - | Return under paragraph 7 of Schedule 17 to FA 2026 | -
(2) Where an entry in column A, B or C of the Table which refers to legislation uses terms used in the legislation, the terms have the same meaning in the entry as in the legislation.
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interpretation
3 (1) This paragraph applies for the interpretation of this Schedule.
(2) References to the Table are to the Table in paragraph 2 (unless otherwise specified).
(3) References to “return” include any return, information, statement, account or other document specified in column A, B or C of the Table.
(4) Each entry in Column A, B or C of the Table is a “group” of returns, and references to returns in or belonging to a group of returns are to be read accordingly.
(5) References to group 1A are to the group of returns in item 1, column A, to group 1B are to the group of returns in item 1, column B, and so on.
(6) Each numbered paragraph in group 1B, 2B or 3B is a “digital reporting sub-group” of returns, and references to returns in or belonging to a digital reporting sub-group of returns are to be read accordingly.
(7) References to digital reporting sub-group (1) of group 1B are to the returns in paragraph (1) in item 1, column B, to digital reporting sub-group (2) of group 1B are to the returns in paragraph (2) in item 1, column B, and so on.
(8) Any reference to making a return includes a reference to filing, delivering or submitting a return.
(9) “Due date”, in relation to a return, means the date by which it is required to be made.
(10) A failure to make a return on or before the due date is treated as occurring on the day after the due date.
(11) “HMRC” means Her Majesty's Revenue and Customs.
Application of Schedule to persons with multiple businesses etc
4 (1) Sub-paragraphs (2) to (4) apply for the interpretation of this Schedule where a person—
(a) carries on more than one business, and
(b) in relation to two or more of those businesses (the “relevant businesses”), is required to make returns belonging to the same group of returns.
(2) If the group of returns mentioned in sub-paragraph (1)(b) is group 1A, 2A, 3A, 4A, 4B or 4C, the person makes a single return belonging to that group for all of the relevant businesses and so there is a single group of returns of that description for those businesses.
(3) If the group of returns mentioned in sub-paragraph (1)(b) is group 1B, 2B or 3B, there is a single group of returns of that description for all of the relevant businesses notwithstanding that the person makes separate returns belonging to that group for each of the relevant businesses.
(4) Where there is a single group of returns of a particular description for two or more relevant businesses (see sub-paragraphs (2) and (3))—
(a) the person has a single liability for points and penalties for those businesses;
(b) any change to the number of relevant businesses does not affect the continuity of the group of returns or the penalty points that the person has for the group of returns.
(5) For the purposes of this Schedule, references to a person who carries on more than one business include references to a person who is treated as carrying on more than one business by section 43(1) of VATA 1994 (groups of companies).
(6) If a body corporate carries on a business in several divisions and the registration of the body corporate under VATA 1994 is in the names of those divisions, such that the body corporate makes separate returns belonging to group 4A, 4B or 4C for each of those divisions—
(a) there is a separate group of returns of that description for each division, and
(b) the body corporate has a separate liability for points and penalties for each division.
(7) Accordingly, it follows from sub-paragraph (6) that where, in paragraph 5—
(a) a limit on a person's liability to penalty points for a group of returns is specified, the limit applies separately in relation to the group of returns of that description for each division, and
(b) a maximum number of penalty points for a group of returns is specified, the maximum applies separately in relation to the group of returns of that description for each division.
PART 2 Liability to a penalty
Liability to penalty points
5 (1) If a person fails to make a return on or before the due date, the person is liable to one penalty point for the group of returns to which the return belongs (but see sub-paragraphs (2) to (8)).
(2) A person is not liable to more than one penalty point per month for each of group 4A, 4B or 4C, even if in that month there is more than one failure to make a return in that group on or before the due date—
(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) A person is not liable to more than one penalty point per month in respect of a failure to make a return in a digital reporting sub-group of returns, even if in that month there is more than one failure to make a return in that digital reporting sub-group on or before the due date.
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) If—
(a) a person carries on more than one business and in relation to two or more of those businesses is required to make returns belonging to digital reporting sub-group (4) of group 1B or 2B or digital reporting sub-group (2) of group 3B, and
(b) the due dates for the returns belonging to the digital reporting sub-group in question do not all fall within the same month of a calendar quarter,
sub-paragraph (3) is to be read in relation to that digital reporting sub-group as if references to a month were references to a calendar quarter.
(6) “Calendar quarter” means a period of 3 months beginning with 1 January, 1 April, 1 July or 1 October.
(7) If there is more than one failure in a month or calendar quarter (as the case may be) to make a return in a group of returns, or in a digital reporting sub-group of returns, on or before the due date (see sub-paragraphs (2), (3) and (5)), the one penalty point for the month or calendar quarter to which the person is liable by virtue of this paragraph is for all of those failures.
(8) A person is not liable to a penalty point for a group of returns if the person already has the maximum number of penalty points for that group of returns.
(9) The maximum number of penalty points for a group of returns is—
(a) if the group is in Column A of the Table, 2 points,
(b) if the group is in Column B of the Table, 4 points, and
(c) if the group is in Column C of the Table, 5 points.
(10) See paragraphs 19 to 21 for further rules about liability to a penalty point.
Award of penalty points
6 (1) Where a person is liable to a penalty point for a group of returns, HMRC may award the person a penalty point for that group.
(2) Where HMRC award a penalty point they must notify the person and, in the notice—
(a) state the failure (or failures) in respect of which the penalty point is awarded, and
(b) include sufficient information for the person to be able to identify the group of returns for which the penalty point is awarded.
(3) HMRC may not award a penalty point after—
(a) the later of date A and (where it applies) date B, or
(b) where the penalty point is to be awarded in respect of a failure (or failures) to make, on or before the due date, a return in digital reporting sub-group ... (4) of group 1B or 2B or digital reporting sub-group (2) of group 3B, the later of date A and (where it applies) date C.
(4) Date A is the end of the period of x weeks beginning with—
(a) if the penalty point is to be awarded in respect of a single failure, the day on which the failure occurred;
(b) if the penalty point is to be awarded in respect of more than one failure in the same month or, as the case may be, the same calendar quarter (see paragraph 5(7)), the day on which the latest of those failures occurred.
(5) In sub-paragraph (4) “x weeks” means—
(a) if the group of returns is in Column A of the Table, 48 weeks,
(b) if the group of returns is in Column B of the Table, 11 weeks, and
(c) if the group of returns is in Column C of the Table, 2 weeks.
(6) Date B is the last day of the period of 12 months beginning with—
(a) the end of the appeal period for the assessment of the liability to tax which would have been shown in the relevant return, or
(b) if there is no such assessment, the date on which that liability is ascertained or it is ascertained that the liability is nil.
(7) In sub-paragraph (6)(a)—
“appeal period” means the period during which—
an appeal could be brought (ignoring any possibility of an appeal out of time), or
an appeal that has been brought has not been determined or withdrawn;
“relevant return” means—
if the penalty point is to be awarded in respect of a single failure to make a return on or before the due date, that return;
if the penalty point is to be awarded in respect of more than one failure to make a return, on or before the due date, in the same month or, as the case may be, the same calendar quarter (see paragraph 5(7)), the return for which there was the latest due date in the period in question.
(8) If more than one return is the relevant return by virtue of paragraph (b) of the definition of “relevant return” in sub-paragraph (7) and the same day is not date B in relation to all of those returns, treat date B as being the latest of those days.
(9) Date C—
(a) applies where, on date A, it was not reasonable to expect HMRC to be aware that the person was required to make the return (or the returns), and
(b) is the last day of the period of 12 months beginning with the first day on which it was reasonable to expect HMRC to be aware that the person was required to make the return (or one of the returns).
(10) For the purposes of this Schedule, a person “has” a penalty point if HMRC has awarded the person the penalty point, the penalty point or liability to it has not been cancelled and the penalty point has not expired.
Cancellation of individual penalty points
6A (1) HMRC may cancel a penalty point awarded under paragraph 6.
(2) Where HMRC cancel a penalty point after a notice under paragraph 6(2) in respect of the penalty point is given, they must notify the person and, in the notice—
(a) state the failure (or failures) in respect of which the penalty point was awarded, and
(b) include sufficient information for the person to be able to identify the group of returns for which the penalty point was awarded.
(3) Where HMRC cancel a penalty point before a notice under paragraph 6(2) in respect of the penalty point is given, HMRC is not required to give the notice under paragraph 6(2).
(4) Where HMRC cancel a penalty point, any assessment of a penalty under this Schedule for which the person is liable by virtue of the penalty point ceases to have effect (and is to be taken as never having had any effect).
(5) The cancellation of a penalty point does not prevent HMRC from subsequently awarding a penalty point for the failure (or failures) in respect of which the cancelled penalty point was awarded.
(6) Sub-paragraph (7) applies if—
(a) HMRC cancel a penalty point,
(b) after that penalty point was given by HMRC and before it was cancelled, the person failed to make a return on or before the due date, and
(c) at the time the failure occurred, the person already had the maximum number of penalty points for the group of returns to which that return belongs (see paragraph 5(8)).
(7) HMRC may award a penalty point in respect of the failure before the end of the period of 12 months beginning with the day after HMRC cancel the penalty point (and paragraph 6(3) does not apply).
Expiry of individual penalty points
7 (1) A penalty point for a group of returns expires at the end of the relevant period, unless immediately before the end of that period the person has the maximum number of penalty points for that group of returns.
(2) The relevant period is—
(a) the period of 24 months beginning with the first day of the month after the month in which the failure or failures, in respect of which the point was awarded, occurred, or
(b) where paragraph 6(3)(b) applied to the award of the point and the point was awarded after date A and on or before date C, the period of 24 months beginning with the day after the day on which the point was awarded.
(3) Where the penalty point was awarded in respect of more than one failure by virtue of paragraph 5(5), the references in sub-paragraph (2)(a) to a month are to be read as references to a calendar quarter.
(4) In this paragraph—
“calendar quarter” has the meaning given by paragraph 5(6);
“date A” and “date C” have the meanings given by paragraph 6.
Expiry of all penalty points for a group of returns
8 (1) Each of a person's penalty points for a group of returns expires
(a) at the beginning of the first day on which both condition A and condition B are met , or
(b) if HMRC notify the person before that time that HMRC have decided the points should expire, at the beginning of the day specified in the notice (which may be before the day on which the notice is given).
(2) Condition A is that the person has made each return in the group on or before its due date for the relevant length of time (or longer).
(3) The relevant length of time is x months beginning with the first day of the month after the month in which the most recent failure to make a return in the group on or before its due date occurred.
(4) In sub-paragraph (3) “x months” means—
(a) if the group of returns is in Column A of the Table, 24 months,
(b) if the group of returns is in Column B of the Table, 12 months, and
(c) if the group of returns is in Column C of the Table, 6 months.
(5) Condition B is met on any day if the person has made all the returns in the group whose due date fell in the period of 24 months ending with the previous day (whether or not those returns were made on or before their due date).
(6) Where each of a person's penalty points for a group of returns expires under paragraph (1)(a), HMRC must notify the person.
(7) For the purposes of this paragraph, where—
(a) a person fails to make a return, and
(b) by virtue of paragraph 19(1) (reasonable excuse) no liability to a penalty point or penalty in respect of the failure arises under this Schedule,
the person is to be treated as if they made the return on or before the due date.
Penalty points: effect of moving between groups of returns
9 (1) Paragraphs 10 to 13 apply where, in relation to any item in the Table, a person—
(a) ceases to be required to make returns in a group of returns specified in relation to that item in one column of the Table (the “old” group of returns), and
(b) instead becomes required to make returns in a group of returns specified in relation to that item in another column of the Table (the “ new ” group of returns),
(for example, where a person ceases to be required to make returns in group 1A and instead becomes required to make returns in group 1B).
(2) But where the returns in the old group of returns relate to a business or businesses carried on by the person, paragraphs 10 to 13 apply only if the returns in the new group of returns also relate to that business or all of those businesses.
10 (1) This paragraph applies to determine the penalty points the person has for the new group of returns, on becoming required to make returns for the new group of returns.
(2) If the person has no penalty points for the old group of returns, the person has no penalty points for the new group of returns.
(3) If the person has penalty points for the old group of returns, the number of penalty points the person has for the new group of returns is determined by taking the number of penalty points the person has for the old group of returns and adjusting it in accordance with the table below.
(4) If the adjustment gives a number of less than zero, treat the adjusted number of penalty points as zero.
Column in which old group of returns falls | Column in which new group of returns falls | Adjustment
Column A | Column B | Add 2 penalty points
Column C | Add 3 penalty points
Column B | Column A | Deduct 2 penalty points
Column C | Add 1 penalty point
Column C | Column A | Deduct 3 penalty points
Column B | Deduct 1 penalty point
11 (1) This paragraph applies if the adjusted number of penalty points for the new group of returns is greater than zero, but less than the actual number of penalty points for the old group of returns.
(2) Treat the person as having, for the new group of returns, the penalty points which were awarded in respect of the x most recent relevant failures (but if a single penalty point was awarded in respect of more than one relevant failure, for the purposes of this sub-paragraph treat those relevant failures as a single relevant failure).
(3) “X” is the adjusted number of penalty points for the new group of returns.
(4) Treat the penalty points in respect of the other relevant failures as having expired (so that the person has no penalty points for the old group of returns).
(5) In this paragraph “relevant failure” means a failure to make a return in the old group of returns on or before its due date, in respect of which a penalty point was awarded.
12 (1) This paragraph applies if the adjusted number of penalty points for the new group of returns is greater than the actual number of penalty points for the old group of returns.
(2) Treat all the penalty points for the old group of returns as penalty points for the new group of returns.
(3) Treat the additional penalty points as having been awarded in respect of relevant failures occurring on the same day as the most recent relevant failure.
(4) For this purpose the additional penalty points are the penalty points added by way of adjustment to the actual number of penalty points for the old group of returns.
(5) In this paragraph “relevant failure” means a failure to make a return in the old group of returns on or before its due date, in respect of which a penalty point was awarded.
13 (1) Paragraph 8 applies in relation to the new group of returns with the following modifications.
(2) Sub-paragraph (3) applies as if for the words from “month in which” to the end there were substituted “ first month for all or part of which a return in the new group of returns is required to be made ”.
(3) The reference in sub-paragraph (5) to returns in the group includes returns in the old group of returns.
Penalty points: effect of change of representative member of VAT group
14 (1) This paragraph applies where—
(a) a person is replaced as the representative member of a group (“the former representative member”) by another member of the group (“the new representative member”) under section 43B of VATA 1994, and
(b) the former representative member has penalty points for the group of 4A, 4B or 4C returns for the businesses that were treated by section 43(1) of VATA 1994 as being carried on by the former representative member (and are now treated by that section as being carried on by the new representative member).
(2) Where this paragraph applies, treat the new representative member as having the penalty points that the former representative member has for the group of returns.
Liability to penalties
15 (1) If a person fails to make a return on or before the due date and condition A or condition B is met, the person is liable to a penalty (but see sub-paragraphs (5) and (9)).
(2) Condition A is that—
(a) the person is awarded a penalty point in respect of the failure (including where the penalty point is awarded in respect of the failure and another failure or other failures), and
(b) on being awarded that penalty point, or on being awarded after that failure a penalty point in respect of an earlier failure (or earlier failures), the person has the maximum number of penalty points for the group of returns to which the return belongs.
(3) Condition B is that the failure occurs on a day on which the person has the maximum number of penalty points for the group of returns to which the return belongs.
(4) The amount of a penalty under this paragraph is £200.
(5) A person is not liable to more than one penalty per month in respect of a failure to make a return in a digital reporting sub-group of returns, even if in that month there is more than one failure to make a return in that digital reporting sub-group on or before the due date.
(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7) If—
(a) a person carries on more than one business and in relation to two or more of those businesses is required to make returns belonging to digital reporting sub-group (4) of group 1B or 2B or digital reporting sub-group (2) of group 3B, and
(b) the due dates for the returns belonging to the digital reporting sub-group in question do not all fall within the same month of a calendar quarter,
sub-paragraph (5) is to be read in relation to that digital reporting sub-group as if references to a month were references to a calendar quarter.
(8) “Calendar quarter” means a period of 3 months beginning with 1 January, 1 April, 1 July or 1 October.
(9) If there is more than one failure in a month or calendar quarter (as the case may be) to make a return in a digital reporting sub-group of returns on or before the due date (see sub-paragraphs (5) and (7)), the one penalty for the month or calendar quarter to which the person is liable by virtue of this paragraph is for all of those failures.
(10) See paragraphs 19 to 21 for further rules about liability to a penalty.
Assessments
16 (1) Where a person is liable to a penalty under this Schedule HMRC may assess the penalty.
(2) Where HMRC assess a penalty they must—
(a) notify the person, and
(b) state in the notice the failure (or, where paragraph 15(9) applies, the failures) for which the person is liable to a penalty.
(3) Where a person is liable to a penalty because condition A in paragraph 15 is met, notice of an assessment of the penalty may not be issued before (but may be issued at the same time as) notice under paragraph 6 of the award of the penalty point as a result of which the person is liable to the penalty.
(4) A penalty under this Schedule must be paid before the end of the period of 30 days beginning with the day on which notification of the penalty is issued.
(5) An assessment of a penalty under this Schedule—
(a) is to be treated for procedural purposes in the same way as an assessment to the tax concerned (except in respect of a matter expressly provided for in this Schedule),
(b) may be enforced as if it were an assessment to the tax concerned, and
(c) may be combined with an assessment to the tax concerned.
Withdrawal of assessments
16A (1) This paragraph applies where HMRC have assessed a penalty for which a person is liable under this Schedule in respect of a failure (or failures) to make a return.
(2) HMRC may withdraw the assessment by notice to the person.
(3) The withdrawn assessment ceases to have effect (and is to be taken as never having had any effect).
(4) But the withdrawal of the assessment does not prevent HMRC from subsequently assessing a penalty for the failure (or failures) mentioned in sub-paragraph (1).
Time limit for assessments
17 (1) An assessment of a penalty under this Schedule may not be made after—
(a) the later of date A and (where it applies) date B, or
(b) where the penalty is to be assessed in respect of a failure (or failures) to make, on or before the due date, a return in digital reporting sub-group ... (4) of group 1B or 2B or digital reporting sub-group (2) of group 3B, the later of date A and (where it applies) date C.
(But see sub-paragraphs (7) and (8).)
(2) Date A is the end of the period of 2 years beginning with—
(a) if the penalty is to be assessed in respect of a single failure, the day on which the failure occurred;
(b) if the penalty is to be assessed in respect of more than one failure in the same month or, as the case may be, the same calendar quarter (see paragraph 15(9)), the day on which the latest of the failures occurred.
(3) Date B is the last day of the period of 12 months beginning with—
(a) the end of the appeal period for the assessment of the liability to tax which would have been shown in the relevant return, or
(b) if there is no such assessment, the date on which that liability is ascertained or it is ascertained that the liability is nil.
(4) In sub-paragraph (3)(a)—
“appeal period” means the period during which—
an appeal could be brought (ignoring any possibility of an appeal out of time), or
an appeal that has been brought has not been determined or withdrawn;
“relevant return” means—
if the penalty is to be assessed in respect of a single failure to make a return on or before the due date, that return;
if the penalty is to be assessed in respect of more than one failure to make a return, on or before the due date, in the same month or, as the case may be, the same calendar quarter (see paragraph 15(9)), the return for which there was the latest due date in the period in question.
(5) If more than one return is the relevant return by virtue of paragraph (b) of the definition of “relevant return” in sub-paragraph (4) and the same day is not date B in relation to all of those returns, treat date B as being the latest of those days.
(6) Date C—
(a) applies where, on date A, it was not reasonable to expect HMRC to be aware that the person was required to make the return (or the returns), and
(b) is the last day of the period of 12 months beginning with the first day on which it was reasonable to expect HMRC to be aware that the person was required to make the return (or one of the returns).
(7) Sub-paragraph (8) applies where—
(a) a person is liable to a penalty in respect of a failure to make a return because condition A in paragraph 15 is met,
(b) that condition is only met because the person has the maximum number of penalty points for the group of returns to which the return belongs on being awarded after that failure a penalty point in respect of an earlier failure (or earlier failures), and
(c) when the penalty point is awarded in respect of the earlier failure (or earlier failures) an assessment of the penalty to which the person is liable may no longer be made because of sub-paragraph (1).
(8) Where this sub-paragraph applies—
(a) sub-paragraph (1) does not apply, and
(b) the assessment of the penalty may instead be made during the period of 12 months beginning with the first day on which it was reasonable to expect HMRC to be aware of the earlier failure (or one of the earlier failures).
Power to amend figures by regulations
18 (1) The Commissioners for HMRC may by regulations—
(a) amend paragraph 5(9) so as to increase or reduce the maximum number of penalty points for a group of returns;
(b) amend paragraph 8(4) so as to increase or reduce the number of months;
(c) amend paragraph 8(5) so as to increase or reduce the number of months;
(d) amend paragraph 15(4) so as to increase or reduce the amount of the penalty.
(2) Regulations under sub-paragraph (1)(a) may also amend column 3 of the table in paragraph 10.
(3) Regulations under this paragraph—
(a) are to be made by statutory instrument;
(b) may include transitional, transitory and saving provision.
(4) A statutory instrument containing regulations under this paragraph may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons.
PART 3 Supplementary provision
Reasonable excuse
19 (1) Liability to a penalty point or a penalty under this Schedule does not arise in respect of a failure to make a return if the person satisfies HMRC (or on appeal, the tribunal) that the person had a reasonable excuse for the failure.
(2) For this purpose—
(a) an insufficiency of funds is not a reasonable excuse unless attributable to events outside the person's control,
(b) where the person relies on another person to do anything, that is not a reasonable excuse unless the first person took reasonable care to avoid the failure, and
(c) where the person had a reasonable excuse for the failure but the excuse has ceased, the person is to be treated as having continued to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased.
(3) In this paragraph “tribunal” means the First-tier Tribunal or Upper Tribunal (as appropriate by virtue of paragraph 23(1)).
Double jeopardy
20 A person is not liable to a penalty point or a penalty under this Schedule in respect of a failure in respect of which the person has been convicted of an offence.
Withdrawal of notice to make a return
21 (1) This paragraph applies where—
(a) a person is liable to a penalty point or a penalty under this Schedule in relation to a failure to make a return in paragraph (1) or (2) of group 1A or 1B, and
(b) HMRC decide (on the request of the person or otherwise) to give the person a notice under section 8B of TMA 1970 withdrawing a notice under section 8 of that Act.
(2) This paragraph also applies where—
(a) the trustees of a settlement are, as a deemed single person (see paragraph 26), liable to a penalty point or a penalty under this Schedule in relation to a failure to make a return in paragraph (1) or (2) of group 2A or 2B, and
(b) HMRC decide (on the request of a trustee of the settlement or otherwise) to give a trustee of the settlement a notice under section 8B of TMA 1970 withdrawing a notice under section 8A of that Act.
(3) This paragraph also applies where—
(a) the partners in a partnership are, as a deemed single person (see paragraph 25), liable to a penalty point or a penalty under this Schedule in relation to a failure to make a return in paragraph (1) or (2) of group 3A, and
(b) HMRC decide, on a request by a partner in the partnership under section 12AAA of TMA 1970, to give a notice under that section withdrawing a notice under section 12AA of that Act.
(4) The notice under section 8B or 12AAA of TMA 1970 may include provision cancelling liability to the penalty point or the penalty.
Appeals
22 A person may appeal against a decision of HMRC under this Schedule—
(a) that the person is liable to a penalty point, or
(b) that a penalty is payable by the person.
23 (1) An appeal under paragraph 22 is to be treated in the same way as an appeal against an assessment to the tax concerned (including by the application of any provision about bringing the appeal by notice to HMRC, about HMRC's review of the decision or about determination of the appeal by the First-tier Tribunal or Upper Tribunal).
(2) Sub-paragraph (1) does not apply—
(a) so as to require the person to pay a penalty before an appeal against the assessment of the penalty is determined, or
(b) in respect of any other matter expressly provided for by this Schedule.
24 (1) On an appeal under paragraph 22 that is notified to the tribunal, the tribunal may—
(a) where the appeal is under paragraph 22(a), affirm or cancel HMRC's decision that the person is liable to the penalty point;
(b) where the appeal is under paragraph 22(b), affirm or cancel HMRC's decision that the penalty is payable by the person.
(2) Where the appeal is under paragraph 22(b), the tribunal may also affirm or cancel HMRC's decision that the person was liable to any of the penalty points by virtue of which the person was liable to the penalty.
(3) Sub-paragraph (2)—
(a) applies in relation to a penalty point even if the time limit for appealing against it expired before the appeal under paragraph 22(b) was brought;
(b) does not apply in relation to a penalty point if HMRC's decision that the person was liable to the penalty point was affirmed on an earlier appeal.
(4) Sub-paragraph (5) applies if—
(a) on an appeal under paragraph 22(b), the tribunal—
(i) cancels a decision that a penalty is payable by a person, and
(ii) cancels a decision that the person was liable to a penalty point ... by virtue of which the person was liable to the penalty,
(b) after the penalty point mentioned in paragraph (a)(ii) was given by HMRC and before the decision mentioned in that paragraph was cancelled, the person failed to make a return ... on or before the due date, and
(c) at the time the failure occurred, the person already had the maximum number of penalty points for the group of returns to which that return belongs (see paragraph 5(8)).
(5) HMRC may award a penalty point in respect of the failure before the end of the period of 12 months beginning with the day after the tribunal's decision on the appeal (and paragraph 6(3) does not apply).
(6) In this paragraph “tribunal” means the First-tier Tribunal or Upper Tribunal (as appropriate by virtue of paragraph 23(1)).
Partnerships
25 (1) For the purposes of this Schedule—
(a) the partners in a partnership are together to be treated as if they were a single person (distinct from the persons who are partners in the partnership);
(b) a failure by one or more partners in the partnership to make a return on or before the due date is to be treated as a failure by the deemed single person referred to in paragraph (a);
(c) other things done by or in relation to a partner in the partnership are also to be treated as done by or in relation to that deemed single person.
(2) The deemed single person referred to in paragraph (a) is to be treated as continuing in existence even if there is a change in the partnership.
(3) Where the deemed single person referred to in paragraph (a) is assessed to a penalty, every relevant partner is jointly and severally liable for the penalty.
(4) For the purposes of sub-paragraph (3)—
(a) “relevant partner” means a person who is a partner in the partnership on the day on which the penalty is assessed;
(b) a person is a relevant partner even if the person was not a partner in the partnership when liability was incurred to one or more of the penalty points by virtue of which liability to the penalty arose;
(c) the relevant partners are jointly and severally liable for the penalty even if none of them were partners in the partnership when liability was incurred to the penalty points by virtue of which liability to the penalty arose.
Settlements
26 (1) For the purposes of this Schedule—
(a) the trustees of a settlement are together to be treated as if they were a single person (distinct from the persons who are trustees of the settlement);
(b) a failure by one or more trustees of the settlement to make a return on or before the due date is to be treated as a failure by the deemed single person referred to in paragraph (a);
(c) other things done by or in relation to a trustee of the settlement are also to be treated as done by or in relation to that deemed single person.
(2) The deemed single person referred to in paragraph (a) is to be treated as continuing in existence even if there is a change in the trustees of the settlement.
(3) Where the deemed single person referred to in paragraph (a) is assessed to a penalty, every relevant trustee is jointly and severally liable for the penalty.
(4) For the purposes of sub-paragraph (3)—
(a) “relevant trustee” means a person who is a trustee of the settlement on the day on which the penalty is assessed;
(b) a person is a relevant trustee even if the person was not a trustee of the settlement when liability was incurred to one or more of the penalty points by virtue of which liability to the penalty arose;
(c) the relevant trustees are jointly and severally liable for the penalty even if none of them were trustees of the settlement when liability was incurred to the penalty points by virtue of which liability to the penalty arose.
SCHEDULE 25 Penalties for deliberately withholding information
Section 116
PART 1 Introduction
Introduction
1 (1) This Schedule provides for penalties to be payable by a person who, by failing to make a return listed in the third column of the Table below on or before the due date, deliberately withholds information which would enable or assist HMRC to assess the person's liability to tax.
(2) Paragraph 20 provides for this Schedule to apply with modifications where the return relates to a partnership.
Tax to which return relates | Return
1 | Income tax or capital gains tax | (1) Return under section 8 of TMA 1970 (2) Accounts, statement or document required under section 8(1)(b) of TMA 1970
2 | Income tax or capital gains tax | (1) Return under section 8A of TMA 1970 (2) Accounts, statement or document required under section 8A(1)(b) of TMA 1970
3 | Income tax or corporation tax | (1) Return under section 12AA(2)(a) or (3)(a) of TMA 1970 (2) Accounts, statement or document required under section 12AA(2)(b) or (3)(b) of TMA 1970
4 | Income tax or corporation tax | Return under regulations under paragraph 10 of Schedule A1 to TMA 1970
5 | Vaping products duty | Vaping products duty return under regulations under section 45 of TCTA 2018.
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interpretation
2 (1) This paragraph applies for the interpretation of this Schedule.
(2) “Return” means any return, statement, account or other document specified in the third column of the Table in paragraph 1.
(3) Any reference to making a return includes a reference to filing, delivering or submitting a return.
(4) “Due date”, in relation to a return, means the date by which it is required to be made.
(5) “HMRC” means Her Majesty's Revenue and Customs.
PART 2 Liability to a penalty
Penalty for deliberately withholding information
3 (1) A person who fails to make a return on or before the due date is liable to a penalty under this paragraph if (and only if) the condition in sub-paragraph (2) is met.
(2) The condition is that at any time (including any time after the due date), by failing to make the return, the person deliberately withholds information which would enable or assist HMRC to assess the person's liability to tax.
(3) If the withholding of the information is deliberate and concealed, the penalty is—
(a) the relevant percentage of any liability to tax which would have been shown in the return in question, or
(b) if the amount in paragraph (a) is less than £300, £300.
(4) For the purposes of sub-paragraph (3)(a) the relevant percentage is—
(a) for the withholding of category 1 information, 100%,
(b) for the withholding of category 2 information, 150%, and
(c) for the withholding of category 3 information, 200%.
(5) If the withholding of the information is deliberate but not concealed, the penalty is—
(a) the relevant percentage of any liability to tax which would have been shown in the return in question, or
(b) if the amount in paragraph (a) is less than £300, £300.
(6) For the purposes of sub-paragraph (5)(a) the relevant percentage is—
(a) for the withholding of category 1 information, 70%,
(b) for the withholding of category 2 information, 105%, and
(c) for the withholding of category 3 information, 140%.
(7) Paragraph 4 explains the categories of information.
(8) The withholding of information by a person is—
(a) deliberate and concealed, if the person deliberately withholds the information and makes arrangements to conceal the fact that the information has been withheld;
(b) deliberate but not concealed, if the person deliberately withholds the information but does not make arrangements to conceal the fact that the information has been withheld.
(9) See paragraphs 15 and 16 for further rules about liability to a penalty.
Categories of information
4 (1) Information is category 1 information if—
(a) it involves a domestic matter, or
(b) it involves an offshore matter and the territory in question is a category 1 territory.
(2) Information is category 2 information if—
(a) it involves an offshore matter or an offshore transfer,
(b) the territory in question is a category 2 territory, and
(c) it is information which would enable or assist HMRC to assess the person's liability to the tax in question.
(3) Information is category 3 information if—
(a) it involves an offshore matter or an offshore transfer,
(b) the territory in question is a category 3 territory, and
(c) it is information which would enable or assist HMRC to assess the person's liability to the tax in question.
(4) Information “involves an offshore matter” if the liability to tax which would have been shown in the return includes a liability to tax charged on or by reference to—
(a) income arising from a source in a territory outside the UK,
(b) assets situated or held in a territory outside the UK,
(c) activities carried on wholly or mainly in a territory outside the UK, or
(d) anything having effect as if it were income, assets or activities of a kind described above.
(5) Information “involves an offshore transfer” if—
(a) it does not involve an offshore matter,
(b) it is information which would enable or assist HMRC to assess the person's liability to the tax in question,
(c) by failing to make the return, the person deliberately withholds the information (whether or not the withholding of the information is also concealed), and
(d) the applicable condition in paragraph 6 is satisfied.
(6) Information “involves a domestic matter” if it does not involve an offshore matter or an offshore transfer.
(7) If the information which the person withholds falls into more than one category—
(a) the person's failure to make the return is to be treated for the purposes of this Schedule as if it were separate failures, one for each category of information according to the matters or transfers which the information involves, and
(b) for each separate failure, the liability to tax which would have been shown in the return in question is taken to be such share of the liability to tax which would have been shown in the return mentioned in paragraph (a) as is just and reasonable.
(8) For the purposes of this Schedule—
(a) paragraph 21A of Schedule 24 to FA 2007 (classification of territories) has effect, but
(b) an order under that paragraph does not apply to a failure if the due date is before the date on which the order comes into force.
(9) In this paragraph and paragraph 6—
(a) “assets” has the meaning given in section 21(1) of TCGA 1992, but also includes sterling;
(b) “UK” means the United Kingdom, including the territorial sea of the United Kingdom.
Power to make changes relating to categories of information by regulations
5 (1) The Treasury may by regulations amend this Part of this Schedule so as to—
(a) add, amend or remove categories of information for the purposes of determining the amount of a penalty under paragraph 3;
(b) amend the relevant percentage specified in that paragraph for the withholding of information in any category.
(2) Regulations under this paragraph may include consequential provision, including provision amending, repealing or revoking any provision of an Act or subordinate legislation whenever passed or made (including this Act and any Act amended by it).
(3) In sub-paragraph (2) “subordinate legislation” has the same meaning as in the Interpretation Act 1978.
Offshore transfers
6 (1) This paragraph makes provision in relation to offshore transfers.
(2) Where the liability to tax which would have been shown in the return is a liability to income tax, the applicable condition is satisfied if the income on or by reference to which the tax is charged, or any part of the income—
(a) is received in a territory outside the UK, or
(b) is transferred before the relevant date to a territory outside the UK.
(3) Where the liability to tax which would have been shown in the return is a liability to capital gains tax, the applicable condition is satisfied if the proceeds of the disposal on or by reference to which the tax is charged, or any part of the proceeds—
(a) are received in a territory outside the UK, or
(b) are transferred before the relevant date to a territory outside the UK.
(4) In the case of a transfer falling within sub-paragraph (2)(b) or (3)(b), references to the income or proceeds transferred are to be read as including references to any assets derived from or representing the income or proceeds.
(5) In relation to an offshore transfer, the territory in question for the purposes of paragraph 4 is the highest category of territory by virtue of which the information involves an offshore transfer.
(6) “Relevant date” means the date on which the person becomes liable to a penalty under this Schedule.
Reductions for disclosure
7 (1) Paragraph 8 provides for reductions in the penalty under this Schedule where the person discloses information which has been withheld by a failure to make a return (“relevant information”).
(2) A person discloses relevant information that involves a domestic matter by—
(a) telling HMRC about it,
(b) giving HMRC reasonable help in quantifying any tax unpaid by reason of its having been withheld, and
(c) allowing HMRC access to records for the purpose of checking how much tax is so unpaid.
(3) A person discloses relevant information that involves an offshore matter or an offshore transfer by—
(a) telling HMRC about it,
(b) giving HMRC reasonable help in quantifying any tax unpaid by reason of its having been withheld,
(c) allowing HMRC access to records for the purpose of checking how much tax is so unpaid, and
(d) providing HMRC with additional information.
(4) The Treasury must make regulations setting out what is meant by “additional information” for the purposes of sub-paragraph (3)(d).
(5) Disclosure of relevant information—
(a) is “unprompted” if made at a time when the person has no reason to believe that HMRC have discovered or are about to discover the relevant information, and
(b) otherwise, is “prompted”.
(6) In relation to disclosure “quality” includes timing, nature and extent.
(7) Paragraph 4(4) to (6) applies to determine whether relevant information involves an offshore matter, an offshore transfer or a domestic matter.
8 (1) If a person who would otherwise be liable to a penalty of a percentage shown in column 1 of the Table in this paragraph (a “standard percentage”) has made a disclosure, HMRC must reduce the standard percentage to one that reflects the quality of the disclosure.
(2) But the standard percentage may not be reduced to a percentage that is below the minimum shown for it—
(a) in the case of a prompted disclosure, in column 2 of the Table, and
(b) in the case of an unprompted disclosure, in column 3 of the Table.
Standard percentage | Minimum percentage for prompted disclosure | Minimum percentage for unprompted disclosure
70% | 45% | 30%
100% | 60% | 40%
105% | 62.5% | 40%
140% | 80% | 50%
150% | 85% | 55%
200% | 110% | 70%
(3) But HMRC must not under this paragraph reduce a penalty below £300.
Special reduction
9 (1) If HMRC think it right because of special circumstances, they may reduce a penalty under this Schedule.
(2) In sub-paragraph (1) “special circumstances” does not include—
(a) ability to pay, or
(b) the fact that a potential loss of revenue from a taxpayer is balanced by a potential over-payment by a taxpayer.
(3) In sub-paragraph (1) the reference to reducing a penalty includes a reference to—
(a) staying a penalty, and
(b) agreeing a compromise in relation to proceedings for a penalty.
Interaction with other penalties
10 (1) This paragraph applies where—
(a) a person is liable to a penalty under this Schedule in respect of a failure, and
(b) the amount of the penalty is the amount in paragraph 3(3)(a) or 3(5)(a).
(2) The amount of that penalty is to be reduced by the amount of any other penalty incurred by the person, the amount of which is determined by reference to the same liability to tax.
(3) In sub-paragraph (2), the reference to “any other penalty” does not include—
(a) a penalty under Schedule 26 (penalties for failure to pay tax),
(b) a penalty under Schedule 56 to FA 2009 (penalty for late payment of tax), or
(c) a penalty under Part 4 of FA 2014 (penalty where corrective action not taken after follower notice etc.).
Determination of penalty where no return made
11 (1) For the purposes of a penalty under this Schedule references to a liability to tax which would have been shown in a return are references to the amount which, if a complete and accurate return had been delivered on the due date, would have been shown to be due or payable by the taxpayer in respect of the tax concerned for the period to which the return relates.
(2) In the case of a penalty which is assessed at a time before the person makes the return to which the penalty relates, HMRC may either—
(a) proceed on the assumption that the amount in paragraph 3(3)(a) is less than the amount in paragraph 3(3)(b), or the amount in paragraph 3(5)(a) is less than the amount in paragraph 3(5)(b), or
(b) determine the amount mentioned in sub-paragraph (1) to the best of HMRC's information and belief.
(3) If the person subsequently makes a return, the penalty must be re-assessed by reference to the amount of tax shown to be due and payable in that return (but subject to any amendments or corrections to the return).
Assessments
12 (1) Where a person is liable to a penalty under this Schedule HMRC may assess the penalty.
(2) Where HMRC assess a penalty they must—
(a) notify the person, and
(b) state in the notice the failure (or failures) for which the person is liable to a penalty.
(3) A penalty under this Schedule must be paid before the end of the period of 30 days beginning with the day on which notification of the penalty is issued.
(4) An assessment of a penalty under this Schedule—
(a) is to be treated for procedural purposes in the same way as an assessment to tax (except in respect of a matter expressly provided for in this Schedule),
(b) may be enforced as if it were an assessment to tax, and
(c) may be combined with an assessment to tax.
Supplementary assessments
13 (1) A supplementary assessment may be made in respect of a penalty under this Schedule if an earlier assessment—
(a) is based on a liability to tax that would have been shown in a return, and that liability is found by HMRC to be an underestimate, or
(b) is based on a liability to tax that is found by HMRC to be insufficient.
(2) Sub-paragraph (3) applies if an assessment in respect of a penalty—
(a) is based on a liability to tax that would have been shown in a return, and that liability is found by HMRC to be an overestimate, or
(b) is based on a liability to tax that is found by HMRC to be excessive.
(3) HMRC may by notice to the person amend the assessment so that it is based upon the correct amount.
(4) An amendment under sub-paragraph (3)—
(a) does not affect when the penalty must be paid;
(b) may be made after the last day on which the assessment in question could have been made under paragraph 14.
Time limit for assessments
14 (1) An assessment of a penalty under this Schedule may not be made after the later of Date A and (where it applies) Date B.
(2) Date A is the end of the period of 2 years beginning with the due date.
(3) Date B is the last day of the period of 12 months beginning with—
(a) the end of the appeal period for the assessment of the liability to tax which would have been shown in the return, or
(b) if there is no such assessment, the date on which that liability is ascertained or it is ascertained that the liability is nil.
(4) In sub-paragraph (3)(a) “appeal period” means the period during which—
(a) an appeal could be brought (ignoring any possibility of an appeal out of time), or
(b) an appeal that has been brought has not been determined or withdrawn.
(5) Sub-paragraph (1) does not apply to a re-assessment under paragraph 11(3).
(6) A re-assessment under that paragraph must be made before the end of the period of 2 years beginning with the day on which the return is made.
PART 3 Supplementary provision
Double jeopardy
15 A person is not liable to a penalty under this Schedule in respect of a failure or action in respect of which the person has been convicted of an offence.
Withdrawal of notice to make a return
16 (1) This paragraph applies where—
(a) a person is liable to a penalty under this Schedule in relation to a failure to make a return within item 1 or 2 in the Table in paragraph 1, and
(b) HMRC decide (on the request of the person or otherwise) to give the person a notice under section 8B of TMA 1970 withdrawing a notice under section 8 or 8A of that Act.
(2) This paragraph also applies where—
(a) a person is liable to a penalty under this Schedule in relation to a failure to make a return within item 3 in the Table in paragraph 1, and
(b) HMRC decide (on a request under section 12AAA of TMA 1970) to give a notice under that section withdrawing a notice under section 12AA of that Act.
(3) The notice under section 8B or 12AAA of TMA 1970 may include provision under this paragraph cancelling liability to the penalty from the date specified in the notice.
Appeals
17 (1) A person may appeal against a decision of HMRC that a penalty is payable by the person.
(2) A person may appeal against a decision of HMRC as to the amount of a penalty payable by the person.
18 (1) An appeal under paragraph 17 is to be treated in the same way as an appeal against an assessment to the tax concerned (including by the application of any provision about bringing the appeal by notice to HMRC, about HMRC's review of the decision or about determination of the appeal by the First-tier Tribunal or Upper Tribunal).
(2) Sub-paragraph (1) does not apply—
(a) so as to require the person to pay a penalty before an appeal against the assessment of the penalty is determined, or
(b) in respect of any other matter expressly provided for by this Schedule.
19 (1) On an appeal under paragraph 17(1) that is notified to the tribunal, the tribunal may affirm or cancel HMRC's decision that a penalty is payable by the person.
(2) On an appeal under paragraph 17(2) that is notified to the tribunal, the tribunal may—
(a) affirm HMRC's decision, or
(b) substitute for HMRC's decision another decision that HMRC had power to make.
(3) If the tribunal substitutes its decision for HMRC's decision in relation to a penalty under this Schedule, the tribunal may rely on paragraph 9—
(a) to the same extent as HMRC (which may mean applying the same percentage reduction as HMRC to a different starting point), or
(b) to a different extent, but only if the tribunal thinks that HMRC's decision in respect of the application of paragraph 9 was flawed.
(4) In sub-paragraph (3)(b) “flawed” means flawed when considered in the light of the principles applicable in proceedings for judicial review.
(5) In this paragraph “tribunal” means the First-tier Tribunal or Upper Tribunal (as appropriate by virtue of paragraph 18(1)).
Partnerships
20 (1) This paragraph applies where—
(a) the representative partner, or a successor of the representative partner, fails to make a return falling within item 3 in the Table in paragraph 1, or
(b) the nominated partner fails to make a return falling within item 4 in that Table.
(2) In determining whether the representative partner, a successor of the representative partner or the nominated partner (as the case may be) is liable to a penalty under paragraph 3, the condition in sub-paragraph (2) of that paragraph is to be read as if the reference to the person's liability to tax was a reference to the liability to tax of any relevant partner.
(3) If a representative partner, a successor of a representative partner or a nominated partner is liable to a penalty under paragraph 3, every relevant partner is liable to a penalty under that paragraph.
(4) The amount of the penalty to which the representative partner, a successor of the representative partner, the nominated partner or a relevant partner is liable is £300 (and accordingly paragraphs 3(3) to (8), 4 to 8, 10, 11 and 13 do not apply).
(5) An appeal under paragraph 17 in connection with a penalty payable by virtue of this paragraph may be brought only by—
(a) the representative partner or a successor of the representative partner, in a case within sub-paragraph (1)(a), or
(b) the nominated partner, in a case within sub-paragraph (1)(b).
(6) Where such an appeal is brought in connection with a penalty payable in respect of a failure, the appeal is to be treated as if it were an appeal in connection with every penalty payable in respect of that failure.
(7) In this paragraph—
“nominated partner” has the meaning given by paragraph 5(5) of Schedule A1 to TMA 1970;
“relevant partner” means a person who was a partner in the partnership to which the return relates at any time during the period in respect of which the return was required;
“representative partner” means a person who has been required by a notice served under or for the purposes of section 12AA(2) or (3) of TMA 1970 to deliver any return;
“successor” has the meaning given by section 12AA(11) of TMA 1970.
Regulations: supplementary provision
21 (1) Regulations under this Schedule are to be made by statutory instrument.
(2) Regulations under this Schedule may include transitional, transitory and saving provision.
(3) A statutory instrument containing regulations under this Schedule is subject to annulment in pursuance of a resolution of the House of Commons.
Section 117
PART 1 Introduction
Introduction
1 (1) This Schedule makes provision for penalties to be payable by a person who, in relation to a tax dealt with by one of the following tables, fails to pay an amount specified in column 2 of the table (“the tax due”) on or before the date specified in column 3 of the table (“the specified date”).
Income tax or capital gains tax
1 | Amount of income tax or capital gains tax payable under section 55 or 56(3)(b) of TMA 1970 | The date determined in accordance with section 55 or 56(3)(b) of TMA 1970 as the date by which the amount must be paid
2 | Amount of income tax or capital gains tax payable under section 59B(3) or (4) of TMA 1970 | The date specified in section 59B(3) or (4) of TMA 1970 as the date by which the amount must be paid
3 | Amount of income tax or capital gains tax payable under section 59B(5) or (6) of TMA 1970 | The date specified in section 59B(5) or (6) of TMA 1970 as the date by which the amount must be paid
4 | Amount of income tax or capital gains tax payable under section 59B(5A) of TMA 1970 | The date specified in section 59B(5A) of TMA 1970 as the date by which the amount must be paid
5 | Amount of income tax or capital gains tax payable under section 59BA(4) or (5) of TMA 1970 | The date specified in section 59BA(4) or (5) of TMA 1970 as the date by which the amount must be paid
6 | Amount of income tax payable under regulations under section 244L(2)(a) of FA 2004 | The due date determined by or under the regulations
7 | Amount of income tax shown in a return under section 254(1) of FA 2004 | The date specified in section 254(5) of FA 2004 as the date by which the amount must be paid
8 | Amount of income tax or capital gains tax (not within item 4) shown in an assessment or determination made by HMRC in default of a return (see paragraph 3) | The date by which the amount would have been required to be paid if it had been shown in the return in question
9 | Amount of income tax or capital gains tax (not within item 1 or 3) shown in an amendment or correction of a return | The later of— the date by which the amount must be paid, and the date on which the amendment or correction is made
10 | Amount of income tax or capital gains tax (not within item 1 or 3) shown in an assessment or determination made by HMRC otherwise than in default of a return (see paragraph 3) | The later of— the date by which the amount must be paid, and the date on which the assessment or determination is made
Value added tax
1 | Amount of value added tax payable under section 25(1) of VATA 1994 except an amount within item 3, 4 or 5, or that is an annual accounting scheme instalment | The date determined by or under regulations under section 25 of VATA 1994 as the date by which the amount must be paid
2 | . . . | . . .
3 | Amount of value added tax shown in an assessment made by HMRC in default of a return (see paragraph 3) | The date by which the amount would have been required to be paid if it had been shown in the return in question
4 | Amount of value added tax shown in an amendment or correction of a return | The date falling 30 days after the date on which the amendment or correction is made
5 | Amount of value added tax shown in an assessment made by HMRC otherwise than in default of a return (see paragraph 3) | The date falling 30 days after the date on which the assessment is made
Carbon border adjustment mechanism
1 | Amount of CBAM payable under paragraph 6 of Schedule 17 to FA 2026 (except an amount within item 2, 3 or 4) | The date determined by paragraph 6 of Schedule 17 to FA 2026 as the date by which the amount must be paid
2 | Amount of CBAM shown in an assessment made by HMRC in default of a return (see paragraph 3) | The date by which the amount would have been required to be paid if it had been shown in the return in question
3 | Amount of CBAM shown in an amendment of a return | The date falling 30 days after the date on which the amendment is made
4 | Amount of CBAM shown in an assessment made by HMRC otherwise than in default of a return (see paragraph 3) | The date falling 30 days after the date on which the assessment is made
Vaping products duty
1 | Amount of vaping products duty payable under Part 4 of FA 2026 (except an amount within item 2 or 3) | The date determined by or under regulations under section 45 of TCTA 2018 as the date by which the amount must be paid
2 | Amount of vaping products duty shown in an assessment made by HMRC in default of a return | The date by which the amount would have been required to be paid if it had been shown in the return in question
3 | Amount of vaping products duty shown in an amendment or correction of a return | The date falling 30 days after the date on which the amendment or correction is made
(2) In the table relating to value added tax, “annual accounting scheme instalment” means an amount payable to HMRC by virtue of regulation 50(2)(a) of the Value Added Tax Regulations 1995 (S.I. 1995/2518).
2 In this Schedule, “HMRC” means Her Majesty's Revenue and Customs.
Assessments and determinations in default of return
3 (1) This paragraph applies for the interpretation of the tables in paragraph 1.
(2) An assessment or determination by HMRC is made in default of a return if it is made where—
(a) a person is required to make or deliver a return which falls within—
(i) any group of returns in the Table in paragraph 2 of Schedule 24, or
(ii) any item in the Table in paragraph 1 of Schedule 55 to FA 2009,
(b) that person fails to make or deliver the return on or before the date by which it is required to be made or delivered, and
(c) if the return had been made or delivered as required, the return would have shown that an amount falling within the relevant table in paragraph 1 was due and payable.
(3) An assessment or determination by HMRC is made otherwise than in default of a return if it is made otherwise than as described in sub-paragraph (2).
PART 2 Liability to a penalty
No penalty if payment in full before end of 15 day period
4 No penalty is payable if—
(a) the tax due is paid in full before the end of the 15 day period, or
(b) the 15 day time to pay condition is met,
(but see paragraph 7).
First penalty: tax remains due at end of 15 day period
5 (1) A penalty is payable under this paragraph if—
(a) the tax due is not paid in full before the end of the 15 day period, and
(b) the 15 day time to pay condition is not met.
(2) If the tax due is paid in full after the end of the 15 day period but before the end of the 30 day period, the amount of the penalty is amount A.
(3) If the tax due is not paid in full before the end of the 30 day period, the amount of the penalty is—
(a) if the 30 day time to pay condition is met, amount A, and
(b) if the 30 day time to pay condition is not met, the total of amount A and amount B,
(but see paragraph 7).
(4) Amount A is 3% of so much of the tax due as is unpaid at the end of the 15 day period.
(5) Amount B is 3% of so much of the tax due as is unpaid at the end of the 30 day period.
Meaning of “15 day time to pay condition” and “30 day time to pay condition”
6 (1) The 15 day time to pay condition is met if a time to pay agreement is made (whether before or after the end of the 15 day period) as a result of proposals for paying the tax due made by the person before the end of the 15 day period.
(2) The 30 day time to pay condition is met if a time to pay agreement is made (whether before or after the end of the 30 day period) as a result of proposals for paying the tax due made by the person after the end of the 15 day period, but before the end of the 30 day period.
First penalty: effect of breaking time to pay agreement
7 (1) This paragraph applies where—
(a) the 15 day time to pay condition or the 30 day time to pay condition is met, and
(b) the person breaks the time to pay agreement by virtue of which the condition was met.
(2) If HMRC give the person notice that a penalty is payable under paragraph 5, a penalty is payable under that paragraph as if the condition in question had never been met.
Second penalty: tax remains due at end of 30 day period
8 (1) A penalty is payable under this paragraph if any amount of the tax due is unpaid at the end of the 30 day period.
(2) The amount of the penalty is calculated by applying the penalty rate, during the further penalty period, to so much of the tax due as is from time to time unpaid.
(3) The penalty rate is 10% per annum.
(4) The further penalty period is the period—
(a) beginning with the day after the last day of the 30 day period, and
(b) ending with the day on which the tax due is paid in full.
(5) But if a time to pay agreement has effect during the further penalty period, the further penalty period does not include the period—
(a) beginning with the relevant day, and
(b) ending with the day on which the tax due is paid in full,
(but see paragraph 9).
(6) The relevant day is the day on which the person makes the proposals to HMRC for paying the tax due, as a result of which the time to pay agreement is made.
Second penalty: effect of breaking time to pay agreement
9 (1) This paragraph applies where—
(a) a time to pay agreement has effect during the further penalty period, and
(b) the person breaks the time to pay agreement.
(2) If HMRC give the person notice that a penalty is payable under paragraph 8, a penalty is payable under that paragraph as if the time to pay agreement had never had effect.
Interpretation of Part 2
10 (1) This paragraph gives the meaning of terms used in this Part of this Schedule.
(2) The “15 day period”, in relation to tax due, is the period of 15 days beginning with the day after the specified date.
(3) The “30 day period”, in relation to tax due, is the period of 30 days beginning with the day after the specified date.
(4) A “time to pay agreement” is an agreement between HMRC and a person that payment of an amount of tax due (the “deferred amount”) may be deferred for a period (the “deferral period”).
(5) A person breaks a time to pay agreement if—
(a) the person fails to pay the deferred amount when the deferral period ends, or
(b) the deferral is subject to the person complying with a condition (including a condition that part of the deferred amount be paid during the deferral period) and the person fails to comply with it.
(6) If a time to pay agreement is varied at any time by a further agreement between the person and HMRC, references in this Schedule to the agreement include the agreement as varied.
Power to amend figures by regulations
11 The Commissioners for HMRC may by regulations amend this Part of this Schedule so as to—
(a) change references to 15 days (or to another number of days resulting from the previous exercise of powers under this sub-paragraph) to references to a greater or lesser number of days;
(b) change references to 30 days (or to another number of days resulting from the previous exercise of powers under this sub-paragraph) to references to a greater or lesser number of days;
(c) increase or reduce the percentage specified in paragraph 5(4);
(d) increase or reduce the percentage specified in paragraph 5(5);
(e) increase or reduce the percentage specified in paragraph 8(3).
PART 3 Supplementary provision
Reasonable excuse
12 (1) Liability to a penalty under this Schedule does not arise in respect of a failure to make a payment if the person satisfies HMRC (or on appeal, the tribunal) that the person had a reasonable excuse for the failure.
(2) For this purpose—
(a) an insufficiency of funds is not a reasonable excuse unless attributable to events outside the person's control,
(b) where the person relies on another person to do anything, that is not a reasonable excuse unless the first person took reasonable care to avoid the failure, and
(c) where the person had a reasonable excuse for the failure but the excuse has ceased, the person is to be treated as having continued to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased.
(3) In this paragraph “tribunal” means the First-tier Tribunal or Upper Tribunal (as appropriate by virtue of paragraph 20(1)).
Special reduction
13 (1) If HMRC think it right because of special circumstances, they may reduce a penalty under this Schedule.
(2) In sub-paragraph (1) “special circumstances” does not include—
(a) ability to pay, or
(b) the fact that a potential loss of revenue from a taxpayer is balanced by a potential over-payment by a taxpayer.
(3) In sub-paragraph (1) the reference to reducing a penalty includes a reference to—
(a) staying a penalty, and
(b) agreeing a compromise in relation to proceedings for a penalty.
Double jeopardy
14 A person is not liable to a penalty under this Schedule in respect of a failure in respect of which the person has been convicted of an offence.
Interaction with other penalties
15 In the application of the following provisions, no account is to be taken of a penalty under this Schedule—
(a) section 97A of TMA 1970 (multiple penalties),
(b) paragraph 12(2) of Schedule 24 to FA 2007 (interaction with other penalties), and
(c) paragraph 15(1) of Schedule 41 to FA 2008 (interaction with other penalties).
Assessments
16 (1) Where a person is liable to a penalty under this Schedule HMRC may assess the penalty.
(2) HMRC may by regulations make provision for HMRC to assess a penalty under paragraph 8 at times or intervals before the end of the further penalty period.
(3) Where HMRC assess a penalty they must notify the person and state in the notice—
(a) the failure to pay the tax due, for which the person is liable to the penalty,
(b) the amount of the penalty, and
(c) how that amount has been calculated (including , where the penalty is assessed under paragraph 8, the period by reference to which the penalty has been calculated).
(4) A penalty under this Schedule must be paid before the end of the period of 30 days beginning with the day on which notification of the penalty is issued.
(5) An assessment of a penalty under this Schedule—
(a) is to be treated for procedural purposes in the same way as an assessment to tax (except in respect of a matter expressly provided for in this Schedule),
(b) may be enforced as if it were an assessment to tax, and
(c) may be combined with an assessment to tax.
17 (1) A supplementary assessment may be made in respect of a penalty if an earlier assessment is based on an amount of tax due and payable that is found by HMRC to be an underestimate or insufficient.
(2) If an assessment in respect of a penalty is based on an amount of tax due or payable that is found by HMRC to be excessive, HMRC may by notice amend the assessment so that it is based upon the correct amount.
(3) An amendment under sub-paragraph (2)—
(a) does not affect when the penalty must be paid;
(b) may be made after the last day on which the assessment in question could have been made under paragraph 18.
17A (1) This paragraph applies where HMRC has assessed a penalty for which a person is liable under this Schedule in respect of a failure to pay the tax due.
(2) HMRC may withdraw the assessment by notice to the person.
(3) The withdrawn assessment ceases to have effect (and is to be taken as never having had any effect).
(4) But the withdrawal of the assessment does not prevent HMRC from subsequently assessing a penalty for the failure mentioned in sub-paragraph (1).
Time limit for assessments
18 (1) An assessment of a penalty under this Schedule in respect of any amount must be made on or before the later of date A and (where it applies) date B.
(2) Date A is the last day of the period of 2 years beginning with the date specified in or for the purposes of column 3 of the relevant table in paragraph 1 ....
(3) Date B is the last day of the period of 12 months beginning with—
(a) the end of the appeal period for the assessment of the amount of tax in respect of which the penalty is assessed, or
(b) if there is no such assessment, the date on which that amount of tax is ascertained.
(4) In sub-paragraph (3)(a) “appeal period” means the period during which—
(a) an appeal could be brought (ignoring any possibility of an appeal out of time), or
(b) an appeal that has been brought has not been determined or withdrawn.
Appeals
19 (1) A person may appeal against a decision of HMRC that the person is liable to a penalty under this Schedule.
(2) A person liable to a penalty under this Schedule may appeal against a decision of HMRC as to the amount of the penalty.
20 (1) An appeal under paragraph 19 is to be treated in the same way as an appeal against an assessment to the tax concerned (including by the application of any provision about bringing the appeal by notice to HMRC, about HMRC's review of the decision or about determination of the appeal by the First-tier Tribunal or Upper Tribunal).
(2) Sub-paragraph (1) does not apply—
(a) so as to require the person to pay a penalty before an appeal against the assessment of the penalty is determined, or
(b) in respect of any other matter expressly provided for by this Schedule.
21 (1) On an appeal under paragraph 19(1) that is notified to the tribunal, the tribunal may affirm or cancel HMRC's decision.
(2) On an appeal under paragraph 19(2) that is notified to the tribunal, the tribunal may—
(a) affirm HMRC's decision, or
(b) substitute for HMRC's decision another decision that HMRC had power to make.
(3) If the tribunal substitutes its decision for HMRC's decision in relation to a penalty under this Schedule, the tribunal may rely on paragraph 13—
(a) to the same extent as HMRC (which may mean applying the same percentage reduction as HMRC to a different starting point), or
(b) to a different extent, but only if the tribunal thinks that HMRC's decision in respect of the application of paragraph 13 was flawed.
(4) In sub-paragraph (3)(b) “flawed” means flawed when considered in the light of the principles applicable in proceedings for judicial review.
(5) In this paragraph “tribunal” means the First-tier Tribunal or Upper Tribunal (as appropriate by virtue of paragraph 20(1)).
Regulations: supplementary provision
22 (1) Regulations under this Schedule are to be made by statutory instrument.
(2) A statutory instrument containing regulations under paragraph 11 (powers to amend Part 2) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons.
(3) A statutory instrument containing regulations under paragraph 16 (assessments) is subject to annulment in pursuance of a resolution of the House of Commons.
(4) Regulations under this Schedule may include transitional, transitory and saving provision.
SCHEDULE 27 Schedules 24 to 26: consequential provision
Section 118
Taxes Management Act 1970
1 TMA 1970 is amended as follows.
2 For section 8B(8) (withdrawal of notice to file personal or trustee return) substitute—
(8) See paragraph 21 of Schedule 24 and paragraph 16 of Schedule 25 to the Finance Act 2021 as to the cancellation of liabilities under those Schedules by including provision in a notice under this section.
3 For section 12AAA(9) (withdrawal of notice to file partnership return) substitute—
(9) See paragraph 21 of Schedule 24 and paragraph 16 of Schedule 25 to the Finance Act 2021 as to the cancellation of liabilities under those Schedules by including provision in a notice under this section.
4 In section 49E (nature of review etc), after subsection (5) insert—
(5A) See section 49EA concerning additional conclusions a review can reach in the case of penalties under Schedule 24 to the Finance Act 2021.
5 After section 49E insert—
Nature of review: penalties under Schedule 24 to FA 2021
49EA (1) This section applies if—
(a) notice of appeal has been given to HMRC under paragraph 22(b) of Schedule 24 to the Finance Act 2021 in respect of a penalty, and
(b) HMRC are required to review the matter in question under section 49B or 49C (which apply to the appeal by virtue of paragraph 23(1) of that Schedule).
(2) The review may also conclude that HMRC's view that the appellant was liable to any of the penalty points by virtue of which the appellant was liable to the penalty is to be—
(a) upheld, or
(b) cancelled.
(3) Subsection (2) applies in relation to a penalty point even if the time limit for appealing against it expired before notice of appeal in respect of the penalty was given.
(4) Subsection (2) does not apply in relation to a penalty point if—
(a) it was concluded on an earlier review under section 49B or 49C that HMRC's view that the appellant was liable to the penalty point was to be upheld, or
(b) HMRC's decision that the appellant was liable to the penalty point has been affirmed on appeal.
6 After section 49F insert—
Effect of conclusions of review: penalties under Schedule 24 to FA 2021
49FA (1) If the conclusions of a review include conclusions reached by virtue of section 49EA and the conclusions of the review are final, sub-paragraphs (4) and (5) of paragraph 24 of Schedule 24 to the Finance Act 2021 apply but with the following modifications—
(a) references to the appeal under paragraph 22(b) of that Schedule are to be read as references to the review under section 49B or 49C (as the case may be),
(b) references to the tribunal are to be read as references to HMRC, and
(c) references to cancelling a decision are to be read as references to concluding that HMRC's view is to be cancelled.
(2) For the purposes of subsection (1) the conclusions of a review are to be treated as final only if the post-review period has ended and the appellant did not notify the appeal to the tribunal within that period.
(3) In subsection (2) “post-review period” has the same meaning as in section 49G (see subsection (5) of that section).
7 In section 69 (recovery of penalty or interest), in subsection (1)—
(a) after paragraph (a) insert—
(aa) penalties imposed under Schedule 26 to the Finance Act 2021;
;
(b) omit paragraph (b).
8 In section 103ZA (disapplication of sections 100 to 103 in the case of certain penalties)—
(a) omit the “or” at the end of paragraph (k);
(b) after paragraph (l) insert—
(m) Schedule 24 to the Finance Act 2021 (penalties for failure to make returns etc),
(n) Schedule 25 to that Act (penalties for deliberately withholding information), or
(o) Schedule 26 to that Act (penalties for failure to pay tax).
9 (1) Section 107A (relevant trustees) is amended as follows.
(2) In subsection (2)—
(a) in paragraph (a), after “Schedule 22 to the Finance Act 2016” insert “ or Schedule 25 to the Finance Act 2021 ”;
(b) in paragraph (c)—
(i) after “Schedule 56 to the Finance Act 2009” insert “ or Schedule 26 to the Finance Act 2021 ”;
(ii) for “that Act” substitute “ the Finance Act 2009 ”.
(3) In subsection (3)—
(a) omit paragraph (a);
(b) in paragraph (c)—
(i) in sub-paragraph (i), for “1, 3C, 12, 18 or 19” substitute “ 3C ”;
(ii) omit sub-paragraph (ii) (but not the “or” at the end of that sub-paragraph);
(iii) in sub-paragraph (iii), omit “or (ii)”;
(c) after paragraph (d) insert—
(e) in relation to—
(i) a penalty under Schedule 26 to the Finance Act 2021 (penalties for failure to pay tax), or
(ii) interest under section 101 of the Finance Act 2009 on a penalty within sub-paragraph (i),
the end of the specified date as defined in paragraph 1 of Schedule 26 to the Finance Act 2021;
.
Income and Corporation Taxes Act 1988
10 In section 824 of the Income and Corporation Taxes Act 1988 (repayment supplements: individuals and others), in subsection (1)—
(a) omit paragraph (c);
(b) in paragraph (d), for “that Act” substitute “ the Finance Act 2009 or Schedules 24 to 26 to the Finance Act 2021. ”
Social Security Contributions and Benefits Act 1992
11 The Social Security Contributions and Benefits Act 1992 is amended as follows.
12 In section 11A (application of certain provisions of the Income Tax Acts in relation to Class 2 contributions under section 11(2)), after subsection (1)(ea) insert—
(eb) Schedules 24 and 25 to the Finance Act 2021 (penalties for failure to make returns etc or for deliberately withholding information);
.
13 In section 16(1) (application of Income Tax Acts and destination of Class 4 contributions), at the end of paragraph (e) insert
and
(f) the provisions of Schedules 24 and 25 to the Finance Act 2021 (penalties for failure to make returns etc or for deliberately withholding information),
.
Social Security Contributions and Benefits (Northern Ireland) Act 1992
14 In section 11A of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (application of certain provisions of the Income Tax Acts in relation to Class 2 contributions under section 11(2)), after subsection (1)(ea) insert—
(eb) Schedules 24 and 25 to the Finance Act 2021 (penalties for failure to make returns etc or for deliberately withholding information);
.
Value Added Tax Act 1994
15 VATA 1994 is amended as follows.
16 In the italic heading before section 59, omit “Default surcharge and other”.
17 Omit sections 59 to 59B (default surcharge).
18 (1) Section 69 (breaches of regulatory provisions) is amended as follows.
(2) In subsection (4)(a), for “for a surcharge under section 59 or 59A” substitute “ to a penalty point or a penalty under Schedule 24 to the Finance Act 2021 ”.
(3) In subsection (9)—
(a) omit paragraph (b) and the “or” at the end of that paragraph;
(b) after paragraph (c) insert
or
(d) a person is awarded a penalty point or assessed to a penalty under Schedule 24 to the Finance Act 2021,
.
19 In section 71 (construction of sections 59 to 70), in the heading and in subsections (1) and (2), for “59” substitute “ 60 ”.
20 (1) Section 76 (assessment of amounts due by way of penalty, interest or surcharge) is amended as follows.
(2) In the heading, for “penalty, interest or surcharge” substitute “ penalty or interest ”.
(3) In subsection (1)—
(a) omit paragraph (a) and the “or” at the end of that paragraph;
(b) in the words after paragraph (d), for “penalty, interest or surcharge” substitute “ penalty or interest ”.
(4) In subsection (3)—
(a) in the words before paragraph (a), for “penalties, interest and surcharge” substitute “ penalties and interest ”;
(b) omit paragraph (a).
(5) In subsection (4), for “penalty, interest or surcharge”, in both places, substitute “ penalty or interest ”.
(6) In subsection (5), for “penalty, interest or surcharge”, in both places, substitute “ penalty or interest ”.
21 In section 77 (assessments: time limits and supplementary assessments), in subsections (2), (3) and (5), for “penalty, interest or surcharge” substitute “ penalty or interest ”.
22 In section 81 (interest given by way of credit and set-off of credits), in subsections (3)(b) and (3A)(c), for “penalty, interest or surcharge” substitute “ penalty or interest ”.
23 In section 83 (appeals), in subsection (1)—
(a) in paragraph (n)—
(i) omit “or surcharge”;
(ii) for “59” substitute “ 60 ”;
(b) in paragraph (q), for “penalty, interest or surcharge” substitute “ penalty or interest ”.
24 In section 83F (nature of review etc), after subsection (5) insert—
(5A) See section 83FA concerning additional conclusions a review can reach in the case of penalties under Schedule 24 to the Finance Act 2021.
25 After section 83F insert—
Nature of review: penalties under Schedule 24 to FA 2021
83FA (1) This section applies if HMRC are required, by virtue of paragraph 23(1) of Schedule 24 to the Finance Act 2021, to undertake a review under section 83C or 83E of a penalty decision in respect of which an appeal lies under paragraph 22(b) of that Schedule.
(2) The review may also conclude that HMRC's decision that P was liable to any of the penalty points by virtue of which P was liable to the penalty in respect of which the appeal lies is to be—
(a) upheld, or
(b) cancelled.
(3) Subsection (2) applies in relation to a penalty point even if the time limit for appealing against it expired before the relevant date.
(4) Subsection (2) does not apply in relation to a penalty point if—
(a) it was concluded on an earlier review required to be undertaken under section 83C or 83E that HMRC's decision that P was liable to the penalty point was to be upheld, or
(b) HMRC's decision that P was liable to the penalty point has been affirmed on appeal.
(5) In subsection (3) “relevant date” has the same meaning as in section 83F(6) (see section 83F(7)).
26 After section 83FA (inserted by paragraph 25) insert—
Effect of conclusions of review: penalties under Schedule 24 to FA 2021
83FB (1) If the conclusions of a review include conclusions reached by virtue of section 83FA and the conclusions of the review are final, sub-paragraphs (4) and (5) of paragraph 24 of Schedule 24 to the Finance Act 2021 apply but with the following modifications—
(a) references to the appeal under paragraph 22(b) of that Schedule are to be read as references to the review required to be undertaken under section 83C or 83E (as the case may be),
(b) references to the tribunal are to be read as references to HMRC, and
(c) references to cancelling a decision are to be read as references to concluding that HMRC's decision is to be cancelled.
(2) For the purposes of subsection (1) the conclusions of a review are to be treated as final only if the period specified in subsection (3)(b), (4)(b) or (5) of section 83G for appealing the reviewed decision has ended and no appeal has been made within that period.
27 In section 84 (further provisions relating to appeals), in subsection (6)—
(a) for “penalty, interest or surcharge” substitute “ penalty or interest ”;
(b) for “59” substitute “ 60 ”.
28 In Schedule 13 (transitional provisions and savings), omit paragraph 14.
Income Tax (Trading and Other Income) Act 2005
29 ITTOIA 2005 is amended as follows.
30 In the italic heading before section 54, for “, interest and VAT surcharges” substitute “ and interest ”.
31 In section 54 (penalties, interest and VAT surcharges)—
(a) in the heading, for “, interest and VAT surcharges” substitute “ and interest ”;
(b) omit subsection (3).
32 In section 272 (application of trading income rules: GAAP), in the table in subsection (2), in the entry for section 54, in the second column, for “, interest and VAT surcharges” substitute “ and interest ”.
33 In section 272ZA (application of trading income rules: cash basis), in the table in subsection (1), in the entry for section 54, in the second column, for “, interest and VAT surcharges” substitute “ and interest ”.
34 In the italic heading before section 869, for “, interest and VAT surcharges” substitute “ and interest ”.
35 In section 869 (penalties, interest and VAT surcharges: non trades etc)—
(a) in the heading, for “, interest and VAT surcharges” substitute “ and interest ”;
(b) omit subsection (5).
Corporation Tax Act 2009
36 In section 1303 of CTA 2009 (penalties, interest and VAT surcharges)—
(a) in the heading, for “, interest and VAT surcharges” substitute “ and interest ”;
(b) omit subsection (3).
Finance Act 2009
37 FA 2009 is amended as follows.
38 In section 108 (suspension of penalties during currency of agreement for deferred payment), in subsection (5), in the Table, omit the entry for value added tax.
39 (1) Schedule 55 (penalty for failure to make returns etc) is amended as follows.
(2) In paragraph 1—
(a) in sub-paragraph (4), in the definition of “penalty date”, for “1 to 3” substitute “ 2A ”;
(b) in the Table, omit items 1, 2 and 3.
(3) In paragraph 2 (as substituted by paragraph 3 of Schedule 10 to F(No.3)A 2010), in sub-paragraph (1)(a), for “1 to 5” substitute “ 2A, 4, 4A, 5 ”.
(4) Omit paragraphs 17A and 17B (cancellation of penalty) and the italic heading before those paragraphs.
(5) Omit paragraph 25 (partnerships) and the italic heading before that paragraph.
(6) Until the coming into force of paragraph 3 of Schedule 10 to F(No.3)A 2010, paragraph 2 of Schedule 55 to FA 2009 has effect as if for “1 to 3” there were substituted “ 2A ”.
40 (1) Schedule 56 (penalty for failure to make payments on time) is amended as follows.
(2) In paragraph 1, in the Table—
(a) omit items 1, 3, 3A, 12, 18 and 19;
(b) omit items 6A and 6B (inserted by paragraph 2(7) of Schedule 11 to F(No.3)A 2010);
(c) omit item 13A (inserted by paragraph 2(9) of Schedule 11 to F(No.3)A 2010);
(d) in item 17—
(i) in column 2, for “1” substitute “ 2, 3B ”;
(ii) in column 3, for “12” substitute “ 13 ”;
(e) in item 23—
(i) in column 2, for “1 to 6A” (as substituted by paragraph 2(13)(a) of Schedule 11 to F(No.3)A 2010) substitute “2, 3B to 6”;
(ii) in column 3—
(a) omit the words in brackets;
(b) for “1 to 6A” (as substituted by paragraph 2(13)(a) of Schedule 11 to F(No.3)A 2010) substitute “2, 3B to 6”;
(f) in item 24—
(i) in column 2, for “1 to 6A” (as substituted by paragraph 2(14)(a) of Schedule 11 to F(No.3)A 2010) substitute “2, 3B to 6”;
(ii) in column 3 omit the words in brackets.
(3) In paragraph 2(c), for “1” substitute “ 2 and 3B ”.
(4) In paragraph 3—
(a) in sub-paragraph (1)(a)—
(i) omit “1, 3,”;
(ii) omit “6B,” (as substituted by paragraph 5(3) of Schedule 11 to F(No.3)A 2010);
(iii) for “12” (as substituted by paragraph 5(3) of Schedule 11 to F(No.3)A 2010) substitute “13”;
(b) in sub-paragraph (1)(b) omit “6A,” (as substituted by paragraph 5(4)(a) of Schedule 11 to F(No.3)A 2010);
(c) omit sub-paragraphs (1)(d) and (1A) (as inserted by paragraph 5(5) and (6) of Schedule 11 to F(No.3)A 2010).
(5) In paragraph 8A (inserted by paragraph 7 of Schedule 11 to F(No.3)A 2010)—
(a) in sub-paragraph (1), omit “6A,”;
(b) omit sub-paragraphs (2) and (3).
(6) In paragraph 8F (inserted by paragraph 7 of Schedule 11 to F(No.3)A 2010)—
(a) in sub-paragraph (1) omit “6A,”;
(b) omit sub-paragraph (2).
(7) Omit paragraph 8K and the italic heading before that paragraph and omit paragraph 8 of Schedule 11 to F(No.3)A 2010 that inserted them.
(8) Until the coming into force of paragraph 2(13)(a) of Schedule 11 to F(No.3)A 2010, item 23 in the Table in paragraph 1 of Schedule 56 to FA 2009 has effect as if, in columns 2 and 3, for “1” there were substituted “ 2, 3B ”.
(9) Until the coming into force of paragraph 2(14)(a) of Schedule 11 to F(No.3)A 2010, item 24 in the Table in paragraph 1 of Schedule 56 to FA 2009 has effect as if, in column 2, for “1” there were substituted “ 2, 3B ”.
Finance Act 2012
41 In Schedule 38 to FA 2012 (tax agents: dishonest conduct), in paragraph 34(1)—
(a) omit the “or” at the end of paragraph (b);
(b) at the end of paragraph (c), insert
, or
(d) Schedule 24 (penalties for failure to make returns etc) or Schedule 25 (penalties for deliberately withholding information) to FA 2021.
Finance Act 2013
42 In Schedule 43C to FA 2013 (penalty under section 212A: supplementary provision), in paragraph 8—
(a) in sub-paragraph (3)(b), after “Schedule 55 to FA 2009” insert “ , or sub-paragraph (3)(b) or (5)(b) of paragraph 3 or paragraph 20(4) of Schedule 25 to FA 2021 ”;
(b) in sub-paragraph (5)—
(i) omit the “or” at the end of paragraph (c);
(ii) at the end of paragraph (d) insert
, or
(e) Schedule 25 to FA 2021 (penalties for deliberately withholding information).
;
(c) in sub-paragraph (6)—
(i) in paragraph (a)—
(a) omit the “or” at the end of sub-paragraph (ii);
(b) at the end of sub-paragraph (iii) insert
or
(iv) paragraph 3(4)(c) of Schedule 25 to FA 2021,
;
(ii) in paragraph (b)—
(a) omit the “or” at the end of sub-paragraph (ii);
(b) at the end of sub-paragraph (iii) insert
or
(iv) paragraph 3(4)(b) of Schedule 25 to FA 2021,
;
(iii) in paragraph (c)—
(a) omit the “or” at the end of sub-paragraph (ii);
(b) at the end of sub-paragraph (iii) insert
or
(iv) paragraph 3(6)(c) of Schedule 25 to FA 2021,
;
(iv) in paragraph (d)—
(a) omit the “or” at the end of sub-paragraph (ii);
(b) at the end of sub-paragraph (iii), for “and” substitute
or
(iv) paragraph 3(6)(b) of Schedule 25 to FA 2021, and
.
Finance Act 2014
43 In section 212 of FA 2014 (aggregate penalties)—
(a) in subsection (2)(b), after “Schedule 55 to FA 2009” insert “ or paragraph 3(3)(b) or (5)(b) or 20(4) of Schedule 25 to FA 2021 ”;
(b) in subsection (4)—
(i) omit the “or” at the end of paragraph (d);
(ii) at the end of paragraph (e) insert
, or
(f) Schedule 25 to FA 2021 (penalties for deliberately withholding information).
;
(c) in subsection (5)—
(i) omit the “or” at the end of paragraph (a)(ii);
(ii) at the end of paragraph (a)(iii) insert
or
(iv) paragraph 3(4)(c) of Schedule 25 to FA 2021,
;
(iii) omit the “or” at the end of paragraph (b)(ii);
(iv) at the end of paragraph (b)(iii) insert
or
(iv) paragraph 3(4)(b) of Schedule 25 to FA 2021,
;
(v) at the end of paragraph (c)(iii) insert
or
(iv) paragraph 3(6)(c) of Schedule 25 to FA 2021,
;
(vi) in paragraph (d)(iii), for “and” substitute
or
(iv) paragraph 3(6)(b) of Schedule 25 to FA 2021, and
.
Finance Act 2015
44 (1) Schedule 21 to FA 2015 (penalties in connection with offshore asset moves) is amended as follows.
(2) In paragraph 1(2), at the beginning of paragraph (b) insert “ where the original penalty is a penalty specified in paragraph (a), (b), (c) or (d) of paragraph 2, ”.
(3) In paragraph 2—
(a) omit the “and” at the end of paragraph (c);
(b) at the end of paragraph (d) insert
, and
(e) a penalty under paragraph 3 of Schedule 25 to FA 2021 (penalties for deliberately withholding information), where the tax at stake is income tax or capital gains tax.
(4) In paragraph 5—
(a) in sub-paragraph (4), in the words before paragraph (a)—
(i) after “original penalty is” insert “ a penalty under paragraph 6 of Schedule 55 to FA 2009 ”;
(ii) for “Schedule 55 to FA 2009” substitute “ that Schedule ”;
(b) after sub-paragraph (5) insert—
(6) Where the original penalty is a penalty under paragraph 3 of Schedule 25 to FA 2021 for a failure to make a return or deliver a document specified in the table in paragraph 1 of that Schedule, the relevant time is, if the tax at stake is income tax or capital gains tax, the beginning of the tax year to which the return or document relates.
Finance Act 2016
45 FA 2016 is amended as follows.
46 In section 167 (simple assessments), omit subsections (3) and (4).
47 (1) Schedule 20 (penalties for enablers of offshore tax evasion or non-compliance) is amended as follows.
(2) In paragraph 1(4), after paragraph (d) insert—
(e) a penalty under paragraph 3 of Schedule 25 to FA 2021 (penalties for deliberately withholding information) involving offshore activity.
(3) In paragraph 3(3)—
(a) omit the “or” at the end of paragraph (b);
(b) at the end of paragraph (c) insert
or
(d) the liability to tax which would have been shown on the return (within the meaning of Schedule 25 to FA 2021),
;
(c) in the words after paragraph (d) (as inserted above), for “or paragraph 6 of Schedule 55” substitute “ , paragraph 6 of Schedule 55 or paragraph 3 of Schedule 25 ”.
(4) In paragraph 4(3)(b), after “Schedule 55 to FA 2009” insert “ or paragraph 3 of Schedule 25 to FA 2021 ”.
(5) In paragraph 5, after sub-paragraph (4) insert—
(5) In the case of a penalty under paragraph 3 of Schedule 25 to FA 2021 involving offshore activity, the potential lost revenue is the liability to tax which would have been shown in the return in question (within the meaning of that Schedule).
48 (1) Schedule 22 (asset-based penalty for offshore inaccuracies and failures) is amended as follows.
(2) In paragraph 2—
(a) in sub-paragraph (1), for “or (4A)” substitute “ , (4A) or (4B) ”;
(b) in sub-paragraph (4A), in the words before paragraph (a), for “paragraph” substitute “ sub-paragraph ”;
(c) after sub-paragraph (4A), insert—
(4B) A penalty falls within this sub-paragraph if—
(a) it is imposed under paragraph 3 of Schedule 25 to FA 2021 (penalties for deliberately withholding information),
(b) it is imposed for the withholding of information involving an offshore matter or an offshore transfer, and
(c) the tax at stake is (or includes) capital gains tax or asset-based income tax.
(3) After paragraph 3(4), insert—
(4A) Where a standard offshore tax penalty is imposed under paragraph 3 of Schedule 25 to FA 2021 for a failure to make a return or deliver a document listed in the table in paragraph 1 of that Schedule, the tax year to which that penalty relates is, if the tax at stake is income tax or capital gains tax, the tax year to which the return or document relates.
(4) In paragraph 5—
(a) in sub-paragraph (1)(b), after “Schedule 55 to FA 2009” insert “ or Schedule 25 to FA 2021 ”;
(b) in sub-paragraph (2)(a), for “or paragraph 6 of Schedule 55 to FA 2009” substitute “ , paragraph 6 of Schedule 55 to FA 2009 or paragraph 3 of Schedule 25 to FA 2021 ”.
(5) In paragraph 19(2), for “or Part 1 of Schedule 18 to FA 2017” substitute “ , Part 1 of Schedule 18 to F(No.2)A 2017 or Schedule 25 to FA 2021 ”.
49 In Schedule 23 (simple assessments), omit paragraph 9.
Finance Act 2017
50 In Schedule 4 to FA 2017 (pensions: offshore transfers), omit paragraph 20.
Finance (No. 2) Act 2017
51 In Schedule 18 to F(No.2)A 2017 (requirement to correct certain offshore tax non-compliance), in paragraph 15(2)(b), after “Schedule 55 to FA 2009” insert “ or of paragraph 11 of Schedule 25 to FA 2021, as the case may be ”.
Section 119
PART 1 Amendment of Chapter 2 of Part 4 of FA 2014
1 Chapter 2 of Part 4 of FA 2014 (follower notices) is amended as follows.
Additional penalty for unreasonable tax appeal
2 After section 208 (penalty if corrective action not taken in response to follower notice) insert—
Additional penalty for unreasonable tax appeal
208A (1) In the case of a follower notice given by virtue of section 204(2)(a) in relation to a tax enquiry into a return or claim made by P, this section applies where—
(a) P makes a tax appeal addressed to the tribunal in relation to the return or claim, and
(b) P is assessed to a penalty under section 208.
(2) In the case of a follower notice given by virtue of section 204(2)(b) in relation to a tax appeal made by P, this section applies where—
(a) the tax appeal is addressed to the tribunal, and
(b) P is assessed to a penalty under section 208.
(3) P is liable to pay a penalty (in addition to the penalty under section 208) if P or P's representative is found to have acted unreasonably in bringing or conducting relevant proceedings.
(4) For the purposes of subsection (3), P or P's representative is found to have acted unreasonably in bringing or conducting relevant proceedings if (and only if) subsection (5) or (6) applies.
(5) This subsection applies if—
(a) the proceedings are struck out—
(i) because there is no reasonable prospect of P's case, or part of it, succeeding, or
(ii) because of something that P or P's representative has done (or not done),
(b) the appeal period has ended, and
(c) the proceedings have not been reinstated or (where the strike out was not automatic) the decision to strike out the proceedings has not been set aside or overturned on appeal.
(6) This subsection applies if—
(a) on an application by HMRC, the tribunal to which the proceedings are addressed makes a declaration that P or P's representative acted unreasonably in bringing or conducting the proceedings,
(b) the appeal period has ended, and
(c) the decision to make the declaration has not been set aside or overturned on appeal.
(7) The powers of the tribunal in relation to relevant proceedings are to be taken to include the power to make a declaration for the purposes of subsection (6)(a).
(8) For the purposes of this section, the following are “relevant proceedings” in relation to P—
(a) where the whole of the proceedings on P's tax appeal relate to the chosen arrangements, the whole of those proceedings;
(b) where part only of the proceedings on P's tax appeal relates to the chosen arrangements, that part of those proceedings;
(c) proceedings before the Upper Tribunal on any further appeal by P in relation to relevant proceedings within paragraph (a) or (b) (where those proceedings were determined by the First-tier Tribunal).
(9) For the purposes of subsection (8), P's tax appeal is the tax appeal mentioned in subsection (1)(a) or (2)(a) (as the case may be).
(10) For the purposes of this section, “the appeal period” is—
(a) the period during which an appeal could be brought against the striking out of the proceedings or, as the case may be, the decision to make the declaration under subsection (6)(a) (ignoring any possibility of an appeal out of time), or
(b) where an appeal mentioned in paragraph (a) has been brought, the period during which that appeal has not been finally determined, withdrawn or otherwise disposed of.
(11) For the purposes of subsection (10), an appeal includes an application to reinstate proceedings that have been struck out or for the tribunal to set aside its decision.
(12) In this section, “tribunal” means the First-tier Tribunal or Upper Tribunal.
Amount of a section 208 or 208A penalty
3 (1) Section 209 (amount of a section 208 penalty) is amended as follows.
(2) In the heading, after “208” insert “ or 208A ”.
(3) In subsection (1), for “50%” substitute “ 30% ”.
(4) After subsection (1) insert—
(1A) The penalty under section 208A is 20% of the value of the denied advantage.
(5) In subsection (3)—
(a) in the words before paragraph (a), for “specified time” substitute “ relevant time ”;
(b) in the words after paragraph (b), after “(1)” insert “ , (1A) ”.
(6) After subsection (3) insert—
(4) The “relevant time” means—
(a) in the case of a penalty under section 208, the specified time;
(b) in the case of a penalty under section 208A, the day after the end of the appeal period.
(5) “The appeal period” has the same meaning for the purposes of this section as it has for the purposes of section 208A (see section 208A(10) and (11)).
Assessment of a section 208A penalty
4 After section 211 (assessment of a section 208 penalty) insert—
Assessment of a section 208A penalty
211A (1) Where a person is liable for a penalty under section 208A, HMRC must—
(a) assess the penalty,
(b) notify the person who is liable for the penalty, and
(c) state in the notice a tax period in respect of which the penalty is assessed.
(2) A penalty under section 208A must be paid before the end of the period of 30 days beginning with the day on which the person is notified of the penalty under subsection (1).
(3) Subsection (4) of section 211 applies to an assessment under this section as it applies to an assessment under that section.
(4) An assessment of a penalty under section 208A must be made before the end of the period of 90 days beginning with the day after the end of the appeal period.
(5) “The appeal period” has the same meaning for the purposes of this section as it has for the purposes of section 208A (see section 208A(10) and (11)).
Aggregate penalties
5 (1) Section 212 (aggregate penalties) is amended as follows.
(2) In subsection (2), after “(1)(b) and (c)” insert “ and any penalty under section 208A that is additional to the penalty mentioned in subsection (1)(b) ”.
(3) In subsection (3), after “208” insert “ or 208A ”.
Alteration of assessment of a section 208 or 208A penalty
6 (1) Section 213 (alteration of assessment of a section 208 penalty) is amended as follows.
(2) In the heading, after “208” insert “ or 208A ”.
(3) In subsection (1), after “211(2)” insert “ or 211A(1) ”.
Cancellation of a section 208A penalty
7 In section 214 (appeal against a section 208 penalty), after subsection (8) insert—
(8A) If the tribunal cancels a decision of HMRC that a penalty is payable by P under section 208, any penalty additional to that penalty to which P is liable under section 208A is also cancelled.
Appeal against a section 208A penalty
PART 2 Amendments consequential on Part 1
FA 2014
9 FA 2014 is amended as follows.
10 In the heading of Schedule 30 (section 208 penalty: value of the denied advantage), after “208” insert “ or 208A ”.
11 In Schedule 31 (follower notices and partnerships), after paragraph 4 insert—
Additional penalty for unreasonable tax appeal
4A Section 208A(3) applies, in relation to a partnership follower notice, as if the first reference to P were to each relevant partner.
12 (1) In Schedule 31, paragraph 5 is amended as follows.
(2) In sub-paragraph (2)—
(a) in paragraph (a), for “20%” substitute “ 12% ”;
(b) after paragraph (a), insert—
(aa) the total amount of the penalties under section 208A(3) for which the relevant partners are liable is 8% of the value of the denied advantage,
;
(c) in paragraph (b), after “the penalty” insert “ under section 208(2) or 208A(3) (as modified by this paragraph) ”.
(3) In sub-paragraph (5), after “penalties” insert “ under section 208(2) (as modified by this paragraph) ”.
(4) In sub-paragraph (6), after “paragraph 4(2)” insert “ or 4A ”.
(5) In sub-paragraph (7)(a), after “penalties” insert “ under section 208(2) ”.
(6) After sub-paragraph (9), insert—
(9A) The right of appeal under section 214A extends to—
(a) a decision that penalties under section 208A(3) are payable by the relevant partners by virtue of this paragraph, and
(b) a decision as to the total amount of those penalties payable by those partners,
but not to a decision as to the appropriate share of, or the amount of a penalty payable by, a relevant partner.
(9B) Section 214A(3) applies to an appeal by virtue of sub-paragraph (9A)(a) as it applies to an appeal under section 214A(1).
(9C) Section 214A(5) applies to an appeal by virtue of sub-paragraph (9A)(a), and section 214A(6) to an appeal by virtue of sub-paragraph (9A)(b).
(7) In sub-paragraph (11), after “(2)(a)” insert “ and (aa) ”.
National Insurance Contributions Act 2015
13 (1) In Schedule 2 to the National Insurance Contributions Act 2015, paragraph 20 (recovery of penalties under Part 4 of FA 2014) is amended as follows.
(2) In sub-paragraph (1), after “208” insert “ , 208A ”.
(3) In sub-paragraph (3), after “208” insert “ or 208A ”.
PART 3 Amendment of Schedule 20 to FA 2015
14 In Schedule 20 to FA 2015 (penalties in connection with offshore matters and offshore transfers), after paragraph 20 insert—
Follower notices: aggregate penalties
21 (1) Section 212(5) of FA 2014 (follower notices: aggregate penalties) is amended as follows.
(2) After paragraph (b) insert—
(ba) 125% in a case where neither paragraph (a) nor paragraph (b) applies and at least one of the penalties is determined by reference to the percentage in—
(i) paragraph 4(2)(c) of Schedule 24 to FA 2007,
(ii) paragraph 6(2)(a) of Schedule 41 to FA 2008, or
(iii) paragraph 6(3A)(a) of Schedule 55 to FA 2009,
.
(3) In paragraph (c), for “neither paragraph (a) nor paragraph (b) applies” substitute “ none of paragraphs (a) to (ba) applies ”.
(4) In paragraph (d), for “none of paragraphs (a), (b) and (c) applies” substitute “ none of paragraphs (a) to (c) applies ”.
PART 4 Commencement
15 The amendments made by Parts 1 and 2 of this Schedule have effect where a penalty under section 208 of FA 2014 is assessed, under section 211 of that Act, on or after the day on which this Schedule comes into force.
16 The reference in section 120(2) of FA 2015 (commencement) to Schedule 20 to that Act is to be read as a reference to Schedule 20 as amended by Part 3 of this Schedule.
SCHEDULE 29 Late payment interest and repayment interest: VAT
Section 120
1 FA 2009 is amended as follows.
2 In section 102(4) (repayment interest on sums to be paid by HMRC)—
(a) omit the “and” at the end of paragraph (a);
(b) after paragraph (a) insert—
(aa) Part 2A makes special provision as to the period for which an amount of VAT credit carries interest, and
.
3 (1) Schedule 54 (repayment interest) is amended as follows.
(2) In Part 2, after paragraph 12B insert—
VAT payments on account
12C (1) This paragraph applies in the case of a repayment of the amount by which—
(a) the total amount of payments on account made in respect of a prescribed accounting period, exceeds
(b) the amount of VAT payable in respect of that accounting period.
(2) The repayment interest start date is the date on which the VAT return for the prescribed accounting period is due.
(3) In this paragraph—
“payment on account” means a payment on account required under section 28 of VATA 1994;
“prescribed accounting period” has the same meaning as in VATA 1994;
“VAT return” means a return required to be made by regulations under VATA 1994.
(3) After Part 2 insert—
PART 2A VAT: special provision as to period for which amount carries interest
12D In this Part of this Schedule—
“prescribed accounting period” has the same meaning as in VATA 1994;
“relevant VAT return” means the VAT return for the prescribed accounting period to which the VAT credit relates;
“VAT credit” has the same meaning as in VATA 1994;
“VAT return” means a return required to be made by regulations under VATA 1994.
12E (1) An amount of VAT credit does not carry interest for any period during which—
(a) a VAT return required to be made on or before the date on which the relevant VAT return is made has not been made, or
(b) there is a failure to comply with a requirement imposed under paragraph 4(1) or (1A) of Schedule 11 to VATA 1994 (production of evidence and giving of security).
(2) The period referred to in sub-paragraph (1)(b)—
(a) begins on the date when written notice requiring production of evidence or the giving of security is given by HMRC, and
(b) ends on the date when HMRC receive the required evidence or the required security.
4 (1) Schedule 54A (further provision as to late payment interest and repayment interest) is amended as follows.
(2) After the Schedule heading insert— “ PART 1 CORPORATION TAX ”(so that the existing text of the Schedule becomes Part 1 of the Schedule).
(3) At the end of the Schedule insert—
PART 2 Value added tax
Interpretation
5 In this Part of this Schedule—
“assessment” has the same meaning as in paragraph 3 of Schedule 53;
“prescribed accounting period” has the same meaning as in VATA 1994;
“VAT credit” has the same meaning as in VATA 1994.
Certain amounts of repayment interest recoverable as late payment interest
6 Where each of conditions A to C is met, an amount of repayment interest that—
(a) has been paid to a person, but
(b) ought not to have been paid (see condition C),
may be recovered from the person as if it were late payment interest.
7 (1) Condition A is that repayment interest has been paid to the person on a VAT credit for a prescribed accounting period.
(2) Condition B is that (whether or not a previous assessment has been made), an assessment or amendment of an assessment is made of the amount of value added tax payable by the person for that prescribed accounting period.
(3) Condition C is that as a result of the assessment or amendment of an assessment, it appears to HMRC that some or all of the repayment interest ought not to have been paid.
Common period rules for value added tax
8 (1) This paragraph applies where there is a common period in relation to a person (see sub-paragraph (2)).
(2) A common period in relation to a person is any period during which—
(a) an amount of value added tax that carries late payment interest is due and payable by the person (“the overdue payment”), and
(b) an amount of VAT credit that carries repayment interest is payable to the person (“the VAT credit”).
(3) During the common period—
(a) the overdue payment is to be treated as carrying late payment interest only on the amount (if any) by which the overdue payment exceeds the VAT credit, and
(b) the VAT credit is to be treated as carrying repayment interest only on the amount (if any) by which the VAT credit exceeds the overdue payment.
Section 121
PART 1 Stop notices and information & inspection powers
1 After section 236 (of FA 2014) insert—
Stop notices
Power to give stop notices
236A (1) An authorised officer may give a person a notice (a “stop notice”) if the authorised officer suspects that the recipient promotes, or has promoted, arrangements of a description specified in the notice or proposals for such arrangements.
(2) A description of arrangements may be specified in a stop notice only if the authorised officer considers that—
(a) condition A and any of conditions B and C are met, or
(b) conditions B and D are met.
(3) Condition A is that arrangements of that description—
(a) would, if the arrangements had been implemented before 5 April 2019, have been likely to—
(i) cause a person to be treated as taking a relevant step for the purposes of Part 7A of ITEPA 2003 by virtue of paragraph 1(1) of Schedule 11 to F(No.2)A 2017 (loan charge: employment income), or
(ii) cause a relevant benefit to be treated as arising for the purposes of section 23A to 23H of ITTOIA 2005 by virtue of paragraph 1 of Schedule 12 to F(No.2)A 2017 (loan charge: trading income),
(b) would be the same, or similar, in form or effect to arrangements or proposed arrangements to which a reference number has been allocated under section 311 of FA 2004 or paragraph 22 of Schedule 17 to F(No.2)A 2017,
(c) would be the same, or similar, in form or effect to arrangements in relation to which a person has been given a follower notice under section 204 (circumstances in which a follower notice may be given), or
(d) would be the same, or similar, in form or effect to arrangements of a description specified in regulations made by the Commissioners under this section.
(4) Condition B is that—
(a) arrangements of that description, or proposals for such arrangements, have been, or are likely to be, marketed (in any manner, whether by the recipient of the stop notice or otherwise) as capable of enabling a person to obtain a particular tax advantage, and
(b) it is more likely than not that arrangements of that description are not capable of enabling that advantage to be obtained.
(5) Condition C is that condition A is met as a result of the allocation of a reference number under section 311 of FA 2004 or paragraph 22 of Schedule 17 to F(No.2)A 2017 in relation to arrangements or proposed arrangements (the “reference arrangements”) and—
(a) HMRC has required any person to provide information or documents under section 310A or 311C of FA 2004 or paragraph 19 or 22C of Schedule 17 to F(No.2)A 2017 in relation to the reference arrangements and that person has not complied with that requirement, or
(b) HMRC has made an application to the tribunal under section 308A(2) of FA 2004 or paragraph 16 of Schedule 17 to F(No.2)A 2017 in relation to the reference arrangements.
(6) Condition D is that—
(a) arrangements of that description or proposals for such arrangements would be relevant arrangements or relevant proposals (see section 234), and
(b) the recipient of the notice is subject to a conduct notice or a monitoring notice.
(7) For the purposes of this section, and sections 236B to 236K and 272A, a person promotes arrangements or a proposal for arrangements if the person does anything in connection with those arrangements or that proposal that would, if those arrangements or that proposal were relevant arrangements or a relevant proposal, cause the person to be carrying on a business as a promoter, or to be treated as such, for the purposes of this Part.
Effect of stop notices
236B (1) A person subject to a stop notice must not promote—
(a) any arrangements that meet the description specified in the notice or that have a similar form or effect to arrangements of that description, or
(b) any proposal for such arrangements.
(2) A person is subject to a stop notice for the purposes of this Part if—
(a) the person is the recipient of the notice;
(b) the person is a body corporate or partnership that the recipient of the notice controls or has significant influence over;
(c) the person controls or has significant influence over a body corporate or partnership that is the recipient of the notice;
(d) the recipient of the notice makes a relevant transfer to the person.
(3) If the recipient of a stop notice controls or has significant influence over a person that is a body corporate or partnership, the recipient must—
(a) within 5 days of the giving of the notice, give a copy of the notice to that person, and
(b) within 15 days of the giving of the notice, provide HMRC with the information mentioned in subsection (6) in relation to that person.
(4) If the recipient of a stop notice is a body corporate or partnership, it must—
(a) within 5 days of the giving of the notice, give a copy of the notice to each person who controls or has significant influence over it, and
(b) within 15 days of the giving of the notice, provide HMRC with the information mentioned in subsection (6) in relation to each such person.
(5) If the recipient of a stop notice makes a relevant transfer to a person, the recipient must—
(a) before making the transfer, give a copy of the notice to that person, and
(b) within 15 days of making the transfer, provide HMRC with the information mentioned in subsection (6) in relation to that person.
(6) The information referred to in subsections (3)(b), (4)(b) and (5)(b) in relation to a person is—
(a) the person's name;
(b) any name under which the person carries on a business and any previous name or pseudonym known by the recipient of the stop notice;
(c) the person's business address or registered office.
(7) An authorised officer may give a copy of a stop notice to any person the officer considers the recipient of the notice is obliged to give a copy to as a result of subsection (3)(a), (4)(a) or (5)(b) (but this does not affect the obligation of the recipient to do so).
(8) Sub-paragraphs (5) to (11) of paragraph 13A of Schedule 34 (meaning of “control” and “significant influence”) apply to this section as they apply to Part 2 of that Schedule.
(9) In this section “relevant transfer” has the meaning it has in paragraph 5 of Schedule 33A (promotion structures).
Quarterly returns
236C (1) A person subject to a stop notice must provide a return to HMRC containing the information described in subsection (4) for each relevant period.
(2) The first relevant period is the 3 month period commencing on the day the stop notice was given to its recipient.
(3) Each successive 3 month period that commences within the period of 3 years commencing on that day is a relevant period.
(4) The information that must be contained in a return under subsection (1) is—
(a) the number (which may be nil) of relevant clients of the person subject to the stop notice in the relevant period to which the return relates,
(b) if the return is the return for the first relevant period, the number (which may be nil) of relevant clients of the person in the period ending with the commencement of the first relevant period,
(c) in respect of each relevant client—
(i) the client's name and address,
(ii) the unique taxpayer reference number (if any) allocated to the client by HMRC, and
(iii) the client's national insurance number (if any),
(d) any name by which any such arrangements or proposal is known or is marketed.
(5) For the purposes of this section, a person (“C”) is a “relevant client” of a person subject to a stop notice (“P”) in a period if at any time during that period—
(a) P has made a firm approach to C in relation to a proposal for arrangements that fall within the description specified in the stop notice;
(b) P has made the proposal available for implementation by C;
(c) P has provided services to C in relation to arrangements falling within the description specified in the stop notice, or in relation to a proposal for such arrangements.
(6) If the person does not have the information referred to in subsection (4)(c)(ii) or (iii) in respect of a relevant client, the return must instead include a statement of that fact.
(7) A return for a relevant period must be provided to HMRC before the end of the period of 15 days commencing on the last day of the relevant period.
(8) An authorised officer may by notice to a person subject to the obligation to make a return under sub-paragraph (1) provide for that obligation to cease to have effect in relation to that person from such time as may be specified in the notice.
Withdrawal of stop notices
236D (1) A person subject to a stop notice may make a request for the notice to cease to have effect in relation to that person if the person—
(a) does not intend to promote, and has not promoted, arrangements that fall within the description of arrangements specified in the notice or proposals for such arrangements,
(b) considers that the conditions for specifying the description of arrangements (see section 236A(2)) were not met, or
(c) considers that there are other reasons for it to cease to have effect.
(2) A request under subsection (1) must—
(a) be made in writing to an authorised officer,
(b) be made before the end of the period of 30 days beginning with the day on which the stop notice was given,
(c) contain an explanation of the basis for the request, and
(d) be accompanied by such evidence to support that explanation as is reasonable to provide in the circumstances.
(3) The authorised officer to whom the request is made must decide whether or not the notice is to cease to have effect in relation to the person who made the request.
(4) The authorised officer must give the person who made the request a notice setting out the officer's decision (“a decision notice”) before the end of the period of 45 days beginning with the day on which the request was received.
(5) If at the end of that period the authorised officer has not given a decision notice, the stop notice ceases to have effect in relation to the person who made the request.
(6) An authorised officer may also determine that a stop notice is to cease to have effect in relation to a person who has not made a request under subsection (1) by giving the person a notice (“a withdrawal notice”).
(7) A decision notice or a withdrawal notice that provides for a stop notice to cease to have effect in relation to a person must specify the date on which it ceases to have effect in relation to that person, which may be earlier or later than the date on which the decision notice or withdrawal notice is given.
Appeal against decision not to withdraw stop notice
236E (1) A person may appeal against a refusal by an authorised officer to grant a request that a stop notice cease to have effect in relation to that person.
(2) Notice of appeal must be given—
(a) in writing to the officer who gave the decision notice under section 236D(4), and
(b) within the period of 30 days beginning with the day on which the decision notice was given.
(3) The notice of appeal must state the grounds of appeal.
(4) The grounds of appeal that may be stated are the same as the grounds on which a person may request that a stop notice cease to have effect as mentioned in section 236D(1).
(5) On an appeal that is notified to the tribunal, the tribunal may—
(a) confirm the refusal, or
(b) direct that the stop notice is to cease to have effect in relation to a person from such date as the tribunal consider appropriate (which may be earlier or later than the date on which the tribunal makes that direction).
(6) Subject to this section, the provisions of Part 5 of TMA 1970 relating to appeals have effect in relation to an appeal under this section.
Suspension of stop notice pending appeal
236F (1) A person who makes an appeal under section 236E may make a suspension request.
(2) A “suspension request” is a request that a stop notice which is the subject of an appeal under that section is to cease to have effect in relation to the person making the request until the appeal has been determined, withdrawn or otherwise disposed of.
(3) A suspension request must—
(a) be made in writing to the authorised officer to whom the notice of appeal was given,
(b) contain an explanation of the basis for the request, and
(c) be accompanied by such evidence to support that explanation as is reasonable to provide in the circumstances.
(4) The authorised officer to whom the suspension request is made must decide whether or not the notice is to cease to have effect in relation to the person who made the request until the appeal has been determined, withdrawn or otherwise disposed of.
(5) When deciding whether or not to grant a suspension request, the officer must have regard to the need to protect—
(a) the public revenue, and
(b) persons to whom arrangements or proposals for arrangements of the description specified in the stop notice might be marketed.
(6) The authorised officer must give the person who made the suspension request a notice setting out the officer's decision (“a suspension decision notice”) before the end of the period of 30 days beginning with the day on which the request was received.
(7) If at the end of that period the authorised officer has not given a suspension decision notice, the stop notice ceases to have effect in relation to the person who made the request until either—
(a) the officer gives a decision notice that provides that the suspension request is not to be granted, or
(b) the appeal has been determined, withdrawn or otherwise disposed of.
Automatic withdrawal of certain stop notices
236G (1) This section applies to a stop notice if—
(a) condition A in section 236A was met in relation to the giving of that notice as a result of the allocation of a reference number under section 311 of FA 2004 or paragraph 22 of Schedule 17 to F(No.2)A 2017, and
(b) that reference number has been withdrawn.
(2) Where this section applies to a stop notice, it ceases to have effect in relation to every person who is subject to it from the time when the reference number in question was withdrawn.
(3) HMRC must give a notice to—
(a) each person who has been given a stop notice to which this section applies, and
(b) every other person that HMRC is aware was subject to that notice.
(4) A notice given under subsection (3) must state the reason for the withdrawal of the reference number in question and may contain such further explanation as HMRC consider appropriate (for example, it may contain HMRC's view of the arrangements or proposed arrangements to which the reference number relates).
Publication
236H (1) An authorised officer may publish—
(a) the fact that a person is subject to a stop notice;
(b) details of any arrangements or proposal for arrangements promoted by that person that the officer considers meet the description specified in the notice.
(2) Publication under subsection (1) may also include the following information about the person—
(a) the person's name;
(b) the person's business address or registered office;
(c) any other information that the authorised officer considers it appropriate to publish in order to make clear the person's identity.
(3) The reference in subsection (2)(a) to the person's name includes any name under which the person carries on a business and any previous name or pseudonym.
(4) Publication of information about a person subject to a stop notice may not take place before the end of the appeal period, but an authorised officer may, at any time after the notice is given, publish the description of arrangements or proposal for arrangements specified in the notice and the fact that arrangements of that description are subject to a stop notice.
(5) The “appeal period” means—
(a) the period during which a request under section 236D(1) (withdrawal of stop notices) could be made,
(b) where such a request was made, the period during which an appeal to the tribunal against a decision notice under section 236D(4) could be brought under section 236E, or
(c) where an appeal mentioned in paragraph (b) has been brought, the period during which the proceedings on that appeal to the tribunal have not been determined, withdrawn or otherwise disposed of.
(6) For the purposes of subsection (5)(c), reference to proceedings on an appeal to the tribunal do not include any proceedings on appeal from the tribunal.
Publication where stop notice automatically withdrawn
236I (1) Where an authorised officer has published anything under section 236H in relation to a stop notice that has ceased to have effect as a result of section 236G, an authorised officer must publish—
(a) the fact it has ceased to have effect;
(b) the reason for the withdrawal of the reference number in question (see section 236G(1));
(c) such further explanation as HMRC consider appropriate.
(2) Where an authorised officer is required to publish information as a result of subsection (1), the officer may also publish information about the persons who were subject to such a stop notice (including the information mentioned in section 236H(1) and (2)).
Disclosure to clients and intermediaries
236J (1) A person (“P”) subject to a stop notice who (at any time) has promoted arrangements falling within the description specified in that notice, or has promoted a proposal for such arrangements, must give a notice to—
(a) each of P's clients in relation to those arrangements or that proposal, and
(b) each person who P could reasonably be expected to know is an intermediary in relation to any such proposal.
(2) The notice must—
(a) set out the fact that a person is subject to a stop notice,
(b) set out the fact that the arrangements or proposed arrangements the recipient of the notice is a client or intermediary in relation to meets the description of arrangements specified in the notice, and
(c) be accompanied with a copy of the stop notice.
(3) A person (“C”) is a client of P if—
(a) P has made a firm approach to C in relation to a proposal for arrangements that fall within the description specified in the stop notice,
(b) P has made the proposal available for implementation by C, or
(c) P has provided services to C in relation to arrangements falling within the description specified in the stop notice, or in relation to a proposal for such arrangements.
(4) A notice under this section must be given—
(a) to each person who was a client of P on or before the day on which P became aware that P was subject to the notice, within 5 days of that day;
(b) to each person that P could reasonably be expected to know was an intermediary in relation to the proposal in question on or before the day on which P became aware that P was subject to the notice, within 5 days of that day;
(c) to each person that P subsequently becomes aware is an intermediary in relation to the proposal in question, within 5 days of P becoming so aware.
Notification of interested persons by HMRC
236K (1) This section applies if an authorised officer suspects that a person subject to a stop notice has failed to comply with section 236B(1).
(2) Where this section applies, the officer may provide a copy of the stop notice to any person the officer considers might be affected by that failure or the giving of the stop notice (for example, any person who is a client of the person who failed to comply with section 236B(1) or who otherwise makes use of arrangements that must not be promoted as a result of the stop notice).
(3) Where the officer provides a copy of a stop notice to a person under subsection (2) the officer may also provide any of the following information to that person—
(a) the name of the person who failed to comply with section 236B(1);
(b) the business address or registered office of that person;
(c) any other information that the authorised officer considers it appropriate to provide in order to make clear the identity of that person;
(d) details of any arrangements or proposal for arrangements promoted by that person that meet the description specified in it;
(e) an explanation of the effect of the stop notice;
(f) an explanation of why the stop notice was given.
2 (1) Section 245 (withdrawal of monitoring notice) is amended as follows.
(2) In subsection (5)(c), after “Part” insert “ (including any obligations connected with any stop notice the person is subject to) ”.
(3) After subsection (8) insert—
(8A) For the purposes of determining whether a person should be given a follow-on conduct notice, the meeting of the condition in paragraph 12 of Schedule 34 (stop notices) by the person at a time when they are subject to a monitoring notice is to be regarded as significant by the authorised officer making the determination (see section 237(5)).
3 Omit section 262 (information required for monitoring compliance with conduct notice).
4 After section 272 insert—
Application of Schedule 36 FA 2008 powers
272A (1) Schedule 36 to FA 2008 (information and inspection powers) applies for a relevant purpose in relation to a relevant person as it applies for the purpose of checking the tax position of a person as if—
(a) any provisions which can have no application for that purpose were omitted (for example, paragraphs 10A, 11, 12A and 12B);
(b) references to “the taxpayer” were to “the relevant person”;
(c) references to prejudice to the assessment or collection of tax included prejudice to the fulfilment of a relevant purpose;
(d) references to “business documents” included any documents (or copies of documents) in connection with any relevant arrangements or relevant proposal;
(e) references to a pending appeal relating to tax were to a pending appeal by the relevant person under this Part;
(f) in paragraph 13, after “paragraph 39” there were inserted “ of this Schedule and paragraph 2(3A) of Schedule 35 to FA 2014 ”;
(g) paragraphs 21 to 21B were omitted;
(h) paragraph 25 were omitted;
(i) in paragraph 29(1) for “a taxpayer”, in the first place it occurs, there were substituted “ a relevant person ”;
(j) Part 7 (penalties) were omitted (but see Schedule 35 of this Act).
(2) A person is “relevant” if—
(a) the officer suspects that the person carries on, or has in the past carried on, a business as a promoter in relation to a relevant proposal or relevant arrangements and—
(i) the officer suspects that the person has met a threshold condition,
(ii) the officer suspects the person could be given a defeat notice, or
(iii) the officer suspects the person promotes, or has promoted, arrangements, or proposals for such arrangements, of a description that the officer suspects could be specified in a stop notice,
(b) the officer suspects that—
(i) the person made a relevant transfer, or
(ii) the person is a person to whom a relevant transfer was made, or
(c) the person is, or was, subject to a stop notice, conduct notice or monitoring notice.
(3) The following are “relevant purposes” in relation to a relevant person—
(a) determining whether the relevant person carries on or has in the past carried on a business as a promoter in relation to a relevant proposal or relevant arrangements;
(b) determining whether the relevant person has met a threshold condition;
(c) determining whether the relevant person could be given a defeat notice;
(d) determining whether the person has provided false or misleading information or documents in relation to a stop notice, conduct notice or monitoring notice;
(e) determining whether arrangements, or proposals for such arrangements, that an officer suspects are promoted by the relevant person are of a description that could be specified in a stop notice;
(f) enabling HMRC to understand the operation of arrangements, or proposals for such arrangements, that an officer suspects are promoted by the relevant person;
(g) identifying any other person who has a connection with the relevant person that results (whether solely because of that connection or otherwise) in the relevant person being a member of a promotion structure;
(h) determining whether the relevant person made a relevant transfer, and if so to whom;
(i) determining whether a relevant transfer was made to the relevant person, and if so by whom;
(j) monitoring compliance with any stop notice, conduct notice or monitoring notice the relevant person is subject to.
(4) In this section—
(a) reference to compliance with a stop notice, conduct notice or monitoring notice includes compliance with any provisions of this Part that a person subject to such a notice must comply with;
(b) reference to a person “promoting” is to be construed in accordance with section 236A(7);
(c) “relevant transfer” has the meaning it has in paragraph 5 of Schedule 33A (promotion structures).
5 (1) Section 273 (confidentiality) is amended as follows.
(2) In subsection (1) before paragraph (a) insert—
(za) a person subject to a stop notice,
(zb) arrangements or proposals for arrangements of a description specified in a stop notice in relation to which a person subject to a stop notice is a promoter,
.
(3) In subsection (2)—
(a) in the words before paragraph (a)—
(i) after “client”” insert “ , in relation to a person mentioned in paragraph (za), (zb), (a) or (b) of subsection (1), ”;
(ii) for “monitored promoter mentioned in subsection (1)(a) or (b)” substitute “ person so mentioned ”;
(b) in paragraphs (a) and (b), for “a relevant”, in both places it occurs, substitute “ an applicable ”;
(c) in paragraph (c), for “relevant” substitute “ applicable ”.
(4) In subsection (3)—
(a) for “a relevant” substitute “ an applicable ”;
(b) for “monitored promoter mentioned in subsection (1)(a) or (b)” substitute “ person mentioned in paragraphs (za), (zb), (a) or (b) of subsection (1) ”.
(5) In subsection (4), for “relevant”, in each place it occurs, substitute “ applicable ”.
(6) After that subsection insert—
(5) Nothing in this section authorises a disclosure of information that would contravene the data protection legislation (but in determining whether a disclosure would do so, take into account this section).
(6) For the purposes of this section, a person mentioned in subsection (1)(za) or (zb) is a promotor of arrangements or a proposal for arrangements if the person would be a promoter of those arrangements or proposal if those arrangements or that proposal were relevant arrangements or a relevant proposal (see section 235(2) to (6) and any regulations made under section 235(6)).
(7) In this section—
“applicable arrangements” means—
in relation to a disclosure falling within subsection (1)(za) or (zb), arrangements falling within the description specified in the stop notice to which the disclosure relates, or
in relation to a disclosure falling within subsection (1)(a) or (b), relevant arrangements;
“applicable proposal” means—
in relation to a disclosure falling within subsection (1)(za) or (zb), a proposal for arrangements falling within the description specified in the stop notice to which the disclosure relates, or
in relation to a disclosure falling within subsection (1)(a) or (b), a relevant proposal;
“the data protection legislation” has the same meaning as in the Data Protection Act 2018 (see section 3(9) of that Act).
6 In section 283 (interpretation of Part 5), in subsection (1), at the appropriate place insert—
“stop notice” means a notice given under section 236A(1);
“subject to a stop notice”, in relation to a person, is to be construed in accordance with section 236B(2);
.
7 In Schedule 34 (threshold conditions)—
(a) for the italic heading before paragraph 12 substitute “ Stop notices ”;
(b) for that paragraph substitute—
12 A person meets this condition if the person is subject to a stop notice and fails to comply with—
(a) section 236B(1) (promotion of arrangements or proposal of a description specified in a stop notice),
(b) section 236C(1) (duty to make return to HMRC), or
(c) any obligations of the person under Schedule 36 to FA 2008 as it has effect as a result of section 272A (information and inspection powers).
8 (1) Schedule 35 (penalties) is amended as follows.
(2) In paragraph 1—
(a) before paragraph (a) insert—
(za) section 236C(1) (duty to make return to HMRC);
;
(b) omit paragraph (g);
(c) after paragraph (h) insert—
(i) paragraph 1, 2, 5 or 5A of Schedule 36 of FA 2008 (information and inspection powers) as it has effect as a result of section 272A.
(3) In paragraph 2—
(a) in sub-paragraph (1)—
(i) the words from “fails” to the end become paragraph (a);
(ii) in that paragraph, for “provision” substitute “ duty ”;
(iii) after that paragraph insert
, or—
(b) deliberately obstructs an officer of Revenue and Customs in the course of an inspection under paragraph 10 of Schedule 36 to FA 2008, as it has effect as a result of section 272A, that has been approved by the tribunal is liable to a penalty not exceeding the relevant amount (see sub-paragraph (3A)).
;
(b) in that sub-paragraph, in the Table, before the first entry insert—
Section 236B(1) (promotion of arrangements or proposal of a description specified in a stop notice) | the relevant amount (see subparagraphs (2A) and (2B))
Section 236B(3)(a), (4)(a) or (5)(a) (requirement to notify persons who are subject to a stop notice) | £10,000
Section 236B(3)(b), (4)(b) or (5)(b) (requirement to notify HMRC of persons who are subject to a stop notice) | £25,000
Section 236C(1) (duty to make return to HMRC) | £5,000
Section 236J(1) (requirement to notify clients and intermediaries of stop notice) | £5,000
;
(c) in that Table, at the end insert—
Duty to comply with a notice given under paragraph 1 of Schedule 36 to FA 2008 as it has effect as a result of section 272A | the relevant amount (see sub-paragraph (3A))
Duty to comply with a notice given under paragraph 2, 5 or 5A of Schedule 36 to FA 2008 as it has effect as a result of section 272A | the relevant amount (see sub-paragraph (3B))
;
(d) in that Table—
(i) in the heading of the first column, after “Provision” insert “ or duty ”;
(ii) omit the entry relating to section 262 (duty to provide information required to monitor compliance with conduct notice);
(e) after sub-paragraph (1) insert—
(1A) In relation to a failure to comply with section 236C(1) the maximum penalty specified in column 2 of the Table is a maximum penalty which may be imposed—
(a) in respect of each failure to provide the required information or statement (see section 236C(6)) about a relevant client (within the meaning given by that section), and
(b) for each day on which a complete return is not provided after the end of the period within which it must be provided (see section 236C(7)).
;
(f) in sub-paragraph (2), after “section” insert “ 236B(3), (4) or (5), 236J(1), ”;
(g) after sub-paragraph (2) insert—
(2A) In relation to a failure to comply with section 236B(1), the “relevant amount” is the sum of—
(a) £100,000 in respect of one or more failures relating to a particular stop notice, and
(b) £5,000 for each person to whom arrangements of a description specified in that stop notice, or a proposal for such arrangements, were promoted (within the meaning it has in that section).
(2B) Where a person fails to comply with section 236B(1) at a time when the person, or another person who the person controls or has significant influence over, is subject to a monitoring notice, sub-paragraph (2A) applies as if—
(a) in paragraph (a), for “£100,000” there were substituted “ £250,000 ”, and
(b) in paragraph (b), for “£5,000” there were substituted “ £10,000 ”.
(2C) If the maximum penalty that would apply as a result of sub-paragraph (2B) in a particular case appears inappropriately low after taking account of the considerations in sub-paragraph (4), sub-paragraph (2B)(a) applies as if for “£250,000” there were substituted “ £1,000,000 ”.
;
(h) after sub-paragraph (3) insert—
(3A) Where a person fails to comply with a notice given under paragraph 1 of Schedule 36 to FA 2008 (as it has effect as a result of section 272A) or deliberately obstructs an officer of Revenue and Customs in the course of an inspection under paragraph 10 of that Schedule (as it has effect as a result of that section) that has been approved by the tribunal, the “relevant amount” is—
(a) in the case of a failure by a person who was subject to a monitoring notice at the time of the failure, or who had control of or had significant influence over such a person, £1,000,000, and
(b) in any other case, £5,000.
(3B) In relation to a failure to comply with a notice given under paragraph 2, 5 or 5A of that Schedule as it has effect as a result of section 272A, the “relevant amount” is the amount for the time being specified in paragraph 39(2) of that Schedule.
;
(i) in sub-paragraph (4)—
(i) in paragraph (a)—
(a) for “to comply with section 255 or 257” substitute “ relating to any arrangements or proposal promoted by a person ”;
(b) for the words from “monitored proposal, arrangements” to the end substitute “ those arrangements or that proposal ”;
(ii) in paragraph (b)—
(a) for the words from “the case” to “(5)” substitute “ such a case ”;
(b) omit “by the person”;
(c) omit “monitored” in both places;
(d) after “proposal” insert “ (including, where the person liable to the penalty is the promoter of those arrangements or that proposal, any advantage that was gained or sought to be gained by the persons to whom the arrangements or proposal were promoted) ”;
(j) after sub-paragraph (4) insert—
(5) The references in sub-paragraph (4) to arrangements or a proposal being “promoted” are to be construed in accordance with section 236A(7).
(6) Sub-paragraphs (5) to (11) of paragraph 13A of Schedule 34 (meaning of “control” and “significant influence”) apply to this paragraph as they apply to Part 2 of that Schedule.
(4) In paragraph 3, in sub-paragraph (1), after “information duty” insert “ , other than a duty arising under section 236C(1), ”.
(5) In paragraph 4—
(a) in sub-paragraph (1)(a), after “information duty” insert “ or a requirement to provide evidence under section 236D(2)(d) or 236F(3)(c) ”;
(b) in sub-paragraph (8)—
(i) in paragraph (a), after “258” insert “, or under Schedule 36 to FA 2008 as it has effect as a result of section 272A in a case where the person required to provide the information or produce the document was at the time subject to a monitoring notice;
(ii) in paragraph (c)—
(a) after “section” insert “ 236C(1), 236D(2)(d), 236F(3)(c), ”;
(b) omit “, 262”;
(c) after “263” insert “ or under Schedule 36 to FA 2008 as it has effect as a result of section 272A in a case not falling within paragraph (a) ”;.
(6) In paragraph 6(1) in sub-paragraph (1) for “, 257 or 262” substitute “ or 257 or under Schedule 36 of FA 2008 as it has effect as a result of section 272A ”.
(7) In paragraph 7—
(a) in sub-paragraph (1), for “255, 257 or 262” substitute “ section 255 or 257, or under Schedule 36 of FA 2008 as it has effect as a result of section 272A, ”;
(b) in sub-paragraph (2), in paragraph (b), for “255, 257 or 262” substitute “ section 255 or 257, or under Schedule 36 of FA 2008 as it has effect as a result of section 272A, ”.
(8) In paragraph 10, in paragraph (b)—
(a) the words from “a penalty under paragraph 3” to the end become sub-paragraph (i);
(b) after that sub-paragraph insert—
(ii) a penalty in respect of a failure to comply with section 236B(1) unless an officer of Revenue and Customs authorised for the purposes of section 100 of TMA 1970 considers that paragraph 2(2C) of this Schedule applies in relation to that failure;
(iii) a penalty in respect of a failure to comply with section 236B(3), (4) or (3), 236C(1) or 236J(1);
(iv) a penalty in respect of a failure to comply with a notice given under paragraph 1 of Schedule 36 to FA 2008 as it has effect as a result of section 272A unless paragraph 2(3A)(a) of this Schedule applies in relation to that failure;
(v) a penalty in respect of a failure to comply with a notice given under paragraph 2, 5 or 5A of Schedule 36 to FA 2008 as it has effect as a result of section 272A.
PART 2 Promotion structures
9 In section 235 (carrying on a business “as a promoter”), after subsection (1) insert—
(1A) For the purposes of this Part, a person is treated as carrying on a business as a promoter if the person is a member of a promotion structure (whether or not the person carries on a business).
Schedule 33A describes the cases in which a person is a member of a promotion structure.
10 After Schedule 33 insert—
SCHEDULE 33A
Promotion structures
Section 235
Cases in which a person is a member of a promotion structure.
1 A person (“A”) is a member of a promotion structure if A falls within—
(a) the case described in paragraph 2 (multiple entity promoter),
(b) the case described in paragraph 3 (acting for a non-resident promoter),
(c) the case described in paragraph 4 (control of another promoter), or
(d) the case described in paragraph 5 (transfer of promotion business).
Multiple entity promoter
2 (1) A falls within this case if—
(a) A and one or more other persons carry out activities between them that if carried out by a single person would cause that person to be a promoter within the meaning of section 235(2) or (3), and
(b) each of the persons carrying out those activities is closely related to at least one other of those persons.
(2) A person (“D”) is closely related to another person (“E”) if—
(a) D is able to secure that E acts in accordance with D's wishes (or vice versa),
(b) E typically acts in accordance with D's wishes,
(c) it is reasonable to expect that E will act in accordance with D's wishes,
(d) a third person is able to secure that D and E act in accordance with the third person's wishes,
(e) D and E typically act in accordance with a third person's wishes,
(f) it is reasonable to expect that D and E will act in accordance with a third person's wishes, or
(g) the 50% investment condition is met in relation to D and E.
(3) The 50% investment condition is met in relation to D and E if—
(a) D has a 50% investment in E (or vice versa), or
(b) a third person has a 50% investment in each of D and E.
(4) Subsections (3) to (9) of section 259ND of TIOPA 2010 apply for the purposes of determining whether a person has a “50% investment” in another person, and references in those subsections to X% are to be read as references to 50%.
Acting for a non-resident promoter
3 (1) A falls within this case if A acts under the instruction or guidance of a person (“O”) who carries on a business as a promoter and who is resident outside the United Kingdom, and—
(a) A does any of the things mentioned in sub-paragraph (2) under that instruction or guidance, or
(b) A receives remuneration (of any kind) from O in connection with the business carried on by O.
(2) The things referred to in sub-paragraph (1)(a) are—
(a) being a promoter;
(b) facilitating any activity by virtue of which a person would be a promoter (for example, by facilitating the organisation of relevant arrangements or by facilitating the making of a relevant proposal available for implementation).
(3) For the purposes of sub-paragraph (1)(b), reference to A receiving remuneration from O includes—
(a) A receiving any payment or benefit as a consequence of instructions given by O (whether or not O is the source of that payment or benefit);
(b) A receiving any payment or benefit as a consequence of any arrangements that O made or participated in the making of, or that are referable to the business carried on by O (which may include relevant arrangements, or arrangements implementing a relevant proposal, promoted by O or which are otherwise referable to that business).
(4) For the purposes of this paragraph a person is a promoter if the person meets the description of a promoter in section 235(2) or (3) (whether or not the person carries on a business).
Control of another promoter
4 (1) A falls within this case if—
(a) A is an individual who controls, or has significant influence over, a body corporate or a partnership (“B”) that carries on a business as a promoter, and
(b) A meets the personal condition or the corporate condition.
(2) The personal condition is that, at any time after A first controlled or had significant influence over B—
(a) A was subject to a disqualification order or disqualification undertaking under the Company Directors Disqualification Act 1986 or the Company Directors Disqualification (Northern Ireland) Order 2002 (S.I. 2002/3150 (N.I. 4)),
(b) A was bankrupt, or A's estate had been sequestrated under the Bankruptcy (Scotland) Act 2016,
(c) A was the subject of an individual voluntary arrangement under Part 8 of the Insolvency Act 1986,
(d) A's estate was subject to a protected trust deed (see section 163 of the Bankruptcy (Scotland) Act 2016),
(e) A was subject to a bankruptcy restrictions order or an interim bankruptcy restrictions order,
(f) A was subject to a debt relief order, or
(g) A was subject to a debt relief restrictions order or interim debt relief restrictions order.
(3) The corporate condition is that at any time A controlled, or had significant influence over, a person (other than B) that carried on business as a promotor that was—
(a) a body corporate or a partnership that was dissolved or became insolvent,
(b) a body corporate that became dormant,
(c) a company formed and registered under the Companies Act 2006 (see section 1 of that Act) that made an application under section 1003 of that Act to strike the company's name off the register, or
(d) a company formed and registered under that Act in respect of which the registrar (within the meaning of that Act) has published a notice under section 1000(3) or 1001(1) of that Act, if two months have passed since the publication of that notice.
(4) For the purposes of this paragraph, the circumstances in which a body corporate or partnership becomes insolvent include—
(a) if a company voluntary arrangement takes effect under Part 1 of the Insolvency Act 1986,
(b) if an administration application (within the meaning of Schedule B1 to that Act) is made or a receiver or manager, or an administrative receiver, is appointed,
(c) on the commencement of a creditor's voluntary winding up (within the meaning of Part 4 of that Act) or a winding up by the court under Chapter 6 of that Part,
(d) if a compromise or arrangement takes effect under Part 26 of the Companies Act 2006,
(e) if a bank insolvency order takes effect under Part 2 of the Banking Act 2009,
(f) if a bank administration order takes effect under Part 3 of that Act, or
(g) on the occurrence of any corresponding circumstances which have effect under or as a result of the law of Scotland or Northern Ireland or a country or territory outside the United Kingdom.
(5) For the purposes of this paragraph, a body corporate is dormant if—
(a) in the case of a body corporate incorporated in the United Kingdom, it is dormant within the meaning given by section 1169 of the Companies Act 2006, or
(b) in any other case, it would be dormant within the meaning of that section if the body corporate were incorporated in the United Kingdom.
(6) Sub-paragraphs (5) to (11) of paragraph 13A of Schedule 34 (meaning of “control” and “significant influence”) apply to this paragraph as they apply to Part 2 of that Schedule.
(7) In this paragraph—
“bankruptcy restrictions order” or “interim bankruptcy restrictions order” means such an order (or as the case may be, undertaking) under—
Schedule 4A to the Insolvency Act 1986,
Schedule 2A to the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)), or
Part 13 of the Bankruptcy (Scotland) Act 2016 (asp 21);
“debt relief order” means such an order under—
Part 7A of the Insolvency Act 1986, or
Part 7A of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19));
“debt relief restrictions order” or “interim debt relief restrictions order” means such an order (or as the case may be, undertaking) under—
Schedule 4ZB to the Insolvency Act 1986, or
Schedule 2ZB to the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)).
Transfer of promotion business
5 (1) A falls within this case if—
(a) there has been a relevant transfer to A, or
(b) there has been a relevant transfer to a body corporate or partnership that A controls, or has significant influence over.
(2) For the purposes of sub-paragraph (1) “relevant transfer” means a transfer of—
(a) the whole of the business of a person carrying on business as a promoter;
(b) any part of such a business that relates to the promotion of relevant arrangements or relevant proposals;
(c) property, rights or liabilities of such a business that are connected with the promotion of relevant arrangements or relevant proposals.
(3) In sub-paragraph (2) “transfer” means any transfer in substance (whether or not the transfer is formal or for consideration, and whether or not the transfer is direct).
(4) Sub-paragraphs (5) to (11) of paragraph 13A of Schedule 34 (meaning of “control” and “significant influence”) apply to this paragraph as they apply to Part 2 of that Schedule.
11 In section 237 (duty to give conduct notice), after subsection (8) insert—
(8A) Where the authorised officer is required to make a determination under subsection (5), the officer must determine that the meeting of the condition (or if more than one is met, all of them) should be regarded as significant if P falls within the case described in paragraph 2 of Schedule 33A (multiple entity promoter).
12 In section 237A (duty to give conduct notice: defeat of promoted arrangement) after subsection (3B) (as inserted by paragraph 22(2) of this Schedule) insert—
(3C) If a person meets a condition in subsection (11), (12) or (13) and the person falls within the case described in paragraph 2 of Schedule 33A (multiple entity promoter), the authorised officer must determine (whether under subsection (1) or (3)(a) or (b)) that the meeting of the condition should be regarded as significant.
13 In section 250 (allocation of promoter reference number), in subsection (2)—
(a) omit the “and” at the end of paragraph (a);
(b) after that paragraph insert—
(aa) any person who HMRC know falls within the case described in paragraph 3 of Schedule 33A by virtue of acting under the instruction or guidance of the monitored promoter, and
.
14 (1) Section 251 (duty of monitored promoter to notify clients and intermediaries of number) is amended as follows.
(2) In the heading for “and intermediaries” substitute “ etc ”.
(3) In subsection (2)—
(a) omit the “and” at the end of paragraph (c);
(b) after that paragraph insert—
(ca) any person who falls within the case described in paragraph 3 of Schedule 33A by virtue of acting under the instruction or guidance of the monitored promoter, and
.
15 (1) Section 252 (duty of those notified to notify others of promoter‘s number) is amended as follows.
(2) After subsection (4) insert—
(4A) Where the notified client is a person who falls within the case described in paragraph 3 of Schedule 33A by virtue of acting under the instruction or guidance of the monitored promoter concerned, the notified client must also, within 30 days, provide the promoter reference number to—
(a) any person to whom the notified client has, since the monitoring notice in relation to the monitored promoter concerned took effect, communicated, for the purposes of any business (whether carried on by the notified client or not), information about a relevant proposal of the monitored promoter, and
(b) any person who the notified client might reasonably be expected to know has, since that monitoring notice took effect, entered into, or is likely to enter into, transactions forming part of relevant arrangements in relation to which that monitored promoter is a promoter.
(3) In subsection (5), for “Subsection (2) or (4) does not” substitute “ None of subsections (2), (4) or (4A) ”.
16 In section 258 (duty of person dealing with non-resident monitored promoter), in subsection (3)—
(a) omit the “and” at the end of paragraph (a);
(b) after that paragraph insert—
(aa) any person who falls within the case described in paragraph 3 of Schedule 33A by virtue of acting under the instruction or guidance of the monitored promoter, and
.
17 (1) Section 260 (intermediaries: duty to provide information about clients) is amended as follows.
(2) In the heading, after “Intermediaries” insert “ etc ”.
(3) In subsection (1)—
(a) the words from “a person” to the end become paragraph (a);
(b) at the end of that paragraph insert
;
(b) a person who falls within the case described in paragraph 3 of Schedule 33A by virtue of acting under the instruction or guidance of the monitored promoter.
(4) In subsection (3)(a) for “the intermediary” substitute “ the person to whom the notice is given ”.
(5) In subsection (5)—
(a) in the words before paragraph (a), for “the intermediary” substitute “ the person to whom the notice under subsection (1) is given (“R”) ”;
(b) in paragraph (a), for “the intermediary” substitute “ R ”.
(6) In subsection (6) for “the intermediary”, in each place it occurs, substitute “ R ”.
18 In section 283 (interpretation)—
(a) in subsection (1), at the appropriate place insert—
“promotion structure” is to be construed in accordance with section 235(1A) and Schedule 33A;
;
(b) after subsection (3) insert—
(4) Any reference in this Part to a person's activities as a promoter includes—
(a) if the person falls within the case described in paragraph 2 of Schedule 33A, the activities carried out by the person and other persons by virtue of which the person falls within the case,
(b) if the person falls within the case described in paragraph 3 of that Schedule, activities carried out under the instruction or guidance of a person who carries on business as a promoter,
(c) if the person falls within the case described in paragraph 4 of that Schedule, the activities of the body corporate or partnership that the person controls, and
(d) if the person falls within the case described in paragraph 5 by virtue of sub-paragraph (1)(b) of that paragraph, the activities of the body corporate or partnership that the person controls.
19 In Schedule 34 (threshold conditions) in paragraph 13B, in sub-paragraph (5), after “individual” insert “ who does not fall within the case described in paragraph 4 or 5 of Schedule 33A ”.
PART 3 Conduct and monitoring notices: transferees
Conduct notices: transferees
20 (1) After section 239 insert—
Conduct notices: transferees
239A (1) This section applies if an authorised officer becomes aware at any time that a person to whom a conduct notice has been given ( “ P ”) has made a relevant transfer within the meaning of paragraph 5 of Schedule 33A (promotion structures) to another person ( “D”).
(2) The authorised officer may give D a conduct notice.
(3) If the proposed terms of the conduct notice to be given to D are the same as the terms of the conduct notice given to P, section 238(2) (content of conduct notice: opportunity to comment) does not apply in relation to the proposed terms.
(4) If the proposed terms of the conduct notice to be given to D differ from the terms of the conduct notice given to P, section 238(2) applies in relation to the proposed terms as if the reference in that provision to “the proposed terms of the notice” were a reference to the differences between the proposed terms of the conduct notice to be given to D and the terms of the conduct notice given to P.
(5) Where a person is given a conduct notice under this section, but considers that they were not a person to whom a relevant transfer was made (such that this section applies), they may make representations to that effect to the authorised officer.
(6) If (in light of those representations) the authorised officer considers that this section did not apply at the time the conduct notice was given, the officer must withdraw the notice.
(2) The amendment made by this paragraph has effect in relation to relevant transfers made on or after the day on which this Act is passed.
Monitoring notices: transferees
21 (1) After section 244 insert—
Monitoring notices: transferees
244A (1) This section applies if an authorised officer becomes aware at any time that a person to whom a monitoring notice has been given ( “ P ”) has made a relevant transfer within the meaning of paragraph 5 of Schedule 33A (promotion structures) to another person ( “D”).
(2) The authorised officer may give D a monitoring notice.
(3) Where a person is given a monitoring notice under this section, but considers that they were not a person to whom a relevant transfer was made (such that this section applies), they may make representations to that effect to the authorised officer.
(4) If (in light of those representations) the authorised officer considers that this section did not apply at the time the monitoring notice was given, the officer must withdraw the notice.
(5) Subsections (2) to (4) of section 244 (monitoring notice: content and issuing) apply in relation to a monitoring notice given under subsection (2) of this section as they apply to a monitoring notice given under subsection (1) of that section, but as if the reference in subsection (3)(a) of that section to “the person” were a reference to P.
(2) In section 248 (publication by HMRC), in subsection (2)(c), for “mentioned in section 242(1)(a)” substitute “ as a promoter which the monitored promoter is carrying on ”.
(3) The amendments made by this paragraph have effect in relation to relevant transfers made on or after the day on which this Act is passed.
PART 4 Miscellaneous amendments
Conduct notices: significance of conditions
22 (1) In section 237 (duty to give conduct notices)—
(a) in subsection (5), in paragraph (b)—
(i) omit sub-paragraph (i) (and the “and” after it);
(ii) in sub-paragraph (ii), for “(or conditions)” substitute “ (or, if more than one condition is met, the meeting of all of those conditions, taken together) ”;
(b) after that subsection insert—
(5A) In determining under subsection (5)(b) whether or not P's meeting of the condition (or conditions) should be regarded as significant, the authorised officer must determine whether the meeting of that condition (or those conditions taken together) by the person mentioned in subsection (1A)(a) should be regarded as significant in view of the purposes of this Part.
(5B) If the officer determines that the meeting of the condition (or those conditions) by that person should be regarded as significant, the officer must determine that P's meeting of that condition (or those conditions) should be regarded as significant.
;
(c) in subsection (7A)—
(i) in the words before paragraph (a) omit “both”;
(ii) omit paragraph (a) (and the “and” after it).
(2) In section 237A (duty to give conduct notices: defeat of promoted arrangements)—
(a) in subsection (3) omit paragraph (a) (and the “and” after it);
(b) after that subsection insert—
(3A) In determining under subsection (3) whether or not P's meeting of the condition should be regarded as significant, the authorised officer must determine whether the meeting of that condition by the person mentioned in subsection (2)(a) should be regarded as significant in view of the purposes of this Part.
(3B) If the officer determines that the meeting of the condition by that person should be regarded as significant, the officer must determine that P's meeting of that condition should be regarded as significant.
;
(c) in subsection (9) omit paragraph (a) (and the “and” after it).
Conduct notices: regular provision of information
23 In section 238 (content of conduct notices), in subsection (3), at the end insert—
(h) to ensure that the recipient provides such information or documents to HMRC as are required for the purpose of monitoring whether and to what extent the recipient is complying with any of the conditions in the notice.
Conduct notices: withdrawal
24 (1) Section 240 (amendment or withdrawal of conduct notice) is amended as follows.
(2) In the heading, for “or withdrawal” substitute “ , withdrawal or reissue ”.
(3) In subsection (3), omit paragraph (b) (and the “and” before it).
(4) After subsection (3) insert—
(4) An authorised officer may (instead of amending the notice) withdraw the notice and give a new conduct notice.
Conduct notices: duration
25 In section 241 (duration of conduct notice)—
(a) in subsection (2)—
(i) in paragraph (a), for “the period of two years” substitute “ the relevant period ”;
(ii) omit the “or” at the end of paragraph (a);
(iii) omit paragraph (b);
(b) after subsection (2) insert—
(2A) But where a new conduct notice was given under section 240(4) that has a commencement date that is later than 12 months before the end of the relevant period in relation to the original notice, that new notice ceases to have effect at the end of the relevant period in relation to the original notice.
;
(c) after subsection (4) insert—
(4A) For the purposes of subsection (2)(a), the relevant period in relation to a conduct notice is calculated in accordance with this table—
If the authorised officer is aware that the person to whom the notice is given meets | the relevant period is such period as may be notified in accordance with subsection (4B) or (4C) up to
1 ordinary condition | 2 years
2 ordinary conditions | 4 years
3 or more ordinary conditions | 5 years
1 significant condition | 3 years
1 significant condition and 1 or more other significant or ordinary conditions | 5 years
Subsection (4E) makes provision for the relevant period to be extended in certain circumstances.
(4B) When an authorised officer gives a person a conduct notice the officer must notify the person of the relevant period calculated by reference to the conditions which the officer is aware the person has met at that time.
(4C) If an authorised officer becomes aware that a person in relation to whom a conduct notice has effect has met one or more conditions which were not taken into account when the relevant period was calculated at the time the notice was given, the officer may give the person a notice—
(a) stating that the relevant period has been recalculated to take account of the additional conditions, and
(b) notifying the person of —
(i) the new relevant period as recalculated in accordance with the table in subsection (4A), and
(ii) the new date at the end of which the conduct notice will cease to have effect.
(4D) For the purposes of the table in subsection (4A)—
(a) a condition is significant if it is—
(i) a threshold condition listed in section 237(9), or
(ii) a condition in section 237A(11), (12) or (13) in respect of which an authorised officer makes a determination (whether in accordance with section 237A(1) or (2) or for the purposes of this paragraph) that meeting the condition should be regarded as significant in view of the purposes of this Part, and
(b) a condition is ordinary if it is a threshold condition not listed in section 237(9).
(4E) In calculating the relevant period for the purposes of subsection (2)(a) no account is to be taken of any day on all or part of which the effect of the conduct notice in question has been suspended by an authorised officer.
(4F) Where an authorised officer suspends the effect of a conduct notice, the officer must, as soon as practicable, notify the person to whom the notice was given of the suspension.
(4G) Where an authorised officer determines that the effect of a conduct notice should be resumed, the officer must, as soon as practicable, notify the person to whom the notice was given—
(a) that its effect has been resumed,
(b) of the number of days that are not to be taken into account in calculating the relevant period in accordance with subsection (4E), and
(c) of the new date at the end of which the relevant period is expected to end.
(4H) Where a conduct notice has been given to a person and the person is subsequently given a notice under paragraph 1 of Schedule 36 of FA 2008 as it has effect as a result of section 272A (power to obtain information and documents), in calculating the relevant period for the purposes of subsection (2)(a) no account is to be taken of any day on which the person has not complied with that notice.
(4I) For the purposes of subsection (4H), a person has not complied with a notice given under that paragraph on each day—
(a) beginning with the day after the last day on which the person could have complied with the notice, and
(b) ending with the day before the day (or, if more than one, the last day) on which the person provides the information or produces the documents required by the notice.
(4J) As soon as reasonably practicable after the day mentioned in subsection (4I)(b), an authorised officer must give the person to whom the conduct notice was given notice of—
(a) the number of days that are not to be taken into account in calculating the relevant period, and
(b) of the new date at the end of which the relevant period is expected to end.
Defeat notices
26 In section 241A (defeat notices), in subsection (4), for “come to the attention of HMRC” substitute “ first come to the attention of an authorised officer ”.
Monitoring notices: applications to tribunal
27 (1) In section 242 (monitoring notices: duty to apply to tribunal), in subsection (1)—
(a) in paragraph (b)—
(i) the words from “has failed” to the end become sub-paragraph (i);
(ii) at the end of that sub-paragraph insert
, or
(ii) has provided false or misleading information or documents in relation to the notice,
;
(b) in the words after paragraph (b), after “the authorised officer must” insert “ , within the period of 12 months beginning with the day on which the authorised officer makes the determination, ”.
(2) After subsection (1) insert—
(1A) Where subsection (1B) applies, an authorised officer, or an officer of Revenue and Customs with the approval of an authorised officer, may apply to the tribunal for approval to give a person (“P”) a monitoring notice.
(1B) This subsection applies where—
(a) within the period of 6 years after a conduct notice ceases to have effect in relation to P, the officer mentioned in subsection (1A) determines that P—
(i) failed to comply with one or more conditions in the notice, or
(ii) provided false or misleading information or documents in relation to the notice, and
(b) the officer could not reasonably have been expected to make the determination when the conduct notice had effect.
(1C) An application under subsection (1A) may not be made after the period of 12 months beginning with the day on which the officer makes the determination mentioned in subsection (1B)(a).
(1D) Where subsection (1E) applies, an authorised officer, or an officer of Revenue and Customs with the approval of an authorised officer, may apply to the tribunal for approval to give a person (“D”) a monitoring notice.
(1E) This subsection applies where—
(a) at any time before the end of the period of 6 years after a conduct notice ceases to have effect in relation to a person (“P”), an authorised officer determines (whether before or after the notice ceases to have effect) that P—
(i) failed to comply with one or more conditions in the notice, or
(ii) provided false or misleading information or documents in relation to the notice,
(b) before the end of that period, the authorised officer becomes aware that P has made a relevant transfer within the meaning of paragraph 5 of Schedule 33A (promotion structures) to D (whether before or after the notice ceases to have effect), and
(c) the officer could not reasonably have been expected—
(i) to apply to the tribunal for approval to give P a monitoring notice, or
(ii) to give P a monitoring notice following such an application,
before the relevant transfer took place.
(1F) For the purposes of an application under subsection (1D), any act or omission of P by reference to which the determination mentioned in subsection (1E)(a) was made is to be treated as an act or omission of D.
(1G) An application under subsection (1D) may not be made after the period of 12 months beginning with the day on which the officer makes the determination mentioned in subsection (1E)(a).
(3) The amendments made by this paragraph have effect in relation to—
(a) conduct notices that cease to have effect on or after the day on which this Act is passed, and
(b) relevant transfers made on or after that day.
Threshold conditions
28 Schedule 34 (threshold conditions) is amended as follows.
29 (1) Paragraph 5 (non-compliance with Part 7 of FA 2004) is amended in accordance with sub-paragraphs (2) to (7).
(2) In the heading, for “Part 7 of FA 2004” substitute “ avoidance disclosure requirements ”.
(3) Before sub-paragraph (1) insert—
(A1) A person meets this condition if the person fails to comply with any of the following provisions of—
(a) Part 7 of FA 2004 (disclosure of tax avoidance schemes);
(b) Schedule 17 to F(No. 2)A 2017 (disclosure of tax avoidance schemes: VAT and other indirect taxes).
(4) In sub-paragraph (1)—
(a) for the words before paragraph (a) substitute “ The provisions of Part 7 of FA 2004 are— ”;
(b) after paragraph (c) insert—
(ca) section 310C (duty of promoter to provide updated information);
(cb) section 312(2) (duty of promoter to notify client of reference number);
;
(c) after paragraph (d) insert—
(e) section 316A (duty to provide additional information).
(5) After sub-paragraph (1) insert—
(1A) The provisions of Schedule 17 to F(No.2)A 2017 are—
(a) paragraph 11(1) (duty of promoter in relation to notifiable proposals);
(b) paragraph 21(3) (duty of promoter to provide updated information);
(c) paragraph 23(2) (duty of promoter to notify client of reference number);
(d) paragraph 27(3) (duty of promoter to provide details of clients);
(e) paragraph 33 (duty to provide additional information).
(6) In sub-paragraph (2)—
(a) for “sub-paragraph (1)” substitute “ sub-paragraphs (1) and (1A) ”;
(b) for “that sub-paragraph” substitute “ any of those sub-paragraphs ”.
(7) In sub-paragraph (4), after “TMA 1970” insert “ or paragraph 48 of Schedule 17 to F(No.2)A 2017 ”.
30 In paragraph 7—
(a) before the existing text, insert—
(1) A person meets this condition if one or more of sub-paragraphs (2) to (4) apply in respect of the person.
;
(b) the existing text becomes sub-paragraph (2);
(c) in that sub-paragraph (2), for “A person meets this condition if” substitute “ This sub-paragraph applies in respect of a person if ”;
(d) after that sub-paragraph, insert—
(3) This sub-paragraph applies in respect of a person (“P”) if—
(a) another person has been given, in respect of arrangements in relation to which P is a promoter (“the promoted arrangements”)—
(i) a pooled arrangements opinion notice, under paragraph 6(2) of Schedule 43A to FA 2013, or
(ii) a bound arrangements opinion notice under paragraph 6(4) of that Schedule,
(b) the notice in question sets out a report prepared by HMRC of an opinion of the GAAR Advisory Panel in relation to the promoted arrangements that is contained in one or more opinion notices given under paragraph 11(3)(b) of Schedule 43 to FA 2013 or paragraph 6(4)(b) of Schedule 43B to FA 2013, and
(c) the opinion notice, or the opinion notices taken together, either—
(i) state the joint opinion of all the members of the sub-panel arranged under Schedule 43 or 43B, as the case may be, or
(ii) state the opinion of two or more members of the sub-panel.
(4) This sub-paragraph applies in respect of a person if—
(a) arrangements in relation to which the person is a promoter (“the promoted arrangements”) are equivalent within the meaning of paragraph 24(3) of Schedule 16 to F(No. 2)A 2017 to arrangements that have been referred to the GAAR Advisory Panel under paragraph 26 of that Schedule,
(b) one or more opinion notices are given under paragraph 34(3)(b) of Schedule 16 to F(No.2)A 2017 that apply to the promoted arrangements for the purposes of Part 7 of that Schedule, and
(c) the notice, or the notices taken together, either—
(i) state the joint opinion of all the members of the sub-panel arranged under that Schedule, or
(ii) state the opinion of two or more members of that sub-panel.
31 In paragraph 10 (exercise of information powers)—
(a) in sub-paragraph (1), for the words from “an information notice” to the end substitute
a requirement imposed by a notice or order given under any of the following provisions—
(a) section 308A, 310A, 313ZB, 313A and 313B of FA 2004;
(b) paragraphs 1, 2, 5 and 5A of Schedule 36 to FA 2008;
(c) paragraphs 16, 19, 28, 29 and 30 of Schedule 17 to F(No.2)A 2017.
(b) in sub-paragraph (2), after “notice” insert “ or order ”.
Section 122
PART 1 Amendments of Part 7 of FA 2004
1 Part 7 of FA 2004 (disclosure of tax avoidance schemes) is amended as follows.
2 Before section 306 insert—
Introduction
305A (1) This Part makes provision about the disclosure of information in relation to arrangements, or proposed arrangements, that enable, or might be expected to enable, a person to obtain a tax advantage.
(2) Among other things, this Part—
(a) imposes duties to provide information to HMRC (and others);
(b) allows HMRC to allocate reference numbers in relation to arrangements and proposed arrangements (in cases where the disclosure duties have been complied with and in other cases);
(c) makes provision about publication of information about arrangements and proposed arrangements, and persons involved in their supply;
(d) makes provision about penalties.
3 In section 307(4A) (meaning of “makes a firm approach”), omit “notifiable” in both places.
4 After section 310C insert—
Notice of potential allocation of reference number: arrangements and proposals suspected of being notifiable
310D (1) This section applies where—
(a) HMRC have become aware that—
(i) a transaction forming part of arrangements has been entered into,
(ii) a firm approach has been made to a person in relation to a proposal for arrangements, with a view to making the proposal available for implementation, or
(iii) a proposal for arrangements is made available for implementation, and
(b) HMRC have reasonable grounds for suspecting that the arrangements are notifiable, or the proposal is notifiable.
(2) HMRC may issue a notice to a person explaining that, unless the person is able to satisfy HMRC, before the end of the notice period, that the arrangements are not notifiable or (as the case may be) the proposal is not notifiable, HMRC may allocate a reference number to the arrangements or (in the case of a proposal) the proposed arrangements.
(3) But HMRC may not issue a notice under this section before the end of the period of 15 days beginning with the day on which they first become aware that the condition in paragraph (a)(i), (ii) or (iii) of subsection (1) is met.
(4) A notice under this section must be issued to any person who, on the day the notice is issued, HMRC reasonably suspect to be a promoter in relation to the arrangements or proposal.
(5) A notice under this section may be issued to any other person who HMRC reasonably suspect to be involved in the supply of the arrangements or proposed arrangements.
5 For section 311 substitute—
Allocation of reference number to arrangements
311 (1) This section applies in—
(a) a subsection (2) case, or
(b) a subsection (3) case.
(2) A “subsection (2) case” is a case where a person complies, or purports to comply, with section 308(1) or (3), 309(1) or 310 in relation to a notifiable proposal or notifiable arrangements.
(3) A “subsection (3) case” is a case where—
(a) notice in relation to arrangements or a proposal has been issued in accordance with section 310D (notice of potential allocation of reference number),
(b) the notice period has expired, and
(c) the person to whom the notice was given has failed to satisfy HMRC, before the expiry of the notice period, that the arrangements are not notifiable or (as the case may be) that the proposal is not notifiable.
(4) “The notice period” means—
(a) the period of 30 days beginning with the day on which the notice under section 310D is issued, or
(b) such longer period as HMRC may direct.
(5) HMRC may allocate a reference number to the arrangements or, in the case of a proposal, the proposed arrangements, subject to subsection (6).
(6) HMRC may not allocate a reference number to arrangements or proposed arrangements after the time limit for doing so.
(7) The time limit for allocating a reference number is—
(a) in a subsection (2) case, the end of the period of 90 days beginning with the compliance, or purported compliance, with section 308(1) or (3), 309(1) or 310, as the case may be;
(b) in a subsection (3) case, the end of the period of one year beginning with the day after the end of the notice period (see subsection (4)).
(8) HMRC may at any time withdraw a reference number allocated to arrangements in a subsection (3) case.
(9) The allocation of a reference number to arrangements or proposed arrangements is not to be regarded as constituting an indication by HMRC that the arrangements could as a matter of law result in the obtaining by any person of a tax advantage.
Duty of HMRC to notify persons of reference number
311A (1) If a reference number is allocated in a case within section 311(2), HMRC must notify the following of the number—
(a) the person who has complied, or purported to comply, with section 308(1) or (3), 309(1) or 310, and
(b) where the person has complied, or purported to comply, with section 308(1) or (3), any other person—
(i) who is a promoter in relation to the proposal (or arrangements implementing it) or the arrangements (or a proposal implemented by them), and
(ii) whose identity and address have been notified to HMRC by the person who complied, or purported to comply, with section 308(1) or (3).
(2) If a reference number is allocated in a case within section 311(3), HMRC must notify the following of the number—
(a) any person who HMRC reasonably suspect to be, or to have been, a promoter in relation to the arrangements or the proposed arrangements, and
(b) any other person who HMRC reasonably suspect to be, or to have been, involved in the supply of the arrangements or the proposed arrangements.
(3) The duty in subsection (2) applies irrespective of whether the notice under section 310D as a result of which the reference number was allocated has been issued to the person concerned.
Right of appeal: section 311(3) case
311B (1) This section applies where HMRC have allocated a reference number to arrangements or proposed arrangements in a case within section 311(3).
(2) A person who has been notified of the reference number may appeal to the tribunal against its allocation.
(3) An appeal under this section may be brought only on the following grounds—
(a) that, in issuing the notice under section 310D as a result of which the reference number was allocated, HMRC did not act in accordance with that section;
(b) that, in allocating the reference number, HMRC did not act in accordance with section 311;
(c) that the arrangements are not in fact notifiable arrangements or, in the case of proposed arrangements, that the proposal for the arrangements is not in fact a notifiable proposal.
(4) Notice of appeal under this section must be given to the tribunal in writing before the end of the period of 30 days beginning with the day on which the person is notified of the number by HMRC.
(5) Notice may be given after that time if the tribunal give permission.
(6) The notice of appeal must specify the grounds of appeal.
(7) On an appeal under this section, the tribunal may affirm or cancel HMRC's decision.
(8) If the tribunal cancel HMRC's decision, HMRC must withdraw the reference number.
(9) Bringing an appeal under this section does not prevent—
(a) a power conferred by this Part from being exercised, or
(b) a duty imposed by this Part from continuing to apply.
Duty to provide further information requested by HMRC: section 311(3) case
311C (1) This section applies where HMRC have allocated a reference number to arrangements or proposed arrangements in a case within section 311(3).
(2) HMRC may require a relevant person to provide—
(a) specified information about the arrangements or proposed arrangements;
(b) documents relating to the arrangements or proposed arrangements.
(3) In subsection (2), “relevant person” means—
(a) any person who HMRC reasonably suspect to be, or to have been, a promoter in relation to the arrangements or the proposed arrangements;
(b) any other person who HMRC reasonably suspect to be, or to have been, involved in the supply of the arrangements or the proposed arrangements.
(4) HMRC may require information or documents only if they have reasonable grounds for suspecting that the information or documents will assist them in considering the arrangements or proposed arrangements.
(5) Where HMRC impose a requirement on a person under subsection (2), the person must comply with the requirement before the end of—
(a) the period of 10 working days beginning with the day on which HMRC imposed the requirement, or
(b) such longer period as HMRC may direct.
6 (1) Section 312 (duty of promoter to notify client of reference number) is amended as follows.
(2) In the heading, at the end insert “ : section 311(2) case ”.
(3) In subsection (2)—
(a) after “any reference number” insert “ allocated in a case within section 311(2) ”;
(b) for “one reference number” substitute “ one such reference number ”.
7 After section 312 insert—
Duty to notify client of reference number: section 311(3) case
312ZA (1) This section applies where a person is providing (or has provided) services to another person (“the client”) in connection with arrangements or proposed arrangements.
(2) The person must, before the end of the period of 30 days beginning with the relevant date, provide the client with prescribed information relating to any reference number allocated in a case within section 311(3) (or, if more than one, any one such reference number) that has been notified to the person (whether by HMRC or any other person) in relation to—
(a) the arrangements or proposed arrangements, or
(b) any arrangements substantially the same as the arrangements or proposed arrangements (whether involving the same or different parties).
(3) In subsection (2), “the relevant date” means the date on which the person has been notified of the reference number.
(4) HMRC may give notice that, in relation to arrangements or proposed arrangements specified in the notice, no person is under the duty imposed by subsection (2) after the date specified in the notice.
8 (1) Section 312A (duty of client to notify parties of reference number) is amended as follows.
(2) In subsection (1)—
(a) after “prescribed information” insert “ under section 312 ”;
(b) for “allocated to the notifiable arrangements or proposed notifiable arrangements” substitute
allocated to—
(a) the notifiable arrangements or proposed notifiable arrangements, or
(b) any arrangements substantially the same as the notifiable arrangements or proposed notifiable arrangements.
(3) After subsection (1) insert—
(1A) This section also applies where a person (a “client”) to whom a person is providing (or has provided) services in connection with arrangements or proposed arrangements receives prescribed information under section 312ZA relating to the reference number allocated to—
(a) the arrangements or proposed arrangements, or
(b) any arrangements substantially the same as the arrangements or proposed arrangements.
(4) In subsection (4), for “notifiable arrangements or a notifiable proposal” substitute “ arrangements or a proposal ”.
9 (1) Section 312B (duty of client to provide information to promoter) is amended as follows.
(2) In the heading, omit “to promoter”.
(3) For subsection (1) substitute—
(1) This section applies where a person (“the client”) has been provided with information under section 312(2) or 312ZA(2) (prescribed information about reference number).
(4) In subsection (2), for “promoter” substitute “ person who provided the information ”.
10 (1) Section 313 (duty of parties to notifiable arrangements to notify Board of number etc) is amended as follows.
(2) For the heading substitute “ Duty of parties to notify HMRC of reference number etc ”.
(3) In subsection (1), omit “notifiable”.
(4) In subsection (2), for “any notifiable arrangements” substitute “ arrangements of any description ”.
(5) In subsection (5), omit “notifiable”.
11 (1) Section 313ZA (duty to provide details of clients) is amended as follows.
(2) In subsection (1), for paragraphs (a) and (b) substitute—
(a) the promoter is subject to the requirement under section 312(2) to provide to the client prescribed information relating to the reference number allocated to—
(i) the arrangements, or
(ii) any arrangements substantially the same as the arrangements, or
(b) the promoter has failed to comply with section 308(1) or (3) in relation to the notifiable arrangements (or the notifiable proposal for them) but would be subject to that requirement if a reference number had been allocated to—
(i) the notifiable arrangements, or
(ii) any arrangements substantially the same as the arrangements
.
(3) After subsection (1) insert—
(1A) This section also applies where—
(a) a person (“the provider”) is providing (or has provided) services to another person (“the client”) in connection with arrangements or proposed arrangements, and
(b) the provider is subject to the requirement under section 312ZA(2) to provide to the client prescribed information relating to the reference number allocated to—
(i) the arrangements or proposed arrangements, or
(ii) any arrangements substantially the same as the arrangements or proposed arrangements.
(4) Omit subsection (2).
(5) In subsection (3), after “promoter” insert “ or (as the case may be) provider ”.
(6) For subsection (4) substitute—
(4) In subsection (3) “the relevant period” means—
(a) in a case within subsection (1), such period as is prescribed and is a period during which the promoter is or would be subject to the requirement mentioned in that subsection;
(b) in a case within subsection (1A), such period as is prescribed and is a period during which the provider is or would be subject to the requirement mentioned in that subsection.
(7) After subsection (5) insert—
(6) The provider need not comply with subsection (3) in relation to any arrangements at any time after HMRC have given notice under section 312ZA(4) in relation to the arrangements.
12 (1) Section 313ZB (enquiry following disclosure of client details) is amended as follows.
(2) In subsection (1), for paragraph (a) substitute—
(a) a person (“the service provider”) is providing or has provided services to another person (“the client”) in connection with arrangements or proposed arrangements,
(aa) the service provider has provided HMRC with information in relation to the client under section 313ZA(3), and
.
(3) In subsection (2), for “promoter”, in both places, substitute “ service provider ”.
(4) In subsection (3), for “promoter” substitute “ service provider ”.
13 (1) Section 313ZC (duty of employer to notify HMRC of details of employees etc) is amended as follows.
(2) For subsection (2) substitute—
(2) Condition A is that—
(a) a person who is a promoter in relation to notifiable arrangements or a notifiable proposal is providing (or has provided) services in connection with the arrangements or proposal to a person (“the client”), or
(b) a person is providing (or has provided) services in connection with arrangements or a proposal to a person (“the client”).
(3) In subsection (3), after “312(2)” insert “ or 312ZA(2) ”.
(4) In subsection (4), omit “notifiable”, in both places.
(5) In subsection (6)—
(a) omit “notifiable”, in both places;
(b) after “312(6)” insert “ , 312ZA(4) ”.
14 In section 316 (information to be provided in form and manner specified by HMRC), in subsection (2)—
(a) after “310C,” insert “ 311C, ”;
(b) after “312(2),” insert “ 312ZA(2), ”.
15 In section 316A (duty to provide additional information), in subsections (1) and (2), after “312(2)” insert “ , 312ZA(2) ”.
16 (1) Section 316C (publication by HMRC) is amended as follows.
(2) For subsection (1) substitute—
(1) HMRC may publish information about—
(a) any arrangements, or proposed arrangements, to which a reference number is allocated under section 311;
(b) where the reference number is allocated in a case within section 311(2), any person who is a promoter in relation to the arrangements or, in the case of proposed arrangements, the proposal;
(c) where the reference number is allocated in a case within section 311(3), any person who is or has been—
(i) a promoter in relation to the arrangements or proposed arrangements, or
(ii) otherwise involved in the supply of the arrangements or proposed arrangements.
(3) In subsection (2)—
(a) in paragraph (a)—
(i) after “(1)(b)” insert “ or (c) ”;
(ii) for “308, 309 or 310” substitute “ any provision of this Part ”;
(b) for paragraph (b) substitute—
(b) any ruling of a court or tribunal relating to—
(i) arrangements within subsection (1)(a);
(ii) a person within subsection (1)(b), in that person's capacity as a promoter;
(iii) a person within subsection (1)(c), in that person's capacity as a promoter or a person otherwise involved in the supply of arrangements or proposed arrangements;
;
(c) in paragraph (c), omit “notifiable”;
(d) in paragraph (e), after “(1)(b)” insert “ or (c) ”.
(4) In subsection (4), omit “notifiable”.
(5) After subsection (4) insert—
(4A) No information may be published under this section in respect of a person involved in the supply of arrangements or proposed arrangements where there are reasonable grounds for believing that the person's involvement is limited to activities subject to legal professional privilege.
(6) In subsection (5)—
(a) for “who is a promoter within subsection (1)(b)” substitute “ within subsection (1)(b) or (c) ”;
(b) for “as a promoter” substitute “ as a promoter or a person involved in the supply of arrangements or proposed arrangements ”.
(7) In subsection (6), for “a promoter within subsection (1)(b)” substitute “ a person within subsection (1)(b) or (c) ”.
(8) After subsection (6) insert—
(6A) Where the reference number is allocated in a case within section 311(3)—
(a) information that identifies a person within subsection (1)(c) may not be published for the first time after the end of the period of one year beginning with the day on which the reference number is allocated;
(b) no information that identifies a person within subsection (1)(c) may be published (or continue to be published) after the end of the period of one year beginning with the day on which it is first published.
(6B) In determining a period of one year for the purposes of subsection (6A)(a) or (b), no account is to be taken of any period during which HMRC are prohibited from publishing the information because of proceedings before a court or tribunal.
17 In section 316D (section 316C: subsequent judicial rulings), in subsection (1)(a), omit “notifiable”, in both places.
18 In section 318(1) (interpretation of Part 7), for the definition of “reference number” substitute—
“reference number” means a reference number allocated under section 311;
.
PART 2 Amendments of Schedule 17 to F(No.2)A 2017
19 Schedule 17 to F(No.2)A 2017 (disclosure of tax avoidance schemes: VAT and other indirect taxes) is amended as follows.
20 Before Part 1 insert—
PART A1 Introduction
A1 (1) This Schedule makes provision about the disclosure of information in relation to arrangements, or proposed arrangements, that enable, or might be expected to enable, a person to obtain a tax advantage in relation to VAT or another indirect tax.
(2) Among other things, this Schedule—
(a) imposes duties to provide information to HMRC (and others);
(b) allows HMRC to allocate reference numbers in relation to arrangements and proposed arrangements (in cases where the disclosure duties have been complied with and in other cases);
(c) makes provision about publication of information about arrangements and proposed arrangements, and persons involved in their supply;
(d) makes provision about penalties.
21 In paragraph 10(1) (meaning of “makes a firm approach”), omit “notifiable”.
22 After paragraph 21 insert—
Notice of potential allocation of reference number: arrangements and proposals suspected of being notifiable
21A (1) This paragraph applies where—
(a) HMRC have become aware that—
(i) a transaction forming part of arrangements has been entered into,
(ii) a firm approach has been made to a person in relation to a proposal for arrangements, with a view to making the proposal available for implementation, or
(iii) a proposal for arrangements is made available for implementation, and
(b) HMRC have reasonable grounds for suspecting that the arrangements are notifiable, or the proposal is notifiable.
(2) HMRC may issue a notice to a person explaining that, unless the person is able to satisfy HMRC, before the end of the notice period, that the arrangements are not notifiable or (as the case may be) the proposal is not notifiable, HMRC may allocate a reference number to the arrangements or (in the case of a proposal) the proposed arrangements.
(3) But HMRC may not issue a notice under this paragraph before the end of the period of 15 days beginning with the day on which they first become aware that the condition in paragraph (a)(i), (ii) or (iii) of sub-paragraph (1) is met.
(4) A notice under this paragraph must be issued to any person who, on the day the notice is issued, HMRC reasonably suspect to be a promoter in relation to the arrangements or proposal.
(5) A notice under this paragraph may be issued to any other person who HMRC reasonably suspect to be involved in the supply of the arrangements or proposed arrangements.
23 For paragraph 22 (and the italic heading before it) substitute—
Allocation of reference number to arrangements
22 (1) This paragraph applies in—
(a) a sub-paragraph (2) case, or
(b) a sub-paragraph (3) case.
(2) A “sub-paragraph (2) case” is a case where a person complies, or purports to comply, with paragraph 11(1), 12(1), 17(2) or 18(2) in relation to a notifiable proposal or notifiable arrangements.
(3) A “sub-paragraph (3) case” is a case where—
(a) notice in relation to arrangements or a proposal has been issued in accordance with paragraph 21A (notice of potential allocation of reference number),
(b) the notice period has expired, and
(c) the person to whom the notice was given has failed to satisfy HMRC, before the expiry of the notice period, that the arrangements are not notifiable or (as the case may be) that the proposal is not notifiable.
(4) “The notice period” means—
(a) the period of 30 days beginning with the day on which the notice under paragraph 21A is issued, or
(b) such longer period as HMRC may direct.
(5) HMRC may allocate a reference number to the arrangements or, in the case of a proposal, the proposed arrangements, subject to sub-paragraph (6).
(6) HMRC may not allocate a reference number to arrangements or proposed arrangements after the time limit for doing so.
(7) The time limit for allocating a reference number is—
(a) in a sub-paragraph (2) case, the end of the period of 90 days beginning with the compliance, or purported compliance, with paragraph 11(1), 12(1), 17(2) or 18(2), as the case may be;
(b) in a sub-paragraph (3) case, the end of the period of one year beginning with the day after the end of the notice period (see sub-paragraph (4)).
(8) HMRC may at any time withdraw a reference number allocated to arrangements in a sub-paragraph (3) case.
(9) The allocation of a reference number to arrangements or proposed arrangements is not to be regarded as constituting an indication by HMRC that the arrangements could as a matter of law result in the obtaining by any person of a tax advantage.
Duty of HMRC to notify persons of reference number
22A (1) If a reference number is allocated in a case within paragraph 22(2), HMRC must notify the following of the number—
(a) the person who has complied, or purported to comply, with paragraph 11(1), 12(1), 17(2) or 18(2), and
(b) where the person has complied, or purported to comply, with paragraph 11(1) or 12(1), any other person—
(i) who is a promoter in relation to the proposal (or arrangements implementing it) or the arrangements (or a proposal implemented by them), and
(ii) whose identity and address have been notified to HMRC by the person who complied, or purported to comply, with paragraph 11(1) or 12(1).
(2) If a reference number is allocated in a case within paragraph 22(3), HMRC must notify the following of the number—
(a) any person who HMRC reasonably suspect to be, or to have been, a promoter in relation to the arrangements or the proposed arrangements, and
(b) any other person who HMRC reasonably suspect to be, or to have been, involved in the supply of the arrangements or the proposed arrangements.
(3) The duty in sub-paragraph (2) applies irrespective of whether the notice under paragraph 21A as a result of which the reference number was allocated has been issued to the person concerned.
Right of appeal: paragraph 22(3) case
22B (1) This paragraph applies where HMRC have allocated a reference number to arrangements or proposed arrangements in a case within paragraph 22(3).
(2) A person who has been notified of the reference number may appeal to the tribunal against its allocation.
(3) An appeal under this paragraph may be brought only on the following grounds—
(a) that, in issuing the notice under paragraph 21A as a result of which the reference number was allocated, HMRC did not act in accordance with that paragraph;
(b) that, in allocating the reference number, HMRC did not act in accordance with paragraph 22;
(c) that the arrangements are not in fact notifiable arrangements or, in the case of proposed arrangements, that the proposal for the arrangements is not in fact a notifiable proposal.
(4) Notice of appeal under this paragraph must be given to the tribunal in writing before the end of the period of 30 days beginning with the day on which the person is notified of the number by HMRC.
(5) Notice may be given after that time if the tribunal give permission.
(6) The notice of appeal must specify the grounds of appeal.
(7) On an appeal under this paragraph, the tribunal may affirm or cancel HMRC's decision.
(8) If the tribunal cancel HMRC's decision, HMRC must withdraw the reference number.
(9) Bringing an appeal under this paragraph does not prevent—
(a) a power conferred by this Part of this Schedule from being exercised, or
(b) a duty imposed by this Part of this Schedule from continuing to apply.
Duty to provide further information requested by HMRC: paragraph 22(3) case
22C (1) This paragraph applies where HMRC have allocated a reference number to arrangements or proposed arrangements in a case within paragraph 22(3).
(2) HMRC may require a relevant person to provide—
(a) specified information about the arrangements or proposed arrangements;
(b) documents relating to the arrangements or proposed arrangements.
(3) In sub-paragraph (2), “relevant person” means—
(a) any person who HMRC reasonably suspect to be, or to have been, a promoter in relation to the arrangements or the proposed arrangements;
(b) any other person who HMRC reasonably suspect to be, or to have been, involved in the supply of the arrangements or the proposed arrangements.
(4) HMRC may require information or documents only if they have reasonable grounds for suspecting that the information or documents will assist them in considering the arrangements or proposed arrangements.
(5) Where HMRC impose a requirement on a person under sub-paragraph (2), the person must comply with the requirement before the end of—
(a) the period of 10 working days beginning with the day on which HMRC imposed the requirement, or
(b) such longer period as HMRC may direct.
24 In the italic heading before paragraph 23, at the end insert “ : paragraph 22(2) case ”.
25 (1) Paragraph 23 (duty of promoter to notify client of reference number) is amended as follows.
(2) In sub-paragraph (2)—
(a) after “any reference number” insert “ allocated in a case within paragraph 22(2) ”;
(b) for “one reference number” substitute “ one such reference number ”.
26 After paragraph 23 insert—
Duty to notify client of reference number: paragraph 22(3) case
23A (1) This paragraph applies where a person is providing (or has provided) services to any person (“the client”) in connection with arrangements or proposed arrangements.
(2) The person must, before the end of the period of 30 days beginning with the relevant date, provide the client with prescribed information relating to any reference number allocated in a case within paragraph 22(3) (or, if more than one, any one such reference number) that has been notified to the person (whether by HMRC or any other person) in relation to—
(a) the arrangements or proposed arrangements, or
(b) any arrangements substantially the same as the arrangements or proposed arrangements (whether involving the same or different parties).
(3) “The relevant date” means the date on which the person has been notified of the reference number.
(4) HMRC may give notice that, in relation to arrangements or proposed arrangements specified in the notice, no person is under the duty under sub-paragraph (2) after the date specified in the notice.
27 (1) Paragraph 24 (duty of client to notify parties of reference number) is amended as follows.
(2) In sub-paragraph (1)—
(a) omit “who is a promoter in relation to notifiable arrangements or a notifiable proposal”;
(b) for “the arrangements or proposal” substitute “ arrangements or a proposal ”.
(3) For sub-paragraph (2) substitute—
(2) Sub-paragraph (3) applies where—
(a) the client receives prescribed information under paragraph 23 relating to the reference number allocated to—
(i) the arrangements or proposed arrangements, or
(ii) any arrangements substantially the same as the arrangements or proposed arrangements; or
(b) the client receives prescribed information under paragraph 23A relating to the reference number allocated to—
(i) the arrangements or proposed arrangements, or
(ii) any arrangements substantially the same as the arrangements or proposed arrangements.
(4) In sub-paragraph (4)(a), for “notifiable arrangements or proposed notifiable arrangements” substitute “ the arrangements or proposed arrangements ”.
(5) In sub-paragraph (4)(b), for “by the promoter under paragraph 23” substitute “ under paragraph 23 or (as the case may be) paragraph 23A ”.
(6) In sub-paragraph (5), for “notifiable arrangements or a notifiable proposal” substitute “ arrangements or a proposal ”.
28 In the italic heading before paragraph 25, omit “to promoter”.
29 (1) Paragraph 25 (duty of client to provide information to promoter) is amended as follows.
(2) For sub-paragraph (1) substitute—
(1) This paragraph applies where a person (“the client”) has been provided with information under paragraph 23(2) or 23A(2) (prescribed information about reference number).
(3) In sub-paragraph (2), for “promoter” substitute “ person who provided the information ”.
30 For the italic heading before paragraph 26 substitute “ Duty of parties to notify HMRC of reference number etc ”.
31 (1) Paragraph 26 (duty of parties to notifiable arrangements to notify HMRC of number etc) is amended as follows.
(2) In sub-paragraph (1), omit “notifiable”.
(3) In sub-paragraph (1)(a), after “23” insert “ , 23A ”.
(4) In sub-paragraph (2), for “any notifiable arrangements” substitute “ arrangements of any description ”.
(5) In sub-paragraph (5), omit “notifiable”.
32 In the italic heading before paragraph 27 omit “of promoter”.
33 (1) Paragraph 27 (duty of promoter to provide details of clients) is amended as follows.
(2) In sub-paragraph (1), for paragraphs (a) and (b) substitute—
(a) the promoter is subject to the requirement under paragraph 23(2) to provide to the client prescribed information relating to the reference number allocated to—
(i) the arrangements, or
(ii) any arrangements substantially the same as the arrangements; or
(b) the promoter has failed to comply with paragraph 11(1) or 12(1) in relation to the notifiable arrangements (or the notifiable proposal for them) but would be subject to that requirement if a reference number had been allocated to—
(i) the notifiable arrangements, or
(ii) any arrangements substantially the same as the arrangements.
(3) After sub-paragraph (1) insert—
(1A) This paragraph also applies where—
(a) a person (“the provider”) is providing (or has provided) services to another person (“the client”) in connection with arrangements or proposed arrangements, and
(b) the provider is subject to the requirement under paragraph 23A(2) to provide to the client prescribed information relating to the reference number allocated to—
(i) the arrangements or proposed arrangements, or
(ii) any arrangements substantially the same as the arrangements or proposed arrangements.
(4) Omit sub-paragraph (2).
(5) In sub-paragraph (3), after “promoter” insert “ or (as the case may be) provider ”.
(6) For sub-paragraph (4) substitute—
(4) In sub-paragraph (3) “the relevant period” means—
(a) in a case within sub-paragraph (1), such period as is prescribed and is a period during which the promoter is or would be subject to the requirement mentioned in that sub-paragraph;
(b) in a case within sub-paragraph (1A), such period as is prescribed and is a period during which the provider is or would be subject to the requirement mentioned in that sub-paragraph.
(7) After sub-paragraph (5) insert—
(6) The provider need not comply with sub-paragraph (3) in relation to any arrangements at any time after HMRC have given notice under paragraph 23A(4) in relation to the arrangements.
34 (1) Paragraph 28 (enquiry following disclosure of client details) is amended as follows.
(2) In sub-paragraph (1), for paragraph (a) substitute—
(a) a person (“the service provider”) is providing or has provided services to another person (“the client”) in connection with arrangements or proposed arrangements,
(aa) the service provider has provided HMRC with information in relation to the client under paragraph 27(3), and
.
(3) In sub-paragraph (2), for “promoter”, in both places, substitute “ service provider ”.
(4) In sub-paragraph (3), for “promoter” substitute “ service provider ”.
(5) In sub-paragraph (4) for “promoter” substitute “ service provider ”.
35 In paragraph 33 (duty to provide additional information), in sub-paragraphs (1) and (2), after “23(2)” insert “ , 23A(2) ”.
36 In paragraph 34 (information to be provided in form and manner specified by HMRC), in sub-paragraph (2)—
(a) after “21(3),” insert “ 22C, ”;
(b) after “23(2),” insert “ 23A(2), ”.
37 (1) Paragraph 36 (publication by HMRC) is amended as follows.
(2) For sub-paragraph (1) substitute—
(1) HMRC may publish information about—
(a) any arrangements, or proposed arrangements, to which a reference number is allocated under paragraph 22;
(b) where the reference number is allocated in a case within paragraph 22(2), any person who is a promoter in relation to the arrangements or, in the case of proposed arrangements, the proposal;
(c) where the reference number is allocated in a case within paragraph 22(3), any person who is or has been—
(i) a promoter in relation to the arrangements or proposed arrangements, or
(ii) otherwise involved in the supply of the arrangements or proposed arrangements.
(3) In sub-paragraph (2)—
(a) in paragraph (a)—
(i) after “(1)(b)” insert “ or (c) ”;
(ii) for “11, 12, 17 or 18” substitute “ any provision of this Part ”;
(b) for paragraph (b) substitute—
(b) any ruling of a court or tribunal relating to—
(i) arrangements within sub-paragraph (1)(a);
(ii) a person within sub-paragraph (1)(b), in that person's capacity as a promoter;
(iii) a person within sub-paragraph (1)(c), in that person's capacity as a promoter or a person otherwise involved in the supply of arrangements or proposed arrangements;
;
(c) in paragraph (c), omit “notifiable”;
(d) in paragraph (d), after “(1)(b)” insert “ or (c) ”.
(4) In sub-paragraph (4), omit “notifiable”.
(5) After sub-paragraph (4), insert—
(4A) No information may be published under this paragraph in respect of a person involved in the supply of arrangements or proposed arrangements where there are reasonable grounds for believing that the person's involvement is limited to activities subject to legal professional privilege.
(6) In sub-paragraph (5)—
(a) for “who is a promoter within sub-paragraph (1)(b)” substitute “ within sub-paragraph (1)(b) or (c) ”;
(b) for “as a promoter” substitute “ as a promoter or a person involved in the supply of arrangements or proposed arrangements ”.
(7) In sub-paragraph (6), for “a promoter within sub-paragraph (1)(b)” substitute “ a person within sub-paragraph (1)(b) or (c) ”.
(8) After sub-paragraph (6) insert—
(7) Where the reference number is allocated in a case within paragraph 22(3)—
(a) information that identifies a person within sub-paragraph (1)(b) or (c) may not be published for the first time after the end of the period of one year beginning with the day on which the reference number is allocated;
(b) no information that identifies a person within sub-paragraph (1)(b) or (c) may be published (or continue to be published) after the end of the period of one year beginning with the day on which it is first published.
(8) In determining a period of one year for the purposes of sub-paragraph (7)(a) or (b), no account is to be taken of any period during which HMRC are prohibited from publishing the information because of proceedings before a court or tribunal.
38 In paragraph 37 (paragraph 36: subsequent judicial rulings), in sub-paragraph (1)(a), omit “notifiable”, in both places.
39 (1) Paragraph 39 (penalty for failure to comply with duties under Part 1 of Schedule) is amended as follows.
(2) In sub-paragraph (1)(a)(i), for “or 19” substitute “ , 19 or 22C ”.
(3) In sub-paragraph (2)—
(a) after paragraph (f) insert—
(fa) paragraph 22C (duty to provide further information requested by HMRC: paragraph 22(3) case);
;
(b) after paragraph (g) insert—
(ga) paragraph 23A(2) (duty to notify client of reference number: paragraph 22(3) case)
.
(4) In sub-paragraph (4), in the table, at the end insert—
A failure to comply with paragraph 22C | The first day after the end of the period before the end of which the person must comply with paragraph 22C
.
40 In paragraph 40 (penalties: supplementary), in sub-paragraph (2), after paragraph (a) (but before the “and” immediately after it) insert—
(aa) in the case of a penalty for a person's failure to comply with paragraph 22C, to the amount of any fees received, or likely to have been received, by the person in connection with the arrangements, the proposed arrangements or the proposal,
.
41 In paragraph 57(1) (interpretation of Schedule), for the definition of “reference number” substitute—
“reference number” means a reference number allocated under paragraph 22;
.
PART 3 Other amendments
42 (1) Section 98C of TMA 1970 (notification under Part 7 of FA 2004: penalties) is amended as follows.
(2) In subsection (1)(a)(i), for “or (ca)” substitute “ , (ca) or (cc) ”.
(3) In subsection (2)—
(a) after paragraph (cb) insert—
(cc) section 311C (duty to provide further information requested by HMRC: section 311(3) case);
;
(b) after paragraph (d) insert—
(dza) section 312ZA(2) (duty to notify client of reference number: section 311(3) case);
.
(4) In subsection (2ZA)(b), at the beginning insert “ (subject to subsection (2ZAB)) ”.
(5) In subsection (2ZA), in the table, at the end insert—
A failure to comply with section 311C | The first day after the end of the period before the end of which the person must comply with section 311C
.
(6) After subsection (2ZA) insert—
(2ZAA) Subsection (2ZAB) applies where—
(a) a person fails to comply with a provision mentioned in subsection (2)(a), (b) or (c) in respect of arrangements or proposed arrangements, and
(b) a reference number is subsequently allocated to the arrangements or proposed arrangements in a case within section 311(3) of the Finance Act 2004 (case where notice given under section 310D)).
(2ZAB) Where this subsection applies, the failure to comply is taken for the purposes of this section to have ceased on the day before the reference number is allocated, if it has not already ceased.
(7) In subsection (2ZB), after paragraph (a) (but before the “and” immediately after it) insert—
(aa) in the case of a penalty for a person's failure to comply with section 311C, to the amount of any fees received, or likely to have been received, by the person in connection with the arrangements, the proposed arrangements or the proposal,
.
43 (1) Chapter 3 of Part 4 of FA 2014 (accelerated payment) is amended as follows.
(2) In section 219 (circumstances in which an accelerated payment notice may be given)—
(a) in subsection (5)(a), omit “notifiable”;
(b) in subsection (5)(b), omit “notifiable” in each place;
(c) in subsection (5)(c)—
(i) for “the promoter” substitute “ a person ”;
(ii) after “312(2)” insert “ or 312ZA(2) ”;
(iii) omit “notifiable”;
(d) in subsection (6)—
(i) omit “notifiable”;
(ii) after “312(6)” insert “ or 312ZA(4) ”;
(iii) for “promoters” substitute “ persons ”.
(3) In section 227 (withdrawal, modification or suspension of accelerated payment notice), for subsection (5) substitute—
(5) Where an accelerated payment notice is given by virtue of the Condition C requirement in section 219(4)(b), and—
(a) under section 311(8) or 311B(8) of FA 2004, HMRC withdraw the reference number allocated to the chosen arrangements, or to proposed arrangements implemented by the chosen arrangements, or
(b) HMRC give notice under section 312(6) or 312ZA(4) of FA 2004, with the result that persons are no longer under the duty in section 312(2) or (as the case may be) section 312ZA(2) of that Act in relation to the chosen arrangements,
HMRC must withdraw the accelerated payment notice, to the extent that it was given by virtue of the Condition C requirement.
PART 4 Commencement
44 This Schedule comes into force on the day on which this Act is passed (“the commencement date”), subject to paragraphs 45 and 46.
45 (1) Section 310D of FA 2004 (inserted by paragraph 4) applies only in relation to transactions entered into, firm approaches made, and proposals that are made available for implementation, on or after the commencement date.
(2) So far as applicable to a person who is not a promoter in relation to the arrangements or proposed arrangements, section 312ZA of FA 2004 (inserted by paragraph 7) applies only where a person is providing, or has provided, services to the client (within the meaning of that section) on or after the commencement date.
(3) Section 316C(1)(c) of FA 2004 (inserted by paragraph 16(2)) applies—
(a) in relation to a person who is or was a promoter in relation to arrangements or proposed arrangements, regardless of when that is or was the case, and
(b) in relation to a person who is otherwise involved in the supply of arrangements or proposed arrangements, only where the person is so involved on or after the commencement date.
(4) Expressions used in this paragraph and Part 7 of FA 2004 have the same meaning in this paragraph as they have in that Part.
46 (1) Paragraph 21A of Schedule 17 to F(No.2)A 2017 (inserted by paragraph 22) applies only in relation to transactions entered into, firm approaches made, and proposals that are made available for implementation, on or after the commencement date.
(2) So far as applicable to a person who is not a promoter in relation to the arrangements or proposed arrangements, paragraph 23A of Schedule 17 to F(No.2)A 2017 (inserted by paragraph 26) applies only where a person is providing, or has provided, services to the client (within the meaning of that paragraph) on or after the commencement date.
(3) Paragraph 36(1)(c) of Schedule 17 to F(No.2)A 2017 (inserted by paragraph 37(2)) applies—
(a) in relation to a person who is or was a promoter in relation to arrangements or proposed arrangements, regardless of when that is or was the case, and
(b) in relation to a person who is otherwise involved in the supply of arrangements or proposed arrangements, only where the person is so involved on or after the commencement date.
(4) Expressions used in this paragraph and Schedule 17 to F(No.2)A 2017 have the same meaning in this paragraph as they have in that Schedule.
Section 124
PART 1 New Schedule to FA 2013
1 After Schedule 43C of FA 2013 insert—
SCHEDULE 43D
The GAAR and partnerships
Section 209
PART 1 General
Introductory
1 (1) This Schedule makes provision about the operation of the general anti-abuse rule in relation to partnerships.
(2) This Schedule applies where—
(a) a return is made under section 12AA of TMA 1970 (a “section 12AA partnership return”), or
(b) a return is made in accordance with regulations under paragraph 10 of Schedule A1 to TMA 1970 (a “Schedule A1 partnership return”).
Meaning of “the responsible partner”
2 In this Schedule, “the responsible partner” means—
(a) in relation to the making of a section 12AA partnership return, the person who delivered the return or their successor (within the meaning of section 12AA(11) of TMA 1970);
(b) in relation to the making of a Schedule A1 partnership return, the nominated partner (within the meaning of paragraph 5 of Schedule A1 to TMA 1970).
Partnership return made on basis that tax advantage arises
3 (1) For the purposes of this Schedule, a partnership return is regarded as made on the basis that a particular tax advantage arises (or might arise) to a partner from particular arrangements if—
(a) it is made on the basis that an increase or reduction in one or more of the amounts mentioned in section 12AB(1) of TMA 1970 (amounts in the partnership statement in a partnership return) results (or might result) from those arrangements, and
(b) that increase or reduction results (or might result) in that tax advantage for the partner.
(2) In sub-paragraph (1) and in the following provisions of this Schedule “partnership return” means a section 12AA partnership return or a Schedule A1 partnership return.
PART 2 Protective GAAR notices
Power to give protective GAAR notice to responsible partner
4 (1) If an officer of Revenue and Customs considers, in relation to a partnership—
(a) that a partnership return has been made on the basis that a tax advantage arises (or might arise) to one or more partners from tax arrangements that are abusive, and
(b) that, on the assumption that the advantage does arise from tax arrangements that are abusive, it ought to be counteracted under section 209,
the officer may give a written notice to that effect (a “protective GAAR notice”) to the responsible partner.
(2) Subsections (2) to (9) of section 209AA apply in relation to a protective GAAR notice given under this paragraph as they apply in relation to a protective GAAR notice given under that section, subject to the modifications in sub-paragraphs (3) and (4).
(3) Section 209AA(3) is to be read as if—
(a) for “a return made by the person, and” there were substituted “ the partnership return ”, and
(b) paragraph (b) were omitted.
(4) Section 209AA(8) is to be read as if, for “212A”, there were substituted “ 212B ”.
PART 3 Notices of proposed counteraction
Power to give notice of proposed counteraction to responsible partner
5 (1) If a designated HMRC officer considers that, in relation to a partnership—
(a) a partnership return has been made on the basis that a tax advantage has arisen to one or more partners from tax arrangements that are abusive, and
(b) the tax advantage ought to be counteracted under section 209,
the officer may give the responsible partner a written notice under this paragraph.
(2) A partner who appears to a designated HMRC officer to fall within sub-paragraph (1)(a) is a “relevant partner” for the purposes of this Part of this Schedule.
(3) The notice must—
(a) specify each relevant partner, the arrangements and the tax advantage,
(b) explain why the officer considers that a tax advantage has arisen to each relevant partner from tax arrangements that are abusive,
(c) set out the counteraction that the officer considers ought to be taken,
(d) inform the responsible partner of the period for making representations under paragraph 4 of Schedule 43, and
(e) explain the effect of—
(i) paragraphs 5 and 6 of Schedule 43, and
(ii) sections 209(8) and 212B.
(4) The notice may set out steps that may be taken to avoid the proposed counteraction.
(5) If, after the notice has been given, it appears to a designated HMRC officer that the tax advantage has not in fact arisen to a partner specified in the notice, the officer must amend the notice accordingly.
(6) Where a designated HMRC officer so amends a notice—
(a) it is treated as having been given in the amended form, and
(b) the officer may take such other steps as the officer considers appropriate.
Effect of giving a notice under paragraph 5
6 Where an officer gives a notice under paragraph 5 in respect of a tax advantage, this Part of this Act has effect in relation to the tax advantage with the modifications in paragraph 7.
Modifications to Schedule 43
7 (1) Schedule 43 (procedural requirements) has effect with the following modifications.
(2) Schedule 43 is to be read as if paragraphs 1A and 3 were omitted.
(3) References to a notice given under paragraph 3 of Schedule 43 are to be read as if they were to a notice given under paragraph 5 of this Schedule.
(4) In paragraphs 4 and 6 to 12, references to the taxpayer are to be read as if they were to the responsible partner.
(5) Schedule 43 is to be read as if, for paragraphs 4A and 4B (and the headings before those paragraphs), there were substituted—
Corrective action taken by the responsible partner
4A (1) Where, in respect of a partnership—
(a) a designated HMRC officer gives a notice under paragraph 5 of Schedule 43D in respect of a tax advantage arising to one or more partners,
(b) the closed period mentioned in section 209(8) has not begun, and
(c) the responsible partner—
(i) amends a partnership return or claim to counteract the tax advantage, and
(ii) notifies HMRC of that fact,
the matter is not to be referred to the GAAR Advisory Panel.
(2) Where a tax enquiry is in progress, no enactment limiting the time during which amendments may be made to returns or claims operates to prevent the responsible partner taking the action mentioned in sub-paragraph (1)(c)(i) and (ii) before the enquiry is closed.
(3) No appeal may be brought, by virtue of a provision mentioned in sub-paragraph (4), against an amendment made by a closure notice in respect of a tax enquiry, to the extent that the amendment takes into account an amendment made by the responsible partner to a return or claim as mentioned in sub-paragraph (1)(c).
(4) The provisions are—
(a) section 31(1)(b) or (c) of TMA 1970,
(b) paragraph 9 of Schedule 1A to TMA 1970.
Corrective action by relevant partners
4B (1) Where, in respect of a partnership—
(a) a designated HMRC officer gives a notice under paragraph 5 of Schedule 43D in respect of a tax advantage arising to one or more partners,
(b) the closed period mentioned in section 209(8) has not begun, and
(c) a partner mentioned in paragraph (a) takes all necessary action to enter into an agreement with HMRC (in writing) for the purpose of relinquishing the tax advantage,
the partner is not to be treated as a relevant partner for the purposes of Part 3 of Schedule 43D.
(2) As soon as is practicable after the beginning of the closed period, the notice given under paragraph 5 of Schedule 43D must be amended by a designated HMRC officer so each partner to whom sub-paragraph (1) applies is no longer specified in it.
(3) Where a notice is amended in accordance with sub-paragraph (2), the notice is treated as having been given in the amended form.
(4) If a partner to whom sub-paragraph (1) applies fails to enter into the written agreement, HMRC may proceed as if that sub-paragraph had not applied in relation to the partner (and accordingly, as if the partner were a relevant partner).
Referral to GAAR Advisory Panel
4C Paragraph 5 and 6 apply if, immediately before the beginning of the closed period mentioned in section 209(8)—
(a) the responsible partner has not taken the action described in paragraph 4A(1)(c), and
(b) there is at least one relevant partner.
Notices may be given on assumption that tax advantage does arise
8 (1) A designated HMRC officer may give a notice, or do anything else, under this Part of this Schedule where the officer considers that a tax advantage might have arisen.
(2) Accordingly, any notice given by a designated HMRC officer under paragraph 5 may be expressed to be given on the assumption that the tax advantage does arise (without agreeing that it does).
HMRC officers
9 Anything that may or must be done by a given designated HMRC officer under this Part of this Schedule may be done instead by any other designated HMRC officer.
PART 4 Pooling notices and notices of binding
Power to give pooling notice or notice of binding to responsible partner
10 (1) If a designated HMRC officer—
(a) has the power to give to a person (“R”) a pooling notice under paragraph 1(3) or a notice of binding under paragraph 2(2) of Schedule 43A in respect of a tax advantage arising from tax arrangements (“R's arrangements”), and
(b) considers that a partnership return has been made on the basis that the tax advantage has arisen to R, or to R and one or more of R's partners, from R's arrangements,
the officer may give the pooling notice or notice of binding to the responsible partner under this paragraph.
(2) A partner (including R) who appears to a designated HMRC officer to fall within sub-paragraph (1)(b) is a “relevant partner” for the purposes of this Part of this Schedule.
(3) If, after the notice has been given, it appears to a designated HMRC officer that the tax advantage has not in fact arisen to a partner specified in the notice, the officer must amend the notice accordingly.
(4) Where a designated HMRC officer so amends the notice—
(a) it is treated as having been given in the amended form, and
(b) the officer may take such other steps as the officer considers appropriate.
(5) The officer may not give a pooling notice under this paragraph if a notice under paragraph 5 has been given in respect of R's arrangements.
(6) The officer may not give a notice of binding under this paragraph if, in respect of R's arrangements, one of the following notices has been given—
(a) a pooling notice under this paragraph, or
(b) a notice under paragraph 5.
Effect of giving notice under paragraph 10
11 Where a pooling notice or notice of binding is given to the responsible partner under paragraph 10, this Part of this Act has effect in relation to the tax advantage with the modifications in paragraphs 12 and 13.
Modifications to Schedule 43A
12 (1) Schedule 43A (procedural requirements: pooling notices and notices of binding) has effect with the following modifications.
(2) Paragraph 1 is to be read as if, in sub-paragraph (3A), after “lead arrangements” there were inserted “ (whether under this Schedule or Schedule 43D) ”.
(3) Paragraph 3 is to be read as if—
(a) in sub-paragraph (2)(a), after “specify” there were inserted “ each relevant partner, ”,
(b) in sub-paragraph (2)(c), for “R” there were substituted “ each relevant partner ”, and
(c) in sub-paragraph (3), for “R may” there were substituted “ may be taken ”.
(4) Schedule 43A is to be read as if, for paragraph 4 (and the heading before it), there were substituted—
Corrective action by responsible partner
4 (1) Where, in respect of a partnership—
(a) a designated HMRC officer gives a pooling notice or notice of binding under paragraph 10 of Schedule 43D in respect of a tax advantage arising to one or more partners,
(b) the closed period mentioned in section 209(9) has not begun, and
(c) the responsible partner—
(i) amends a partnership return or claim to counteract the tax advantage, and
(ii) notifies HMRC of that fact,
the responsible partner is treated for the purposes of paragraphs 6 to 9 and Schedule 43B as not having been given the notice in question.
(2) Where a tax enquiry is in progress, no enactment limiting the time during which amendments may be made to returns or claims operates to prevent the responsible partner taking the action mentioned in sub-paragraph (1) before the enquiry is closed.
(3) No appeal may be brought, by virtue of a provision mentioned in sub-paragraph (4), against an amendment made by a closure notice in respect of a tax enquiry, to the extent that the amendment takes into account an amendment made by the responsible partner to a return or claim as mentioned in sub-paragraph (1)(c).
(4) The provisions are—
(a) section 31(1)(b) or (c) of TMA 1970,
(b) paragraph 9 of Schedule 1A to TMA 1970.
Corrective action by relevant partners
4A (1) Where, in respect of a partnership—
(a) a designated HMRC officer gives a pooling notice or notice of binding under paragraph 10 of Schedule 43D in respect of a tax advantage arising to one or more partners,
(b) the closed period mentioned in section 209(9) has not begun, and
(c) a partner mentioned in paragraph (a) takes all necessary action to enter into an agreement with HMRC (in writing) for the purpose of relinquishing the tax advantage,
the partner is not to be treated as a relevant partner for the purposes of Part 4 of Schedule 43D.
(2) As soon as is practicable after the beginning of the closed period, the pooling notice or notice of binding must be amended by a designated HMRC officer so each partner to whom sub-paragraph (1) applies is no longer specified in it.
(3) Where a notice is amended in accordance with sub-paragraph (2), the notice is treated for the purposes of paragraphs 6 to 9 and Schedule 43B as having been given in the amended form.
(4) If a partner to whom sub-paragraph (1) applies fails to enter into the written agreement, HMRC may proceed as if that sub-paragraph had not applied in relation to the partner (and accordingly, as if the partner were a relevant partner).
(5) Paragraph 7(3)(a) is to be read as if “to the person” were omitted.
(6) Paragraph 8(1) is to be read as if for “paragraph 1(3)” there were substituted “ paragraph 10 of Schedule 43D. ”
(7) Paragraph 10(b) is to be read as if for “the person concerned” there were substituted “ the responsible partner ”.
(8) Paragraph 9(1)(a) is to be read as if for “paragraph 2” there were substituted “ paragraph 10 of Schedule 43D ”.
(9) Paragraph 11(c) is to be read as if “to a person” were omitted.
Modifications to Schedule 43B
13 (1) Schedule 43B to FA 2013 (procedural requirements: generic referral of tax arrangements) has effect with the modifications in sub-paragraph (2).
(2) Paragraph 1 is to be read as if—
(a) in sub-paragraph (1)(a), for “paragraph 1(3) of Schedule 43A” there were substituted “ paragraph 10 of Schedule 43D ”,
(b) for the words before sub-paragraph (b)(i), there were substituted “ the relevant corrective action has been taken before ”, and
(c) after sub-paragraph (5), there were inserted—
(6) For the purposes of sub-paragraph (1)(b) the “relevant corrective action” is taken if (and only if) in respect of the tax advantage arising out of the lead arrangements—
(a) the responsible partner has taken the action mentioned in paragraph 4A(1)(c) of Schedule 43, or
(b) each of the relevant partners in question have taken the action described in paragraph 4B(1)(c) of that Schedule.
Notices may be given on assumption that tax advantage does arise
14 (1) A designated HMRC officer may give a notice, or do anything else, under this Part of this Schedule where the officer considers that a tax advantage might have arisen.
(2) Accordingly, any notice given by a designated HMRC officer under paragraph 10 may be expressed to be given on the assumption that the tax advantage does arise (without agreeing that it does).
HMRC officers
15 Anything that may or must be done by a given designated HMRC officer under this Part of this Schedule may be done instead by any other designated HMRC officer.
PART 2 Minor and consequential amendments to Part 5 of FA 2013
2 Part 5 of FA 2013 is amended as follows.
3 (1) Section 209 (counteracting tax advantages) is amended as follows.
(2) In subsection (5), for “the person to whom the tax advantage would arise” substitute “ anyone else ”.
(3) After subsection (6) insert—
(6A) The procedural requirements mentioned in subsection (6)(a) include any procedural requirements which apply under or by virtue of Schedule 43D (which makes provision in relation to partnerships).
(4) For subsections (8) and (9) substitute—
(8) Where a matter is referred to the GAAR Advisory Panel under paragraph 5 or 6 of Schedule 43 in relation to any tax arrangements, no GAAR-related adjustments may be made in the period (“the closed period”) that—
(a) begins with the 31st day after the end of the 45 day period mentioned in paragraph 4(1) of Schedule 43, and
(b) ends immediately before the day on which the notice under paragraph 12 of Schedule 43 is given in relation to the tax arrangements.
(9) Where a pooling notice or notice of binding has been given in relation to any tax arrangements, no GAAR-related adjustments may be made in the period (“the closed period”) that—
(a) begins with the 31st day after the day on which the notice is given, and
(b) ends immediately before the day on which a notice under paragraph 8(2) or 9(2) of Schedule 43A, or a notice under paragraph 8(2) of Schedule 43B, is given in relation to the tax arrangements (as the case may be).
(5) In subsection (10)(a), after “43” insert “ or paragraph 5 of Schedule 43D. ”
4 After section 209AB insert—
Adjustments under section 209: notices under Schedule 43D
209ABA (1) This section applies in the case of any particular adjustments in respect of a particular period or matter (“the adjustments concerned”) if, in relation to a partnership—
(a) the responsible partner is given a notice under paragraph 5 or 10 of Schedule 43D (“the Schedule 43D notice”) that specifies the adjustments concerned (whether or not other adjustments are specified),
(b) the Schedule 43D notice is given within the relevant time limit applicable to the adjustments concerned, and
(c) the adjustments concerned have not been specified in a protective GAAR notice given before the time at which the Schedule 43D notice is given.
(2) The Schedule 43D notice is given within the relevant time limit if—
(a) it is given within the ordinary assessing time limit applicable to the adjustments concerned, or
(b) in a case where a tax enquiry is in progress into a partnership return made by the responsible partner and the particular adjustments concerned relate to the matters contained in the return, it is given no later than the time when the enquiry is completed.
(3) The adjustments concerned have effect as if they are made by virtue of section 209.
(4) If, in the case of the specified adjustments (whether made by virtue of section 209 or otherwise)—
(a) notice of appeal is not given or notice of appeal is given but the appeal is subsequently withdrawn or determined by agreement, and
(b) no final GAAR counteraction notice is given,
the Schedule 43D notice has effect for all purposes (other than the purposes of section 212B) as if it had been given as a final GAAR counteraction notice (and, accordingly, as if the GAAR procedural requirements had been complied with).
(5) In any case not falling within subsection (4)—
(a) the adjustments concerned have no effect (so far as they are made by virtue of section 209) unless they (or lesser adjustments) are subsequently specified in a final GAAR counteraction notice, but
(b) the giving of the Schedule 43D notice is treated as meeting the requirements of section 209(6)(b) in the case of that final GAAR counteraction notice.
(6) In subsection (1) “protective GAAR notice” means a protective GAAR notice given under section 209AA or paragraph 4 of Schedule 43D.
(7) In this section “the responsible partner” and “partnership return” have the same meaning as in Schedule 43D.
5 (1) Section 209AC (sections 209AA and 209AB: definitions) is amended as follows.
(2) In the heading for “and 209AB” substitute “ to 209ABA ”.
(3) In subsection (1)—
(a) in the opening words for “and 209AB” substitute “ to 209ABA ”,
(b) in the definition of “GAAR procedural requirements” for “or 43B” substitute “ , 43B, or (as the case may be) 43D ”, and
(c) in the definition of “lesser adjustments” after “Schedule 43 or 43A notice” insert “ (within the meaning of section 209AB) or the Schedule 43D notice (within the meaning of section 209ABA) ”.
(4) In subsection (2) for “and 209AB” substitute “ to 209ABA ”.
6 In section 210 (consequential relieving adjustments)—
(a) in subsection (1)(b) omit “by the taxpayer”, and
(b) for subsection (10) substitute—
(10) For the purposes of subsection (1)(b), HMRC must be notified—
(a) in a case where Schedule 43D applies, by the responsible partner (within the meaning of that Schedule), and
(b) in any other case, by the person to whom the tax advantage would have arisen.
7 In section 212A (penalty), in subsection (1)(c)(ii) for “paragraph (c)” substitute “ paragraph (b) ”.
8 After section 212A insert—
Penalty: partnerships
212B (1) This section applies if, in respect of a partnership—
(a) the responsible partner has been given a notice under—
(i) paragraph 12 of Schedule 43,
(ii) paragraph 8 or 9 of Schedule 43A, or
(iii) paragraph 8 of Schedule 43B,
stating that a tax advantage is to be counteracted, and
(b) the tax advantage, so far as arising to a partner (P) in the partnership, has been counteracted by the making of adjustments under section 209.
(2) P is liable to pay a penalty of an amount equal to 60% of the value of the counteracted tax advantage.
(3) Schedule 43C—
(a) gives the meaning of “the value of the counteracted tax advantage”, and
(b) makes other provision in relation to penalties under this section.
(4) For the meaning of “the responsible partner” see paragraph 2 of Schedule 43D.
9 In section 214(1)—
(a) in the entry for “notice of binding” after “43A” insert “ or paragraph 10 of Schedule 43D (as the case may be) ”,
(b) in the entry for “pooling notice” for “paragraph 1(4) of Schedule 43A” insert “ paragraph 1(3) of Schedule 43A or paragraph 10 of Schedule 43D (as the case may be); ”, and
(c) omit the entry for “tax appeal”.
10 (1) Schedule 43 (general anti-abuse rule: procedural requirements) is amended as follows.
(2) Omit paragraph 1A.
(3) In paragraph 4A(3)(b) omit the words from the beginning to “that notice,”.
(4) In paragraph 4A(7)—
(a) at the beginning insert “ Where a tax enquiry is in progress, ”, and
(b) omit “(whether or not before the specified time)”.
(5) In paragraph 13(1) omit “to the taxpayer”.
(6) After paragraph 13 insert—
HMRC officers
14 Anything that may or must be done by a given designated HMRC officer under this Schedule may be done instead by any other designated HMRC officer.
11 (1) Schedule 43A (procedural requirements: pooling notices and notices of binding) is amended as follows.
(2) In paragraph 1(1), after “43” insert “ , or paragraph 5 of Schedule 43D, ”.
(3) In paragraph 4(7), at the beginning insert “ Where a tax enquiry is in progress, ”.
(4) In paragraph 12(1), omit “to the person concerned”.
12 (1) Schedule 43B (procedural requirements: generic referral of tax arrangements) is amended as follows.
(2) In paragraph 2(1)(a), after “43” insert “ or paragraph 5 of Schedule 43D (as the case may be) ”.
(3) In paragraph 3—
(a) in sub-paragraph (3)(a), after “43” insert “ or paragraph 5 of Schedule 43D (as the case may be) ”,
(b) in sub-paragraph (3A), after “43” insert “ or paragraph 5 of Schedule 43D ”, and
(c) in sub-paragraph (3A) omit “(by virtue of paragraph 4A of that Schedule)”.
(4) In paragraph 9(1), omit “to the person concerned”.
13 (1) Schedule 43C (penalty under section 212A: supplementary provision) is amended as follows.
(2) In the heading after “212A” insert “ or 212B ”.
(3) In paragraph 1, for “section 212A” substitute “ sections 212A and 212B ”
(4) In paragraph 2—
(a) for sub-paragraph (1), substitute—
(1) The “value of the counteracted tax advantage” is—
(a) for a penalty under section 212A, the additional amount due or payable in respect of tax as a result of the counteraction mentioned in subsection (1)(d) of that section, and
(b) for a penalty under section 212B, the additional amount due or payable in respect of tax (by the partner in question) as a result of the counteraction mentioned in subsection (1)(b) of that section.
,
(b) for “section 212A(1)(c)” substitute “ section 212A(1)(d) or as result of the counteraction mentioned in 212B(1)(b) (as the case may be) ”, and
(c) in sub-paragraph (5), for “the”, in the second place it occurs, substitute “ a ”.
(5) In paragraph 3(1) omit “mentioned in section 212A(1)(b) (“the tax advantage”)”.
(6) In paragraph 4(1), after “212A” insert “ or 212B (as the case may be) ”.
(7) In paragraph 5—
(a) in sub-paragraph (1), after “212A” insert “ or 212B (as the case may be) ”, and
(b) in sub-paragraph (2), for paragraph (a) substitute—
(a) notify—
(i) where the penalty is under section 212A, the person who is liable for it;
(ii) where the penalty is under section 212B, the person who is liable for it and the responsible partner.
, and
(c) in sub-paragraph (5), after “section 212A(1)(d)” insert “ or section 212B(1)(b) (as the case may be) ”.
(8) In paragraph 8—
(a) in sub-paragraph (1)(b), after “212A” insert “ or 212B (as the case may be) ”, and
(b) in sub-paragraph (4), after “212A” insert “ or 212B ”.
(9) In paragraph 9—
(a) in sub-paragraph (1)(a), after “212A” insert “ or 212B ”, and
(b) after sub-paragraph (1) insert—
(1A) Where the penalty is under section 212B, an appeal against it must be brought by the responsible partner.
(10) In paragraph 10(1), after section 212A insert “ or 212B ”.
SCHEDULE 33 Licensing authorities: requirements to give or obtain tax information
Section 125
Meaning of “authorisation”, “authorised activity” and “licensing authority” etc
1 (1) In this Schedule—
(a) “authorisation” means an authorisation mentioned in the first column of the table in sub-paragraph (2);
(b) “authorised activity” means the activity authorised by an authorisation (described, for ease of reference, in the second column of the table);
(c) “licensing authority” means the person who grants an authorisation (described, for ease of reference, in the third column of the table);
(d) references to the “category” of an authorisation or authorised activity are to the category assigned to it in the fourth column of the table.
(2) Here is the table—
Authorisation | Authorised activity | Licensing authority | Category
A licence under section 46 of TPCA 1847 | Driving a hackney carriage (England and Wales) | The Commissioners (within the meaning of TPCA 1847) | 1
A licence under section 8 of MPCA 1869 | Driving a hackney carriage (London) | Transport for London | 1
A licence under section 9 of PCCA 1975 | Driving a private hire vehicle (Plymouth) | Plymouth City Council | 1
A licence under section 51 of LG(MP)A 1976 | Driving a private hire vehicle (England and Wales) | A district council (within the meaning of Part 2 of LG(MP)A 1976) | 1
A taxi driver’s licence (including a temporary licence) under section 13 of CG(S)A 1982 | Driving a taxi (Scotland) | A licensing authority (within the meaning of CG(S)A 1982) | 1
A private hire car driver’s licence (including a temporary licence) under section 13 of CG(S)A 1982 | Driving a private hire car (Scotland) | A licensing authority (within the meaning of CG(S)A 1982) | 1
A licence under section 13 of PHV(L)A 1998 | Driving a private hire vehicle (London) | The licensing authority (within the meaning of PHV(L)A 1998) | 1
A licence under section 23 of TA(NI) 2008 | Driving a taxi (Northern Ireland) | The Department for Infrastructure in Northern Ireland | 1
A licence under section 13 of PCCA 1975 | Operating a private hire vehicle (Plymouth) | Plymouth City Council | 2
A licence under section 55 of LG(MP)A 1976 | Operating a private hire vehicle (England and Wales) | A district council (within the meaning of Part 2 of LG(MP)A 1976) | 2
A licence (including a temporary licence) under Part 1 of CG(S)A 1982 for the activity specified in article 2(2) of LBOO 2009 | Use of premises as booking office for taxis or private hire cars (Scotland) | A licensing authority (within the meaning of CG(S)A 1982) | 2
A licence under section 3 of PHV(L)A 1998 | Operating a private hire vehicle (London) | The licensing authority (within the meaning of PHV(L)A 1998) | 2
A metal dealer’s licence (including a temporary licence) under section 28 of CG(S)A 1982 | Carrying on business as a metal dealer (Scotland) | A licensing authority (within the meaning of CG(S)A 1982) | 3
A site licence under SMDA 2013 (see section 2 of that Act) | Carrying on business as a scrap metal dealer at a site (England and Wales) | A local authority (within the meaning of SMDA 2013) | 3
An itinerant metal dealer’s licence (including a temporary licence) under section 32 of CG(S)A 1982 | Carrying on business as an itinerant metal dealer (Scotland) | A licensing authority (within the meaning of CG(S)A 1982) | 4
A collector's licence under SMDA 2013 (see section 2 of that Act) | Carrying on business as a scrap metal dealer as a mobile collector (England and Wales) | A local authority (within the meaning of SMDA 2013) | 4
(3) In the table—
“CG(S)A 1982” means the Civic Government (Scotland) Act 1982;
“LBOO 2009” means the Civic Government (Scotland) Act 1982 (Licensing of Booking Offices) Order 2009 (S.S.I. 2009/145);
“LG(MP)A 1976” means the Local Government (Miscellaneous Provisions) Act 1976;
“MPCA 1869” means the Metropolitan Public Carriage Act 1869;
“PCCA 1975” means the Plymouth City Council Act 1975;
“PHV(L)A 1998” means the Private Hire Vehicles (London) Act 1998;
“SMDA 2013” means the Scrap Metal Dealers Act 2013;
“TA(NI) 2008” means the Taxis Act (Northern Ireland) 2008 (c. 4 (N.I.));
“TPCA 1847” means the Town Police Clauses Act 1847.
First-time application: licensing authority required to give information about tax compliance
2 (1) Sub-paragraph (2) applies where—
(a) an individual or company applies to a licensing authority for an authorisation, and
(b) the application is a first-time application.
(2) The licensing authority may not consider the application until it has—
(a) drawn the applicant's attention to such guidance relating to tax compliance as is for the time being specified for the purposes of this paragraph by the HMRC Commissioners,
(b) obtained confirmation from the applicant that the applicant is aware of the contents of that guidance, and
(c) drawn the applicant's attention to the powers of officers of HMRC to obtain information from the licensing authority about the applicant arising under—
(i) Schedule 36 to FA 2008 (information and inspection powers), and
(ii) Schedule 23 to FA 2011 (data-gathering powers).
(3) For the purposes of this Schedule an application for an authorisation is a “first-time” application if the applicant—
(a) has not previously been granted a relevant authorisation, or
(b) has previously been granted a relevant authorisation, but no relevant authorisation has been in effect in relation to the person for a period of one year ending with the date on which the application is made.
(4) For the purposes of sub-paragraph (3) an authorisation is “relevant” if—
(a) it is the authorisation to which the application in question relates, or
(b) it is in the same category as that authorisation.
Renewed application: licensing authority required to obtain confirmation of tax check
3 (1) Sub-paragraph (2) applies where—
(a) an individual or company applies to a licensing authority for an authorisation, and
(b) the application is not a first-time application.
(2) The licensing authority may not consider the application unless it has—
(a) requested confirmation from HMRC that the applicant has, within the required period, completed a tax check in relation to the authorised activity in question, and
(b) obtained that confirmation from HMRC.
(3) Sub-paragraph (2) is subject to paragraph 6 (no requirement to confirm completion of tax check where HMRC in default).
(4) For the purposes of this Schedule “the required period”, in relation to an application, means the period of 120 days ending with the day on which the request under sub-paragraph (2)(a) is made in relation to the application.
HMRC required to make arrangements in connection with tax checks
4 (1) HMRC must make arrangements (whether by means of a website or otherwise) for—
(a) enabling tax checks to be undertaken by persons who have applied, or who propose to apply, for an authorisation, and
(b) enabling licensing authorities to make, and HMRC to respond to, requests under paragraph 3(2)(a) (requests for confirmation of completed tax check).
(2) HMRC must make arrangements (whether by means of a website or otherwise) for enabling licensing authorities to confirm the availability during any period of arrangements made pursuant to sub-paragraph (1)(a).
Tax checks
5 (1) For the purposes of this Schedule a person undertakes a “tax check” in relation to an authorised activity by doing the following in accordance with arrangements made pursuant to paragraph 4(1)(a)—
(a) giving HMRC such information as HMRC may reasonably request in order to be satisfied that the person has complied with any obligation of the person to give a notice of liability in respect of the relevant period,
(b) if the person has delivered a tax return to HMRC in respect of the relevant period, confirming to HMRC whether or not the return included information relating to relevant authorised activity income, and
(c) giving HMRC such information as HMRC may reasonably request in order to assess the effectiveness of this Schedule in improving the tax compliance of persons carrying on authorised activities.
(2) The information that HMRC may request a person to give under sub-paragraph (1)(a) and (c) includes, in particular—
(a) the person's name and other information enabling the person to be identified (such as an individual's or company's Unique Taxpayer Reference, an individual's date of birth or national insurance number, or a company's registered number);
(b) the authorised activity in respect of which the person has applied, or proposes to apply, for authorisation (“the authorised activity”);
(c) information about the person's existing or previous authorisations in respect of the authorised activity or authorised activities in the same category as that activity (such as length or date of expiry).
(3) A tax check undertaken by a person in relation to an authorised activity—
(a) is “initiated” on the earlier of—
(i) the first day on which HMRC receive any information in response to a request under sub-paragraph (1)(a) and (c), and
(ii) in a case in which the person is required to give the confirmation mentioned in sub-paragraph (1)(b), the day on which HMRC receive that confirmation;
(b) is “completed” on the day on which HMRC indicates to the person that they are satisfied that they have received—
(i) all of the information requested under sub-paragraph (1)(a) and (c), and
(ii) in a case in which the person is required to give the confirmation mentioned in sub-paragraph (1)(b), that confirmation.
(4) In this paragraph—
“notice of liability” means—
a notice under section 7 of TMA 1970 (notice of liability to income tax), or
a notice under paragraph 2 of Schedule 18 to FA 1998 (duty to give notice of chargeability to corporation tax);
“relevant authorised activity income” means income that arose from the authorised activity or an authorised activity in the same category as that activity;
“the relevant period” means—
in relation to a notice of liability or tax return under TMA 1970, the most recent tax year to have ended 6 months or more before the day on which the tax check is initiated;
in relation to a notice of liability or tax return under Schedule 18 to FA 1998, the most recent accounting period of the company to have ended 12 months or more before the day on which the tax check is initiated;
“tax return” means—
a return required to be made under section 8 of TMA 1970 (personal return), or
a return required to be made under paragraph 3 of Schedule 18 to FA 1998 (company tax return).
Requirement to confirm completion of tax check ceases to apply if HMRC in default
6 (1) Paragraph 3(2) (requirement of licensing authority to request and receive confirmation that applicant has completed tax check before considering application) ceases to apply in relation to an application if either of the following conditions is met.
(2) The first condition is that—
(a) at any time after the application is made, the licensing authority requests the applicant to give it further information for the purpose of enabling it to make a request, or make a further request, under paragraph 3(2)(a) (request for confirmation of completed tax check) in relation to the application,
(b) the applicant notifies the licensing authority that arrangements made pursuant to paragraph 4(1)(a) (HMRC arrangements for enabling tax checks to be undertaken) were unavailable throughout—
(i) the period of 5 days beginning with the day on which the request under paragraph (a) was made, or
(ii) such later period of 5 days as the applicant specifies, and
(c) the licensing authority verifies, in accordance with arrangements made pursuant to paragraph 4(2), the information notified to the licensing authority under paragraph (b).
(3) The second condition is that—
(a) arrangements made pursuant to paragraph 4(1)(b) (HMRC arrangements for confirming tax check status) are unavailable throughout—
(i) the period of 5 days beginning with the day on which the licensing authority first attempts to make use of them for the purposes of the application, or
(ii) any later period of 5 days, and
(b) as a result, the licensing authority is prevented from making a request under paragraph 3(2)(a) (request for confirmation of completed tax check) in relation to the application that it would otherwise have made in that period.
Disclosure of information
7 (1) HMRC (or anyone acting on their behalf) may, for the purpose mentioned in sub-paragraph (2), disclose to a licensing authority (or anyone acting on their behalf) any confirmation or other information given to HMRC in the course of a tax check.
(2) The purpose is to enable or assist the licensing authority or HMRC to comply with this Schedule.
(3) A person who receives information as a result of this paragraph—
(a) may use it only for the purpose of complying with this Schedule, and
(b) may not further disclose it without the consent of the HMRC Commissioners (which may be general or specific).
(4) If—
(a) a person discloses information in contravention of sub-paragraph (3)(b), and
(b) the information relates to a person whose identity is specified in, or can be deduced from, the disclosure,
section 19 of CRCA 2005 (offence of wrongful disclosure) applies in relation to that disclosure as it applies in relation to a disclosure in contravention of section 20(9) of that Act.
(5) Nothing in this paragraph authorises a disclosure of information if the disclosure would contravene the data protection legislation or is prohibited by the investigatory powers legislation (but in determining whether a disclosure would do either of those things, the power conferred by sub-paragraph (1) is to be taken into account).
(6) In sub-paragraph (5)—
“the data protection legislation” has the same meaning as in the Data Protection Act 2018 (see section 3 of that Act);
“the investigatory powers legislation” means Parts 1 to 7 and Chapter 1 of Part 9 of the Investigatory Powers Act 2016.
(7) Nothing in this section limits the circumstances in which information may be disclosed under section 18(2) of CRCA 2005 or under any other enactment or rule of law.
Regulations
8 (1) The HMRC Commissioners may by regulations make provision about—
(a) the form or manner in which any information may or must be requested, or given, for the purposes of this Schedule;
(b) when any information is to be regarded for the purposes of this Schedule as having been requested, given or obtained;
(c) the retention or copying of any information obtained by a licensing authority (or anyone acting on its behalf) under this Schedule.
(2) References in sub-paragraph (1) to information include—
(a) the confirmation mentioned in paragraph 2(2)(b), 3(2) or 5(1)(b), and
(b) the indication mentioned in paragraph 5(3).
(3) Regulations under sub-paragraph (1) may—
(a) make provision which applies generally or only for specified cases or purposes;
(b) make different provision for different cases or purposes;
(c) include incidental, consequential, transitional or transitory provision;
(d) confer a discretion on HMRC.
(4) The HMRC Commissioners may by regulations amend any of the following provisions by substituting a different number of days for that for the time being specified in it—
(a) paragraph 3(4) (length of period after which tax check expires);
(b) sub-paragraphs (i) and (ii) of paragraph 6(2)(b) (length of period throughout which HMRC systems must be unavailable to applicant for waiver of requirement for tax check);
(c) sub-paragraphs (i) and (ii) of paragraph 6(3)(a) (length of period throughout which HMRC systems must be unavailable to licensing authority for waiver of requirement for tax check).
(5) Regulations under this paragraph are to be made by statutory instrument.
(6) A statutory instrument containing regulations under this paragraph is subject to annulment in pursuance of a resolution of the House of Commons.
Interpretation
Partnerships
10 (1) A reference in this Schedule to an individual or company applying for an authorisation includes a reference to that individual or company applying, in their capacity as a partner in a partnership, for an authorisation of the partnership.
(2) In relation to an application for an authorisation of the kind mentioned in sub-paragraph (1)—
(a) the reference to the applicant in paragraph 2(3) (meaning of “first- time” application) is to the partnership;
(b) any other reference in this Schedule to the applicant is to the individual or company who makes the application.
(3) In this paragraph—
(a) “partnership” includes a limited liability partnership that is carrying on a business with a view to profit, and
(b) “partner” includes a member of such a body.
Consequential amendments
11 (1) In the Transport Act 1985, section 17 (London taxi driver licensing: appeals) is amended in accordance with sub-paragraphs (2) and (3).
(2) In subsection (7) after “shall” insert “ (subject to subsections (12) to (14)) ”.
(3) After subsection (11) insert—
(12) Subsection (13) applies where—
(a) the application mentioned in subsection (7) is an application for a licence under section 8 of the Metropolitan Public Carriage Act 1869 (taxi driver licences),
(b) at any time after the application is made, the licensing authority requests the applicant to give it further information for the purpose of enabling it to make a request, or make a further request, under paragraph 3(2)(a) of Schedule 33 to the Finance Act 2021 (request for confirmation of completed tax check) in relation to the application, and
(c) at the end of the relevant period, the licensing authority continues to be prevented from considering the application by virtue of paragraph 3(2) of that Schedule to that Act.
(13) The existing licence mentioned in subsection (7) expires at the end of the relevant period.
(14) In subsections (12) and (13) “the relevant period” means—
(a) the period of 28 days beginning with the day on which the request under subsection (12)(b) is made, or
(b) if the final day of that period is earlier than the day on which (disregarding subsections (7) and (13)) the existing licence mentioned in subsection (7) expires, the period ending with that later day.
(4) In the Scrap Metal Dealers Act 2013, in Schedule 1 (further provision about licences), paragraph 1 (term of licence) is amended in accordance with sub-paragraphs (5) and (6).
(5) In sub-paragraph (2), after paragraph (a) insert—
(aa) if—
(i) at any time after the application is made, the local authority requests the applicant to give it further information for the purpose of enabling it to make a request, or make a further request, under paragraph 3(2)(a) of Schedule 33 to the Finance Act 2021 (request for confirmation of completed tax check) in relation to the application, and
(ii) at the end of the relevant period, the local authority continues to be prevented from considering the application by virtue of paragraph 3(2) of that Schedule to that Act,
the licence expires at the end of that period;
.
(6) After sub-paragraph (2) insert—
(2A) In sub-paragraph (2)(aa) “the relevant period” means—
(a) the period of 28 days beginning with the day on which the request under sub-paragraph (2)(aa)(i) is made, or
(b) if the final day of that period is earlier than the day on which (disregarding sub-paragraph (2)) the licence expires, the period ending with that later day.
SCHEDULE 34 Information powers: miscellaneous amendments
Section 128
1 Schedule 36 to FA 2008 (information and inspection powers) is amended as follows.
Disclosure of third party or financial institution notice
2 After paragraph 51 insert—
Disclosure of third party or financial institution notice
51A (1) This paragraph applies if—
(a) a person (“P”) is given a third party notice or financial institution notice (“the notice”), and
(b) the tribunal has disapplied the requirement in paragraph 4(1) or 4A(7)(a) (as the case may be) to give a copy of the notice to the taxpayer to whom it relates.
(2) The notice may include a requirement that P must not disclose the notice, or anything relating to it, to—
(a) the taxpayer to whom the notice relates, or
(b) any other person, except for a purpose relating to compliance with the notice.
(3) A requirement imposed under sub-paragraph (2) has effect for a period of 12 months beginning with the day on which P is given the notice unless, before the end of that period—
(a) the requirement is withdrawn in accordance with sub-paragraph (4), or
(b) the period is extended in accordance with sub-paragraph (5).
(4) An officer of Revenue and Customs may, by notice in writing to P, withdraw a requirement imposed under sub-paragraph (2).
(5) An officer of Revenue and Customs may—
(a) by notice in writing to P, extend the period for which a requirement imposed under sub-paragraph (2) has effect for a further period of 12 months (beginning with the day after the last day of the previous period), and
(b) do so on one or more occasions.
(6) An officer of Revenue and Customs may act under sub-paragraph (4) or (5) only if—
(a) the officer is an authorised officer of Revenue and Customs, or
(b) an authorised officer of Revenue and Customs has agreed to the withdrawal of the requirement or the extension of the period (as the case may be).
(7) An authorised officer of Revenue and Customs may only extend, or agree to the extension of, a period under sub-paragraph (5) if that officer has reasonable grounds for believing that not doing so might prejudice the assessment or collection of tax.
51B (1) A person who breaches a requirement imposed under paragraph 51A (not to disclose a notice or anything relating to it) is liable to a penalty of £1,000.
(2) If a person becomes liable for a penalty under sub-paragraph (1)—
(a) HMRC may assess the penalty, and
(b) if they do so, they must notify the person.
(3) The assessment must be made within the period of 12 months beginning with the date on which the breach of the requirement first came to the attention of an officer of Revenue and Customs.
(4) Paragraph 41 applies in relation to the sum specified in sub-paragraph (1) above as it applies in relation to the sums mentioned in paragraph 41(1) but as if—
(a) the reference in paragraph 41(2)(a) to this Act were to FA 2021, and
(b) paragraph 41(3) prevented the regulations from applying to any breach committed before the date on which the regulations come into force.
51C (1) A person may appeal a decision of an officer of Revenue and Customs that a penalty is payable by the person under paragraph 51B.
(2) Paragraph 48 (procedure on appeal against penalty) applies in relation to an appeal under this paragraph as it applies in relation to an appeal under paragraph 47(1)(a) but as if the reference to the notification under paragraph 46 were to the notification under paragraph 51B(2)(b).
(3) Paragraph 49 (enforcement of penalty) applies in relation to a penalty under paragraph 51B as it applies in relation to a penalty under paragraph 39 but as if the reference to the notification under paragraph 46 were to the notification under paragraph 51B(2)(b).
Increased daily default penalty
3 The existing text of paragraph 47 (right to appeal against penalty) is renumbered as sub-paragraph (1) and after that sub-paragraph as renumbered insert—
(2) But sub-paragraph (1)(b) does not give a right of appeal against the amount of an increased daily penalty payable as a result of paragraph 49A.
4 In paragraph 48 (procedure on appeal against penalty)—
(a) in sub-paragraph (3), for “paragraph 47(a)” substitute “ paragraph 47(1)(a) ”, and
(b) in sub-paragraph (4), for “paragraph 47(b)” substitute “ paragraph 47(1)(b) ”.
5 (1) Paragraph 49A (increased daily penalty) is amended as follows.
(2) In sub-paragraph (1)(c), for “imposed” substitute “ assessable ”.
(3) In sub-paragraph (2), for “imposed” substitute “ assessable ”.
(4) For sub-paragraphs (3) and (4) substitute—
(3) If the tribunal decides that an increased daily penalty should be assessable—
(a) the tribunal must determine the day from which the increased daily penalty is to apply and the maximum amount of that penalty (“the new maximum amount”), and
(b) from that day, paragraph 40(2) has effect in the person's case as if the new maximum amount were substituted for the amount for the time being specified there.
(4) The new maximum amount may not be more than £1,000.
(5) In sub-paragraph (5), in the opening words, for “the amount” substitute “ the new maximum amount ”.
(6) In sub-paragraph (6), at the end insert “ but as if the reference in paragraph 41(2)(a) to this Act were to FA 2021 ”.
6 (1) Paragraph 49B is amended as follows.
(2) In sub-paragraph (1), for “a person becomes liable to a penalty” substitute “ the tribunal makes a determination ”.
(3) In sub-paragraph (2), for the words from “the day” to the end substitute “ the new maximum amount and the day from which it applies ”.
(4) Omit sub-paragraph (3).
7 Omit paragraph 49C.
Power to give taxpayer notice following land transaction return
8 (1) Paragraph 21A (taxpayer notices following land transaction return) is amended as follows.
(2) In sub-paragraph (2), for “A to C” substitute “ A to D ”.
(3) After sub-paragraph (6) insert—
(7) Condition D is that relief from stamp duty land tax has been given in respect of the transaction and the notice is given for the purpose of checking whether—
(a) the relief is withdrawn to any extent under a provision mentioned in section 81 or 81ZA of FA 2003, or
(b) paragraph 6 of Schedule 6B to FA 2003 (transfers involving multiple dwellings) applies.
(8) Where condition D is met (and not any of conditions A to C), a taxpayer notice may not be given by virtue of this paragraph after the end of the period of 4 years beginning with the effective date of the transaction (but see sub-paragraph (9) in relation to PAIF seeding relief and COACS seeding relief).
(9) Where condition D is met because the notice is given for the purpose of checking whether the relief is withdrawn to any extent under a paragraph of Schedule 7A to FA 2003 (PAIF seeding relief and COACS seeding relief), the reference in sub-paragraph (8) to the effective date of the transaction is to be read as a reference to the first day of the control period within the meaning of that Schedule (see paragraph 21 of that Schedule).
(10) “Effective date” has the same meaning for the purposes of sub-paragraph (8) as for the purposes of Part 4 of FA 2003 (see section 119 of that Act).
Commencement
9 The amendments made by paragraph 8 have effect whenever the land transaction return under section 76 of FA 2003 was delivered.