SCHEDULE 8 Value added tax: non-business use of business assets etc
Section 19
Input tax
1 (1) Section 24 of VATA 1994 (input tax and output tax) is amended as follows.
(2) Omit subsection (3) (accommodation used for domestic purposes by company director etc).
(3) In subsection (5) (goods or services used partly for business purposes), for the words after “other purposes” substitute
—
(a) VAT on supplies, acquisitions and importations shall be apportioned so that so much as is referable to the taxable person's business purposes is counted as that person's input tax, and
(b) the remainder of that VAT (“the non-business VAT”) shall count as that person's input tax only to the extent (if any) provided for by regulations under subsection (6)(e).
(4) After that subsection insert—
(5A) For the purposes of subsections (1) and (5), a relevant asset held for the purposes of a business carried on or to be carried on by a taxable person is not, in any circumstances, to be regarded as used or to be used for the purposes of the business if, and to the extent that, it is used or to be used for that person's private use or the private use of that person's staff.
(5B) In subsection (5A) “relevant asset” means—
(a) any interest in land,
(b) any building or part of a building,
(c) any civil engineering work or part of such a work,
(d) any goods incorporated or to be incorporated in a building or civil engineering work (whether by being installed as fixtures or fittings or otherwise),
(e) any ship, boat or other vessel, or
(f) any aircraft.
(5) In subsection (6) (powers to make regulations), after paragraph (d) insert—
(e) in cases where an apportionment is made under subsection (5), for the non-business VAT to be counted as the taxable person's input tax for the purposes of any provision made by or under section 26 in such circumstances, to such extent and subject to such conditions as may be prescribed.
(6) After that subsection insert—
(6A) Regulations under subsection (6) may contain such supplementary, incidental, consequential and transitional provisions as appear to the Commissioners to be necessary or expedient.
(7) Omit subsection (7) (definition of “director” etc).
(8) The amendments made by sub-paragraphs (2), (4) and (7) come into force on 1 January 2011 and apply in relation to VAT incurred by a taxable person on or after that date.
(9) For the purposes of sub-paragraph (8), the VAT “incurred” by a person in respect of an asset is—
(a) VAT on the supply to the person of the asset,
(b) VAT on the supply to the person of any goods or services the expenditure on which constitutes expenditure related to the asset,
(c) VAT on the acquisition by the person from another member State of the asset or anything comprised in it, and
(d) VAT paid or payable by the person on the importation of the asset or anything comprised in it from a place outside the member States;
and VAT within paragraphs (a) to (d) is incurred at the time of the supply, acquisition or importation in question.
2 In section 26 of VATA 1994 (input tax allowable under section 25), in subsection (4) for “and supplementary” substitute “ , supplementary, consequential and transitional ”.
Non-business use of certain assets not to be treated as supply of services
3 (1) In paragraph 5 of Schedule 4 to VATA 1994 (matters to be treated as supply of goods or services), after sub-paragraph (4) (non-business use of business asset treated as supply of services) insert—
(4A) Sub-paragraph (4) does not apply (despite paragraph 9(1)) to—
(a) any interest in land,
(b) any building or part of a building,
(c) any civil engineering work or part of such a work,
(d) any goods incorporated or to be incorporated in a building or civil engineering work (whether by being installed as fixtures or fittings or otherwise),
(e) any ship, boat or other vessel, or
(f) any aircraft.
(2) This paragraph comes into force on 1 January 2011.
(3) This paragraph does not apply in relation to an asset in respect of which the person in question or any of that person's predecessors incurred VAT before 1 January 2011.
(4) But, where VAT is incurred by such a person before that date in respect of the asset, VAT incurred by such a person on or after that date in respect of the asset is not to be treated as referable to that person's business purposes by virtue of paragraph 5(4) and (6) of Schedule 4 to VATA 1994 if, and to the extent that, the asset is used or to be used for that person's private use or the private use of that person's staff, or more generally for purposes other than those of that person's business.
(5) For the purposes of this paragraph—
“asset” means anything falling within any of paragraphs (a) to (f) of paragraph 5(4A) of Schedule 4 to VATA 1994 (as inserted by sub-paragraph (1) above);
“the person in question” means the person carrying on the business referred to in paragraph 5(4) of that Schedule;
“predecessor” has the same meaning as in paragraph 5 of that Schedule;
and references to the VAT “incurred” by a person in respect of an asset are to be construed in accordance with paragraph 1(9).
Output tax charge where credit attributable to purported paragraph 5(4) supply
4 (1) Sub-paragraph (2) applies where—
(a) a person carrying on a business or any of that person's predecessors has been allowed credit under sections 25 and 26 of VATA 1994 for input tax on the basis that the input tax is attributable to a thing done or to be done which is or would be a paragraph 5(4) supply,
(b) some or all of that credit was allowed before 22 January 2010,
(c) disregarding sub-paragraph (2), the thing done or to be done is not or would not be a paragraph 5(4) supply, and
(d) the credit allowed as mentioned in paragraph (a) is not reversed in full.
(2) The thing done or to be done is to be treated for the purposes of VATA 1994 as if it were or would be a paragraph 5(4) supply.
(3) But sub-paragraph (2) does not confer on the person allowed credit as mentioned in sub-paragraph (1)(a) any entitlement to that credit under sections 25 and 26 of that Act.
(4) For the purposes of sub-paragraph (1) credit for input tax is “allowed” under sections 25 and 26 of VATA 1994 to the extent that the credit is claimed, and the claim is satisfied by one or more of the following—
(a) the deduction of input tax under section 25(2) of that Act from any output tax that is due to the Commissioners;
(b) a payment by the Commissioners in respect of the credit under section 25(3) of that Act;
(c) the setting off of the credit against a sum payable to the Commissioners, whether under section 81(3) of that Act or section 130 of FA 2008 or otherwise.
(5) In this paragraph—
“paragraph 5(4) supply” means a supply under paragraph 5(4) of Schedule 4 to VATA 1994 (goods held or used for the purposes of a business which are put to private use etc);
“predecessor” has the same meaning as in paragraph 5 of that Schedule.
(6) This paragraph is to be treated as having always had effect.
Section 25
Part 1 Corporation tax
Amendments of sections 101 to 104
1 FA 2009 is amended as follows.
4 After section 103 insert—
Further provision as to late payment interest and repayment interest
103A Schedule 54A makes special provision as to certain amounts of late payment interest and repayment interest.
5 In section 104(1), for “103” substitute “ 103A (and Schedules 53 to 54A) ”.
New Schedule
12 After Schedule 54 to FA 2009 insert—
Schedule 54A
Further provision as to late payment interest and repayment interest
Section 103A
Certain amounts of repayment interest recoverable as late payment interest
1 Where each of conditions A to D (see paragraph 2) is met, an amount of repayment interest that—
(a) has been paid to a company, but
(b) ought not to have been paid (see condition D),
may be recovered from the company as if it were late payment interest.
2 (1) This paragraph applies for the purposes of paragraph 1.
(2) Condition A is that repayment interest has been paid to the company on—
(a) a repayment of corporation tax paid by the company for an accounting period,
(b) a payment of first-year tax credit under Schedule A1 to CAA 2001 for an accounting period,
(c) a payment of R&D tax credit under Chapter 2 or 7 of Part 13 of CTA 2009 for an accounting period,
(d) a payment of land remediation tax credit or life assurance company tax credit under Part 14 of CTA 2009 for an accounting period, or
(e) a payment of film tax credit under Chapter 3 of Part 15 of CTA 2009 for an accounting period.
(3) Condition B, in a case falling within sub-paragraph (2)(a), is that (whether or not any previous assessment or determination has been made)—
(a) an assessment, or an amendment of an assessment, of the amount of corporation tax payable by the company for the accounting period is made, or
(b) a determination of that amount is made under paragraph 36 or 37 of Schedule 18 to FA 1998 (which until superseded by a self-assessment under that Schedule has effect as if it were one).
(4) Condition B, in a case falling within sub-paragraph (2)(b) to (e), is that an assessment, or an amendment of an assessment, is made to recover an amount of the tax credit in question paid to the company for that accounting period.
(5) Condition C is that the change (as a result of condition B being met) in—
(a) the company's assessed liability to corporation tax, or
(b) the amount of tax credit payable,
is not one which in whole or in part corrects an error made by HMRC.
(6) In sub-paragraph (5) “error” includes—
(a) any computational error, and
(b) the allowance of a claim or election which ought not to have been allowed.
(7) Condition D is that as a result only of that change (and, in particular, not as a result of any error in the calculation of the interest), it appears to HMRC that some or all of the repayment interest ought not to have been paid.
Common period rule for corporation tax
3 (1) This paragraph applies where—
(a) there is a common period in relation to a company (see sub-paragraph (2)), and
(b) each of conditions A to C (see paragraph 4) is met.
(2) A common period in relation to a company is any period during which—
(a) an amount of corporation tax is due and payable by the company in accordance with section 59D of TMA 1970 or regulations made under section 59E of that Act (“the overdue payment”), and
(b) an amount which has been paid on account of corporation tax is repayable to the company (“the repayment”).
(3) During the common period—
(a) the overdue payment does not carry late payment interest or interest under regulations made by virtue of section 59E(2)(g) of TMA 1970 (interest payable to HMRC on amounts of corporation tax due and payable under regulations under that section), and
(b) the repayment does not carry repayment interest or interest under regulations made by virtue of section 59E(2)(i) of TMA 1970 (interest payable by HMRC on amounts paid or repaid under regulations under that section).
4 (1) This paragraph applies for the purposes of paragraph 3.
(2) Condition A is that the overdue payment and the repayment are in respect of different accounting periods.
(3) Condition B is that the overdue payment would (apart from paragraph 3) carry—
(a) late payment interest, or
(b) interest under regulations made by virtue of section 59E(2)(g) of TMA 1970.
(4) Condition C is that the repayment would (apart from paragraph 3) carry—
(a) repayment interest, or
(b) interest under regulations made by virtue of section 59E(2)(i) of TMA 1970.
SCHEDULE 10 Penalty for failure to make returns etc
Section 26
1 Schedule 55 to FA 2009 (penalty for failure to make returns etc) is amended as follows.
2 (1) Paragraph 1 (penalty for failure) is amended as follows.
(2) In sub-paragraph (2), for “13” substitute “ 13J ”.
(2A) In sub-paragraph (4), in the definition of “filing date”, at the end insert “ (or, in the case of a return mentioned in item 7AA or 7AB of the Table, to the tax authorities to whom the return is required to be delivered) ”.
(3) The Table is amended as follows.
(4) After item 7 insert—
7A | Value added tax | Return under regulations under paragraph 2 of Schedule 11 to VATA 1994
7B | Insurance premium tax | Return under regulations under section 54 of FA 1994
7AA | Value added tax | Relevant non-UK return (as defined in paragraph 20(3) of Schedule 3BA to VATA 1994)
7AB | Value added tax | Relevant special scheme return (as defined in paragraph 16(3) of Schedule 3B to VATA 1994)
.
(5) Insert at the end—
14 | Aggregates levy | Return under regulations under section 25 of FA 2001
15 | Climate change levy | Return under regulations under paragraph 41 of Schedule 6 to FA 2000
16 | Landfill tax | Return under regulations under section 49 of FA 1996
17 | Air passenger duty | Return under regulations under section 38 of FA 1994
18 | Alcoholic liquor duties | Return under regulations under section 13, 49, 56 or 62 of ALDA 1979
19 | Tobacco products duty | Return under regulations under section 7 of TPDA 1979
20 | Hydrocarbon oil duties | Return under regulations under section 21 of HODA 1979
21 | Excise duties | Return under regulations under section 93 of the Customs and Excise Management Act 1979
22 | Excise duties | Return under regulations under section 100G or 100H of the Customs and Excise Management Act 1979
23 | General betting duty | Return under regulations under paragraph 2 of Schedule 1 to BGDA 1981
24 | Pool betting duty | Return under regulations under paragraph 2A of Schedule 1 to BGDA 1981
25 | Bingo duty | Return under regulations under paragraph 9 of Schedule 3 to BGDA 1981
26 | Lottery duty | Return under regulations under section 28(2) of FA 1993
27 | Gaming duty | Return under directions under paragraph 10 of Schedule 1 to FA 1997
28 | Remote gaming duty | Return under regulations under section 26K of BGDA 1981
.
3 For paragraph 2 (amount of penalty for occasional or annual returns) and the italic heading preceding it substitute—
Amount of penalty: occasional returns and returns for periods of 6 months or more
2 (1) Paragraphs 3 to 6 apply in the case of—
(a) a return falling within any of items 1 to 5, 7 and 8 to 13 in the Table,
(b) a return falling within any of items 7A, 7B and 14 to 28 which relates to a period of 6 months or more, and
(c) a return falling within item 7A which relates to a transitional period for the purposes of the annual accounting scheme.
(2) In sub-paragraph (1)(c), a transitional period for the purposes of the annual accounting scheme is a prescribed accounting period (within the meaning of section 25(1) of VATA 1994) which—
(a) ends on the day immediately preceding the date indicated by the Commissioners for Her Majesty's Revenue and Customs in a notification of authorisation under regulation 50 of the Value Added Tax Regulations 1995 (S.I. 1995/2518) (admission to annual accounting scheme), or
(b) begins on the day immediately following the end of the last period of 12 months for which such an authorisation has effect.
4 (1) Paragraph 6 (amount of penalty for occasional returns and annual returns) is amended as follows.
(2) In sub-paragraph (2), after “P” in the first place it occurs insert “ deliberately ”.
(3) In sub-paragraph (5), for “any other case” substitute “ any case not falling within sub-paragraph (2) ”.
5 (1) Paragraph 11 (amount of penalty for certain CIS returns after 12 months) is amended as follows.
(2) In sub-paragraph (2), after “P” in the first place it occurs insert “ deliberately ”.
(3) In sub-paragraph (5), for “any other case” substitute “ any case not falling within sub-paragraph (2) ”.
6 (1) Paragraph 12 (amount of penalty for other CIS returns after 12 months) is amended as follows.
(2) In sub-paragraph (2), after “P” insert “ deliberately ”.
7 After paragraph 13 insert—
Amount of penalty: returns for periods of between 2 and 6 months
13A (1) Paragraphs 13B to 13E apply in the case of a return falling within any of items 7A to 7B , 13A , 13B and 14 to 28 in the Table which relates to a period of less than 6 months but more than 2 months.
(2) But those paragraphs do not apply in the case of a return mentioned in paragraph 2(1)(c).
13B (1) P is liable to a penalty under this paragraph of £100.
(2) In addition, a penalty period begins to run on the penalty date for the return.
(3) The penalty period ends with the day 12 months after the filing date for the return, unless it is extended under paragraph 13C(2)(c) or 13H(2)(c).
13C (1) This paragraph applies if—
(a) a penalty period has begun under paragraph 13B or 13G because P has failed to make a return (“return A”), and
(b) before the end of the period, P fails to make another return (“return B”) falling within the same item in the Table as return A.
(2) In such a case—
(a) paragraph 13B(1) and (2) do not apply to the failure to make return B, but
(b) P is liable to a penalty under this paragraph for that failure, and
(c) the penalty period that has begun is extended so that it ends with the day 12 months after the filing date for return B.
(3) The amount of the penalty under this paragraph is determined by reference to the number of returns that P has failed to make during the penalty period.
(4) If the failure to make return B is P's first failure to make a return during the penalty period, P is liable, at the time of the failure, to a penalty of £200.
(5) If the failure to make return B is P's second failure to make a return during the penalty period, P is liable, at the time of the failure, to a penalty of £300.
(6) If the failure to make return B is P's third or a subsequent failure to make a return during the penalty period, P is liable, at the time of the failure, to a penalty of £400.
(7) For the purposes of this paragraph—
(a) in accordance with sub-paragraph (1)(b), the references in sub-paragraphs (3) to (6) to a return are references to a return falling within the same item in the Table as returns A and B, and
(b) a failure to make a return counts for the purposes of those sub-paragraphs if (but only if) the return relates to a period of less than 6 months.
(8) A penalty period may be extended more than once under sub-paragraph (2)(c).
13D (1) P is liable to a penalty under this paragraph if (and only if) P's failure continues after the end of the period of 6 months beginning with the penalty date.
(2) The penalty under this paragraph is the greater of—
(a) 5% of any liability to tax which would have been shown in the return in question, and
(b) £300.
13E (1) P is liable to a penalty under this paragraph if (and only if) P's failure continues after the end of the period of 12 months beginning with the penalty date.
(2) Where, by failing to make the return, P deliberately withholds information which would enable or assist HMRC to assess P's liability to tax, the penalty under this paragraph is determined in accordance with sub-paragraphs (3) and (4).
(3) If the withholding of the information is deliberate and concealed, the penalty is the greater of—
(a) 100% of any liability to tax which would have been shown in the return in question, and
(b) £300.
(4) If the withholding of the information is deliberate but not concealed, the penalty is the greater of—
(a) 70% of any liability to tax which would have been shown in the return in question, and
(b) £300.
(5) In any case not falling within sub-paragraph (2), the penalty under this paragraph is the greater of—
(a) 5% of any liability to tax which would have been shown in the return in question, and
(b) £300.
Amount of penalty: returns for periods of 2 months or less
13F (1) Paragraphs 13G to 13J apply in the case of a return falling within any of items 7A, 7B and 14 to 28 in the Table which relates to a period of 2 months or less.
(2) But those paragraphs do not apply in the case of a return mentioned in paragraph 2(1)(c).
13G (1) P is liable to a penalty under this paragraph of £100.
(2) In addition, a penalty period begins to run on the penalty date for the return.
(3) The penalty period ends with the day 12 months after the filing date for the return, unless it is extended under paragraph 13C(2)(c) or 13H(2)(c).
13H (1) This paragraph applies if—
(a) a penalty period has begun under paragraph 13B or 13G because P has failed to make a return (“return A”), and
(b) before the end of the period, P fails to make another return (“return B”) falling within the same item in the Table as return A.
(2) In such a case—
(a) paragraph 13G(1) and (2) do not apply to the failure to make return B, but
(b) P is liable to a penalty under this paragraph for that failure, and
(c) the penalty period that has begun is extended so that it ends with the day 12 months after the filing date for return B.
(3) The amount of the penalty under this paragraph is determined by reference to the number of returns that P has failed to make during the penalty period.
(4) If the failure to make return B is P's first, second, third, fourth or fifth failure to make a return during the penalty period, P is liable, at the time of the failure, to a penalty of £100.
(5) If the failure to make return B is P's sixth or a subsequent failure to make a return during the penalty period, P is liable, at the time of the failure, to a penalty of £200.
(6) For the purposes of this paragraph—
(a) in accordance with sub-paragraph (1)(b), the references in sub-paragraphs (3) to (5) to a return are references to a return falling within the same item in the Table as returns A and B, and
(b) a failure to make a return counts for the purposes of those sub-paragraphs if (but only if) the return relates to a period of less than 6 months.
(7) A penalty period may be extended more than once under sub-paragraph (2)(c).
13I (1) P is liable to a penalty under this paragraph if (and only if) P's failure continues after the end of the period of 6 months beginning with the penalty date.
(2) The penalty under this paragraph is the greater of—
(a) 5% of any liability to tax which would have been shown in the return in question, and
(b) £300.
13J (1) P is liable to a penalty under this paragraph if (and only if) P's failure continues after the end of the period of 12 months beginning with the penalty date.
(2) Where, by failing to make the return, P deliberately withholds information which would enable or assist HMRC to assess P's liability to tax, the penalty under this paragraph is determined in accordance with sub-paragraphs (3) and (4).
(3) If the withholding of the information is deliberate and concealed, the penalty is the greater of—
(a) 100% of any liability to tax which would have been shown in the return in question, and
(b) £300.
(4) If the withholding of the information is deliberate but not concealed, the penalty is the greater of—
(a) 70% of any liability to tax which would have been shown in the return in question, and
(b) £300.
(5) In any case not falling within sub-paragraph (2), the penalty under this paragraph is the greater of—
(a) 5% of any liability to tax which would have been shown in the return in question, and
(b) £300.
8 In paragraph 14(1) (reductions for disclosure), for “or 11(3) or (4)” substitute “ , 11(3) or (4), 13E(3) or (4) or 13J(3) or (4) ”.
9 In paragraph 15(5) (reductions for disclosure not below certain amounts)—
(a) for “paragraph 11(3) or (4)” substitute “ sub-paragraph (3) or (4) of any of paragraphs 11, 13E and 13J ”, and
(b) for “paragraph 11(3)(b) or (4)(b) (as the case may be)” substitute “ paragraph (b) of that sub-paragraph ”.
10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11 For paragraph 23(1) (no liability where there is reasonable excuse for failure) substitute—
(1) If P satisfies HMRC or (on appeal) the First-tier Tribunal or Upper Tribunal that there is a reasonable excuse for a failure to make a return—
(a) liability to a penalty under any paragraph of this Schedule does not arise in relation to that failure, and
(b) the failure does not count for the purposes of paragraphs 13B(2), 13C, 13G(2) and 13H.
SCHEDULE 11 Penalty for failure to make payments on time
Section 27
1 Schedule 56 to FA 2009 (penalty for failure to make payments on time) is amended as follows.
2 (1) Paragraph 1 (penalty for failure) is amended as follows.
(2) In sub-paragraph (2), for “8” substitute “ 8J ”.
(3) After sub-paragraph (4) insert—
(5) Sub-paragraph (4) is subject to paragraph 2A.
(4) The Table is amended as follows.
(5) In item 2, in column 3, omit “(except an amount falling within item 20)”.
(6) In item 4, in column 4, for “section 62” substitute “ section 71 ”.
(7) After item 6 insert—
6A | Value added tax | Amount payable under section 25(1) of VATA 1994 (except an amount falling within item 6B, 13A, 23 or 24) | The date determined— by or under regulations under section 25 of VATA 1994, or in accordance with an order under section 28 of that Act, as the date by which the amount must be paid
6B | Value added tax | Amount payable under section 25(1) of VATA 1994 which is an instalment of an amount due in respect of a period of 9 months or more (“amount A”) | The date on or before which P must pay any balancing payment or other outstanding payment due in respect of amount A
6BA | Value added tax | Amount payable under relevant special scheme return (as defined in paragraph 16(3) of Schedule 3B to VATA 1994) (except an amount falling within item 13A, 13AA, 13AB, 23 or 24) | The date by which the amount must be paid under the law of the member State which has established the special scheme
6BB | Value added tax | Amount payable under relevant non-UK return (as defined in paragraph 20(3) of Schedule 3BA to VATA 1994) (except an amount falling within item 13A, 13AA, 13AB, 23 or 24) | The date by which the amount must be paid under the law of the member State which has established the non-UK special scheme
6C | Insurance premium tax | Amount payable under regulations under section 54 of FA 1994 (except an amount falling within item 13B, 23 or 24) | The date determined by or under regulations under section 54 of FA 1994 as the date by which the amount must be paid
.
(8) After item 11 insert—
11A | Aggregates levy | Amount payable under regulations under section 25 of FA 2001 (except an amount falling within item 16A, 23 or 24) | The date determined by or under regulations under section 25 of FA 2001 as the date by which the amount must be paid
11B | Climate change levy | Amount payable under regulations under paragraph 41 of Schedule 6 to FA 2000 (except an amount falling within item 16B, 23 or 24) | The date determined by or under regulations under paragraph 41 of Schedule 6 to FA 2000 as the date by which the amount must be paid
11C | Landfill tax | Amount payable under regulations under section 49 of FA 1996 (except an amount falling within item 16C, 23 or 24) | The date determined by or under regulations under section 49 of FA 1996 as the date by which the amount must be paid
11D | Air passenger duty | Amount payable under regulations under section 38 of FA 1994 (except an amount falling within item 17A, 23 or 24) | The date determined by or under regulations under section 38 of FA 1994 as the date by which the amount must be paid
11E | Alcoholic liquor duties | Amount payable under regulations under section 13, 49, 56 or 62 of ALDA 1979 (except an amount falling within item 17A, 23 or 24) | The date determined by or under regulations under section 13, 49, 56 or 62 of ALDA 1979 as the date by which the amount must be paid
11F | Tobacco products duty | Amount payable under regulations under section 7 of TPDA 1979 (except an amount falling within item 17A, 23 or 24) | The date determined by or under regulations under section 7 of TPDA 1979 as the date by which the amount must be paid
11G | Hydrocarbon oil duties | Amount payable under regulations under section 21 or 24 of HODA 1979 (except an amount falling within item 17A, 23 or 24) | The date determined by or under regulations under section 21 or 24 of HODA 1979 as the date by which the amount must be paid
11H | General betting duty | Amount payable under section 5B of BGDA 1981 (except an amount falling within item 17A, 23 or 24) | The date determined— under section 5B of BGDA 1981, or by or under regulations under para-graph 2 of Schedule 1 to that Act, as the date by which the amount must be paid
11I | Pool betting duty | Amount payable under section 8 of BGDA 1981 (except an amount falling within item 17A, 23 or 24) | The date determined— under section 8 of BGDA 1981, or by or under regulations under that section or directions under para-graph 3 of Schedule 1 to that Act, as the date by which the amount must be paid
11J | Bingo duty | Amount payable under regulations under paragraph 9 of Schedule 3 to BGDA 1981 (except an amount falling within item 17A, 23 or 24) | The date determined by or under regulations under paragraph 9 of Schedule 3 to BGDA 1981 as the date by which the amount must be paid
11K | Lottery duty | Amount payable under section 26 of FA 1993 (except an amount falling within item 17A, 23 or 24) | The date determined— by section 26 of FA 1993, or by or under regulations under that section, as the date by which the amount must be paid
11L | Gaming duty | Amount payable under section 12 of FA 1997 (except an amount falling within item 17A, 23 or 24) | The date determined by or under regulations under— section 12 of FA 1997, or paragraph 11 of Schedule 1 to that Act, as the date by which the amount must be paid
11M | Remote gaming duty | Amount payable under section 26I of BGDA 1981 (except an amount falling within item 17A, 23 or 24) | The date determined by or under regulations under section 26I of BGDA 1981 as the date by which the amount must be paid
.
(9) After item 13 insert—
13A | Value added tax | Amount assessed under section 73(1) of VATA 1994 in the absence of a return | The date by which the amount would have been required to be paid if it had been shown in the return
13AA | Value added tax | Amount assessed under section 73(1) of VATA 1994, by virtue of paragraph 16 of Schedule 3B to that Act, in the absence of a value added tax return (as defined in paragraph 23(1) of that Schedule) | The date by which the amount would have been required to be paid under the law of the member State under whose law the return was required
13AB | Value added tax | Amount assessed under section 73(1) of VATA 1994, by virtue of paragraph 20 of Schedule 3BA to that Act, in the absence of a relevant non-UK return (as defined in paragraph 38(1) of that Schedule) | The date by which the amount would have been required to be paid under the law of the member State under whose law the return was required
13B | Insurance premium tax | Amount assessed under section 56(1) of FA 1994 in the absence of a return | The date by which the amount would have been required to be paid if it had been shown in the return
.
(10) After item 16 insert—
16A | Aggregates levy | Amount assessed under paragraph 2 or 3 of Schedule 5 to FA 2001 in the absence of a return | The date by which the amount would have been required to be paid if it had been shown in the return
16B | Climate change levy | Amount assessed under paragraph 78 or 79 of Schedule 6 to FA 2000 in the absence of a return | The date by which the amount would have been required to be paid if it had been shown in the return
16C | Landfill tax | Amount assessed under section 50(1) of FA 1996 in the absence of a return | The date by which the amount would have been required to be paid if it had been shown in the return
.
(11) After item 17 insert—
17A | Tax falling within any of items 11D to 11M | Amount assessed under section 12(1) of FA 1994 in the absence of a return | The date by which the amount would have been required to be paid if it had been shown in the return
.
(12) Omit item 20.
(13) In item 23—
(a) in columns 2 and 3, for “items 1 to 6, 9 or 10” substitute “ items 1 to 6A,6BA, 6BB, 6C, 9, 10 , 11A or 11B to 11M ”, and
(b) in column 3, for “any of items 18 to 20” substitute “ item 18 or 19 ”.
(14) In item 24—
(a) in column 2, for “items 1 to 6, 9 or 10” substitute “ items 1 to 6A,6BA, 6BB, 6C, 9, 10 , 11A or 11B to 11M ”, and
(b) in column 3, for “any of items 18 to 20” substitute “ item 18 or 19 ”.
3 In paragraph 2 (assessments and determinations in default of return), in paragraph (c), for “10” substitute “ 11M ”.
4 After paragraph 2 insert—
Different penalty date for certain PAYE payments
2A (1) PAYE regulations may provide that, in relation to specified payments of tax falling within item 2, the penalty date is a specified date later than that determined in accordance with column 4 of the Table.
(2) In sub-paragraph (1) “specified” means specified in the regulations.
5 (1) Paragraph 3 (amount of penalty for occasional amounts and amounts due for periods of 6 months or more) is amended as follows.
(2) Sub-paragraph (1) is amended as follows.
(3) In paragraph (a), for “... 3B and 7 to 24” substitute “ ... 3B, 6B, 7 to 11ZA and 12 to 24 ”.
(4) In paragraph (b)—
(a) for “item 2 or 4” substitute “ any of items 2, 4, 6A, 6C and 11A to 11M ”, and
(b) omit the “and” at the end.
(5) After paragraph (c) insert
, and
(d) a payment of tax falling within item 6A which relates to a transitional period for the purposes of the annual accounting scheme.
(6) After sub-paragraph (1) insert—
(1A) In sub-paragraph (1)(d), a transitional period for the purposes of the annual accounting scheme is a prescribed accounting period (within the meaning of section 25(1) of VATA 1994) which—
(a) ends on the day immediately preceding the date indicated by the Commissioners for Her Majesty's Revenue and Customs in a notification of authorisation under regulation 50 of the Value Added Tax Regulations 1995 (S.I. 1995/2518) (admission to annual accounting scheme), or
(b) begins on the day immediately following the end of the last period of 12 months for which such an authorisation has effect.
6 For paragraph 6 substitute—
6 (1) P is liable to a penalty, in relation to each tax, of an amount determined by reference to—
(a) the number of defaults that P has made during the tax year (see sub-paragraphs (2) and (3)), and
(b) the amount of that tax comprised in the total of those defaults (see sub-paragraphs (4) to (7)).
(2) For the purposes of this paragraph, P makes a default when P fails to make one of the following payments (or to pay an amount comprising two or more of those payments) in full on or before the date on which it becomes due and payable—
(a) a payment under PAYE regulations;
(b) a payment of earnings-related contributions within the meaning of the Social Security (Contributions) Regulations 2001 (S.I. 2001/1004);
(c) a payment due under the Income Tax (Construction Industry Scheme) Regulations 2005 (S.I. 2005/2045);
(d) a repayment in respect of a student loan due under the Education (Student Loans) (Repayments) Regulations 2009 (S.I. 2009/470) or the Education (Student Loans) (Repayments) Regulations (Northern Ireland) 2000 (S.R. 2000 No. 121).
(3) But the first failure during a tax year to make one of those payments (or to pay an amount comprising two or more of those payments) does not count as a default for that tax year.
(4) If P makes 1, 2 or 3 defaults during the tax year, the amount of the penalty is 1% of the amount of the tax comprised in the total of those defaults.
(5) If P makes 4, 5 or 6 defaults during the tax year, the amount of the penalty is 2% of the amount of the tax comprised in the total of those defaults.
(6) If P makes 7, 8 or 9 defaults during the tax year, the amount of the penalty is 3% of the amount of the tax comprised in the total of those defaults.
(7) If P makes 10 or more defaults during the tax year, the amount of the penalty is 4% of the amount of the tax comprised in the total of those defaults.
(8) For the purposes of this paragraph—
(a) the amount of a tax comprised in a default is the amount of that tax comprised in the payment which P fails to make;
(b) a default counts for the purposes of sub-paragraphs (4) to (7) even if it is remedied before the end of the tax year.
(9) The Treasury may by order made by statutory instrument make such amendments to sub-paragraph (2) as they think fit in consequence of any amendment, revocation or re-enactment of the regulations mentioned in that sub-paragraph.
7 After paragraph 8 insert—
Amount of penalty: amounts in respect of periods of between 2 and 6 months
8A (1) Paragraphs 8B to 8E apply in the case of a payment of tax falling within any of items 6A,6BA, 6BB, 6C and 11A to 11M in the Table which relates to a period of less than 6 months but more than 2 months.
(2) But those paragraphs do not apply in the case of a payment mentioned in paragraph 3(1)(d).
(3) Paragraph 8K sets out how payments on account of VAT (item 6A) are to be treated for the purposes of paragraphs 8B to 8E.
8B (1) A penalty period begins to run on the penalty date for the payment of tax.
(2) The penalty period ends with the day 12 months after the date specified in or for the purposes of column 4 for the payment, unless it is extended under paragraph 8C(2)(c) or 8H(2)(c).
8C (1) This paragraph applies if—
(a) a penalty period has begun under paragraph 8B or 8G because P has failed to make a payment (“payment A”), and
(b) before the end of the period, P fails to make another payment (“payment B”) falling within the same item in the Table as payment A.
(2) In such a case—
(a) paragraph 8B(1) does not apply to the failure to make payment B,
(b) P is liable to a penalty under this paragraph for that failure, and
(c) the penalty period that has begun is extended so that it ends with the day 12 months after the date specified in or for the purposes of column 4 for payment B.
(3) The amount of the penalty under this paragraph is determined by reference to the number of defaults that P has made during the penalty period.
(4) If the default is P's first default during the penalty period, P is liable, at the time of the default, to a penalty of 2% of the amount of the default.
(5) If the default is P's second default during the penalty period, P is liable, at the time of the default, to a penalty of 3% of the amount of the default.
(6) If the default is P's third or a subsequent default during the penalty period, P is liable, at the time of the default, to a penalty of 4% of the amount of the default.
(7) For the purposes of this paragraph—
(a) P makes a default when P fails to pay an amount of tax in full on or before the date on which it becomes due and payable;
(b) in accordance with sub-paragraph (1)(b), the references in sub-paragraphs (3) to (6) to a default are references to a default in relation to the tax to which payments A and B relate;
(c) a default counts for the purposes of those sub-paragraphs if (but only if) the period to which the payment relates is less than 6 months;
(d) the amount of a default is the amount which P fails to pay.
(8) A penalty period may be extended more than once under sub-paragraph (2)(c).
8D If any amount of the tax is unpaid after the end of the period of 6 months beginning with the penalty date, P is liable to a penalty of 5% of that amount.
8E If any amount of the tax is unpaid after the end of the period of 12 months beginning with the penalty date, P is liable to a penalty of 5% of that amount.
Amount of penalty: amounts in respect of periods of 2 months or less
8F (1) Paragraphs 8G to 8J apply in the case of a payment of tax falling within any of items 6A, 6C and 11A to 11M in the Table which relates to a period of 2 months or less.
(2) But those paragraphs do not apply in the case of a payment mentioned in paragraph 3(1)(d).
8G (1) A penalty period begins to run on the penalty date for the payment of tax.
(2) The penalty period ends with the day 12 months after the date specified in or for the purposes of column 4 for the payment, unless it is extended under paragraph 8C(2)(c) or 8H(2)(c).
8H (1) This paragraph applies if—
(a) a penalty period has begun under paragraph 8B or 8G because P has failed to make a payment (“payment A”), and
(b) before the end of the period, P fails to make another payment (“payment B”) falling within the same item in the Table as payment A.
(2) In such a case—
(a) paragraph 8G(1) does not apply to the failure to make payment B,
(b) P is liable to a penalty under this paragraph for that failure, and
(c) the penalty period that has begun is extended so that it ends with the day 12 months after the date specified in or for the purposes of column 4 for payment B.
(3) The amount of the penalty under this paragraph is determined by reference to the number of defaults that P has made during the penalty period.
(4) If the default is P's first, second or third default during the penalty period, P is liable, at the time of the default, to a penalty of 1% of the amount of the default.
(5) If the default is P's fourth, fifth or sixth default during the penalty period, P is liable, at the time of the default, to a penalty of 2% of the amount of the default.
(6) If the default is P's seventh, eighth or ninth default during the penalty period, P is liable, at the time of the default, to a penalty of 3% of the amount of the default.
(7) If the default is P's tenth or a subsequent default during the penalty period, P is liable, at the time of the default, to a penalty of 4% of the amount of the default.
(8) For the purposes of this paragraph—
(a) P makes a default when P fails to pay an amount of tax in full on or before the date on which it becomes due and payable;
(b) in accordance with sub-paragraph (1)(b), the references in sub-paragraphs (3) to (7) to a default are references to a default in relation to the tax to which payments A and B relate;
(c) a default counts for the purposes of those sub-paragraphs if (but only if) the period to which the payment relates is less than 6 months;
(d) the amount of a default is the amount which P fails to pay.
(9) A penalty period may be extended more than once under sub-paragraph (2)(c).
8I If any amount of the tax is unpaid after the end of the period of 6 months beginning with the penalty date, P is liable to a penalty of 5% of that amount.
8J If any amount of the tax is unpaid after the end of the period of 12 months beginning with the penalty date, P is liable to a penalty of 5% of that amount.
8 After paragraph 8J insert—
Calculation of unpaid VAT: treatment of payments on account
8K (1) Where P is required, by virtue of an order under section 28 of VATA 1994, to make any payment on account of VAT—
(a) each payment is to be treated for the purposes of this Schedule as relating to the prescribed accounting period in respect of which it is to be paid (and not as relating to the interval between the dates on which payments on account are required to be made), and
(b) the amount of tax unpaid in respect of the prescribed accounting period is the total of the amounts produced by paragraphs (a) and (b) of sub-paragraph (3).
(2) In determining that total—
(a) if there is more than one amount of POAD or POAT, those amounts are to be added together, and
(b) if the amount produced by sub-paragraph (3)(b) is less than zero, that amount is to be disregarded.
(3) The amounts are—
(a) POAD-POAT
(b) BPD-BPT
(4) In this paragraph—
POAD is the amount of any payment on account due in respect of the prescribed accounting period,
POAT is the amount of any payment on account paid on time (that is, on or before the date on which it was required to be made),
BPD (which is the balancing payment due in respect of the prescribed accounting period) is equal to
BPT (which is the amount paid on time in satisfaction of any liability to pay BPD) is equal to
(5) In sub-paragraph (4)—
PAPD is the amount of VAT due in respect of the prescribed accounting period,
PAPP is the total amount paid, on or before the last day on which P is required to make payments in respect of that period, in satisfaction of any liability to pay PAPD, and
POAP is the total amount paid, on or before that day (but whether or not paid on time), in satisfaction of any liability to pay POAD.
9 (1) Paragraph 11 (assessment) is amended as follows.
(2) In sub-paragraph (4), for “unpaid tax” substitute “ tax which was due or payable ”.
(3) After sub-paragraph (4) insert—
(4A) A replacement assessment may be made in respect of a penalty if an earlier assessment operated by reference to an overestimate of an amount of tax which was due or payable.
10 For paragraph 16(1) (no liability where there is reasonable excuse for failure) substitute—
(1) If P satisfies HMRC or (on appeal) the First-tier Tribunal or Upper Tribunal that there is a reasonable excuse for a failure to make a payment—
(a) liability to a penalty under any paragraph of this Schedule does not arise in relation to that failure, and
(b) the failure does not count as a default for the purposes of paragraphs 6, 8B, 8C, 8G and 8H.
Section 28
Part 1 Stamp duty land tax
1 Part 4 of FA 2003 (stamp duty land tax) is amended as follows.
New provisions relating to overpaid tax
2 In Schedule 10 (returns, enquiries, assessments and appeals), for paragraph 34 and the italic heading preceding it substitute—
Claim for relief for overpaid tax etc
34 (1) This paragraph applies where—
(a) a person has paid an amount by way of tax but believes that the tax was not due, or
(b) a person has been assessed as liable to pay an amount by way of tax, or there has been a determination to that effect, but the person believes that the tax is not due.
(2) The person may make a claim to the Commissioners for Her Majesty's Revenue and Customs for repayment or discharge of the amount.
(3) Paragraph 34A makes provision about cases in which the Commissioners for Her Majesty's Revenue and Customs are not liable to give effect to a claim under this paragraph.
(4) The following make further provision about making and giving effect to claims under this paragraph—
(a) paragraphs 34B to 34D, and
(b) Schedule 11A.
(5) Paragraph 34E makes provision about the application of this paragraph and paragraphs 34A to 34D to amounts paid under contract settlements.
(6) The Commissioners for Her Majesty's Revenue and Customs are not liable to give relief in respect of a case described in sub-paragraph (1)(a) or (b) except as provided—
(a) by this Schedule and Schedule 11A (following a claim under this paragraph), or
(b) by or under another provision of this Part of this Act.
(7) For the purposes of this paragraph and paragraphs 34A to 34E, an amount paid by one person on behalf of another is treated as paid by the other person.
Cases in which Commissioners not liable to give effect to a claim
34A (1) The Commissioners for Her Majesty's Revenue and Customs are not liable to give effect to a claim under paragraph 34 if or to the extent that the claim falls within a case described in this paragraph.
(2) Case A is where the amount paid, or liable to be paid, is excessive by reason of—
(a) a mistake in a claim or election, or
(b) a mistake consisting of making or giving, or failing to make or give, a claim or election.
(3) Case B is where the claimant is or will be able to seek relief by taking other steps under this Part of this Act.
(4) Case C is where the claimant—
(a) could have sought relief by taking such steps within a period that has now expired, and
(b) knew, or ought reasonably to have known, before the end of that period that such relief was available.
(5) Case D is where the claim is made on grounds that—
(a) have been put to a court or tribunal in the course of an appeal by the claimant relating to the amount paid or liable to be paid, or
(b) have been put to Her Majesty's Revenue and Customs in the course of an appeal by the claimant relating to that amount that is treated as having been determined by a tribunal (by virtue of paragraph 37 (settling of appeals by agreement)).
(6) Case E is where the claimant knew, or ought reasonably to have known, of the grounds for the claim before the latest of the following—
(a) the date on which an appeal by the claimant relating to the amount paid, or liable to be paid, in the course of which the ground could have been put forward (a “relevant appeal”) was determined by a court or tribunal (or is treated as having been so determined),
(b) the date on which the claimant withdrew a relevant appeal to a court or tribunal, and
(c) the end of the period in which the claimant was entitled to make a relevant appeal to a court or tribunal.
(7) Case F is where the amount in question was paid or is liable to be paid—
(a) in consequence of proceedings enforcing the payment of that amount brought against the claimant by Her Majesty's Revenue and Customs, or
(b) in accordance with an agreement between the claimant and Her Majesty's Revenue and Customs settling such proceedings.
(8) Case G is where—
(a) the amount paid, or liable to be paid, is excessive by reason of a mistake in calculating the claimant's liability to tax, and
(b) liability was calculated in accordance with the practice generally prevailing at the time.
Making a claim
34B (1) A claim under paragraph 34 may not be made more than 4 years after the effective date of the transaction.
(2) A claim under paragraph 34 may not be made by being included in a land transaction return.
The claimant: partnerships
34C (1) This paragraph applies where an amount is paid, or is liable to be paid, in respect of a land transaction entered into as purchaser by or on behalf of the members of a partnership (within the meaning of Schedule 15).
(2) Paragraphs 6 and 8 of Schedule 15 do not apply to a claim under paragraph 34 in respect of the amount.
(3) A claim under paragraph 34 in respect of the amount—
(a) may be made by a relevant person who has been nominated to make the claim by all of the relevant persons, and
(b) may not be made by any other person.
(4) In relation to such a claim, references in paragraph 34A to the claimant are to any of the relevant persons.
(5) The relevant persons are—
(a) any person who was a partner in the partnership at the effective date of the transaction, and
(b) the personal representative of such a person.
Assessment of claimant in connection with claim
34D (1) This paragraph applies where—
(a) a claim is made under paragraph 34,
(b) the grounds for giving effect to the claim also provide grounds for a discovery assessment on the claimant in respect of any land transaction, and
(c) such an assessment could be made but for a relevant restriction.
(2) The reference to the claimant in subsection (1)(b) includes—
(a) in relation to a claim for an amount paid or liable to be paid in respect of a land transaction entered into as purchaser by or on behalf of the members of a partnership (within the meaning of Schedule 15), a responsible partner within the meaning of paragraph 6(2) of Schedule 15;
(b) in relation to a claim for an amount paid or liable to be paid in respect of a land transaction entered into by trustees of a settlement (within the meaning of Schedule 16), a responsible trustee within the meaning of paragraph 5(3) of Schedule 16.
(3) The following are relevant restrictions—
(a) the restrictions in paragraph 30, and
(b) the expiry of a time limit for making a discovery assessment.
(4) Where this paragraph applies—
(a) the relevant restrictions are to be disregarded, and
(b) the discovery assessment is not out of time if it is made before the final determination of the claim.
(5) A claim is not finally determined until it, or the amount to which it relates, can no longer be varied (whether on appeal or otherwise).
Contract settlements
34E (1) In paragraph 34(1)(a) the reference to an amount paid by a person by way of tax includes an amount paid by a person under a contract settlement in connection with tax believed to be due.
(2) Sub-paragraphs (3) to (6) apply if the person who paid the amount under the contract settlement (“the payer”) and the person from whom the tax was due (“the taxpayer”) are not the same person.
(3) In relation to a claim under paragraph 34 in respect of that amount—
(a) the references to the claimant in paragraph 34A(5) to (7) (Cases D, E and F) have effect as if they included the taxpayer,
(b) the reference to the claimant in paragraph 34A(8) (Case G) has effect as if it were a reference to the taxpayer,
(c) the reference to the claimant in paragraph 34D(1)(b) has effect as if it were a reference to the taxpayer, and
(d) references to tax in Schedule 11A (as it applies to a claim under paragraph 34) include such an amount.
(4) Sub-paragraph (5) applies where the grounds for giving effect to a claim by the payer in respect of the amount also provide grounds for a discovery assessment on the taxpayer in respect of any land transaction.
(5) The Commissioners for Her Majesty's Revenue and Customs may set any amount repayable to the payer by virtue of the claim against any amount payable by the taxpayer by virtue of the assessment.
(6) The obligations of the Commissioners for Her Majesty's Revenue and Customs and the taxpayer are discharged to the extent of any set-off under sub-paragraph (5).
(7) “Contract settlement” means an agreement made in connection with any person's liability to make a payment to the Commissioners for Her Majesty's Revenue and Customs under or by virtue of an enactment.
Consequential amendments
3 In section 113 (functions conferred on “the Inland Revenue”), omit subsection (3)(b)(ii).
4 (1) Schedule 10 (returns, enquiries, assessments and appeals) is amended as follows.
(2) In the heading at the beginning of Part 6, after “Relief in the case of” insert “ overpaid tax or ”.
(3) In paragraph 45(1) (determination of market value by relevant tribunal), for “paragraphs 34(6) or” substitute “ paragraph ”.
5 In Schedule 11A (claims not included in returns etc), in paragraph 14(5) (application of provisions of Schedule 10)—
(a) for “and 44” substitute “ , 44 and 45 ”, and
(b) omit “(settling of appeals by agreement)”.
Part 2 Petroleum revenue tax
Claims for recovery of overpaid tax etc
6 Schedule 2 to OTA 1975 (management and collection of petroleum revenue tax) is amended as follows.
7 In the Table in paragraph 1(1) (applying provisions of TMA 1970 in relation to management and collection of petroleum revenue tax), omit the entry relating to section 33 of TMA 1970.
8 In paragraph 10(1A) (time limit for assessments and determinations) for “and 12B” substitute “ , 12B and 13E ”.
9 In paragraph 12(1B) (disapplication of time limits for further assessments and determinations)—
(a) omit the “or” at the end of paragraph (a), and
(b) after that paragraph insert—
(aa) a claim under paragraph 13A (see paragraph 13E), or
.
10 After paragraph 13 insert—
Claim for relief for overpaid tax etc
13A (1) This paragraph applies where—
(a) a participator has paid an amount by way of tax but believes that the tax was not due, or
(b) a participator has been assessed as liable to pay an amount by way of tax but believes that the tax is not due.
(2) The participator may make a claim to the Commissioners for Her Majesty's Revenue and Customs (“HMRC”) for repayment or discharge of the amount.
(3) Paragraph 13B makes provision about cases in which HMRC are not liable to give effect to a claim under this paragraph.
(4) Paragraphs 13C to 14I make further provision about making and giving effect to claims under this paragraph.
(5) Paragraph 13F makes provision about the application of this paragraph and paragraphs 13B to 13E to amounts paid under contract settlements.
(6) HMRC are not liable to give relief in respect of a case described in sub-paragraph (1)(a) or (b) except as provided—
(a) by this Schedule (following a claim under this paragraph), or
(b) by or under another provision of the Oil Taxation Acts.
(7) For the purposes of this paragraph and paragraphs 13B to 13F, an amount paid by one person on behalf of another is treated as paid by the other person.
(8) In this paragraph and paragraphs 13B to 13F, “the Oil Taxation Acts” means—
(a) Parts 1 and 3 of this Act,
(b) the Oil Taxation Act 1983, and
(c) any other enactment relating to petroleum revenue tax.
Cases in which HMRC not liable to give effect to a claim
13B (1) HMRC are not liable to give effect to a claim under paragraph 13A if or to the extent that the claim falls within a case described in this paragraph.
(2) Case A is where the amount paid, or liable to be paid, is excessive by reason of—
(a) a mistake in a claim, election or notice or a nomination under Schedule 10 to FA 1987, or
(b) a mistake consisting of making or giving, or failing to make or give, a claim, election or notice or a nomination under Schedule 10 to FA 1987.
(3) Case B is where the participator—
(a) has or could have sought relief by making a claim for expenditure to be allowed under section 3 or 4 (allowance of expenditure), or
(b) is or will be able to seek relief by taking other steps under the Oil Taxation Acts.
(4) Case C is where the participator—
(a) could have sought relief by taking such steps within a period that has now expired, and
(b) knew, or ought reasonably to have known, before the end of that period that such relief was available.
(5) Case D is where the claim is made on grounds that—
(a) have been put to a court or tribunal in the course of an appeal by the participator relating to the amount paid or liable to be paid, or
(b) have been put to HMRC in the course of an appeal by the participator relating to that amount that is treated as having been determined by a tribunal (by virtue of paragraph 14(9) (settling of appeals by agreement)).
(6) Case E is where the participator knew, or ought reasonably to have known, of the grounds for the claim before the latest of the following—
(a) the date on which an appeal by the participator relating to the amount paid, or liable to be paid, in the course of which the ground could have been put forward (a “relevant appeal”) was determined by a court or tribunal (or is treated as having been so determined),
(b) the date on which the participator withdrew a relevant appeal to a court or tribunal, and
(c) the end of the period in which the participator was entitled to make a relevant appeal to a court or tribunal.
(7) Case F is where the amount in question was paid or is liable to be paid—
(a) in consequence of proceedings enforcing the payment of that amount brought against the participator by HMRC, or
(b) in accordance with an agreement between the participator and HMRC settling such proceedings.
(8) Case G is where—
(a) the amount paid, or liable to be paid, is excessive by reason of a mistake in calculating the participator's liability to tax, and
(b) liability was calculated in accordance with the practice generally prevailing at the time.
Making a claim
13C (1) A claim under paragraph 13A may not be made more than 4 years after the end of the relevant chargeable period.
(2) In relation to a claim made in reliance on paragraph 13A(1)(a), the relevant chargeable period is—
(a) where the amount paid, or liable to be paid, is excessive by reason of a mistake in a return or returns under paragraph 2 or 5, the chargeable period to which the return (or, if more than one, the first return) relates, and
(b) otherwise, the chargeable period in respect of which the amount was paid.
(3) In relation to a claim made in reliance on paragraph 13A(1)(b), the relevant chargeable period is the chargeable period to which the assessment relates.
(4) A claim under paragraph 13A must be in such form as the HMRC may prescribe.
Decision on claim
13D HMRC must—
(a) make a decision on the claim, and
(b) by notice inform the participator of their decision.
Assessment of claimant in connection with claim
13E (1) This paragraph applies where—
(a) a claim is made under paragraph 13A,
(b) the grounds for giving effect to the claim also provide grounds for making an assessment or determination under paragraph 10 or 12, or an amendment of such an assessment or determination, on the participator in respect of any accounting period, and
(c) such an assessment, determination or amendment could be made but for the expiry of a time limit in paragraph 10(1A), 12(1A), 12A or 12B.
(2) Where this paragraph applies—
(a) the time limit does not apply, and
(b) the assessment, determination or amendment is not out of time if it is made before the final determination of the claim.
(3) A claim is not finally determined until it, or the amount to which it relates, can no longer be varied (whether on appeal or otherwise).
Contract settlements
13F (1) In paragraph 13A(1)(a) the reference to an amount paid by a participator by way of tax includes an amount paid by a person under a contract settlement in connection with tax believed to be due.
(2) Sub-paragraphs (3) to (6) apply if the person who paid the amount under the contract settlement (“the payer”) and the person from whom the tax was due (“the taxpayer”) are not the same person.
(3) In relation to a claim under paragraph 13A in respect of that amount—
(a) the references to the participator in paragraph 13B(5) to (7) (Cases D, E and F) have effect as if they included the taxpayer,
(b) the reference to the participator in paragraph 13B(8) (Case G) has effect as if it were a reference to the taxpayer, and
(c) the reference to the participator in paragraph 13E(1)(b) has effect as if it were a reference to the taxpayer.
(4) Sub-paragraph (5) applies where the grounds for giving effect to a claim by the payer in respect of the amount also provide grounds for making an assessment or determination under paragraph 10 or 12, or an amendment of such an assessment or determination, on the taxpayer in respect of any chargeable period.
(5) HMRC may set any amount repayable to the payer by virtue of the claim against any amount payable by the taxpayer by virtue of the assessment, determination or amendment.
(6) The obligations of HMRC and the taxpayer are discharged to the extent of any set-off under sub-paragraph (5).
(7) “Contract settlement” means an agreement made in connection with any person's liability to make a payment to HMRC under or by virtue of an enactment.
11 (1) Paragraph 14 (appeals) is amended as follows.
(2) After sub-paragraph (1) insert—
(1A) A participator who has made a claim under paragraph 13A may appeal from the decision on the claim by notice in writing given to HMRC within 30 days after the date of issue of the notice of the decision.
(3) In sub-paragraph (9) for “section 33 of the Taxes Management Act 1970 as applied by paragraph 1 above” substitute “ paragraph 13A ”.
(4) In sub-paragraph (10) for “the appeal that” substitute “ an appeal under sub-paragraph (1) ”.
(5) After sub-paragraph (10) insert—
(10A) If an appeal under sub-paragraph (1A) is notified to the tribunal and it appears to the tribunal that the decision is wrong, the tribunal shall substitute such decision as may be required.
Consequential amendments
12 (1) Schedule 24 to FA 2007 (penalties for errors) is amended as follows.
(2) In the Table in paragraph 1, after the first entry relating to petroleum revenue tax insert—
Petroleum revenue tax | Statement or declaration in connection with a claim under paragraph 13A of Schedule 2 to the Oil Taxation Act 1975.
(3) In paragraph 1(5), after “Oil Taxation Act 1975” insert “ or a statement or declaration under paragraph 13A of that Schedule ”.
13 In FA 2009—
(a) in Schedule 51 (time limits for assessments, claims etc), omit paragraph 18(2), and
(b) in Schedule 52 (recovery of overpaid tax etc), omit paragraph 11.
Section 29
Part 1 Record-keeping
1 (1) Section 118A of CEMA 1979 (duty of revenue traders to keep records) is amended as follows.
(2) In subsection (1)(b), for “require” substitute “ specify in writing (and different lesser periods may be specified for different cases) ”.
(3) For subsection (3) substitute—
(3) A duty imposed by this section to preserve records may be discharged—
(a) by preserving them in any form and by any means, or
(b) by preserving the information contained in them in any form and by any means,
subject to any conditions or exceptions specified in writing by the Commissioners.
(4) Omit subsections (4) to (6).
2 In consequence of the amendment made by paragraph 1(4)—
(a) in FA 1994, omit section 256(3), and
(b) in the Criminal Procedure (Consequential Provisions) (Scotland) Act 1995, omit paragraph 18(2) of Schedule 4.
Part 2 Time limits
Assessments
3 (1) Section 12 of FA 1994 (assessments to excise duty) is amended as follows.
(2) In subsections (4)(a) and (5), for “three years” substitute “ 4 years ”.
(3) In subsection (5), for the words from “in the case” to the end substitute “ in any case falling within subsection (5A)(a) or (b) ”.
(4) After subsection (5) insert—
(5A) The cases are—
(a) a case involving a loss of duty of excise brought about deliberately by the person assessed (P) or by another person acting on P's behalf, and
(b) a case in which P has participated in a transaction knowing that it was part of arrangements of any kind (whether or not legally enforceable) intended to bring about a loss of duty of excise.
(5) After subsection (6) insert—
(6A) The reference in subsection (5A) to a loss of duty of excise brought about deliberately by P or another person includes a loss that arises as a result of—
(a) a deliberate inaccuracy in a document given to Her Majesty's Revenue and Customs by that person, or
(b) a deliberate failure by that person to comply with an obligation specified in the Table in paragraph 1 of Schedule 41 to the Finance Act 2008 with respect to that duty of excise.
(6) Omit subsection (7).
(7) The amendments made by this paragraph have effect in relation to the making of assessments under section 20AAB(4) of HODA 1979 as to the making of assessments under section 12(1) of FA 1994 (see section 20AAB(5) of HODA 1979).
4 In consequence of the amendment made by paragraph 3(6), omit paragraph 22 of Schedule 6 to the Serious Crime Act 2007.
5 (1) Section 12A of FA 1994 (other assessments relating to excise duty matters) is amended as follows.
(2) In subsections (4)(a) and (6), for “three years” substitute “ 4 years ”.
(3) In subsection (6), for the words from “where the assessment” to the end substitute “ falling within section 12(5A)(a) or (b) ”.
(4) After subsection (6) insert—
(7) For the purposes of subsection (6), a reference in section 12(5A) to a loss of duty of excise includes a loss caused by giving relief, allowing a rebate, conferring an entitlement to drawback or repaying an amount that ought not to have been given, allowed, conferred or repaid.
6 (1) Schedule 4A to BGDA 1981 (unlicensed amusement machines) is amended as follows.
(2) In paragraph 2(3)(a), for “three years” substitute “ 4 years ”.
(3) In sub-paragraph (5) of paragraph 6—
(a) for “three years” substitute “ 4 years ”, and
(b) omit “or (7)”.
(4) For sub-paragraph (6) of that paragraph substitute—
(6) This sub-paragraph applies where—
(a) a loss of amusement machine licence duty is brought about deliberately by the responsible person or anyone acting on the responsible person's behalf (including a representative), or
(b) the responsible person has participated in a transaction knowing that it was part of arrangements of any kind (whether or not legally enforceable) intended to bring about a loss of amusement machine licence duty.
(5) Omit sub-paragraph (7) of that paragraph.
Claims
7 In section 137A(4) of CEMA 1979 (recovery of overpaid excise duty), for “three years” substitute “ 4 years ”.
8 In Schedule 3 to FA 2001 (excise duty: payments by Commissioners in case of error or delay), in each of the following provisions, for “three years” substitute “ 4 years ”
(a) paragraph 7(1)(d),
(b) paragraph 8(1)(e),
(c) paragraph 9(1)(g), and
(d) paragraph 10(1)(b).
Part 3 Information and inspection powers
9 CEMA 1979 is amended as follows.
10 In section 112 (power of entry upon premises etc of revenue traders), after subsection (6) insert—
(7) For the purposes of subsection (1)—
(a) it does not matter if the premises in question are owned or used partly for the purposes of the trade and partly for other purposes (including as a dwelling), but
(b) the officer may not enter or inspect any part of the premises that is used solely as a dwelling.
(8) Premises used to hold or store anything for the purposes of a revenue trader's trade are taken to be used by the revenue trader for the purposes of that trade, regardless of who owns or occupies the premises.
11 After that section insert—
Section 112: supplementary powers
112A (1) The power in section 112(1) includes power to inspect any business documents that are on the premises.
(2) “Business documents” means documents (or copies of documents) that relate to the carrying on of the revenue trader's trade, whether or not ones that a person may be required to produce under section 118B.
(3) Subsections (4) to (8) of section 118B apply to documents inspected under section 112(1) as they apply to documents produced under section 118B.
(4) The power in section 112(1) also includes power—
(a) to mark items that have been examined or inspected, and anything containing such items, for the purpose of indicating that they have been examined or inspected, and
(b) to obtain and record information (whether electronically or otherwise) relating to the premises, items and documents that have been examined or inspected.
12 After section 118B insert—
Further duty to provide information and documents
118BA (1) An officer may by notice in writing require a person to provide documents if—
(a) they are reasonably required by the officer for the purpose of protecting, securing, collecting or managing revenues derived from duties of excise, and
(b) the officer has reasonable cause to believe that the person is in possession or control of them.
(2) An officer may not give a notice under this section without the approval of the tribunal.
(3) An application for approval may be made without notice (except as required under subsection (4)).
(4) The tribunal may not give its approval unless—
(a) it is satisfied that, in the circumstances, the officer proposing to give the notice is justified in doing so,
(b) the person to whom the notice is to be given has been told that the documents are required and given a reasonable opportunity to make representations to an officer, and
(c) the tribunal has been given a summary of any representations made by that person.
(5) Paragraphs (b) and (c) of subsection (4) do not apply to the extent that the tribunal is satisfied that taking the action specified in those paragraphs might prejudice the protection, security, collection or management of revenues derived from duties of excise.
(6) A decision of the tribunal under this section is final (despite the provisions of sections 11 and 13 of the Tribunals, Courts and Enforcement Act 2007).
(7) The following provisions of Schedule 36 to the Finance Act 2008 apply to a notice under this section as they apply to an information notice—
(a) paragraphs 7 and 8 (complying with notices and producing copies of documents),
(b) paragraphs 15 and 16 (powers to copy and remove documents),
(c) Part 4 (restrictions on powers) except paragraphs 21, 21A and 28, and
(d) Part 9 (miscellaneous provisions and interpretation) so far as relevant to the provisions listed above.
(8) The powers in this section apply to information as they apply to documents (and “documents” is to be read accordingly).
(9) Nothing in this section affects or limits section 118B.
Inspection powers: goods-based duties
118BB (1) This section applies to premises if an officer has reasonable cause to believe that—
(a) the premises are used in connection with the supply, importation or exportation of goods of a class or description chargeable with a duty of excise, and
(b) any such goods, or documents relating to any such goods, are on the premises.
(2) The officer may at any reasonable time enter and inspect the premises and inspect—
(a) any goods found on the premises, and
(b) any documents found on the premises that appear to the officer to relate to the supply, importation or exportation of goods of a class or description chargeable to duty of excise.
(3) For the purposes of this section—
(a) it does not matter if the premises are used partly for a purpose mentioned in subsection (1)(a) and partly for other purposes (including as a dwelling), but
(b) the officer may not enter or inspect any part of the premises that is used solely as a dwelling.
(4) Premises used to hold or store goods in connection with their supply, importation or exportation are taken to be premises used in connection with the supply, importation or exportation of goods, regardless of who owns or occupies the premises.
Inspection powers: gaming duty
118BC (1) This section applies to premises if an officer has reasonable cause to believe that section 10 gaming is taking place, has taken place or is about to take place on the premises.
(2) The officer may at any reasonable time enter and inspect the premises and inspect—
(a) accounts, records and other documents in the custody or control of any person who is engaging, or whom the officer reasonably suspects of engaging, in section 10 gaming or in any activity by reason of which the person is or may become liable to gaming duty, and
(b) any equipment that is being, or the officer reasonably suspects of having been or of being intended to be, used on the premises for or in connection with section 10 gaming.
(3) Subsection (1) does not permit an officer to enter or inspect a particular part of premises if—
(a) the officer has no reasonable cause to believe that section 10 gaming is taking place, has taken place or is about to take place in that part, and
(b) the part is used solely as a dwelling.
(4) “Section 10 gaming” means gaming to which section 10 of the Finance Act 1997 applies.
Inspection powers: supplementary provision
118BD (1) If an officer, in the course of exercising a power under section 118BB or 118BC, finds reason to believe that the premises are owned or used by a revenue trader (within the meaning of section 112), the officer may also exercise any power that the officer could have exercised under section 112 if the officer had entered the premises under that section.
(2) Subsections (4) to (8) of section 118B apply to documents inspected under section 118BB or 118BC as they apply to documents produced under section 118B.
(3) The powers under sections 118BB and 118BC include power—
(a) to mark items that have been inspected, and anything containing such items, for the purpose of indicating that they have been inspected, and
(b) to obtain and record information (whether electronically or otherwise) relating to the premises, items and documents that have been inspected.
13 In section 118C (entry and search of premises and persons), omit subsections (2), (2A) and (2B).
14 In section 118D (order for access to recorded information), in subsection (5), for “118B and 118C” substitute “ 118B to 118C ”.
15 (1) Section 118G (offences under Part 9) is amended as follows.
(2) The existing provisions become subsection (1).
(3) After that subsection insert—
(2) Part 7 of Schedule 36 to the Finance Act 2008 (penalties) applies to a person who fails to comply with a notice under section 118BA as it applies to a person who fails to comply with an information notice.
(3) Part 8 of that Schedule (offences) applies in relation to documents that are or are likely to be the subject of a notice under section 118BA as it applies in relation to documents that are or are likely to be the subject of an information notice (with the reference to approval of the tribunal in accordance with paragraph 3 or 5 of that Schedule being read as a reference to approval of the tribunal in accordance with section 118BA of this Act).
16 (1) Section 161A (power to search premises: search warrant) is amended as follows.
(2) After subsection (2) insert—
(2A) The power in subsection (2)(a) includes power to search for and remove documents relating to any such thing (including documents about title, storage and movement).
(3) In subsection (3), for “subsections (1) and (2)” substitute “ subsections (1), (2) and (2A) ”.
Section 31
Inheritance tax
1 (1) Section 58 of IHTA 1984 (relevant property) is amended as follows.
(2) For the word “and” at the end of subsection (1)(e) substitute—
(ea) property comprised in an asbestos compensation settlement, and
.
(3) After subsection (3) insert—
(4) In subsection (1)(ea) above “asbestos compensation settlement” means a settlement—
(a) the sole or main purpose of which is making compensation payments to or in respect of individuals who have, or had before their death, an asbestos-related condition, and
(b) which is made before 24 March 2010 in pursuance of an arrangement within subsection (5) below.
(5) An arrangement is within this subsection if it is—
(a) a voluntary arrangement that has taken effect under Part 1 of the Insolvency Act 1986 or Part 2 of the Insolvency (Northern Ireland) Order 1989,
(b) a compromise or arrangement that has taken effect under section 425 of the Companies Act 1985, Article 418 of the Companies (Northern Ireland) Order 1986 or Part 26 of the Companies Act 2006, or
(c) an arrangement or compromise of a kind corresponding to any of those mentioned in paragraph (a) or (b) above that has taken effect under, or as a result of, the law of a country or territory outside the United Kingdom.
(4) The amendments made by this paragraph are treated as having come into force on 6 April 2006.
Capital gains tax
2 (1) Section 271 of TCGA 1992 (other miscellaneous exemptions) is amended as follows.
(2) After subsection (1)(e) insert—
(ea) any gain accruing on the disposal by the trustees of an asbestos compensation settlement of any property comprised in the settlement;
.
(3) After subsection (1) insert—
(1ZA) In subsection (1)(ea) above “asbestos compensation settlement” means a settlement—
(a) the sole or main purpose of which is making compensation payments to or in respect of individuals who have, or had before their death, an asbestos-related condition, and
(b) which is made before 24 March 2010 in pursuance of an arrangement within subsection (1ZB) below.
(1ZB) An arrangement is within this subsection if it is—
(a) a voluntary arrangement that has taken effect under Part 1 of the Insolvency Act 1986 or Part 2 of the Insolvency (Northern Ireland) Order 1989,
(b) a compromise or arrangement that has taken effect under section 425 of the Companies Act 1985, Article 418 of the Companies (Northern Ireland) Order 1986 or Part 26 of the Companies Act 2006, or
(c) an arrangement or compromise of a kind corresponding to any of those mentioned in paragraph (a) or (b) above that has taken effect under, or as a result of, the law of a country or territory outside the United Kingdom.
(4) The amendments made by this paragraph are treated as having come into force on 6 April 2006.
Income tax
3 (1) ITA 2007 is amended as follows.
(2) In section 462(11) (overview of Part), after “charitable trusts” insert “ and section 838A for special provision about asbestos compensation settlements ”.
(3) After section 838 (exemption from income tax for local authorities and local authority associations) insert—
Asbestos compensation settlements
838A (1) The trustees of an asbestos compensation settlement are not liable to income tax in respect of the income of the trustees.
(2) In this section “asbestos compensation settlement” means a settlement—
(a) the sole or main purpose of which is making compensation payments to or in respect of individuals who have, or had before their death, an asbestos-related condition, and
(b) which is made before 24 March 2010 in pursuance of an arrangement within subsection (3).
(3) An arrangement is within this subsection if it is—
(a) a voluntary arrangement that has taken effect under Part 1 of the Insolvency Act 1986 or Part 2 of the Insolvency (Northern Ireland) Order 1989,
(b) a compromise or arrangement that has taken effect under section 425 of the Companies Act 1985, Article 418 of the Companies (Northern Ireland) Order 1986 or Part 26 of the Companies Act 2006, or
(c) an arrangement or compromise of a kind corresponding to any of those mentioned in paragraph (a) or (b) that has taken effect under, or as a result of, the law of a country or territory outside the United Kingdom.
(4) The amendments made by sub-paragraphs (2) and (3) are treated as having had effect for the tax year 2007-08 and subsequent tax years.
(5) ICTA is treated as having had effect for the tax year 2006-07 with an amendment, after section 518 of that Act, which corresponds to that made by sub-paragraph (3).