43 Companies with investment business: transitional provisions
(1) Any amount which, apart from this subsection, would have fallen to be treated under the old section 75(3) as if it had been disbursed as expenses of management for the first new accounting period of a company shall instead be treated as if it were expenses of management deductible for that period by virtue of the new section 75(9).
(2) To the extent that any amount was deductible under subsection (1) of section 75 for an old accounting period, the amount shall not again be deductible under that subsection for a new accounting period.
(3) Subsection (2) is without prejudice to the old section 75(3) and the new section 75(9) (carry forward of unrelieved excess to later accounting period).
(4) To the extent that an amount—
(a) was not deductible under section 75(1) by an investment company for any old accounting period, but
(b) would have been deductible under the new section 75(1) for an old accounting period if the amendments made by sections 38 and 39 and Schedule 6 or any order under section 46 (so far as having effect in relation to the first new accounting period) had been in force in relation to that period,
the amount shall be deductible under section 75(1) for the first new accounting period of the company.
(5) Where there is an accounting period that begins before, and ends on or after, 1st April 2004 (“the commencement date”), it shall be assumed, for the purpose of determining the amounts that are deductible for that period under section 75(1) of the Taxes Act 1988, that that accounting period (the “straddling period”) consists of two separate accounting periods—
(a) the first beginning with the straddling period and ending with the day preceding the commencement date, and
(b) the second beginning with the commencement date and ending with the straddling period,
but this is subject to subsection (6).
(6) In the case of an investment company, subsection (5) does not have effect for the purpose of determining the amounts that are deductible for the straddling period under section 75(1) by virtue of—
(a) subsection (3) of the old section 75, or
(b) any provision of the Corporation Tax Acts, apart from section 75 and this section.
(7) Where, for the purposes of section 768B or 768C of the Taxes Act 1988, there is a change in the ownership of a company during the straddling period, then for the purposes of the section in question (and Schedule 28A to that Act), before making any such division as is required by section 768B(4) or 768C(3) of that Act,—
(a) the straddling period shall be divided into two parts in accordance with subsection (5), and
(b) those parts shall be treated in accordance with that subsection as two separate accounting periods, but
(c) subsection (6) shall be disregarded,
and section 768B or 768C of, and Schedule 28A to, the Taxes Act 1988 shall have effect accordingly.
(8) In this section—
“the commencement date” shall be construed in accordance with subsection (5);
“investment company” has the same meaning as in Part 4 of the Taxes Act 1988 (see section 130 of that Act);
“new accounting period” means an accounting period beginning on or after the commencement date;
“old accounting period” means an accounting period beginning before the commencement date;
“the new section 75” means section 75 as it has effect in relation to a new accounting period;
“the old section 75” means section 75 as it has effect (apart from subsection (5) above) in relation to an old accounting period;
“section 75” means section 75 of the Taxes Act 1988.
(1) The Treasury may by order make such amendments, repeals or revocations in any enactment (including an enactment amended by this Act) as appear to them to be appropriate in consequence of sections 38 to 40 and 45 and Schedule 6.
(2) The power conferred by subsection (1) to make an order includes power—
(a) to make different provision for different cases, and
(b) to make incidental, consequential, supplemental or transitional provision and savings.
(3) Any order made under this section on or before 31st December 2004 may make provision having effect in relation to accounting periods ending before the date on which the order is made (but not before 1st April 2004).
(4) In this section—
“enactment” includes an enactment comprised in subordinate legislation;
“subordinate legislation” has the same meaning as in the Interpretation Act 1978 (c. 30) (see section 21 of that Act).
Schedule 7 to this Act (which makes provision about insurance companies and companies which have ceased to be insurance companies after a transfer of business) shall have effect.
52 Amendment of enactments that operate by reference to accounting practice
(1) Schedule 10 makes amendments of provisions of the Tax Acts that operate by reference to accounting practice.
(2) In that Schedule—
Part 1 makes amendments relating to loan relationships;
Part 2 makes amendments relating to derivative contracts;
Part 3 makes amendments relating to intangible fixed assets;
Part 4 makes amendments relating to foreign currency accounting.
(3) The amendments have effect in relation to—
(a) periods of account beginning on or after 1st January 2005, ...
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
53 Treatment of expenditure on research and development
(1) Expenditure by a company on research and development, if not of a capital nature, is not prevented from being regarded for tax purposes as deductible in computing profits by reason of the fact that for accounting purposes it is brought into account by the company in determining the value of an intangible asset.
(2) Subsection (1) applies, in particular, for the purposes of—
section 82A of the Taxes Act 1988 (deduction of expenditure on research and development),
Schedule 20 to the Finance Act 2000 (c. 17) (R&D tax relief),
Schedule 12 to the Finance Act 2002 (c. 23) (tax relief for expenditure on research and development), and
Schedule 13 to that Act (tax relief for expenditure on vaccine research etc.).
(3) Where expenditure is brought into account by a company for tax purposes in accordance with subsection (1), no deduction may be made in computing for tax purposes the profits of the company in respect of the writing down of so much of the value of an intangible asset as is attributable to that expenditure.
(4) Expenditure shall not be regarded by virtue of subsection (1) as deductible in computing a company’s profits for an accounting period to the extent that—
(a) a deduction has been made in respect of it in computing the company’s profits for a previous accounting period, or
(b) the company has benefited from a tax relief in respect of it for a previous accounting period under any of the provisions specified in subsection (2).
(5) In this section—
“intangible asset” has the meaning it has for accounting purposes; and
“research and development” has the meaning given by section 837A of the Taxes Act 1988.
(6) This section shall come into force in accordance with provision made by the Treasury by order made by statutory instrument.
55 Duty of company to give notice of coming within charge to corporation tax
(1) A company must give notice to the Board—
(a) of the beginning of its first accounting period, and
(b) of the beginning of any subsequent accounting period that does not immediately follow the end of a previous accounting period.
(2) The notice required by this section—
(a) must be in writing;
(b) must state when the accounting period began;
(c) must contain such other information as may be prescribed;
(d) may be given to any officer of the Board; and
(e) must be given not later than three months after the beginning of the accounting period.
(3) “Prescribed” in subsection (2)(c) means prescribed by regulations made by the Board.
(4) A company that has a reasonable excuse for failing to give notice as required by this section—
(a) is not to be regarded as having failed to comply with this section until the excuse ceases, and
(b) after the excuse ceases is not to be regarded as having failed to comply with this section if the required notice is given without unreasonable delay after the excuse ceases.
(5) In this section—
(a) “accounting period” means an accounting period for the purposes of corporation tax;
(b) “company” means a body corporate and does not include an unincorporated association or a partnership; and
(c) “the Board” means the Commissioners of Inland Revenue.
(6) In the second column of the Table in section 98 of the Taxes Management Act 1970 (c. 9) (penalty for failure to provide information), at the appropriate place insert— “ section 55 of the Finance Act 2004 ”.
(7) This section applies in relation to accounting periods beginning on or after the day on which this Act is passed.
(1) A company is not required to give notice under section 55 of the beginning of an accounting period if it reasonably expects that—
(a) all the income on which it will be chargeable to corporation tax for the period will consist of payments on which it bears income tax by deduction, ...
(b) it will have no chargeable gains for the period , and
(c) in consequence of the deduction of the income tax mentioned in paragraph (a) at the fourth step in paragraph 8 of Schedule 18 to the Finance Act 1998 (calculation of tax payable), the amount of tax payable for the period will be nil.
(2) Subsection (3) applies if—
(a) by reason of subsection (1) a company is not required to give notice under section 55 of the beginning of an accounting period (“the unreported period”), and
(b) a subsequent accounting period immediately follows the end of the unreported period.
(3) The subsequent accounting period is to be treated for the purposes of section 55 as if it does not immediately follow the end of a previous accounting period.
(4) If by reason of subsection (1) ceasing to apply a company becomes subject to the duty to give notice under section 55 of the beginning of an accounting period the notice must be given not later than three months after the date on which it becomes subject to that duty.
(5) Where subsection (1) would apply as regards a company if the company were to make a claim to obtain relief under section 6(2)(a) or (3)(a) of TIOPA 2010 in respect of a disposal that has an appropriate connection to a collective investment vehicle for the purposes of paragraph 6 of Schedule 5AAA to TCGA 1992, the company is not required to make such a claim in order to obtain relief in respect of the disposal (despite section 6(6) of TIOPA 2010).
(1) This Chapter provides for certain payments (see section 60) under construction contracts to be made under deduction of sums on account of tax (see sections 61 and 62).
(2) In this Chapter “construction contract” means a contract relating to construction operations (see section 74) which is not a contract of employment but where—
(a) one party to the contract is a sub-contractor (see section 58); and
(b) another party to the contract (“the contractor”) either—
(i) is a sub-contractor under another such contract relating to all or any of the construction operations, or
(ii) is a person to whom section 59 applies.
(3) In sections 60 and 61 “the contractor” has the meaning given by this section.
(4) In this Chapter—
(a) references to registration for gross payment are to registration under section 63(2),
(b) references to registration for payment under deduction are to registration under section 63(3), and
(c) references to registration under section 63 are to registration for gross payment or registration for payment under deduction.
(5) To the extent that any provision of this Chapter would not, apart from this subsection, form part of the Tax Acts, it shall be taken to form part of those Acts.
For the purposes of this Chapter a party to a contract relating to construction operations is a sub-contractor if, under the contract—
(a) he is under a duty to the contractor to carry out the operations, or to furnish his own labour (in the case of a company, the labour of employees or officers of the company) or the labour of others in the carrying out of the operations or to arrange for the labour of others to be furnished in the carrying out of the operations; or
(b) he is answerable to the contractor for the carrying out of the operations by others, whether under a contract or under other arrangements made or to be made by him.
(1) This section applies to the following bodies or persons—
(a) any person carrying on a business which includes construction operations;
(b) any public office or department of the Crown (including any Northern Ireland department, the Welsh Assembly Government and any part of the Scottish Administration);
(c) the Corporate Officer of the House of Lords, the Corporate Officer of the House of Commons, the Scottish Parliamentary Corporate Body and the National Assembly for Wales Commission;
(d) any local authority;
(e) any development corporation or new town commission;
(f) the Homes and Communities Agency;
(fa) the Greater London Authority in the exercise of its functions relating to housing or regeneration or its new towns and urban development functions;
(g) the Secretary of State if the contract is made by him under section 89 of the Housing Associations Act 1985 (c. 69);
(h) the Regulator of Social Housing, a housing association, a housing trust, Scottish Homes, and the Northern Ireland Housing Executive;
(i) any NHS trust;
(j) any HSS trust;
(k) any such body or person, being a body or person (in addition to those falling within paragraphs (b) to (j)) which has been established for the purpose of carrying out functions conferred on it by or under any enactment, as may be designated as a body or person to which this section applies in regulations made by the Board of Inland Revenue;
(l) a person carrying on a business at any time if, in the period of one year ending with that time, the person's expenditure on construction operations exceeds £3,000,000.
(2) But this section only applies to a body or person falling within any of paragraphs (b) to (fa) or (h) to (k) of subsection (1) at any time if, in the period of one year ending with that time, the body or person's expenditure on construction operations exceeds £3,000,000.
(3) Where the condition in subsection (1)(l) or (2) is met in relation to a body or person at any time, the body or person may elect for the condition to be treated as no longer being met if, at that time, the body or person is not expected to make any further expenditure on construction operations.
(3A) Where the condition in subsection (1)(l) or (2) ceases to be met in relation to a body or person at any time, the body or person may elect for the condition to be treated as continuing to be met until the body or person is not expected to make any further expenditure on construction operations.
(3B) Subsections (3) and (3A) do not prevent the condition in subsection (1)(l) or (2) from being met again in relation to the body or person.
(4) Where the whole or part of a trade is transferred by a company (“the transferor”) to another company (“the transferee”) and Chapter 1 of Part 22 of the Corporation Tax Act 2010 has effect in relation to the transfer, then in determining for the purposes of this section the amount of expenditure incurred by the transferee—
(a) the whole or, as the case may be, a proportionate part of any expenditure incurred by the transferor at a time before the transfer is to be treated as if it had been incurred at that time by the transferee; and
(b) where only a part of the trade is transferred, the expenditure is to be apportioned in such manner as appears to the Board of Inland Revenue, or on appeal to the tribunal, to be just and reasonable.
(5) In this section—
“development corporation” has the same meaning as in—
the New Towns Act 1981 (c. 64), or
the New Towns (Scotland) Act 1968 (c. 16);
“enactment” includes an enactment comprised in an Act of the Scottish Parliament and a provision comprised in Northern Ireland legislation;
“housing association” has the same meaning as in—
the Housing Associations Act 1985 (c. 69), or
Part 2 of the Housing (Northern Ireland) Order 1992 (S.I. 1992/ 1725 (N.I. 15));
“housing trust” has the same meaning as in the Housing Associations Act 1985;
“HSS trust” means a Health and Social Services trust established under the Health and Personal Social Services (Northern Ireland) Order 1991 (S.I. 1991/194 (N.I. 1));
“new town commission” has the same meaning as in the New Towns Act (Northern Ireland) 1965 (c. 13 (N.I.));
“NHS trust” means a National Health Service trust—
established under section 25 of the National Health Service Act 2006 or section 18 of the National Health Service (Wales) Act 2006, or
constituted under section 12A of the National Health Service (Scotland) Act 1978 (c. 29).
(6) In this section references to a body or person include references to an office or department.
(7) The Board of Inland Revenue may make regulations amending this section for the purpose of removing references to bodies which have ceased to exist.
(8) This section is subject to section 73A (designated international organisations: exemption from section 59).
(1) In this Chapter “contract payment” means any payment which is made under a construction contract and is so made by the contractor (see section 57(3)) to—
(a) the sub-contractor,
(b) a person nominated by the sub-contractor or the contractor, or
(c) a person nominated by a person who is a sub-contractor under another such contract relating to all or any of the construction operations.
(2) But a payment made under a construction contract is not a contract payment if any of the following exceptions applies in relation to it.
(3) This exception applies if the payment is treated as earnings from an employment by virtue of Chapter 7 of Part 2 of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) (agency workers).
(3A) This exception applies in so far as—
(a) the payment can reasonably be taken to be for the services of an individual, and
(b) the provision of those services gives rise to an engagement to which Chapter 10 of Part 2 of ITEPA 2003 applies (workers' services provided through intermediaries to public authorities or medium or large clients).
(3B) But the exception in subsection (3A) does not apply if, in the case of the engagement mentioned in paragraph (b) of that subsection, the client for the purposes of section 61M(1) of ITEPA 2003—
(a) is not a public authority, and
(b) either—
(i) does not qualify as medium or large for the tax year in which the payment concerned is made, or
(ii) does not have a UK connection for the tax year in which the payment concerned is made.
(3C) Sections 60I (when a person has a UK connection for a tax year), 61K(3) (when a person qualifies as medium or large for a tax year) and 61L (meaning of public authority) of ITEPA 2003 apply for the purposes of subsection (3B).
(4) This exception applies if the person to whom the payment is made or, in the case of a payment made to a nominee, each of the following persons—
(a) the nominee,
(b) the person who nominated him, and
(c) the person for whose labour (or, where that person is a company, for whose employees' or officers' labour) the payment is made,
is registered for gross payment when the payment is made.
But this is subject to subsections (5) and (6).
(5) Where a person is registered for gross payment as a partner in a firm (see section 64), subsection (4) applies only in relation to payments made under contracts under which—
(a) the firm is a sub-contractor, or
(b) where a person has nominated the firm to receive payments, the person who has nominated the firm is a sub-contractor.
(6) Where a person is registered for gross payment otherwise than as a partner in a firm but he is or becomes a partner in a firm, subsection (4) does not apply in relation to payments made under contracts under which—
(a) the firm is a sub-contractor, or
(b) where a person has nominated the firm to receive payments, the person who has nominated the firm is a sub-contractor.
(7) This exception applies if such conditions as may be prescribed in regulations made by the Board of Inland Revenue for the purposes of this subsection are satisfied; and those conditions may relate to any one or more of the following—
(a) the payment,
(b) the person making it, and
(c) the person receiving it.
(8) For the purposes of this Chapter a payment (including a payment by way of loan) that has the effect of discharging an obligation under a contract relating to construction operations is to be taken to be made under the contract; and if—
(a) the obligation is to make a payment to a person (“A”) within paragraph (a) to (c) of subsection (1), but
(b) the payment discharging that obligation is made to a person (“B”) not within those paragraphs,
the payment is for those purposes to be taken to be made to A.
61 Deductions on account of tax from contract payments
(1) On making a contract payment the contractor (see section 57(3)) must deduct from it a sum equal to the relevant percentage of so much of the payment as is not shown to represent the direct cost to the sub-contractor of materials used or to be used in carrying out the construction operations to which the contract under which the payment is to be made relates.
(2) In subsection (1) “the relevant percentage” means such percentage as the Treasury may by order determine.
(3) That percentage must not exceed—
(a) if the person for whose labour (or for whose employees' or officers' labour) the payment in question is made is registered for payment under deduction, the percentage which is the basic rate for the year of assessment in which the payment is made, or
(b) if that person is not so registered, the percentage which is the higher rate for that year of assessment.
(4) Subsection (5) applies where the contractor is a person falling within section 59(1)(l).
(5) An officer of Revenue and Customs may, if the officer considers it appropriate to do so, by notice in writing—
(a) exempt the contractor from the requirement to deduct sums from contract payments under subsection (1) for a specified period;
(b) treat the contractor as if such an exemption had applied in relation to—
(i) specified contract payments made before the date of the notice, or
(ii) contract payments made during a specified period before the date of the notice.
(6) The period referred to in subsection (5)(a)—
(a) must not exceed 90 days, but
(b) may be extended by one or more further notices under subsection (5).
(7) In subsection (5) “specified” means specified in the notice.
(1) A sum deducted under section 61 from a payment made by a contractor—
(a) must be paid to the Board of Inland Revenue, and
(b) is to be treated for the purposes of income tax or, as the case may be, corporation tax as not diminishing the amount of the payment.
(2) If the sub-contractor is not a company a sum deducted under section 61 and paid to the Board is to be treated as being income tax paid in respect of the sub-contractor’s relevant profits.
If the sum is more than sufficient to discharge his liability to income tax in respect of those profits, so much of the excess as is required to discharge any liability of his for Class 4 contributions is to be treated as being Class 4 contributions paid in respect of those profits.
(3) If the sub-contractor is a company—
(a) a sum deducted under section 61 and paid to the Board is to be treated, in accordance with regulations, as paid on account of any relevant liabilities of the sub-contractor;
(b) regulations must provide for the sum to be applied in discharging relevant liabilities of the year of assessment in which the deduction is made;
(c) if the amount is more than sufficient to discharge the sub-contractor’s relevant liabilities, the excess may be treated, in accordance with the regulations, as being corporation tax paid in respect of the sub-contractor’s relevant profits; and
(d) regulations must provide for the repayment to the sub-contractor of any amount not required for the purposes mentioned in paragraphs (b) and (c).
(3A) Regulations under subsection (3) may include provision authorising an officer of Revenue and Customs to—
(a) correct an error or omission relating to a set-off claim;
(b) remove a set-off claim;
(c) prohibit a person from making a further set-off claim, for a specified period or indefinitely.
(3B) Regulations under subsection (3) that include provision of the kind mentioned in subsection (3A) may, for example, include provision—
(a) allowing the things mentioned in subsection (3A)(a) to (c) to be done by amending a return (including a return not made under the regulations) or otherwise;
(b) allowing a set-off claim to be removed where the claimant is not eligible to make the claim (including where the claimant is not a company, not a sub-contractor, or is registered for gross payment);
(c) requiring information to be given to the Commissioners of Revenue and Customs, at such times as may be specified in the regulations.
(3C) In subsections (3A) and (3B), “set-off claim” means a claim for treating a sum deducted under section 61 as paid on account of any relevant liabilities.
(4) For the purposes of this section the “relevant liabilities”of a sub-contractor are any liabilities of the sub-contractor, whether arising before or after the deduction is made, to make a payment to the Inland Revenue in pursuance of an obligation as an employer or contractor.
(5) In this section—
(a) “the sub-contractor” means the person for whose labour (or for whose employees' or officers' labour) the payment is made;
(b) references to the sub-contractor’s “relevant profits” are to the profits from the trade, profession or vocation carried on by him in the course of which the payment was received;
(c) “Class 4 contributions” means Class 4 contributions within the meaning of the Social Security Contributions and Benefits Act 1992 (c. 4) or the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7).
(6) References in this section to regulations are to regulations made by the Board of Inland Revenue.
(7) Regulations under this section may contain such supplementary, incidental or consequential provision as appears to the Board to be appropriate.
62A Payments made in the knowledge of deliberate failures to comply
(1) This section applies to a person who—
(a) has made a payment under a construction contract, and
(b) before making a payment, knew or should have known that a connected party had deliberately failed, or would deliberately fail, to comply with a requirement to—
(i) deduct a sum under section 61,
(ii) pay a sum to the Commissioners under section 62, or
(iii) deduct or pay an amount to His Majesty’s Revenue and Customs under PAYE regulations.
(2) If this section applies, an officer of Revenue and Customs may determine that the person is liable to pay to the Commissioners an amount equal to 20% of the payment referred to in subsection (1).
(3) In this section, a “connected party” is
(a) another party to the construction contract referred to in subsection (1)(a), or
(b) a party to another construction contract relating to the same construction operations as the construction contract referred to in subsection (1)(a).
62B Returns made in the knowledge of deliberate failures to comply
(1) This section applies to a person who—
(a) makes a return which treats a sum as deducted and paid on account of the person’s liabilities under section 62(2) or (3), and
(b) before doing so, knew or should have known that the sum—
(i) had not been deducted, or
(ii) had deliberately not been, or would deliberately not be, paid on account of the person’s liabilities.
(2) If this section applies, an officer of Revenue and Customs may determine that the person is liable to pay to the Commissioners an amount equal to the sum which the return treats as paid on account of the person’s liabilities.
63 Registration for gross payment or for payment under deduction
(1) If the Board of Inland Revenue are satisfied, on the application of an individual or a company, that the applicant has provided—
(a) such documents, records and information as may be required by or in accordance with regulations made by the Board, and
(b) such additional documents, records and information as may be required by the Inland Revenue in connection with the application,
the Board must register the individual or company under this section.
(2) If the Board are satisfied that the requirements of subsection (2), (3) or (4) of section 64 are met, the Board must register—
(a) the individual or company, or
(b) in a case falling within subsection (3) of that section, the individual or company as a partner in the firm in question,
for gross payment.
(3) In any other case, the Board must register the individual or company for payment under deduction.
64 Requirements for registration for gross payment
(1) This section sets out the requirements (in addition to that in subsection (1) of section 63) for an applicant to be registered for gross payment.
(2) Where the application is for the registration for gross payment of an individual (otherwise than as a partner in a firm), he must satisfy the conditions in Part 1 of Schedule 11 to this Act.
(3) Where the application is for the registration for gross payment of an individual or a company as a partner in a firm—
(a) the applicant must satisfy the conditions in Part 1 of Schedule 11 to this Act (if an individual) or Part 3 of that Schedule (if a company), and
(b) in either case, the firm itself must satisfy the conditions in Part 2 of that Schedule.
(4) Where the application is for the registration for gross payment of a company (otherwise than as a partner in a firm)—
(a) the company must satisfy the conditions in Part 3 of Schedule 11 to this Act, and
(b) if the Board of Inland Revenue have given a direction under subsection (5), each of the persons to whom any of the conditions in Part 1 of that Schedule applies in accordance with the direction must satisfy the conditions which so apply to him.
(5) Where the applicant is a company, the Board may direct that the conditions in Part 1 of Schedule 11 to this Act or such of them as are specified in the direction shall apply to—
(a) the directors of the company,
(b) if the company is a close company, the persons who are the beneficial owners of shares in the company, or
(c) such of those directors or persons as are so specified,
as if each of them were an applicant for registration for gross payment.
(6) See also section 65(1) (power of Board to make direction under subsection (5) on change in control of company applying for registration etc).
(7) In subsection (5) “director” has the meaning given by section 67 of the Income Tax (Earnings and Pensions) Act 2003 (c. 1).
65 Change in control of company registered for gross payment
(1) Where it appears to the Board of Inland Revenue that there has been a change in the control of a company—
(a) registered for gross payment, or
(b) applying to be so registered,
the Board may make a direction under section 64(5).
(2) The Board may make regulations requiring the furnishing of information with respect to changes in the control of a company—
(a) registered for gross payment, or
(b) applying to be so registered.
(3) In this section references to a change in the control of a company are references to such a change determined in accordance with section 995 of the Income Tax Act 2007.
(1) The Board of Inland Revenue may at any time make a determination cancelling a person’s registration for gross payment if it appears to them that—
(a) if an application to register the person for gross payment were to be made at that time, the Board would refuse so to register him,
(b) he has made an incorrect return or provided incorrect information (whether as a contractor or as a sub-contractor) in connection with an obligation arising under any provision of this Chapter or of regulations made under it, or
(c) he has failed to comply (whether as a contractor or as a sub-contractor) with an obligation arising under or in connection with any provision of this Chapter or of regulations made under it.
(2) Where the Board make a determination under subsection (1), the person’s registration for gross payment is cancelled with effect from the end of a prescribed period after the making of the determination (but see section 67(5)).
(3) The Board of Inland Revenue may at any time make a determination cancelling a person’s registration for gross payment if they have reasonable grounds to suspect that the person—
(a) became registered for gross payment on the basis of information which was false,
(b) has fraudulently made an incorrect return or has fraudulently provided incorrect information (whether as a contractor or a sub-contractor) in connection with an obligation—
(i) arising under any provision of this Chapter or of regulations made under it;
(ii) arising under any provision of PAYE regulations;
(iii) to submit a self-assessment return;
(iv) arising under any provision of the Value Added Tax Act 1994 or of regulations made under it, or
(c) has knowingly failed to comply (whether as a contractor or as a sub-contractor) with an obligation arising under or in connection with any provision of this Chapter or of regulations made under it.
(3A) The Commissioners may at any time make a determination cancelling a person’s registration for gross payment if—
(a) section 62A (payments made in the knowledge of deliberate failures to comply), or
(b) section 62B (returns made in the knowledge of deliberate failures to comply),
applies to the person.
(4) Where the Commissioners make a determination under subsection (3) or subsection (3A), the person’s registration for gross payment is cancelled with immediate effect.
(5) On making a determination under this section cancelling a person’s registration for gross payment, the Board must without delay give the person notice stating the reasons for the cancellation.
(6) Where a person’s registration for gross payment is cancelled by virtue of a determination under subsection (1),
(a) the person must be registered for payment under deduction , and
(b) the person may not, within the period of one year beginning with the day on which the cancellation takes effect (see subsection (2) and section 67(5)), apply for registration for gross payment.
(7) Where a person’s registration for gross payment is cancelled by virtue of a determination under subsection (3) or subsection (3A),
(a) the person may, if the Commissioners think fit, be registered for payment under deduction, and
(b) the person may not, within the period of five years beginning with the day on which the cancellation takes effect (see subsection (4)), apply for registration for gross payment.
(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(9) In this section “a prescribed period” means a period prescribed by regulations made by the Board.
(1) A person aggrieved by—
(a) the refusal of an application for registration for gross payment, or
(b) the cancellation of his registration for gross payment,
may by notice appeal ....
(2) The notice must be given to the Board of Inland Revenue within 30 days after the refusal or cancellation.
(3) The notice must state the person’s reasons for believing that—
(a) the application should not have been refused, or
(b) his registration for gross payment should not have been cancelled.
(4) The jurisdiction of the tribunal on such an appeal that is notified to the tribunal shall include jurisdiction to review any relevant decision taken by the Board of Inland Revenue in the exercise of their functions under section 63, 64, 65 or 66.
(5) Where a person appeals against the cancellation of his registration for gross payment by virtue of a determination under section 66(1), the cancellation of his registration does not take effect until whichever is the latest of the following—
(a) the abandonment of the appeal,
(b) the determination of the appeal by the tribunal, or
(c) the determination of the appeal by the Upper Tribunal or a court.
(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
68 Registration for payment under deduction: cancellation and appeals
The Board of Inland Revenue may make regulations providing for—
(a) the cancellation, in such circumstances as may be prescribed by the regulations, of a person’s registration for payment under deduction;
(b) appeals against a refusal to register a person for payment under deduction or the cancellation of such registration.
69 Verification etc of registration status of sub-contractors
(1) The Board of Inland Revenue may make regulations requiring persons who make payments under contracts relating to construction operations, except in prescribed circumstances, to verify with the Board whether a person to whom they are proposing to make—
(a) a contract payment, or
(b) a payment which would be a contract payment but for section 60(4),
is registered for gross payment or for payment under deduction.
(2) The provision that may be made by regulations under subsection (1) includes provision—
(a) for preventing a person from verifying unless such conditions as may be prescribed have been satisfied;
(b) as to the period for which the verification remains valid.
(3) The Board of Inland Revenue may make regulations requiring the Board to notify persons of a prescribed description who make payments under contracts relating to construction operations that—
(a) a person registered for gross payment has become registered for payment under deduction or has ceased to be registered under section 63, or
(b) a person registered for payment under deduction has become registered for gross payment or has ceased to be registered under section 63.
(4) The provision that may be made by regulations under subsection (1) or (3) includes provision for a person to be entitled to assume, except in prescribed circumstances, that—
(a) a person verified or notified as being registered for gross payment, or
(b) a person verified or notified as being registered for payment under deduction,
has not subsequently ceased to be so registered.
(5) In this section “prescribed” means prescribed by regulations under this section.
(1) The Board of Inland Revenue may make regulations requiring persons who make payments under construction contracts—
(a) to make to the Board, at such times and in respect of such periods as may be prescribed, returns relating to such payments;
(b) to keep such records as may be prescribed relating to such payments;
(c) to provide such information as may be prescribed, at such times as may be prescribed, to persons to whom such payments are made or to such of those persons as are of a prescribed description.
(2) The provision that may be made by regulations under subsection (1)(a) includes provision requiring, except in such circumstances as may be prescribed,—
(a) the person making a return to declare in the return that none of the contracts to which the return relates is a contract of employment;
(b) the person making a return to declare in the return that, in the case of each person to whom a payment to which the return relates is made, he has complied with the requirements of any regulations made under section 69(1) (verification of registration status);
(c) returns to contain such other information and to be in such form as may be prescribed;
(d) a return to be made where no payments have been made in the period to which the return relates.
(3) The Board of Inland Revenue may make regulations with respect to—
(a) the production, copying and removal of, and the making of extracts from, any records kept by virtue of any such requirement as is referred to in subsection (1)(b), and
(b) rights of access to, or copies of, any such records which are removed.
(4) Regulations under this section may make provision—
(a) for or in connection with enabling a person who makes payments under construction contracts to appoint another person (a “scheme representative”) to act on his behalf in connection with any requirements imposed on him by regulations under this section, and
(b) as to the rights, obligations or liabilities of scheme representatives.
(5) In this section “prescribed” means prescribed by regulations under this section.
(1) The Commissioners for Her Majesty's Revenue and Customs may by regulations make provision for and in connection with requiring the giving, by prescribed persons and in prescribed circumstances, of security for the payment of amounts that a person is or may be liable to pay to the Commissioners under this Chapter.
(2) Regulations under this section must provide that security may be required only where an officer of Revenue and Customs considers it necessary for the protection of the revenue.
(3) Regulations under this section must provide for a right of appeal against—
(a) decisions to require security to be given;
(b) decisions as to the amount, terms or duration of any security required.
(4) A person commits an offence if—
(a) the person fails to comply with a requirement to give security that is imposed by regulations under this section, and
(b) the failure continues for such period as is prescribed.
(5) A person who commits an offence under subsection (4) is liable on summary conviction—
(a) in England and Wales, to a fine;
(b) in Scotland or Northern Ireland, to a fine not exceeding level 5 on the standard scale.
(6) In this section—
“prescribed” means prescribed in regulations under this section;
“security” includes further security.
(1) The Board of Inland Revenue must make regulations with respect to the collection and recovery, whether by assessment or otherwise, of sums required to be deducted from any payments under section 61.
(2) The regulations may include any matters with respect to which PAYE regulations may be made.
(3) Interest required to be paid by the regulations—
(a) is to be paid without any deduction of income tax, ...
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) This section applies in a case within subsection (2), (3) or (4).
(2) A case is within this subsection if a person (“A”)—
(a) makes a statement, or furnishes a document, which A knows to be false in a material particular, or
(b) recklessly makes a statement, or furnishes a document, which is false in a material particular,
for the purpose of becoming registered for gross payment or for payment under deduction.
(3) A case is within this subsection if a person (“A”) who exercises influence or control over another person (“B”) or is in a position to do so —
(a) makes a statement, or furnishes a document, which A knows to be false in a material particular, or
(b) recklessly makes a statement, or furnishes a document, which is false in a material particular,
for the purpose of enabling or facilitating B to become registered for gross payment or for payment under deduction.
(4) A case is within this subsection if a person (“A”) who exercises influence or control over another person (“B”) or is in a position to do so—
(a) encourages B to make a statement, or furnish a document, which A knows to be false in a material particular, or
(b) encourages B to make a statement or furnish a document—
(i) which is false in a material particular, and
(ii) where A is reckless as to whether the statement or document is false in a material particular,
for the purpose of enabling or facilitating B to become registered for gross payment or for payment under deduction.
(5) In a case where this section applies, A is liable to a penalty not exceeding £3,000.
(1) A person is liable to a penalty not exceeding 30% of any amount that they are determined to be liable to pay under section 62A (payments made in the knowledge of deliberate failures to comply) or 62B (returns made in the knowledge of deliberate failures to comply).
(2) A penalty under this section may not be determined more than three years after the date on which the determination under section 62A or 62B becomes final.
(3) For the purposes of subsection (2) and section 72B(3), a determination becomes final at the time when the period for any appeal or further appeal relating to the determination expires or, if later, when any appeal or final appeal relating to the penalty is finally determined.
(4) Section 103(4) TMA 1970 (time limits) does not apply to a penalty under this section.
72B Penalties under section 72A: officers’ liability
(1) Where—
(a) a company is liable to a penalty under section 72A, and
(b) the actions of the company which give rise to that liability were attributable to an officer of the company,
the officer is liable to pay such portion of the penalty (which may be equal to or less than 100%) as the Commissioners may specify in a notice given to the officer (a “decision notice”).
(2) Before giving the officer a decision notice, the Commissioners must—
(a) inform the officer that they are considering doing so, and
(b) afford the officer the opportunity to make representations about whether a decision notice should be given or the portion that should be specified.
(3) A decision notice—
(a) may not be given before the amount of the penalty due from the company has been determined (but it may be given immediately after that has happened), and
(b) may not be given more than three years after the date on which the determination mentioned in section 72A(1) becomes final.
(4) Where the Commissioners have specified a portion of the penalty in a decision notice given to the officer—
(a) the officer must pay the specified portion before the end of the period of 30 days beginning with the day on which the notice is given,
(b) the specified portion shall be recoverable as if it were tax due from the officer, and
(c) a further decision notice may be given in respect of a portion of any additional penalty for which the company is determined to be liable.
(5) The Commissioners may not recover more than 100% of the penalty through issuing decision notices in relation to two or more persons.
(6) A person is not liable to pay an amount by virtue of this section if the actions of the company concerned are attributable to the person by reference to conduct for which the person has been convicted of an offence.
In this subsection “conduct” includes omissions.
(7) In this section and section 72C—
“company” means a body corporate or unincorporated association;
“officer” means—
in relation to a body corporate other than one whose affairs are managed by its members—
a director, manager, secretary or other similar officer of the body, or a person purporting to act in such a capacity, or
a shadow director within the meaning of section 251 of the Companies Act 2006;
in relation to a limited liability partnership or other body corporate whose affairs are managed by its members—
a member who exercises management functions with respect to it, or purports to do so, or
in the case of a limited liability partnership, a shadow member;
in relation to an unincorporated association, a person who exercises functions of management with respect to it, or purports to do so;
“shadow member” means a person in accordance with whose directions or instructions the members of a limited liability partnership are accustomed to act, save that a person is not a shadow member by reason only of the fact that the members act on advice given by that person in a professional capacity.
72C Appeals in relation to a decision notice under section 72B
(1) An officer may appeal—
(a) the decision to give a decision notice under section 72B, including on the grounds that the company is not liable to the penalty under section 72A to which the decision notice relates;
(b) the amount of the specified portion.
(2) Notice of an appeal must—
(a) state the ground of appeal, and
(b) be given in writing to HMRC before the end of the period of 30 days beginning with the day on which the decision notice was given to the officer.
(3) The provisions of Part 5 of TMA 1970 relating to appeals have effect in relation to appeals under this section as they have effect in relation to an appeal against an assessment to income tax.
(1) The Board of Inland Revenue may by regulations make such other provision for giving effect to this Chapter as they consider necessary or expedient.
(2) The provision that may be made by regulations under subsection (1) includes provision for or in connection with modifying the application of this Chapter in circumstances where—
(a) a person acts as the agent of a contractor or sub-contractor;
(b) a person’s right to payments under a construction contract is assigned or otherwise transferred to another person.
(3) Regulations under this Chapter may make different provision for different cases.
(4) Any power under this Chapter to make regulations authorising or requiring a document (whether or not of a particular description), or any records or information, to be given or requested by or to be sent or produced to the Board of Inland Revenue includes power—
(a) to authorise the Board to nominate a person who is not an officer of the Board to be the person who on behalf of the Board—
(i) gives or requests the document, records or information; or
(ii) is the recipient of the document, records or information; and
(b) to require the document, records or information, in cases prescribed by or determined under the regulations, to be sent or produced to the address (determined in accordance with the regulations) of the person nominated by the Board to receive it on their behalf.
73A Designated international organisations: exemption from section 59
(1) The Treasury may by order designate for the purposes of this section any international organisation of which the United Kingdom is a member.
(2) Section 59 does not apply to an organisation which is so designated.